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Soon after concluding that proceedings below Segment 138 of the Act could well be protected and thus subject to your rigours of Area fourteen on the Code and that a moratorium would use versus the company debtor in this sort of proceedings in addition, the Supreme Courtroom went on to contemplate whether or not Portion 138 proceedings in opposition to the administrators/individuals in administration or control of the corporation would be lined and so matter to the rigours of Area fourteen from the Code. 

e., the signatories to the cheques/directors of the company debtor escape prosecution. How can a person allow the normal folks to escape liability on these specious plea?”

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Just before 1988, there was no provision during the Act prohibiting individuals from issuing checks devoid of sufficient income inside their account, nor was there any provision punishing them if their checks were dishonoured. 

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To handle The problem of undue delay in the final resolution of cheque dishonour circumstances and discourage frivolous litigation by offering interim compensation towards the complainant, pending the 138 proceedings or even the attraction as the case may be.

Irrespective of whether the corporate debtor is topic to your moratorium, steps less than Segment 138 with the Negotiable Instruments Act, 1881, against the company debtor’s administrators/persons in management is usually continued or begun, and they'll be statutorily liable.

In light in the foregoing, the Supreme Courtroom, just after reviewing many rulings about the legitimate character of processes below Chapter XVII on the Act, concluded the course of action under Segment 138 could be referred to as a “civil sheep” dressed for a “felony wolf.”

This ruling did not, nevertheless, completely take care of The difficulty of territorial jurisdictions. By depositing the Check out-in the branch of your lender that was bodily remote from the real department in the bank where by the complainant held his account, the complainant may well However obtain an unfair advantage and produce the accused towards the distant corners on the nation for prosecution. 

Kaul, J, composing for himself and Oka, J, turned down the contention and observed that the method underneath the IBC whether or not underneath Section 31 or Sections 38 to 41 which could extinguish the personal debt would not ipso facto use to your extinguishment of the criminal proceedings.

Should such a path to pay/deposit interim remuneration be issued to the corporate debtor’s directors/folks in administration and control, it is probably going to trigger a pandora’s box of litigation.

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This short article ventures into the provisions from the Negotiable Devices Act in relation for the aforementioned case and gives an Assessment on the SC judgement in light-weight of such provisions. 

To determine a formulated course of action for service of summons for the accused or witness by Courtroom as a result of pace write-up or empanelled personal couriers;

Prior to delving into the court docket’s observations and conclusions, it’s critical to grasp the gist with the make any difference introduced prior to it via the appellant. The appellant argued that the purpose of Section fourteen from the Code was to shield the assets of the corporate debtor for the duration of the corporate insolvency treatment.