In case cheque issued prior to admission of CIRP and presented for encashment after admission of or during CIRP, Promoters/Directors of Corporate Debtor being natural persons, cannot be prosecuted under Section 138 of NI Act and P. Mohanraj & Others v. Shah Brothers Ispat does not apply – Govind Prasad Todi and Anr. Vs. Govt. of NCT of Delhi and Anr. – Delhi High Court
Hon’ble High Court holds that in P. Mohanraj, 51 cheques were issued by the company in favour of the respondent towards amounts payable from 21.09.2015 to 11.11.2016. On 31.03.2017, the respondent issued a statutory demand notice under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The order admitting the application was passed on 06.06.2017 by the Adjudicating Authority directing commencement of the CIRP with respect to the company and putting a moratorium in terms of Section 14 of the IBC. Hence in judgment of P.Mohanraj, the moratorium commenced from 06.06.2017. Prior to that not only the cheques had bounced but demand notices were also issued. In the present case, prior to presentation of cheques, not only the mortarium kicked in but the IRP had also sent the effective letter. As a result, the cheques became incapable of encashment.