Jagmohan Garg v. National Spot Exchange Ltd & Anr.

WP-1749-2024-J.DOCNational Spot Exchange Ltd & Anr…RespondentsWITHAPPLICATION NO. 1882 OF 2024Jay Shankar Shrivastava… ApplicantVersusNational Spot Exchange Ltd & Anr…RespondentsMr Sudeep Pasbola, Senior Advocate i/by Mr. Abhiraj Rao, for the Applicant in APL 1749 of 2024. Mr. Vinay J Bhanushali with Mr. Abhiraj Rao, Mr. Sanmit Vaze, Ms. Diksha Sharma, for the Applicant in APL Nos.1690/2024, 1694/2024, 1743/2024, 1742/2024, 1745/2024, 1750/2024, 1744/2024, 1748/2024, 1746/2024, 1756/2024, 1757/2024, 1758/2024, 1754/2024, 1838/2024, 1841/2024, 1839/2024, 1840/2024, 1885/2024, 1883/2024, 1886/2024, 1882/2024 and 501/2024. Ms. Aakanksha Nehra (through VC), with Mr. Anuj Jhaveri, Mr. Mihir Modi, for the Petitioner in WP/2228/2025 and WP/2229/2025.Mr. Rishi Bhuta, a/w Ms. Vaishnavi Javheri, Mr. Pratham Jain, Mr.Parth Govilkar, Mr. Prateek Dutta, Ms. Maitrayee Ganediwala,Ms. Ankita Bamboli, Ms. Saakshi Jha, Ms. Karishma Rajesh, Ms.Kashish Singhi, Ms. Khushboo shah, Mr. Faizan shaikh, Ms.Neha Patil, Mr. Ashish Dubey, Ms. Sujata, Ms. SteveFernandes /by Mr. Dilip Shukla, for the Petitioners inWP/6264/2024.Mr. Arvind Lakhawat a/w Mr. Nimeet Sharma, Mr. Vinit Vaidya, Ms.Jalpa Shah, Ms. Himani Narula, i/b. MZM Legal LLP, forRespondent No.1 - NSEL in all the matters.Mr. D J Haldankar, APP for the Respondent-StateCORAM :N. J. JAMADAR, J. RESERVED ON :23rd JULY 2026 PRONOUNCED ON :18 AUGUST 2026ARS 5/64 WP-1749-2024-J.DOCJUDGMENT:1.Rule. Rule made returnable forthwith and, with the consent ofthe learned Counsel for the parties, heard finally.2. In these Petitions and Applications the core question that arisesfor consideration is the applicability of the moratorium under theprovisions of Section 96 of the Insolvency and Bankruptcy Code, 2016(“IBC 2016”) to the initiation or continuation of a complaint filed forthe commission of an offence punishable under Section 138 read withSection 141 of the Negotiable Instruments Act, 1881 (“the NI Act,1881”) qua the directors/the persons liable for commission of suchoffence under Section 141 of the NI Act, 1881?3.Since a common question of law arises for determination in a, byand large, similar fact-situation, all the Applications and Petitions wereheard together and are being decided by this common judgment. 4.The facts in Application No. 1749 of 2024 are noted as arepresentative case. Reference would be made to the facts in the WritPetitions in brief, a little latter. 5.The broad background facts leading to the Application No. 1749of 2024 can be summarized as under:5.1National Spot Exchange Limited (“NSEL”), the complainant, is acompany incorporated under the Companies Act, 1956. Thecomplainant carries on business as a spot exchange providing for anARS 6/64 WP-1749-2024-J.DOCelectronic trading platform for spot contracts in commodities on acompulsory delivery basis. M/s Mohan India Private Limited (A1) is aprivate limited company. A1 is a trading and clearing member of thecomplainant. 5.2The Applicant (A2) is the director and authorized signatory of A1.A3 is also a director and authorized signatory of A1. The day to dayaffairs of A1 were managed by A2 and A3 and they were allegedly in-charge and control of the day to day affairs of A1 and liable for all theacts and deeds done by A1.5.3As a member of the complainant spot exchange, A1 was bound tocomply with the Rules and By-laws of the complainant. The Accusedhad given an undertaking to that effect.5.4Vide Circular dated 31st July 2013, the complainant directed thatthe positions outstanding in the contracts would be settled by way ofdelivery and payment after expiry of 15 (fifteen) days. 5.5In the wake of outstanding with respect to A1 and its sisterconcerns, Tavashi Enterprises Private Limited and Vrunda CommodityPrivate Limited, A1 alongwith its sister concern and six others(including A2 and A3) had entered into a Settlement Agreement. On30th October 2013, a Settlement Award as contemplated under Section73 of the Arbitration and Conciliation Act, 1996 (“the Act, 1996”) cameto be passed.ARS 7/64 WP-1749-2024-J.DOC5.6Under the said Award, an amount of Rs. 771 Crores became dueand payable by A1 in 13 installments. The first installment was paid byA1. However, the accused committed default in payment of thesucceeding installments. As of 10th March 2014 a sum of Rs.124.50Crores was due and payable in terms of the Settlement Award. 5.7Towards discharge of the liability as per the Settlement Award, A1issued a cheque for a sum of Rs.30 Crores drawn on Axis Bank Limited,New Delhi Branch, payable on 28th February 2014. The said cheque wassigned by A2 and A3 on behalf of A1. 5.8Upon presentment, the said cheque was returned unencashedwith the remarks, “funds insufficient” and “account freezed”, vide BankMemo dated 28th February 2014. Despite service of the demand noticedated 10 March 2014, the accused committed default in payment of theamount covered by the cheque, within the stipulated period. Thus,Respondent No.1-complainant lodged the complaint for an offencepunishable under Section 138 read with Section 141 of the N.I. Act,1881. 5.9During the pendency of the said complaint, the Applicant (A2)filed an Application seeking stay of the proceeding in the said complaintunder Section 96 of the IBC, 2016, on the premise that A2 had filed anApplication under Section 94 of the IBC, 2016, before the NationalARS 8/64 WP-1749-2024-J.DOCCompany Law Tribunal, Delhi (NCLT) for initiation of InsolvencyResolution Process (“IRP”), on 13th May 2024.5.10A2 contended that with the initiation of the IR Petition, theinterim moratorium contained in Section 96 of IBC, came into effect.Resultantly, all the legal proceedings, including the subject prosecutionfor an offence punishable under Section 138 of the N.I. Act, 1881, weredeemed to have been stayed. Since the complainant has asserted in thecomplaint that the subject cheque was drawn towards the discharge ofpart of the debt, the conditions for applicability of moratorium underSection 96 stood satisfied. Moreover, in view of the provisions containedin Section 238 of the IBC, 2016, which gives an overriding effect to theprovisions of IBC, 2016, the prosecution under Section 138 of the NIAct, 1881, was required to be stayed. 5.11A2 further asserted that he had given his personal guarantee tovarious companies and one of the financial creditors had alreadyinvoked the personal guarantee given by A2. Therefore, the proceedingin the complaint were required to be stayed in view of the moratoriumunder Section 96 of the IBC, 2016.5.12Respondent No.1-complainant resisted the Application. It wasrefuted that Section 96 of the IBC, 2016 governed facts of the case. Thesubject cheque was drawn by A1 company for discharge of it partliability, as such. A2 was prosecuted for being a director and the personARS 9/64 WP-1749-2024-J.DOCresponsible for A1-company by invoking the provisions contained inSection 141 of the NI Act, 1881. In substance, A2 was being prosecutedas a natural person by invoking his vicarious liability contained inSection 141 of NI Act, 1881. The prosecution was not in relation to thedebt owed by A2 personally. 5.13Respondent No.1 further asserted that, the proceeding underSection 94 of the IBC, 2016 for initiation of the IR were in relation tothe personal liability of A2 in his capacity as a surety in the contract ofguarantee executed by him in favour of the complainant. In contrast,the prosecution in the instant case, was in relation to the debt of A1-company towards discharge of which the subject cheque was drawn.The debt of A1 was not the personal debt of A2. There is no embargofor the continuation of the prosecution for an offence punishable underSection 138 of the NI Act, 1881, against the natural person. Themoratorium under Section 96, would be attracted only in case of thecorporate entity and not the natural person.5.14 The learned Magistrate, after appraisal of the material on recordand the rival submissions, was persuaded to reject the Applicationopining inter alia that the subject cheque was drawn by A1-companypurportedly towards the discharge of its liability. A2 has, in fact, raiseda defence that he was not liable to pay the debt towards discharge ofwhich the subject cheque was allegedly drawn. Thus, the expressionARS 10/64 WP-1749-2024-J.DOC‘debt’ used in Section 96 of the IBC, 2016 would not govern theliabilities of A2 under Section 141 of NI Act, 1881. Consequently, theproceeding in the complaint were not requested to be stayed. 5.15Being aggrieved A2 has preferred this Application.6.In WP No.2228 of 2025 and 2229 of 2025, the change is that theApplication under Section 95 of IBC, 2016 was instituted before NCLT,Chennai. Thereupon, the Petitioners filed an application under Section96 of IBC 2016. Learned Magistrate rejected the Application opining,inter alia, that the cheques were drawn on an account maintained bythe corporate entity to discharge its corporate liability; the Petitionerswere being prosecuted in their capacity as directors / responsiblepersons by invoking the provisions of Section 141 of the Act, 1881 andthat the Petitioners were not the primary debtors. 7.In WP No.6264 of 2024, the Petitioner / accused filed anapplication seeking stay of the proceedings on the strength of thePetition filed under Section 95(1) of IBC, 2016 before the NCLTMumbai. As the learned Magistrate rejected the application, thePetitioner preferred a revision before the learned Sessions Judge. TheRevision Application was dismissed as non-maintainable, construing theorder of rejection as an interlocutory order. 8.I have heard Mr. Vinay J Bhanushali, the learned Counsel for theApplicant in APL Nos.1690/2024, 1694/2024, 1743/2024, 1742/2024,ARS 11/64 WP-1749-2024-J.DOC1745/2024, 1750/2024, 1744/2024, 1748/2024, 1746/2024, 1756/2024,1757/2024, 1758/2024, 1754/2024, 1838/2024, 1841/2024, 1839/2024,1840/2024, 1885/2024, 1883/2024, 1886/2024, 1882/2024 and 501/2024,Mr. Rishi Bhuta, the learned Counsel for the Petitioner inWP/6264/2024, Ms. Aakanksha Nehra (through VC), the learnedCounsel for the Petitioner in WP/2228/2025 and WP/2229/2025, Mr.Sudeep Pasbola, the learned Senior Advocate, for the Applicant in APLNo.1749 of 2024, Mr. Arvind Lakhawat, the learned Counsel forRespondent No.1-NSEL, in all the matters, at length. 9.With the assistance of the learned Counsel for the parties, I haveperused the material on record. SUBMISSIONS : FOR APPLICANTS/PETITIONERS :10.Mr. Bhanushali, the learned Counsel for the Applicants submittedthat, if the entire scheme of IBC, 2016 and the underlying object of themechanism of moratorium are appreciated, then the continuation of theprosecution for an offence punishable under Section 138 of the NI Act,1881, qua the directors would prove detrimental and counterproductive to the avowed object of revival of the corporate entity. Thedistinction between the corporate debtor and the natural person whoare sought to be prosecuted for an offence punishable under SectionARS 12/64 WP-1749-2024-J.DOC138 read with Section 141 of the NI Act, 1881, does not hold theground if the legislative intendment is properly understood. 11.Mr. Bhanushali submitted that the decision in the case of P.Mohanraj Vs M/s Shah Brothers Ispat Pvt Ltd,1 which forms the sheetanchor of the distinction between the fate of the proceeding qua thecorporate debtor and natural person, does not advance the cause of thesubmissions on behalf of the complainant, if the principles laid downtherein are appreciated correctly. On the contrary, the said decisionthough rendered in the context of the provisions contained in Section14 of the IBC, 2016 would apply with greater force and rigor to themoratorium envisaged under Sections 96 and 101 of the IBC, 2016.12.Taking the Court through the provisions of Sections 94 and 95,which are subsumed in Part III of IBC, 2016, Mr. Bhanushali would urgethat ultimate effect of initiation of IR Process either under Section 94 orSection 95 of IBC, 2016 is that, it triggers the operation of the interimmoratorium under Section 96 of the IBC, 2016 no sooner the Petition isadmitted. Consequently, during the pendency of such InsolvencyResolution Petition before the NCLT, by operation of law, theproceedings, including the prosecution under Section 138 of NI Act,1881, are deemed to be instantaneously stayed. 13.Mr. Bhanushali would urge that, if the object and operation of themoratorium is to ensure that there is no depletion of corporate debtors1 (2021) 6 SCC 258.ARS 13/64 WP-1749-2024-J.DOCassets during IR Process for maximizing value for all stake holders andrevival of the corporate entity, if possible, the fine distinction sought tobe made in the matter of the proceeding qua the corporate entity andthe natural person would fall through. It was submitted that the scopeof operation of the moratorium under Sections 96 and 101 of IBC, 2016is more expansive than Section 14 of IBC, 2016 which applies tocorporate debtors. 14.Mr. Bhanushali further submitted that the decisions in the casesof Ajay Kumar Radheyshyam Goenka Vs Tourisin Finance Corporation ofIndia2 and Rakesh Bhanot Vs M/s Gurdas Agro Pvt Ltd3, on whichreliance was placed on behalf of Respondent No.1, are of no assistanceto the complainant as those decisions were rendered in a different fact-situation. In any event, the decision in the case of P Mohanraj (Supra)which is rendered by a Bench of three Hon’ble Judges, if properlyconstrued governs the case of personal insolvency as well. Resultantly,the complaints under Section 138 and Section 141 of NI Act, 1881 quathe natural persons, who are impleaded in the capacity of the directorsand the persons in-charge of and responsible to the affairs of thecompany, are also required to be stayed.15. Mr. Rishi Bhuta, the learned counsel for the Petitioners in WritPetition No. 6264 of 2024 submitted that, the text of Section 96 of the2(2023) 10 SCC 545.3 (2025) 6 SCC 781.ARS 14/64 WP-1749-2024-J.DOCIBC, 2016 is absolutely clear and unambiguous. Once an InsolvencyResolution Petition is admitted, the interim moratorium operatesautomatically and instantaneously. The broad expression, “any legalaction or proceeding in respect of any debt” used in Section 96, coversin its fold a prosecution for an offence under Section 138 of the NI Act,1881, as well. 16.Amplifying the aforesaid submission Mr. Bhuta would urge acomplaint under Section 138 of the NI Act, 1881, has its genesis in theissuance of a cheque towards discharge of a legally enforceable debt orliability. Thus, the Supreme Court in the case of P. Mohanraj (Supra),enunciated that, though proceedings under Section 138 of the NI Act,1881, are criminal in form, yet they are primarily intended to enforcethe payment of a debt or discharge of the liability. Consequently, thecontinuation of the prosecution even against the director of a companyduring the pendency of the moratorium is legally impermissible.17. Mr. Bhuta also laid emphasis on the non-obstante clausecontained in Section 238 of IBC, 2016, which gives an overriding effectto the provisions of IBC, 2016, over any other law or instrument. Thus,since Section 6 defines a cheque as an instrument, the provisions of themoratorium would also extend to any instrument having effect by virtueof any law. ARS 15/64 WP-1749-2024-J.DOC18.Mr. Bhuta further submitted that, the IBC, 2016 itself carves outthe specific exceptions in the form, “excluded debts” under Section79(15). The Parliament has not included the debt arising out ofdishonour of cheque within the category of excluded debts and,therefore, the moratorium under Section 96 of the IBC, 2016 mustapply to the proceedings under Section 138 of the NI Act, 1881.19. A contrary view, Mr. Bhuta would urge, would defeat the objectand purpose of IBC, 2016. If the creditors are allowed to pursue theprosecution under Section 138 of the NI Act, 1881, against thedirectors, whilst the proceeding stand stayed against the corporateentity, it would lead to a chaotic situation and undermine the collectiveinsolvency resolution mechanism. In any event, no prejudice is likely tobe caused to the complainant as the moratorium under Section 96 canonly be for a limited period. 20.Ms. Aakanksha Nehra, the learned Counsel for the Petitioner inWrit Petition Nos. 2228 of 2025 and 2229 of 2025 submitted that, thereis a distinction between the Insolvency Resolution process at theinstance of the debtor himself and on the Application of a Creditor. Inthe underlying proceeding in Writ Petition No. 1749 of 2024, the IRPwas initiated by the creditors. Therefore, the decision in the case ofRakesh Bhanot (Supra) which arises out of the IR Process initiated bydebtor himself would not govern the facts of the case. This crucialARS 16/64 WP-1749-2024-J.DOCdistinction was lost sight of the by the Trial Court. If the IR Process isinitiated at the instance of the creditor, the interim moratorium underSection 96 must operate, submitted Ms. Nehra.21.Mr. Sudeep Pasbola, the learned Senior Advocate for theApplicants would urge that the claim of complainant falls within theambit of ‘debt’ for the purpose of Section 96 of IBC, 2016. The trialCourt committed a grave error in law in carving out a distinctionbetween the personal debt of the Applicants and that of the corporateentity. If the effect test is applied, there is no justification for suchartificial distinction. Secondly, the proceeding under Section 138 of theNI Act,1881, is a quasi-criminal proceeding for recovery of the debt asthe predominant object is to restitute the complainant. Thirdly, if thebenefit of the interim moratorium under Section 96 of IBC, 2016, is notmade applicable to the proceeding under Section 138 of the NI Act,1881, the very object of IBC would be jeopardized. 22.In order to lend support to the aforesaid submissions, the learnedCounsel for the Applicants/Petitioners have placed reliance on thejudgments of the Supreme Court in the cases of (I) Dilip B. JiwrajkaV/s. Union of India and Ors.4; (ii) P. Mohanraj and Ors. V/s. ShahBrothers Ispat Pvt. Ltd. (supra); (iii)Ajay Kumar Radheyshyam GoenkaV/s. Tourism Finance Corporation of India Ltd. (supra); (iv) Indian4 (2024) 5 SCC 435ARS 17/64 WP-1749-2024-J.DOCOverseas Bank V/s. M/s. RCM Infrastructure Ltd.5 and the judgment ofthe learned Single Judge of this court in the case of Sheetal Gupta V/s.National Spot Exchange Ltd. and Anr.6. For Respondent No.1 – complainant : 23.Mr. Arvind Lakhawat, the learned Counsel for Respondent No.1-complainant, stoutly countered the submissions on behalf of theApplicants-Petitioners and supported the impugned order. 24. Mr. Lakhawat would urge that the issue sought to be raised onbehalf of the accused is settled by binding judgments of the SupremeCourt in the cases of Rakesh Bhanot (Supra) and Ajaykumar Goenka(supra).25. The support sought to be drawn by the Accused from thedecisions in the cases of Dilip B Jiwrajka Vs Union of India7 and SheetalGupta Vs National Spot Exchange Ltd8 is of no avail. Right from thejudgment of the Supreme Court in the case of P Mohanraj (Supra) it iswell-recognized that the moratorium, be it under Section 14 or Section96 of the IBC, 2016, does not operate qua the proceeding againstnatural persons. 26.The decision in the case of P Mohanraj (Supra), according to Mr.Lakhawat, supports the stand of the complainant. In the case of Sheetal5 2022 LiveLaw (SC) 4966 Cri. Appl. No.1151 of 2022 dt. 10 Jan. 20237 (2024) 5 SCC 435.8 2023 SCC OnLine Bom 3095.ARS 18/64 WP-1749-2024-J.DOCGupta (Supra) the attention of this Court was not drawn to the relevantobservations in the judgment in the case of P. Mohanraj (Supra)pertaining to the natural persons in the matter of the application ofmoratorium. Nor the distinction between the provisions contained inSections 14 and 96 of IBC, 2016 was considered by this Court.Comparing and contrasting the provisions contained in Section 14(1)(a), which uses the expression, “against the corporate debtor” andSection 96 (1) (b) (i), which uses the expression, “in respect of anydebt”, Mr. Lakhawat submitted that Section 96 governs the case ofpersonal debt and not the debt of the corporate entity. 27.Mr. Lakhawat submitted that the reliance on the judgment in thecase of P Mohanraj (Supra) is wholly misplaced as the said judgmentdoes not strictly govern a case covered by Section 96 of IBC, 2016. Onthe contrary, the decision in the case of Ajay Kumar RadhyeshyamGoenka (Supra), Mr. Lakhawat would urge, makes it explicitly clear thatthere is no bar for continuation of prosecution for an offence punishableunder Section 138 of the NI Act, 1881, qua the natural persons. Mr.Lakhawat submitted that after the decision in the case of Rakesh Bhanot(Supra) in a series of judgments, the challenge of an identical naturehas been repelled by various Courts. 28.At this juncture, it is necessary to note that the parties were heardon the implications of the judgment of the Supreme Court in the case ofARS 19/64 WP-1749-2024-J.DOCDineshchand Surana Vs Uco Bank9, whereby a two Judge Bench of theSupreme Court, after an elaborate analysis, enunciated that themoratorium under Sections 96 and 101 of IBC, 2016, respectively, isapplicable qua the directors’ who are saddled with the liability todischarge the compensatory obligation of the company by virtue of theuse of the words, “any debt” therein. And the following questions werereferred to a three Judge Bench : 1. Whether the provisions of Section 138 of theNI Act, 1881 and the objective underlying theenactment thereof indicate that it is a quasi-criminalin nature with a tilt towards the criminal side?2.Whether the moratorium provisions under Part III ofthe IBC, 2016, should be made applicable on theentire proceedings under Section 138 of NI Act, 1881or only to the compensatory aspect thereof?29. The Counsels for the Applicants/Petitioners were in unison onthe point that the decision on these Applications/Petitions be deferredtill the larger Bench decides the aforesaid questions. It was submittedthat the aforesaid judgment bolsters up the case of the Accused. 30.Per contra, the learned Counsel for the Respondents-complainantsubmitted that the aforesaid judgment reinforces the principle that, sofar as the prosecution of the natural persons for an offence punishableunder Section 138 of the NI Act, 1881, the moratorium is not attracted.What has been referred to the three Judge Bench is the aspect of the9 2026 INSC 579ARS 20/64 WP-1749-2024-J.DOCapplicability of the moratorium to the compensatory aspect of theproceeding under Section 138 of the NI Act, 1881. Since, that stage isyet to be reached, there is no propriety in staying the underlyingproceedings under Section 138 of the NI Act, 1881 till the decision ofthe larger Bench. 31.In any event, Mr. Lakhawat, the learned Counsel, would urge, it issettled position in law that the mere fact that a decision is referred to alarger Bench does not dilute the precedential authority of such decision.Thus this Court need not defer the decision on theApplications/Petitions which have been extensively heard. 32.To begin with, a resume of the provisions of the IBC 2016, whichbear upon the determination of the question in controversy. Section3(11) of IBC 2016 defines “debt”, as under : “(11) “debt” means a liability or obligation inrespect of a claim which is due from any personand includes a financial debt and operational debt;”33. Chapter II of IBC 2016 makes the fasciculus of provisions inregard to the corporate insolvency resolution process. Under Section 6,a financial creditor, an operational creditor or the corporate debtor itselfmay initiate corporate insolvency resolution process. Section 7 providesfor initiation of corporate insolvency resolution process by financialcreditor. Section 9 provides for initiation of corporate insolvencyresolution process by operational creditor. ARS 21/64 WP-1749-2024-J.DOC34.Section 14(1) of IBC 2016, which provides for Moratorium, readsas under : “14.Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvencycommencement date, the Adjudicating Authority shallby order declare moratorium for prohibiting all of thefollowing, namely : - (a)the institution of suits or continuation ofpending suits or proceedings against the corporatedebtor including execution of any judgment, decreeor order in any Court of law, tribunal, arbitrationpanel or other authority; (b)transferring, encumbering, alienating ordisposing of by the corporate debtor any of its assetsor any legal right of beneficial interest therein; (c)any action to foreclose, recover or enforce anysecurity interest created by the corporate debtor inrespect of its property including any action under theSecuritisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002 (54 of2002); (d)the recovery of any property by an owner orlessor where such property is occupied by or in thepossession of the corporate debtor. [Explanation. - For the purpose of this sub-section, it is hereby clarified that notwithstandinganything contained in any other law for the timebeing in force, a license, permit, registration, quota,concession, clearances or a similar grant or rightgiven by the Central Government, State Government,local authority, sectoral regulator or any otherARS 22/64 WP-1749-2024-J.DOCauthority constituted under any other law for thetime being in force, shall not be suspended orterminated on the grounds of insolvency, subject tothe condition that there is no default in payment ofcurrent dues arising for the use or continuation of thelicense, permit, registration, quota, concession,clearances or a similar grant or right during themoratorium period.] 35.Chapter III makes the provisions in relation to insolvencyresolution process qua a person. Section 94 provides for insolvencyresolution process at the instance of the debtor. Section 95 enables acreditor to initiate insolvency resolution process. They read as under : “94.Application by debtor to initiate insolvencyresolution process. - (1) a debtor who commits a defaultmay apply, either personally or through a resolutionprofessional, to the Adjudicating Authority for initiatingthe insolvency resolution process, by submitting anapplication. (2)Where the debtor is a partner of a firm, suchdebtor shall not apply under this Chapter to theAdjudicating Authority in respect of the firm unless allor a majority of the partners of the firm file theapplication jointly. (3)An application under sub-section (1) shall besubmitted only in respect of debts which are notexcluded debts. (4)A debtor shall not be entitled to make anapplication under sub-section (1) if he is - (a) an undischarged bankrupt; ARS 23/64 WP-1749-2024-J.DOC (b)undergoing a fresh start process; (c)undergoing an insolvency resolutionprocess; or (d)undergoing a bankruptcy process. (5)A debtor shall not be eligible to apply under sub-section (1) if an application under this Chapter has beenadmitted in respect of the debtor during the period oftwelve months preceding the date of submission of theapplication under this section. (6)The application referred to in sub-section (1)shall be in such form and manner and accompanied withsuch fee as may be prescribed. 95.Application by creditor to initiate insolvencyresolution process. - (1)A creditor may apply eitherby himself, or jointly with other creditors, or through aresolution professional to the Adjudicating Authority forinitiating an insolvency resolution process under thissection by submitting an application. (2)A creditor may apply under sub-section (1) inrelation to any partnership debt owed to him forinitiating an insolvency resolution process against - (a)any one or more partners of the firm; or (b)the firm. (3)Where an application has been made against onepartner in a firm, any other application against anotherpartner in the same firm shall be presented in ortransferred to the Adjudicating Authority in which thefirst mentioned application is pending for adjudicationand such Adjudicating Authority may give suchdirections for consolidating the proceedings under theapplications as it thinks just. ARS 24/64 WP-1749-2024-J.DOC(4)An application under sub-section (1) shall beaccompanied with details and documents relating to - (a)the debts owed by the debtor to thecreditor or creditors submitting the application forinsolvency resolution process as on the date ofapplication; (b)the failure by the debtor to pay the debtwithin a period of fourteen days of the service of thenotice of demand; and (c)relevant evidence of such default or non-repayment of debt. (5)The creditor shall also provide a copy of theapplication made under sub-section (1) to the debtor. (6)The application referred to in sub-section (1)shall be in such form and manner and accompanied bysuch fee as may be prescribed. (7)The details and documents required to besubmitted under sub-section (4) shall be such as may bespecified.” 36.Section 96 of IBC, with which we are primarily concerned inthese proceedings, provides for interim moratorium in the wake ofinsolvency resolution application under Section 94 or Section 95.Section 96 reads as under : “96.Interim-Moratorium. - (1) When an application isfiled under section 94 or section 95 - (a)an interim-moratorium shall commence onthe date of the application in relation to all the debtsand shall cease to have effect on the date of admissionof such application; and (b)during the interim-moratorium period -ARS 25/64 WP-1749-2024-J.DOC (i)any legal action or proceedingpending in respect of any debt shall be deemed to havebeen stayed; and (ii)the creditors of the debtor shall notinitiate any legal action or proceedings in respect of anydebt. (2)Where the application has been made in relationto a firm, the interim-moratorium under sub-section (1)shall operate against all the partners of the firm as onthe date of the application. (3)The provisions of sub-section (1) shall not applyto such transactions as may be notified by the CentralGovernment in consultation with any financial sectorregulator.”37.Section 101 deals with the Moratorium. It reads as under : “101. Moratorium. - (1) When the application isadmitted under Section 100, a moratorium shallcommence in relation to all the debts and shall cease tohave effect at the end of the period of one hundred andeighty days beginning with the date of admission of theapplication or on the date the Adjudicating Authoritypasses an order on the repayment plan under section114, whichever is earlier. (2)During the moratorium period - (a)any pending legal action or proceeding inrespect of any debt shall be deemed to have been stayed; (b)the creditors shall not initiate any legalaction or legal proceedings in respect of any debt; and (c)the debtor shall not transfer, alienate,encumber or dispose of any of his assets or his legalrights or beneficial interest therein; ARS 26/64 WP-1749-2024-J.DOC(3)Where an order admitting the application undersection 96 has been made in relation to a firm, themoratorium under sub-section (1) shall operate againstall the partners of the firm. (4)The provisions of this section shall not apply tosuch transactions as may be notified by the CentralGovernment in consultation with any financial sectorregulator.” 38. A conjoint reading of the aforesaid provisions would indicatethat the Parliament with a view to ensure that there is no depletion ofassets of the corporate debtor or a person against whom insolvencyresolution process has been initiated in different modes and the debtoris revived as a running concern, insulating it/him from the claims ofcreditors during the period of insolvency resolution process, hasintroduced the device of moratorium. 39.While appreciating the interplay between the provisionscontained in Section 14 and section 96, or, for that matter, Section 101of the IBC 2016, the object of IBC 2016, in general, and the device ofmoratorium, in particular, deserves to be kept in view. The Parliamenthas undoubtedly used different expressions in Section 14 and Section96 of the IBC 2016. Yet, while construing the terms used in the saidprovisions, the overarching object of the mechanism of moratoriumcannot be lost sight of. 40.The Statement of Objects and Reasons indicates that IBC 2016was enacted to consolidate and amend the laws relating toARS 27/64 WP-1749-2024-J.DOCreorganisation and insolvency resolution of corporate persons,partnership firm, individuals in a time bound manner for maximizationof value of assets of such persons, to promote entrepreneurship,availability of credit and balance the interests of all the stakeholdersincluding alteration in the priority of payment of government dues andto establish an effective legal framework for timely resolution ofinsolvency and bankruptcy. 41.In the case of P. Mohanraj (supra), a three-judge Bench of theSupreme Court emphasised that the object of a moratorium provisionlike Section 14, was to ensure that there is no depletion of corporatedebtor’s assets during the insolvency resolution process so that it can bekept running as a going concern during this time, thus maximisingvalue for all stakeholders. The idea is that it facilitates the continuedoperation of the business of the corporate debtor to allow it breathingspace to organise its affairs so that a new management may ultimatelytake over and bring the corporate debtor out of financial sickness, thusbenefiting all stakeholders, which would include workmen of thecorporate debtor. 42.At this juncture, the object of the provisions contained in ChapterXVII of the Negotiable Instruments Act, 1881, which came to beintroduced by the amending Act, 1988, deserves to be noted. ChapterXVII was introduced to inculcate faith in the efficacy of bankingARS 28/64 WP-1749-2024-J.DOCoperations and credibility in transacting business on negotiableinstruments. 43.In the case of Mosaraf Hossain Khan V/s. Bhagheeratha Engg.Ltd.10, the Supreme Court enunciated that the object of the provision ofSection 138 of the NI Act, is that for proper and smooth functioning ofbusiness transaction in particular, use of cheques as negotiableinstruments would primarily depend upon the integrity and honesty ofthe parties. It was noticed that cheques used to be issued as a deviceinter alia for defrauding the creditors and stalling the payments.Dishonour of a cheque by the bank causes incalculable loss, injury andinconvenience to the payee and the entire credibility of the businesstransactions within and outside the country suffers a serious setback.Remedy available in a civil court is a long-drawn process and anunscrupulous drawer normally takes various pleas to defeat the genuineclaim of the payee. 44.In regard to the nature of the liability of the corporate entity,which could be enforced by resorting to the prosecution for an offencepunishable under Section 138 of the NI Act, 1881, and the applicabilityof the moratorium qua the prosecution under Section 138 of the NI Act,1881, in the case of P. Mohanraj (supra), the Supreme Court enunciatedthat the word “proceedings” covers in its fold a prosecution for anoffence punishable under Section 138 of the NI Act, 1881. The10 (2006) 3 SCC 658ARS 29/64 WP-1749-2024-J.DOCobservations in paragraph Nos.31, 35.2, 35.3 and 36 are instructive,and, hence, extracted below : “31.It can thus be seen that regard being had to theobject sought to be achieved by the IBC in imposingthis moratorium, a quasi-criminal proceeding whichwould result in the assets of the corporate debtorbeing depleted as a result of having to paycompensation which can amount to twice the amountof the cheque that has bounced would directly impactthe corporate insolvency resolution process in thesame manner as the institution, continuation, orexecution of a decree in such suit in a civil court forthe amount of debt or other liability. Judged from thepoint of view of this objective, it is impossible todiscern any difference between the impact of a suitand a Section 138 proceeding, insofar as the corporatedebtor is concerned, on its getting the necessarybreathing space to get back on its feet during thecorporate insolvency resolution process. Given thisfact, it is difficult to accept that noscitur a sociis orejusdem generis should be used to cut down the widthof the expression “proceedings” so as to make suchproceedings analogous to civil suits. …..35.2A legal action or proceeding in respect of anydebt would, on its plain language, include a Section138 proceeding. This is for the reason that a Section138 proceeding would be a legal proceeding “inrespect of” a debt. “In respect of” is a phrase which iswide and includes anything done directly or indirectly– see Macquarie Bank Ltd. v. Shilpi Cable TechnologiesARS 30/64 WP-1749-2024-J.DOCLtd.11 (at page 709) and Giriraj Garg v. Coal IndiaLtd.12 (at pages 202-203). This, coupled with the factthat the Section is not limited to ‘recovery’ of any debt,would indicate that any legal proceeding evenindirectly relatable to recovery of any debt would becovered. 35.3When the language of these Sections isjuxtaposed against the language of Section 14, it isclear that the width of Section 14 is even greater, giventhat Section 14 declares a moratorium prohibitingwhat is mentioned in clauses (a) to (d) thereof inrespect of transactions entered into by the corporatedebtor, inclusive of transactions relating to debts, as iscontained in Sections 81, 85, 96, and 101. Also,Section 14(1)(d) is conspicuous by its absence in anyof these Sections. Thus, where individuals or firms areconcerned, the recovery of any property by an owneror lessor, where such property is occupied by or inpossession of the individual or firm can be recoveredduring the moratorium period, unlike the property of acorporate debtor. 36.For all these reasons, therefore, given the objectand context of Section 14, the expression“proceedings” cannot be cut down by any rule ofconstruction and must be given a fair meaningconsonant with the object and context. It is concededbefore us that criminal proceedings which are notdirectly related to transactions evidencing debt orliability of the corporate debtor would be outside thescope of this expression.” (emphasis supplied) 11 (2018) 2 SCC 67412 (2019) 5 SCC 192ARS 31/64 WP-1749-2024-J.DOC45.The Supreme Court went on to examine the co-relation of Section14 with the other provisions of IBC 2016, especially Section 32-A, andenunciated that, a moratorium provision does not extinguish anyliability, civil or criminal, but only casts a shadow on proceedingsalready initiated and on proceedings to be initiated, which shadow islifted when the moratorium period comes to an end. 46.While considering the question whether natural persons arecovered under Section 14 of IBC 2016, after following thepronouncement in the case of Aneeta Hada V/s. Godfather Travels &Tours (P) Ltd.13, which enunciated that a proceeding under Section 138read with 141 of the Act, 1881 cannot be initiated or continued againstthe directors / persons in management or control of corporate debtor,without the corporate debtor being impleaded as an accused, theSupreme Court enunciated the law as under : “102.Since the corporate debtor would be covered bythe moratorium provision contained in Section 14 ofthe IBC, by which continuation of Section 138/141proceedings against the corporate debtor and initiationof Section 138/141 proceedings against the saiddebtor during the corporate insolvency resolutionprocess are interdicted, what is stated in paragraphs51 and 59 in Aneeta Hada (supra) would then becomeapplicable. The legal impediment contained in Section14 of the IBC would make it impossible for suchproceeding to continue or be instituted against the13 (2012) 5 SCC 661ARS 32/64 WP-1749-2024-J.DOCcorporate debtor. Thus, for the period of moratorium,since no Section 138/141 proceeding can continue orbe initiated against the corporate debtor because of astatutory bar, such proceedings can be initiated orcontinued against the persons mentioned in Section141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratoriumprovision contained in Section 14 of the IBC wouldapply only to the corporate debtor, the natural personsmentioned in Section 141 continuing to be statutorilyliable under Chapter XVII of the NegotiableInstruments Act.” (emphasis supplied) 47.The thrust of the submission on behalf of theApplicants/Petitioners was that, in view of the difference in theterminology used in Section 96 of the IBC 2016, the aforesaiddistinction drawn in the matter of applicability of moratorium underSection 14 qua natural persons does not apply with equal force.Emphasis was laid on the expressions “in relation to all the debts” usedin sub-section (a) of Section 96(1), and “any legal action orproceedings” and “in respect of any debt” used in sub-clauses (i) and(ii) respectively, of clause (b) of Section 96(1). 48.As noted above, an endeavour was made to drive home the pointthat, in P Mohanraj (supra), the Supreme Court was concerned with themoratorium qua corporate insolvency resolution process initiated underChapter II of IBC 2016. Reliance was placed on the observations inARS 33/64 WP-1749-2024-J.DOCpara 35.2 (extracted above), to the effect that a legal action orproceeding in respect of any debt would, on its plain language, includea section 138 proceeding, as it would be a legal proceeding “in respectof” a debt. And “in respect of” is a phrase which is wide and includesanything done directly or indirectly. Thus, any legal proceeding evenindirectly relatable to recovery of any debt would be covered. 49.The prosecution for an offence punishable under Section 138 ofthe NI Act, 1881, if viewed in the context of the consequences that theconviction may entail with fine double the amount of the cheque and/orcompensation, is essentially for the recovery of the debt or liabilitytowards the discharge of which a dishonoured cheque was drawn. Theprovisions contained in Section 96 must receive an expansiveinterpretation, was the substratum of the submissions on behalf of theApplicants/Petitioners. 50.The response on behalf of the Respondent No.1 -complainant wasthat the question sought to be raised is no longer res integra and standsanswered by the binding judgments of the Supreme Court. Taking theCourt through the provisions of Section 141 of the Act, 1881, especiallythe nature of vicarious liability fastened on the directors / persons incharge of the affairs of the corporate entity, it was submitted that thedebt or liability remains that of the corporate entity and does notARS 34/64 WP-1749-2024-J.DOCassume the character of personal debt of the directors / responsiblepersons. 51.At this stage, reference to the judgments of the Supreme Court,which were pressed into service in support and negation of thesubmissions canvassed, would be advantageous. 52.In the case of Ajay Kumar Radheyshyam Goenka (supra), thefacts were that the Appellant – Ajay Kumar was the Promoter andManaging Director of a corporate entity namely M/s. Rainbow PapersLtd. The Respondent – Tourism Finance Corporation of India Ltd., hadextended financial facilities to the corporate entity. A cheque drawn bythe corporate entity towards the discharge of the part of the liabilitywas dishonoured on presentment, and, eventually, that led to filing of acomplaint under Section 138 read with 141 of the NI Act, 1881. In themeanwhile, the operational creditor filed an application under Section 9of the IBC 2016 before the NCLT. The Appellant filed an application fordischarge before the learned Magistrate. As the learned Magistrate andthe High Court did not accede to the prayer of the Appellant, an SLPwas filed before the Supreme Court. 53.In a leading judgment, two Honourable Judges of the SupremeCourt considered the question : whether in the wake of the initiation of theinsolvency resolution process under IBC 2016, aARS 35/64 WP-1749-2024-J.DOCprosecution for an offence punishable under Section138 read with 141 can simultaneously continue ? 54.And after appraisal of the provisions of IBC 2016 and NegotiableInstruments Act, 1881, and the objects of two enactments, enunciatedthe law as under : “16.The issue whether the respondent is a SecuredFinancial Creditor or an Unsecured Financial Creditorwithin the meaning of the said Code is not something wecan deal with as that is the matter of the proceedingsunder the said Code or any appeal preferred therefrom.The only issue with which we are concerned with iswhether during the pendency of the proceedings underthe said Code which have been admitted, the presentproceedings under the N.I.Act can continuesimultaneously or not. 17.We have no hesitation in coming to the conclusionthat the scope of nature of proceedings under the twoActs is quite different and would not intercede eachother. In fact, a bare reading of Section 14 IBC wouldmake it clear that the nature of proceedings which haveto be kept in abeyance do not include criminalproceedings, which is the nature of proceedings underSection 138 of the N.I. Act. We are unable to appreciatethe plea of the learned counsel for the Appellant thatbecause Section 138 of the N.I. Act proceedings arisefrom a default in financial debt, the proceedings underSection 138 should be taken as akin to civil proceedingsrather than criminal proceedings. We cannot lose sight ofthe fact that Section 138 of the N.I. Act are not recoveryproceedings. They are penal in character. A person mayface imprisonment or fine or both under Section 138 ofARS 36/64 WP-1749-2024-J.DOCthe N.I. Act. It is not a recovery of the amount withinterest as a debt recovery proceedings would be. Theyare not akin to suit proceedings. 18.It cannot be said that the process under IBCwhether under Section 31 or Section 38 to 41 which canextinguish the debt would ipso facto apply to theextinguishment of the criminal proceedings. No doubt interms of the Scheme under the IBC there are sacrifices tobe made by the parties to settle the debts, the companybeing liquidated or revitalized. The Appellant before ushas been roped in as a signatory of the cheque as well asthe Promoter and Managing Director of the Accusedcompany, which availed of the loan. The loan agreementwas also signed by him on behalf of the company. Whatthe Appellant seeks is escape out of criminal liabilityhaving defaulted in payment of the amount at a veryearly stage of the loan. In fact, the loan account itselfwas closed. So much for the bona fides of the Appellant. 19.We are unable to accept the plea that ifproceedings against the company come to an end thenthe Appellant as the Managing Director cannot beproceeded against. We are unable to accept the plea thatSection 138 of the N.I. Act proceedings are primarilycompensatory in nature and that the punitive element isincorporated only at enforcing the compensatoryproceedings. The criminal liability and the fines are builton the principle of not honouring a negotiableinstrument, which affects trade. This is apart from theprinciple of financial liability per se. To say that under ascheme which may be approved, a part amount will berecovered or if there is no scheme a person may stand inARS 37/64 WP-1749-2024-J.DOCa queue to recover debt would absolve the consequencesunder Section 138 of the N.I. Act, is unacceptable.” 55.Evidently, the judgment in the case of Ajay Kumar RadheyshyamGoenka (supra), arose out of the corporate insolvency resolutionprocess. The Supreme Court has noted the submissions canvassed onbehalf of the parties in relation to the decision in the case of P. Mohanraj(supra), and the Supreme Court has taken a view which was inconsonance with its prior decision in the case of P. Mohanraj (supra).The Supreme Court has in terms observed that the object of IBC 2016and the NI Act, 1881 are distinct and would not intercede each other.The extinguishment of the debt, consequent to the insolvency resolutionprocess under IBC 2016, would not ipso facto result in extinguishmentof criminal proceeding. Nor can the termination of the proceedingagainst the corporate entity would result in automatic exoneration ofthe directors / responsible persons from the offence punishable underSection 138 of the Act, 1881. 56.Then came the decision of the two-judge Bench of the SupremeCourt in the case of Rakesh Bhanot (supra), wherein the precisequestion; that is sought to be raised in these applications / Petitions,was considered by the Supreme Court. The question was formulated bythe Supreme Court, as under : ARS 38/64 WP-1749-2024-J.DOC“Whether the proceedings initiated against theappellants / Petitioners (natural persons) under Section138 read with section 141 of the NI Act, 1881 should bestayed in view of the interim moratorium under section96 IBC having come into effect upon the appellants /petitioners’ filing applications under Section 94 IBC ? 57.To appreciate the ratio in the case of Rakesh Bhanot (supra),with greater clarity, it may be advantageous to note the facts in thebackdrop of which the said decision was rendered. 58.The Respondent therein had initiated a prosecution for an offencepunishable under Section 138 read with Section 141 of the NI Act, 1881against M/s. Arjun Mall Retail Holdings Pvt. Ltd., and its directors,including Rakesh Bhanot – Appellant. During the pendency of the saidcomplaint, the Appellant filed an application before the NCLT underSection 94 of IBC to initiate the personal insolvency resolution process.Upon the admission of the Petition, the Appellant sought stay to theprosecution on the premise that the interim moratorium under Section96 was triggered. The learned Magistrate as well as the High Courtrepelled the contention of the Appellant. The Supreme Courtconsidered the question, whether the prosecution under Section 138read with 141 of the NI Act, is required to be stayed, in view of theoperation of the interim moratorium under Section 96 of the IBC 2016,ARS 39/64 WP-1749-2024-J.DOCconsequent to initiation of insolvency resolution process by the debtorunder Section 94. 59.The two-judge Bench of the Supreme Court, after an analysis ofthe judgments in the cases of P. Mohanraj (supra), and following thethree-judge Bench judgment in the case of Ajay Kumar RadheyshyamGoenka (supra), answered the aforesaid question to the effect that theprayers of the Appellants / Petitioners to quash the prosecution underSection 138 of the Act, 1881, relying on the interim moratorium underSection 96 of IBC 2016 cannot be entertained. The observations of theSupreme Court in paragraph Nos.11 to 13 and 17 to 18 are material,and, hence, extracted below : “11.Admittedly, the appellants / petitioners arefacing trial for the offence under section 138 / 141 ofthe N.I. Act, 1881, at the instance of therespondents / complainants. While so, they initiatedthe personal insolvency proceedings under the IBCand sought exemption from the section 138proceedings before the trial Court, referring tointerim moratorium provided under Section 96 IBC. Itis to be noted that upon the application beingadmitted, the moratorium provisions under the IBCoffer protection only to the corporate debtor, i.e., thecompany, and do not extend protection against civilliability to personal guarantors by specific exclusionor to any individual who is prosecuted for committinga criminal act. ARS 40/64 WP-1749-2024-J.DOC12.The legislative intent behind the Insolvencyand Bankruptcy Code (IBC) is to provide a structuredframework for the resolution of corporate debtors'financial distress, facilitating their rehabilitation andensuring the maximization of asset value. Theapplication under Section 94 or 95 would fall underChapter III of the IBC. An application under Section94, when taken out by a debtor in the capacity of apersonal guarantor of a company, to declare him/heras insolvent, is to be disposed by following theprocedures in Sections 97 to 119. The applicationfiled under Section 94 is scrutinized by the ResolutionProfessional and a report is submitted ascontemplated under Section 99 recommending eitherthe approval or rejection of the application. Theinterim moratorium which commences on thepresentation of the application will expire on theadmission of the application by an order of theadjudicating authority under Section 100. Uponadmission, the moratorium under Section 101 comesinto operation. The interim moratorium underSection 96 and the moratorium under Section 101IBC are designed to offer a breathing space to thecorporate debtor, allowing them to reorganize theirfinancial affairs without the immediate threat ofcreditor actions. However, this moratorium is notintended to shield individuals from personal criminalliabilities arising from their actions outside the scopeof corporate debt restructuring. The respectiveappellants / petitioners, having filed insolvencyapplications as personal guarantors under Section 94IBC, cannot extend this protection to avoidARS 41/64 WP-1749-2024-J.DOCprosecution under Section 138 of the N.I. Act, 1881.Upon filing of the application under section 94 IPC, amoratorium comes into effect, designed to protect thedebtors from any legal actions concerning their debts.Specifically, Section 96 IBC provides that any legalproceedings pending against the debtor concerningany debt shall be deemed to have been stayed. Theterm “any legal action or proceedings” does not mean“every legal action or proceedings”. In sub-clauses 96(b) (i) and (ii), the term “legal action or proceedings”are followed by the term “in respect of any debt”. Theterm “legal action or proceedings” would have to beunderstood to include such legal action orproceedings relating to recovery of debt by invokingthe principles of noscitur a sociis. The purpose ofinterim moratorium contemplated under Section 96 isto be derived from the object of the act, which is notto stall the proceedings unrelated to the recovery ofthe debt. The protection is not available against penalactions, the object of which is to not recover any debt.This moratorium serves as a critical mechanism,allowing the debtor to reorganize their financialaffairs without the immediate threat of creditoractions. The clear and unequivocal language of thisprovision reflects the legislative intent to provide aprotective shield for debtors during the insolvencyprocess. 13.On the other hand, the proceedings underSection 138 of the N.I. Act, 1881, pertain to thedishonor of cheques issued by the respectiveappellants / petitioners in their personal capacity.These proceedings are distinct from the corporateARS 42/64 WP-1749-2024-J.DOCinsolvency proceedings and are aimed at upholdingthe integrity of commercial transactions by holdingindividuals accountable for their personal actions.The scope and nature of the proceedings under theIBC may result in extinguishment of the actual debtby restructuring or through the process of liquidation.But such extinguishment will not absolve its directorsfrom the criminal liability. Section 141 of the N.I. Act,1881 enables the prosecution of the persons in chargeof the affairs and responsible for the conduct of thebusiness of the company along with the company. Thestatutory liability against the directors under Section138 of the N.I. Act, 1881, is personal and hence,continues to bind natural persons, irrespective of anymoratorium applicable to the corporate debtor. Theacceptance of the resolution plan under Section 31IBC or its implementation thereof will have no effecton the prosecution under Section 138 of the N.I. Act,1881. Similarly, the acceptance of the report by theresolution professional under Section 100 and themoratorium under Section 101, which reprisesSection 96, will not bar the continual of any criminalaction. The cause of action for prosecution underSection 138 of NI Act commences on the dishonor ofthe cheque and the failure to pay the amount unpaidbecause of dishonour, within 15 days from the date ofreceipt of notice demanding payment. It is pertinentto mention here that the prosecution can be only withrespect to the amount unpaid by dishonour of thecheque irrespective of the actual debt. The distinctionbetween the right to sue based on a dishonouredcheque by initiating a civil suit and launching aARS 43/64 WP-1749-2024-J.DOCprosecution under Section 138 of the NegotiableInstruments Act is significant. In case of former, theinterim moratorium can operate, but not in case oflater. ……….17.For the foregoing discussion, we are of theopinion that the object of moratorium or for thatpurpose, the provision enabling the debtor toapproach the Tribunal under Section 94 is not to stallthe criminal prosecution, but to only postpone anycivil actions to recover any debt. The deterrent effectof Section 138 is critical to maintain the trust in theuse of negotiable instruments like cheques in businessdealings. Criminal liability for dishonoring chequesensures that individuals who engage in commercialtransactions are held accountable for their actions,however subject to satisfaction of other conditions inthe N.I.Act, 1881. Therefore, allowing the respectiveappellants / petitioners to evade prosecution underSection 138 by invoking the moratorium wouldundermine the very purpose of the N.I.Act, 1881,which is to preserve the integrity and credibility ofcommercial transactions and the personalresponsibility persists, regardless of the insolvencyproceedings and its outcome. 18.In view thereof, the contention of theappellants that the decisions relied on by the HighCourt dealt with the proceedings under section 14 IBC and not the proceedings under Section 96 IBC,cannot be countenanced by us. Furthermore, thedecision in Dilip B. Jiwrajka (supra) is not relevant tothe facts of the present case, as the issue therein wasARS 44/64 WP-1749-2024-J.DOCrelating to the constitutional validity of certainprovisions of the IBC and the applicability ofmoratorium to a proceedings under Section 138 ofthe N.I. Act, 1881 was not the subject matter.” (emphasis supplied)60.It is pertinent to note that, the Supreme Court has observed thatthe decision in the case of Dilip B Jiwrajka (supra), on which reliancewas placed on behalf of the Petitioners/Applicants, was of no assistanceto the Appellant therein, as in the case of Dilip B Jiwrajka (supra), theSupreme Court was dealing with the constitutional validity of certainprovisions of IBC and the applicability of the moratorium to theprovisions under Section 138 of the Act, was not the subject matter ofconsideration in the said case. 61.It would be profitable to immediately notice the manner in whichthree-judge Bench of the Supreme Court exposited the import of Section96 of IBC 2016 in the case of Dilip B. Jiwrajka (supra). Theobservations in paragraph Nos.57 and 58 are instructive, and, hence,extracted below : “57.Section 96, as its marginal note indicates, dealswith an “interim-moratorium”. In terms of Section 96,the interim moratorium takes effect on the date of theapplication. In other words, the very submission of anapplication under Section 94 or Section 95 triggers theinterim moratorium which then ceases to have effect onthe date of the admission of the application (underSection 100). The consequences which flow from anARS 45/64 WP-1749-2024-J.DOCinterim moratorium are specified in clause (b) of sub-section (1) of Section 96. The impact of the interim-moratorium under Section 96 is that a legal action orproceeding pending in respect of any debt is deemed tohave been stayed and the creditors or the debtors shallnot initiate any legal action or proceedings in respect ofany debt. The crucial words which are used both inclause (b)(i) and clause (b)(ii) of sub-section (1) ofSection 96 are “in respect of any debt”. These wordsindicate that the interim-moratorium which is intendedto operate by the legislature is primarily in respect of adebt as opposed to a debtor. Clause (b) of sub-section (1)indicates that the purpose of the interim-moratorium isto restrain the initiation or the continuation of legalaction or proceedings against the debt. 58.This must be contra-distinguished from theprovisions for moratorium which are contained inSection 14 in relation to the CIRP under Part II. Section14(1)(a) provides that on the insolvency commencementdate, the institution of suits or continuation of pendingsuits or proceedings against the corporate debtor,including proceedings in execution shall stand prohibitedby an order of the adjudicating authority. Clause (b) ofsub-section (1) of Section 14 empowers the adjudicatingauthority to declare a moratorium restraining thetransfer, encumbrance, alienation or disposal by thecorporate debtor of any of its assets or any legal right orbeneficial interest therein. Significantly, the moratoriumunder Section 14 operates on the order passed by anadjudicating authority. The purpose of the moratoriumunder Section 96 is protective. The object of themoratorium is to insulate the corporate debtor from theARS 46/64 WP-1749-2024-J.DOCinstitution of legal actions or the continuation of legalactions or proceedings in respect of the debt.”(emphasis supplied) 62.The provisions contained in Sections 94, 95 and 96 are requiredto be read in juxtaposition. The emphasis cannot be laid on theexpression “in relation to all the debts” in clause (a) and “in respect ofany debt” in clause (b) of sub-section (1) of Section 96, only. Theopening words of sub-section (1) of Section 96 are of materialsignificance. Interim moratorium under Section 96 operates “when anapplication is filed under Sections 94 or 95”. Under Section 94, adebtor who commits default may apply for initiating the insolvencyresolution process. Thus, a person who makes an application underSection 94 must be a debtor. Likewise, under Section 95, the creditorwho applies for initiating insolvency resolution process is enjoinedunder sub-section (4) to furnish details and documents relating to “thedebts owed by the debtor to the creditor or creditors.” Sections 94 and95 thus, make it abundantly clear that the person who initiatesinsolvency resolution process or against home insolvency resolutionprocess is initiated must be a debtor in the first instance. 63.It is well recognized, the shareholders or the directors of thecompany are not the owners of the property of the company. It has anindependent juristic existence. When a corporate entity incurs a debt,either by pledging the credit of its property or otherwise, the debtARS 47/64 WP-1749-2024-J.DOCremains that of the corporate entity. Such debt does not become thedebt of the directors of the company. Thus, in a case where a cheque isdrawn towards the discharge of such debt by the company on anaccount maintained by the company, the debt or liability is primarilythat of the company. The directors of the company or persons in chargeof the affairs of, and responsible to, the company, are liable to beprosecuted on account of deeming provisions contained in Section 141of the Act, 1881. That, however, does not alter the character of the debtin discharge of which the corporate entity has drawn the cheque. 64.It would be contextually relevant to note that, sub-section (2) ofSection 94 as well as sub-section (2) of Section 95, make provisions inrelation to a partnership firm. Under sub-section (2) of Section 95, thecreditor may apply for initiating the insolvency resolution processagainst one or more partners of the firm or a firm, where anypartnership debt is owed to him. Thus, the distinction between thecorporation as a juristic person and its directors cannot be lost sight of,when construing the provisions contained in Section 96 read withSections 94 or 95 of IBC 2016. To put it in other words, the debtreferred to in Section 96 must be a debt of the person by or againstwhom the insolvency resolution process is initiated under Sections 94 or95, as the case may be. ARS 48/64 WP-1749-2024-J.DOC65.It would be contextually relevant to note that, in a differentcontext, the Supreme Court was called upon to examine the width ofthe applicability of the provisions contained in Section 96 of the IBC2016 in the case of Saranga Anilkumar Aggarwal V/s. Bhavesh DhirajlalSheth and Ors.14. In the said case, the home buyer / complainant hadlodged a consumer dispute before the Consumer Fora. The saidcomplaint was allowed. During the pendency of the executionproceedings before the Consumer Fora, SBI initiated personalinsolvency proceedings under Section 95 of IBC 2016 against theAppellant in her capacity as the guarantor for the credit facilitiesextended to another entity. Invoking the provisions of the interimmoratorium under Section 96 of IBC 2016, the Appellant moved anapplication before the NCDRC to stay the execution of the penalty order,sine die. It was urged that the initiation of the personal insolvencyresolution under Section 95 brought into effect immediate andautomatic interim moratorium called “any legal action or proceedingspending in respect of any debt”, inclusive of the proceedings forexecution of the orders passed by the Consumer Fora. NCDRC did notaccede to the said prayer. 66.In the appeal, the Supreme Court considered the questionwhether the execution of regulatory penalty orders passed underSection 27 of the Consumer Protection Act can be stayed in view of the14 (2025) 4 SCC 629ARS 49/64 WP-1749-2024-J.DOCinterim moratorium provisions envisaged by Section 96 of IBC 2016.The Supreme Court exposited that the statutory protection appliesstrictly to a “debt” as defined under the IBC. It does not extend toregulatory penalties arising from infractions of consumer welfarelegislation. The purpose of the interim moratorium under Section 96 isto provide a temporary, targeted breathing room for individuals torestructure personal liabilities, not to act as a blanket shield againstregulatory non-compliance. 67.Drawing distinction between the corporate moratorium underSection 14 and the personal interim moratorium under Section 96, theSupreme Court clarified that Section 14 is much broader in scope,freezing all execution and enforcement actions against a corporatedebtor to preserve its overall valuation. In contrast, Section 96 is limitedin its scope, staying only “legal actions or proceedings in respect of anydebt”. The legislative intent behind limiting the scope of interimmoratorium under Section 96 IBC must be respected, and a blanket stayon all regulatory penalties would defeat the objectives of consumerprotection laws. 68.Another significant approach delineated by the Supreme Court inthe case of Saranga Anilkumar Aggarwal (supra), was the implicationsof the “excluded debt” under Section 79(15) of the IBC 2016, in theARS 50/64 WP-1749-2024-J.DOCmatter of the operation of the moratorium. Under Section 79(15),“excluded debt” is defined as under : “(15) “excluded debt” means - (a)liability to pay fine imposed by a Court ortribunal; (b)liability to pay damages for negligence, nuisanceor breach of a statutory, contractual or other legalobligation; (c)liability to pay maintenance to any person underany law for the time being in force; (d)liability in relation to a student loan; and (e)any other debt as may be prescribed;” 69.Laying emphasis on clauses (a) and (b) of sub-section (15) ofSection 79, the Supreme Court in the case of Saranga AnilkumarAggarwal (supra), emphasised that, liabilities arising from court-imposed fines, penalties or damages for negligence or breach ofobligations are explicitly excluded from being discharged orrestructured under the resolution process. The NCDRC penalties andcompensatory damages for structural delays fall squarely within thiscategory of “excluded debts”. Consequently, they remain completelyunaffected by the commencement of individual insolvency proceedings.70.In the context of the controversy at hand, the aforesaid decisionin the case of Saranga Anilkumar Aggarwal (supra), is of criticalsalience from two perspectives. First, in the said case, personalinsolvency resolution process was initiated by the creditor under SectionARS 51/64 WP-1749-2024-J.DOC95 and not by the debtor himself under Section 94, which was the casein Rakesh Bhanot (supra). Therefore, the distinction sought to bedrawn by Ms.Nehra, learned Counsel for the Petitioner, in the matter ofthe applicability of the interim moratorium under Section 96, in thecases of initiation of insolvency resolution process by the debtor himselfunder Section 94, and such initiation by the creditor under Section 95,falls through. 71.Second, the decision in the case of Saranga Anilkumar Aggarwal(supra) also substantially addresses the thrust of the submission onbehalf of the Applicants/Petitioners that the conviction under Section138 read with 141 of the NI Act, 1881, may entail the consequences ofpayment of fine and/or compensation by the natural persons, in thecapacity of the directors/responsible persons of the corporate entity,and, therefore, if the said test is applied, the moratorium becomesoperational. The Supreme Court has clarified that the liability to pay afine imposed by the Court or Tribunal falls in the category of “excludeddebt” as provided under Section 79(15), and, resultantly, the impositionof fine and/or direction for payment of compensation remainedunaffected by the commencement of individual insolvency proceedings.72.This leads me to the decision in the case of Dineshchand SuranaVs Uco Bank (supra), which has referred the matter to the larger Bench.As noted above, the parties were heard on the import of the recentARS 52/64 WP-1749-2024-J.DOCdecision in the case of Dineshchand Surana Vs Uco Bank (supra) andthe learned Counsel for the respective parties made an endeavour toplace reliance on the relevant observations in the judgment in the caseof Dineshchand Surana Vs Uco Bank (supra), which suit their respectivecases. 73.For instance, Mr. Bhanushali, after taking the Court through theobservations contained in paras 29 and 74, laid emphasis on theobservations in para 120, wherein the Supreme Court observed that thereasoning adopted by the three-judge Bench in the case of P. Mohanraj(supra), for calling Section 138 of the NI Act, a “civil sheep in criminalwolf’s clothing” is based primarily on how the proceedings undersection 138 come to be prosecuted. 74.While the Supreme Court in Dineshchand Surana (supra), agreedthat the procedure for the prosecution of the offence of chequedishonour makes a departure from the procedure ordinarily followedunder the CrPC, yet such differences, in the opinion of the Court, wasonly because cheque dishonour has been statutorily designated as acriminal offence and would not be regarded so in the absence of Section138. Eventually, the Supreme Court observed that, where the injurycontinues to remain civil but the act causing it has intentionally beenmade criminal by way of a statutory provision, the Bench found itdifficult to accept that the offence is a “civil sheep in criminal wolf’sARS 53/64 WP-1749-2024-J.DOCclothing”. In the case of Dineshchand Surana (supra), the SupremeCourt went on to emphasise the compensatory aspect of the provisionscontained in Section 138 of the Act, 1881. 75.Mr. Bhuta, learned Counsel for the Applicants joined Mr.Bhanushali in laying emphasis on the observations of the SupremeCourt in paragraph Nos.131 and 133, especially where the SupremeCourt observed that, the expression “legal action or proceeding inrespect of any debt” when read stand alone would undoubtedly includeproceedings under Section 138 of the NI Act. A reading of the saidexpression with the qualifier “in respect of any debt” would also notexclude Section 138 proceedings considering that the dishonouredcheque thereunder must be drawn for the payment in whole or in part,of any legally enforceable debt or liability. 76.Mr. Bhanushali would urge that the Supreme Court has given itsimprimatur to the construction of the word “debt” in the case of SheetalGupta Vs National Spot Exchange Ltd (supra). 77.In contrast, Mr. Lakhanwat, learned Counsel for Respondent No.1would submit that the decision in the case of Dineshchand Surana(supra), in effect, reiterates the earlier pronouncements that the naturalpersons cannot draw any mileage out of the initiation of insolvencyresolution process and the proceedings against the natural persons areARS 54/64 WP-1749-2024-J.DOCnot at all required to be stayed by invoking the provisions contained inSection 96 of IBC. 78.The Supreme Court has underscored the predominantly criminalnature and objective of Section 138 of the Act, 1881. Having made itexplicitly clear that the moratorium under Section 96 of IBC 2016cannot be used to interdict the criminal aspect of Section 138proceedings, the Supreme Court has referred the question whether, thecompensatory aspect of the moratorium is stayed by the operation ofthe moratorium under Section 96 of IBC. 79.Mr. Lakhanwat placed reliance on the following observations ofthe Supreme Court in the case of Dineshchand Surana (supra) : “158. For the reasons in the aforesaid, we find that themoratorium provisions under Part III of the IBC must bemade applicable on the compensatory aspect of Section138 of the NI Act owing to the inherently civil nature ofthe same. Therefore, once the criminal court exercisingjurisdiction over a complaint under Section 138, orderscompensation under Section 395 of the BNSS, then themoratorium would be made applicable if the recovery ofcompensation remains pending. Similarly, themoratorium provision would not put a temporary bar onthe initiation of Section 138 proceedings. The same maybe initiated and taken to it its logical conclusion. Thedrawer of the cheque, if convicted must discharge hispersonal criminal liability by serving the sentence ofimprisonment or paying the fine imposed. However, ifthe court has adjudicated that compensation ought to beARS 55/64 WP-1749-2024-J.DOCgiven, then the recovery thereof must be temporarilyhalted. The impact of IBC proceedings on thecompensatory aspect of Section 138 of the NI Act mustbe the same as how such proceedings would affect anyother civil legal action or proceeding in respect of anyother debt. We say so because the assumption of ‘debt’ isinherent in the provision under Section 138 of the NIAct……..………..166. Therefore, we have no qualms in observing that foran individual undergoing personal insolvency, themoratorium under Sections 96 and 101 of the IBCrespectively, would stay the operation of the recovery ofcompensation, if any, ordered by the criminal court whileadjudicating the complaint under Section 138 of the NIAct. 171.The position of law in this regard has beenreaffirmed by the dicta of this Court in Ajay KumarRadheshyam Goenka (supra), P. Mohanraj (supra), aswell as Rakesh Bhanot (supra). Therefore, the extensionof criminal liability under Section 138 of the NI Act, tothe directors of the company by the operation of Section141 is well established canon of law. 187.In such view of the matter, we may with a view toobviate any confusion, clarify that moratorium under Sections 96 and 101 respectively, when triggered by the insolvency proceedings of the individual director of sucha corporate debtor which is also undergoing insolvencyor liquidation under Part II of the IBC, stays the recoveryof compensation ordered under Section 395 of the BNSSduring the proceedings under Section 138 of the NI Act. ARS 56/64 WP-1749-2024-J.DOC193. We may, at the cost of repetition, reiterate that themoratorium provisions would not operate in respect ofthe criminal aspect of Section 138 and the director(s) ofthe corporate debtor cannot escape personal criminalliability, as clarified in Rakesh Bhanot (supra).” (emphasis supplied) 80.At this juncture, to correctly understand the enunciation of theSupreme Court in the case of Dineshchand Surana (supra), it isnecessary to also extract the observations in paragraph 133, which readas under : “133.We are conscious of the fact that the commissionof the criminal offence of cheque dishonour results inthe civil injury of non-payment of ‘debt’. However, in ourconsidered view, to make moratorium provisions underthe IBC applicable on proceedings under Section 138 ofthe NI Act, solely because of the civil nature of the injuryis untenable in light of the objective sought to beachieved by the enactment of Section 138. We mayeven go so far as to say that the applicability ofmoratorium provisions on Section 138 proceedingsmakes the same equivalent to a debt recoverymechanism, which could never have been the intentionof the legislature.” (emphasis supplied) 81.The aforesaid observations of the Supreme Court in the case ofDineshchand Surana (supra),make it explicitly clear that the SupremeCourt has not departed from the law enunciated in the cases of AjayKumar Radheyshyam Goenka (supra), and Rakesh Bhanot (supra). TheARS 57/64 WP-1749-2024-J.DOCSupreme Court has, at the cost of repetition, reiterated that themoratorium provisions would not operate in respect of criminal aspectof Section 138 and the directors of the corporate debtors cannot escapefrom the personal liability in the event they are found guilty of theoffence punishable under Section 138 read with 141 of the Act, 1881.The moratorium under Sections 96 and 101 respectively, whentriggered by the insolvency proceedings of the individual director ofsuch a corporate debtor which is also undergoing insolvency orliquidation under Part II of the IBC, stays the recovery of compensationordered under Section 395 of the BNSS during the proceedings underSection 138 of the NI Act. 82.Therefore, the principal submission on behalf of the Applicants /Petitioners that the trial itself is required to be stayed during thecurrency of the interim moratorium under Section 96 of IBC, does notfind support, even from the decision in the case of Dineshchand Surana(supra). At best, the criminal Court may be called upon to examine thesaid aspect at the stage of the consideration on the aspect of theimposition of punishment, particularly a direction to pay thecompensation qua the natural persons under Section 395 of BNSS or atthe stage of effecting recovery of the compensation from such directors.However, even from the point of view of the moratorium on thecompensatory aspect, there is no justification to stay the trial of theARS 58/64 WP-1749-2024-J.DOCcomplaint for the offence punishable under Section 138 read withSection 141 of the Act, qua the individual directors. 83.As regards the reference of the question to the larger Bench, thelegal position is no longer res integra. It is well recognized, thereference of correctness of the view recorded in a judgment to a largerBench does not dilute the precedential value of the referred judgment.A useful reference can be made to the decision of the Supreme Court inthe case of Ashok Sadarangani and Anr. V/s. Union of India and Ors.15,wherein it was enunciated that the pendency of a reference to a largerBench, does not mean that all other proceedings involving the sameissue would remain stayed till a decision was rendered in the reference.Till such time as the decisions cited at the Bar are not modified oraltered in any way, they continue to hold the field. 84.In the case of Union Territory of Ladakh and Ors. V/s. R1 :Jammu and Kashmir National conference and Anr.16, the Supreme Courthas again emphasised that it is not open, unless specifically directed bythe Supreme Court, to await an outcome of a Reference or a ReviewPetition. It is also not open to a High Court to refuse to follow thejudgment of the Supreme Court by stating that it has been doubted bythe latter co-ordinate Bench. The observations in para 35 read as under: 15 AIR 2012 SC 156316 (2024) 18 SCC 643ARS 59/64 WP-1749-2024-J.DOC“35.We are seeing before us judgments and orders byHigh Courts not deciding cases on the ground that theleading judgment of this Court on this subject is eitherreferred to a larger Bench or a review petition relatingthereto is pending. We have also come across examplesof High Courts refusing deference to judgments of thisCourt on the score that a later Coordinate Bench hasdoubted its correctness. In this regard, we lay down theposition in law. We make it absolutely clear that theHigh Courts will proceed to decide matters on the basisof the law as it stands. It is not open, unless specificallydirected by this Court, to await an outcome of areference or a review petition, as the case may be. It isalso not open to a High Court to refuse to follow ajudgment by stating that it has been doubted by a laterCoordinate Bench….…”85.In the respectful understanding of this Court, the two-judgeBench decision of the Supreme Court in the case of Dineshchand Surana(supra), cannot be said to have taken a view which is completelycontrary to the one recorded in the decisions in the cases of Ajay KumarRadheyshyam Goenka (supra) and Rakesh Bhanot (supra). Nay thetwo-judge Bench observed in no unequivocal terms that the criminalaspect of the prosecution under Section 138 of the Act, 1881 would notbe affected by the moratorium provisions of the IBC 2016 and thedirectors of the corporate debtor cannot escape personal criminalliability. ARS 60/64 WP-1749-2024-J.DOC86.In this view of the matter, this Court is not inclined to accede tothe submission on behalf of the Applicants/ Petitioners that theproceedings are required to be stayed till the decision of the referenceby the larger Bench. 87.At this juncture, it is also necessary to note the stage of theunderlying proceedings before the learned Magistrates : Sr. No.Case DetailsStage1NSEL V/s. Mohan India 9649/SS/2005 and 10 other complaints.(Cheque amount – 675 Crores) HC expeditedFor further cross-examination of C.W.12NSEL V/s. Lotus 243/SS/2017(Cheque amount – 252 Crores)HC ExpeditedFor final arguments3NSEL V/s. Metkore Alloys2216/SS/2017, 10560/SS/2016(Cheque Amount – 18 Crores)HC ExpeditedFor recording statement under Section 313 of Cr.P.C.4NSEL V/s. White Water Foods9357/SS/2026, 9358/SS/2016(Cheque amount – 84 Crores)For further cross – examination of bank witness88.As the underlying proceedings in almost all the matters havereached an advanced stage and the trial in the complaints are pendingsince 10 or more years, this Court does not consider it appropriate tostay the trial, till the decision by the larger Bench. 89.The conspectus of aforesaid consideration is that the trial Courthas proceeded on the premise that, for the applicability of theARS 61/64 WP-1749-2024-J.DOCmoratorium under Section 96 of the IBC 2016, qua the prosecutionunder Section 138 of the Act, 1881, the debt ought to have beenincurred by the debtor in his personal capacity and not as a feature ofvicarious liability. 90.Incontrovertibly, the debt in question is that of the corporateentity and the concomitant factors to constitute an offence punishableunder Section 138 of the Act, 1881, are in relation to the failure of thecorporate entity to pay the amount covered by the respective cheques,in discharge of which the cheques were drawn by the corporate entity.The Applicants / Petitioners have been arraigned by invoking theprovisions contained in Section 141 of the Act, 1881. 91.The decisions in the cases of Ajay Kumar Radheyshyam Goenka(supra) and Rakesh Bhanot (supra), authoritatively enunciate that, in acase of the present nature, the initiation of the insolvency resolutionprocess, either under Part II or III does not preclude the continuation ofthe prosecution for an offence punishable under Section 138 of the Act,1881. 92.Reliance on a decision of the learned Single Judge of this Court inthe case of Sheetal Gupta (supra), is of no assistance to the Applicants /Petitioners as the subsequent decisions of the Supreme Court in thecases of Ajay Kumar Radheyshyam Goenka (supra) and Rakesh Bhanot(supra), have enunciated in clear and explicit terms that theARS 62/64 WP-1749-2024-J.DOCmoratorium under Section 96 of IBC 2016 does not operate qua aprosecution under Section 138 of the Act, 1881, in relation to theindividual director of the corporate entity. 93.Reference of the questions to the larger Bench in the case ofDineshchand Surana (supra), does not assist the cause of the Applicants/ Petitioners as the Supreme Court in the said judgment has reiteratedmultiple times that, the criminal aspect of the prosecution for an offencepunishable under Section 138 of the Act, 1881 cannot be stayed byinvoking the provisions of interim moratorium under Section 96 of theIBC 2016 and the reference is made for an authoritative pronouncementas to whether the moratorium provisions of Part III of IBC should bemade applicable to the proceedings under Section 138 of the Act, 1881and only to the compensatory aspect. 94.In the meanwhile, till the reference is decided by the largerBench, the precedential value of the decisions in the cases of AjayKumar Radheyshyam Goenka (supra) and Rakesh Bhanot (supra),remains intact. 95.For the foregoing reasons, the Applications / Petitions deserve tobe dismissed. 96.Hence, the following order : ORDER(i)The Applications / Petitions stand dismissed. ARS 63/64 WP-1749-2024-J.DOC (ii)Rule discharged. (iii)In view of the dismissal of the Applications / Petitions,interim orders stand vacated and all Interim Application (s), if any, alsostand disposed. [N. J. JAMADAR, J.]97.At this stage, Mr. Bhanushali, learned Counsel for the Applicantsseeks continuation of the interim relief. 98.Since the complaints are pending for almost 10 years and in thelight of the view this court is persuaded to take, the prayer forcontinuation of the stay to the trial before the Magistrates’, does notseem justifiable. 99.Hence, the oral application for stay stands rejected.[N. J. JAMADAR, J.]ARS 64/64