Notice to Punjab on plea against proceedings under instruments Act

Chandigarh, March 12

The Punjab and Haryana High Court has put the state of Punjab on notice on a petition claiming that the proceedings in a criminal case cannot continue once the same have been initiated under the Insolvency and Bankruptcy Code (IBC).

The notice by Justice Amol Rattan Singh came on a petition by Kudos Chemie Ltd director Kabir Sodhi through counsel Viren Sibal. He was seeking the quashing of a complaint under Section 138 of the Negotiable Instruments Act and the orders passed thereon. Sibal among other things submitted that legal proceedings in the criminal case could not continue once the same had been initiated under the code with regard to a company in terms of the Supreme Court judgment in the case of ‘P Mohanraj and others versus M/s Shah Brothers Ispat Pvt Ltd’.

Viren, in the petition, said the Supreme Court considered “whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments Act can be said to be covered by the moratorium provision, namely Section 14 of the IBC”. The apex court answered the question in the negative, thereby placing a bar on parallel proceedings.

Viren added: “If the complainant is permitted to continue with the parallel proceedings, it may actually profit from the transaction in as much as it may wrongly recover money from the petitioner both under the pressure of an FIR and also the IBC. This could have never been the intention of the legislature”.

Justice Amol Rattan Singh fixed the case for April 26 before directing the trial court to adjourn the matter to a date beyond it. — TNS