In Brief
Nag Leathers Pvt. Ltd, a corporate debtor subject to an NCLT moratorium, challenged criminal proceedings initiated by creditors under Section 138 of the Negotiable Instruments Act (dishonoured cheque). The Supreme Court held that Section 138 proceedings against a corporate debtor are covered by the moratorium under the Insolvency and Bankruptcy Code and must be stayed. Following P. Mohanraj v. Shah Brothers Ispat Private Ltd., such proceedings can continue only against natural persons in-charge of the corporate entity if they are arrayed as accused. Since none were arrayed here, the proceedings were quashed entirely and the appeal allowed.
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