In Brief
Multiple appellants sought to stay criminal proceedings under Section 138 of the Negotiable Instruments Act for dishonoring cheques, claiming protection under the interim moratorium provisions of the Insolvency and Bankruptcy Code (IBC). The Supreme Court held that the moratorium under Sections 96 and 101 of the IBC protects debtors only from civil debt recovery actions, not from criminal prosecution. Criminal liability for cheque dishonor is personal to the signatory and independent of the corporate debtor's status. The Court ruled that allowing individuals to evade Section 138 prosecution through insolvency proceedings would undermine the integrity of commercial transactions. Accordingly, all criminal appeals and the writ petition were dismissed, affirming that Section 138 proceedings must continue despite the pendency of insolvency applications."
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