Moratorium under Section 14 IBC Covers Proceedings Against Corporate Debtor For Cheque Dishonor Under Section 138 NI ACT: Supreme Court
Introduction
Hon’ble Supreme Court in matter of P. Mohanraj & Ors. v. M/s Shah Brothers Ispat Pvt. Ltd. held that Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 (IBC) bars parallel proceedings against Corporate Debtor under Section 138 of the Negotiable Instrument Act, 1881 (NI Act). In the aforesaid scenario, Steel products were supplied by M/s Shah Brothers Ispat Pvt. Ltd (Respondent) to M/s Diamond Engineering Pvt. Ltd and a few cheques were returned dishonored on account of ‘fund insufficiency’.