Date of Order:
13.03.2024
Bench:
Justice Mahabir Singh Sindhu
Parties:
Jitender Singh Sodhi & anr vs. Deputy Commissioner of Income Tax & anr (And 36 other petitions)
SUBJECT
Since the controversy of multiple cases were of similar nature, the hon’ble court decided to dispose off all the 36 petitions by the common order. By virtue of Section 96 of the IBC, during the interim moratorium period, it is considered that any legal action or proceeding relating to ‘any debt’ shall be covered by the stay of legal proceedings. The Court was entertaining a bunch of matters where the applicants prayed for discharge of the proceeding institution under NI Act in light of Section 96 of IBC.
IMPORTANT PROVISIONS
Criminal Procedure Code, 1973
- Section 482: Saving of inherent power of High Court
- Section 313: Power to examine the accused
Negotiable Instruments Act, 1881
- Section 138: Dishonour of cheque for sufficiency, etc., of funds in the account
Insolvency and Bankruptcy Code, 2016
- Section 96: Interim moratorium
FACTS OF THE CASE
- The Court was hearing a number of miscellaneous petitions to condone the proceeding under the NI Act having reference to Section 96 of IBC.
- A complaint was laid under section 138 of the NI Act before the Sub Divisional Judicial Magistrate, by Income Tax Department against a company and its directors on the cheque dishonour case in 2015 for a certain amount.
- As alleged, a cheque was agreed and passed for the discharge of the liability for the payment of income tax that was due for the fiscal year 2012-2013.
- Afterwards, due to the introduction of Negotiable Instruments (Amendment) Ordinance 2015, the SDJM handed over the complaint to the Court of the Chief Judicial Magistrate, Chandigarh, and finally, the matter was handed over to JMIC.
- Nevertheless, it was submitted despite several efforts, through summons/bailable warrants, petitioners failed to appear hence the, in relation to non-bailable warrants, both the petitioners have filled the warrants and were released on bond.
ISSUES RAISED
- To quash the proceedings under NI Act.
ARGUMENTS ADVANCED BY THE APPELLANT
- In lieu of provisions of section 96 of IBC, the Judicial Magistrate First Class is completely barred from hearing and continuing the proceedings under the NI Act.
- It was further argued that provisions of Section 14 of the IBC are not applicable to the personal guarantor and the non obstante clause under Section 238 of the IBC is operating in derogation of provisions of the NI Act. Therefore, all the proceedings in the learned JMIC should be temporarily halted.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The Counsel contended that the proceedings pending under the NI Act are penal in character and a person may face imprisonment and/or fine or both. There’s no such provision under IBC.
- Thus, the nature & scope of proceeding under both the Acts is relatively different and as such, the impugned order has no requirement of interference by this Court.
JUDGEMENT ANALYSIS
- Even more so, section 96 of the IBC, among other things, contemplates where at any time during the interim moratorium period, any legal action or proceeding stating that in respect of ‘any debt’ it shall be presumed that any action pending shall be stayed.
- As the present proceedings before the NI Act are not in regards any debt; rather penal in character and can lead to imprisonment for a term which may extend to two years or fine which may extend to with the cheque amount or either of the two or twice the cheque amount. Therefore, in such a situation, it cannot be allowed that further continuation of the proceedings under NI Act against both as petitioners are Managing Director/Director of the company, they deserve to be stayed or that Section 96 of the IBC would be treated as a bar for in any way that could cause that effect.
- Judicial precedents cited by learned counsel for the petitioners were held distinguishable; hence not helpful, in any manner.
- The present petition under Section has been filed. 482 CrPC is not an appeal or a revision; that is why such an opportunity can be entertained only to give effect to any order under the CrPC or for protection from abuse of the process of any Court; or otherwise to safe the ends of justice; but not mechanically.
- The petition was dismissed and not to be construed as an expression of opinion on merits of controversy.
