In the case of Rakesh Rajpal v. Ashok Kumar Gupta, the Madhya Pradesh High Court addressed the interplay between proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) and the moratorium provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).
Brief Facts:
The petitioner, Rakesh Rajpal, was facing criminal proceedings under Section 138 of the NI Act, which deals with the dishonour of cheques. Concurrently, he had initiated personal insolvency proceedings under the IBC. Upon his application, an interim moratorium under Section 96 of the IBC was granted. Despite this, both the trial court and the revisional court declined to stay the Section 138 proceedings. Aggrieved by these decisions, Rajpal approached the High Court, contending that the ongoing proceedings should be stayed in light of the moratorium.
Final Judgment:
The Madhya Pradesh High Court considered the petitioner’s submissions and the legal framework governing the issue. Recognizing the applicability of the interim moratorium under Section 96 of the IBC, the court issued an interim order directing that the proceedings under Section 138 of the NI Act pending before the trial court be stayed until further notice. This decision underscores the precedence of the IBC’s moratorium provisions over concurrent legal proceedings, including those under the NI Act.