Interim Order 2

Order Details: Order
Pdf Text: 1 C. C. No.3283/SS/2018
Exh.66
ORDER BELOW EXH.66
Read the application and say filed by the
complainant.
2. Heard both sides.
3. This is an application filed by the accused under
Section 96 of the Insolvency and Bankruptcy Code 2016
(hereinafter referred to as the ‘Code’) for staying of the proceeding
against the accused.
4. It is the contention of the accused that this is a case
filed against the accused for the offence punishable under Section
138 of N.I. Act. The Insolvency and Bankruptcy Code 2016 came
into effect from 01/12/2019. This code deals with the insolvency
and bankruptcy of individual and partnership firms regarding
personal guarantors of a Corporate Debtor. It is further the
contention of the accused that M/s. Vinsari Frutech Limited has
filed an application before the National Company Law Tribunal,
Mumbai (hereinafter referred to as N.C.L.T.) on 14/03/2024
against the accused under Section 95 of the Code for adjudicating
the accused as an insolvent. As per the said application, the
N.C.L.T. vide order dated 09/05/2024 has appointed Rajesh Kumar
Mittal as the Resolution Professional in the matter of Niraj Kakad.
That matter is pending for the report of the Resolution
Professional. It is further contended by the accused that in view of
the application filed against the accused before N.C.L.T., and that
application is pending, therefore, as per the judgment of the
Hon’ble Kerala High Court in the case of Jenny Thankachan V/s.
Union of India and others [WP (C) No.31502 of 2023], case of
Vijay Kumar Ghai V/s. Pritpal Singh Babar was decided by the
Hon’ble Punjab and Haryana High Court [CRM-M-22685 of 2021],
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2 C. C. No.3283/SS/2018
Exh.66
case of Sheetal Gupta V/s. National Spot Exchange Limited
decided by the Hon’ble Bombay High Court [Criminal Application
No.1151 of 2022], case of Mukund Ajay Kumar Choudhary and
other V/s. K.B. Board Mills LLP decided by the Hon’ble Bombay
High Court – (1) an interim moratorium is legal and acceptable
only when application filed under Sections 94 to 96 of the Code is
filed without any defect, satisfying statutory requirements of filing
and when the adjudicating authority numbers the application and
(2) during the interim moratorium period, any legal action or
proceeding pending in respect of any debt shall be deemed to have
been stayed. It is the further contention of the accused that in view
of the application filed by the M/s. Vinsari Frutech Limited, before
the N.C.L.T. against the accused, the continuation of further
proceedings against the accused would be illegal, and a
contravention of the mandatory provisions of Section 96 of the
Code. Hence, lastly, he prayed to stay the proceedings against the
accused during the period of interim moratorium in accordance
with the provision of Section 96 of the Code.
5. The complainant has filed his say at (Exh.69) and
strongly objected to the application. The complainant contends
that the accused has filed this application with
malafide intention
of delaying the proceedings. Complainant further contended that
the Hon’ble Apex Court has passed an order dated 01/04/2025
and held that the provisions of Sections 94 to 96 of the Code do
not apply to proceedings initiated under the Negotiable
Instruments Act, particularly in relation to criminal prosecution.
Hence, he lastly prayed to dismiss the application as it is not
maintainable.
6. Perused record. It appears that this is a case filed
against the accused under Section 138 of N.I. Act and pending
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3 C. C. No.3283/SS/2018
Exh.66
since 23/06/2023 for further cross-examination of the
complainant. As per the xerox copy of the order passed by N.C.L.T.,
Mumbai bench, dated 09/05/2024, M/s. Vinsari Frutech Limited
has filed a petition against accused No.2 under Section 95(1) of
the Code, and in that application, Rajesh Kumar Mittal is
appointed as a Resolution Professional and directed to examine the
company's petition and file a report. It is also ordered that during
the interim moratorium period, any legal action or proceeding
pending in respect of any debt shall be deemed to have been
stayed, and the creditors of the accused shall not initiate any legal
action or proceedings in respect of any debt.
7. It appears from the order of the N.C.L.T. Mumbai
bench that M/s. Vinsari Frutech Limited has initiated proceedings
against the present accused No.2 before the N.C.L.T. under Section
95(1) of the Code. However, the Hon’ble Supreme Court in the
case of Rakesh Bhanot V/s. M/s. Gurdas Agro Private Limited
[(2025) 6 SCC 781] has held that the provisions under Sections 94
to 96 of the Code do not apply to the prosecution under Section
138 of N.I. Act. As per the said judgment, the provision of Section
96 of the Code does not apply to criminal cases i.e. prosecution
filed against the accused under Section 138 of N.I. Act. Therefore,
considering the ruling given in the judgment, the present
application does not seem to be tenable and devoid of merit.
Hence, I proceed to pass the following order :
ORDER
Application is rejected.
Date : 05/01/2026
Sd/-
( Shri. M. S. Budhwant )
Judicial Magistrate First Class,
63rd Court, Andheri, Mumbai
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