18-WP-2223-2025.DOC IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION WRIT PETITION NO.2223 OF 2025 Suhas Gopal Shukla …Petitioner Versus D. S. Kulkarni & Co. & Anr. …Respondents WITH WRIT PETITION NO.2225 OF 2025 Mrudula Suhas Shukla …Petitioner Versus D. S. Kulkarni & Co. & Anr. …Respondents Mr. Lakshyaved R. Odhekar a/w. Mr. Omkar N. Mhasde and Mr. Sujen Shaikh, for the Petitioners. Mr. P. P. Jadhav, APP, for Respondent No.3-State. CORAM: MADHAV J. JAMDAR, J. DATED : 1st SEPTEMBER 2026 P. C.: 1. Heard Mr. Odhekar, learned Counsel appearing for the Petitioners and Mr. Jadhav, learned APP appearing for Respondent No.2-State. 2. In Writ Petition No.2223 of 2025, the challenge is to the legality and validity of the order dated 31st October 2023 passed by the learned Additional Chief Judicial Magistrate, Nashik, below Page 1 Sonali 18-WP-2223-2025.DOC Exhibit-73 in SCC No.4270 of 2017, by which the said Application bearing Exhibit-73 filed by accused No.2 to stay the matter till the pendency of the proceedings before the National Company Law Tribunal (“NCLT”), Mumbai was allowed. 3. In Writ Petition No.2225 of 2025, the challenge is to the legality and validity of the order dated 31st October 2023 passed by the learned Additional Chief Judicial Magistrate, Nashik, below Exhibit-74 in SCC No.4269 of 2017, by which the said Application bearing Exhibit-74 filed by accused No.2 to stay the matter till the pendency of the proceedings before the NCLT, Mumbai was allowed. 4. It is the submission of Mr. Odhekar, learned Counsel appearing for the Petitioners that the NCLT proceedings filed under the provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC”) are still pending. However, he submits that the Supreme Court in the case of Dineshchand Surana vs. UCO Bank1 has clarified that as far as the proceedings under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) are concerned, they 1 2026 SCC OnLine SC 987 Page 2 Sonali 18-WP-2223-2025.DOC are divided into two parts. One part is regarding criminal aspect and other part is regarding compensation aspect. He submits that the Supreme Court has clarified that the moratorium which is contemplated under Section 96 of the IBC is not applicable to the criminal aspects of the offence under Section 138 of the NI Act and the same may apply to the compensation aspect of Section 138 of the NI Act and that stage has not yet arrived at. He more particularly relied on paragraph Nos.198 to 202 of the decision of the Supreme Court in the case of Dineshchand Surana (supra). He also relied on the decision of the learned Single Judge dated 18th August 2026 in the case of Jagmohan Garg vs. National Spot Exchange Limited & Anr2 and connected matters and more particularly, on paragraph Nos.78 to 94. 5. Before considering the rival contentions, it is necessary to set out the order dated 30th June 2026, passed by this Court: “1) A learned Single Judge by order dated 19th June, 2024 has issued notice to the Respondents and further directed that the notice to indicate that the Petition be disposed of finally. 2 2026 SCC OnLine Bom 10654 Page 3 Sonali 18-WP-2223-2025.DOC 2) The office note indicates that Respondent Nos.1 and 2 have been duly served. Despite service of notice, none has appeared on behalf of Respondent Nos.1 and 2. By way of a last opportunity, stand over to 6th July, 2026. To be shown fairly high on board. 3) It is made clear that if, inspite of this opportunity, Respondent Nos.1 and 2 fail to appear, this Court shall proceed to hear and decide both these Writ Petitions finally.” Thus, although the Respondents are served, none appears for the Respondent No.1 and 2, even after granting opportunity, none appears. 6. By the impugned orders, the learned Trial Court stayed the criminal cases filed under Section 138 of the NI Act on the ground that proceeding under IBC Act are pending before the NCLT. In view of the said reasoning given by the learned Trial Court, it is necessary to set out the paragraph Nos.198 to 202 of Dineshchand Surana (supra) on which the learned Counsel appearing for the Petitioners relied, which read as under: “198. However, we have also noted the decisions of this Court and the 2008 Amendment to the NI Act which place emphasis on the compensatory and remedial framework of Section 138 of the NI Act. Upon examination of the nature and dual Page 4 Sonali 18-WP-2223-2025.DOC objectives of Section 138, we found it prudent to treat the legal action taken under Section 138 as tiered proceedings. Tier I of the proceeding under Section 138 is without any doubt, criminal and culminates into punishment of either imprisonment, fine or both, if the drawer of the cheque is convicted. Tier I is mandatory in nature unlike Tier II which is dependent upon the discretion of the courts to order compensation. Tier II is the compensatory aspect of Section 138 which causes an inevitable overlap between criminal and civil actions. II. Whether the proceedings under Section 138 of the NI Act are protected during the moratorium period provided under Part-III of the IBC? 199. Having discussed the dual objective and nature of the proceedings under Section 138 of the NI Act, we have found that the applicability of moratorium provisions to the same is rife with complexity. If Section 138 proceeding in its entirety is stayed by the operation of moratorium, then it would do violence to the avowed object of attaching criminal consequences to the wrong of cheque dishonour. On the other hand, if the Section 138 proceedings are kept outside the purview of moratorium, then it would be detrimental to the interests of the debtor as well as other creditors whose claims are similarly placed but are kept secondary due to adoption of methods of payments other than cheques. 200. Therefore, it is imperative to balance between the objectives sought to be achieved by both the legislations. We have attempted to balance the provisions of both the NI Act and the IBC by bifurcating the offence of cheque dishonour into (i) criminal aspect of the offence Page 5 Sonali 18-WP-2223-2025.DOC (Tier I), and (ii) compensatory aspect of the Section 138 proceedings (Tier II). 201. The criminal aspect of Section 138 proceedings results in punishment including imprisonment, fine or both. This makes it sufficiently clear that moratorium provisions under Part III of the IBC cannot be made applicable on the criminal impact of Section 138 of the NI Act. We have said so because Section 79(15) of the IBC which defines “excluded debts” has excluded the ‘liability to pay fine’ from debts in respect of which legal actions and proceedings are stayed by the operation of moratorium under Part III of the IBC. We are of the view that allowing Section 138 proceedings to enjoy the benefit of moratorium, especially in light of such express exclusion of criminal liability, is not a good law. 202. We have also dealt with the compensatory aspect of Section 138 proceedings and have taken the view that the same is in the nature of a civil remedy that would result in the depletion of the assets of the individual debtor if not stayed. Therefore, we are of the view that the moratorium provisions under Part III of the IBC must be made applicable in respect of recovery of compensation in Section 138 proceedings.” (Emphasis added) Thus, it is very clear that as held by the Supreme Court, criminal aspect of Section 138 proceedings results in punishment including imprisonment, fine or both and that moratorium Page 6 Sonali 18-WP-2223-2025.DOC provisions under Part III of the IBC cannot be made applicable on the criminal aspect of Section 138 of the NI Act. 7. Learned Single Judge in Jagmohan Garg (supra) after considering the Supreme Court’s decision in the case of Dineshchand Surana (supra) and Ajay Kumar Radheshyam Goenka vs. Tourism Finance Corporation of India3 and in the case of Rakesh Bhanot vs. M/s. Gurdas Agro Pvt. Ltd.4 has observed in paragraph No.85 as under: “85. In the respectful understanding of this Court, the two-judge Bench decision of the Supreme Court in the case of Dineshchand Surana (supra), cannot be said to have taken a view which is completely contrary to the one recorded in the decisions in the cases of Ajay Kumar Radheyshyam Goenka (supra) and Rakesh Bhanot (supra). Nay the two-judge Bench observed in no unequivocal terms that the criminal aspect of the prosecution under Section 138 of the Act, 1881 would not be affected by the moratorium provisions of the IBC 2016 and the directors of the corporate debtor cannot escape personal criminal liability.” (Emphasis added) 3 (2023) 10 SCC 545 4 (2025) 6 SCC 781 Page 7 Sonali 18-WP-2223-2025.DOC 8. Thus, in view of the law laid down by the Supreme Court in the case of Dineshchand Surana (supra), it is very clear that the criminal aspect of the prosecution under Section 138 of the NI Act, will not be affected by the moratorium provisions of the IBC and the directors of the corporate debtor cannot escape personal criminal liability. 9. Thus, in view of the law laid down by the Supreme Court, both these Writ Petitions are disposed of by passing the following order: ORDER Writ Petition No.2223 of 2025: (a) The order dated 31st October 2023 passed by the learned Additional Chief Judicial Magistrate, Nashik, below Exhibit-73 in S.C.C. No.4270 of 2017 is quashed and set aside and the said Application bearing Exhibit-73 is dismissed. Writ Petition No.2225 of 2025: (b) The order dated 31st October 2023 passed by the learned Additional Chief Judicial Magistrate, Nashik, Page 8 Sonali 18-WP-2223-2025.DOC below Exhibit-74 in S.C.C. No. 4269 of 2017 is quashed and set aside and the said Application bearing Exhibit-74 is dismissed. (c) As the said criminal cases are pending since the year 2017, the learned Trial Court is requested to expeditiously dispose of the said criminal cases on or before 31st December 2027. 10. The Writ Petitions are disposed of in above terms with no order as to costs. [MADHAV J. JAMDAR, J.] Page 9 Sonali SONALI MILIND PATIL Digitally signed by SONALI MILIND PATIL Date: 2026.09.03 10:34:26 +0530