CRL.M.C. 1398/2023 Page 1 of 7 $~25 * IN THE HIGH COURT OF DELHI AT NEW DELHI # CNR No. DLHC010067122023 + CRL.M.C. 1398/2023, CRL.M.A. 5394/2023 MOHINDER JAIN & ANR. .....Petitioners Through: Mr. P.S. Singhal, Advocate. versus STERLING ENAMELLED WIRES PRIVATE LIMITED & ANR. .....Respondents Through: None. CORAM: HON'BLE MR. JUSTICE SANJEEV NARULA O R D E R % 23.09.2026 1. This petition under Section 482 of the Code of Criminal Procedure, 1973 [“CrPC”] seeks quashing of the proceedings in CC No. 8933/2020, arising out of a complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881 [“NI Act”], insofar as they concern the Petitioners, as also the summoning order dated 26th October, 2021. The Petitioners are arrayed as Accused Nos. 2 and 3 in the complaint and were directors of M/s J.P. Engineers Pvt. Ltd. [“Company”/“corporate debtor”]. 2. The question which arises is a narrow one. By the time the cheques in question were presented, corporate insolvency resolution proceedings had commenced against the Company, an Interim Resolution Professional [“IRP”] had been appointed, and the powers of its Board stood suspended under Section 17 of the Insolvency and Bankruptcy Code, 2016 [“IBC”]. The question is whether, in these circumstances, the Petitioners can This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 2 of 7 nevertheless be prosecuted for the subsequent failure to make payment within the statutory period under Section 138 of the NI Act. 3. The relevant chronology may be briefly noticed. The complaint states that, on 29th November, 2019, the Company owed a substantial amount to the complainant. On that date, the Company, through Accused No. 2, handed over six cheques towards the outstanding liability. At a meeting held on 3rd January, 2020, the accused undertook to pay the outstanding amount by 27th March, 2020. Three of the cheques, bearing Nos. 005072, 005073 and 005074, were to be encashed on 22nd January, 2020. The other three cheques, bearing Nos. 005075, 005076 and 005077, which form the subject matter of the present petition, were to be encashed on 31st March, 2020, if the outstanding amount had not been paid by 27th March, 2020. 4. At certain places in the petition, the date of these later three cheques is stated as 31st March, 2022. The discrepancy does not affect the issue before the Court. The complaint itself records the date as 31st March, 2020, which is also consistent with the subsequent events in April and May 2020. 5. The intervening development is significant. On 26th February, 2020, the NCLT admitted the petition under Section 9 of the IBC against the Company, declared a moratorium under Section 14, appointed an IRP and directed him to take the steps mandated under Section 17. Consequently, by the time the deadline for payment on 27th March, 2020 and the date on which the three cheques could have been encashed on 31st March, 2020 arrived, the management of the corporate debtor had vested in the IRP and the powers of its Board stood suspended. 6. The cheques in question were thereafter presented and dishonoured. A statutory notice dated 6th May, 2020 was issued to the Company and the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 3 of 7 Petitioners, to which a reply dated 21st May, 2020 was sent stating, inter alia, that CIRP had commenced and an IRP had been appointed. The complaint itself states that the cause of action arose when the cheques were dishonoured and the accused failed to make payment within fifteen days of receipt of the statutory notice. 7. The Metropolitan Magistrate took cognizance of the offence under Section 138 of the NI Act and summoned all three accused. Insofar as the Petitioners are concerned, the Magistrate noted that Accused Nos. 2 and 3 were involved in the day-to-day affairs of the Company and that Accused No. 2 was stated to be the signatory of the impugned cheque. 8. The Petitioners rely principally upon Vishnoo Mittal v. Shakti Trading Company1. The Respondents had entered appearance on 23rd April, 2024 and sought time to file a reply, but no reply has been filed till date. Thereafter, the Respondents have remained unrepresented, as is the position even today. The issue, therefore, falls to be considered principally on the basis of the complaint, the statutory demand notice and other material placed on record. 9. The appointment of an IRP does not bring a director’s tenure to an end. However, Section 17 of the IBC vests the management of the corporate debtor in the IRP and suspends the powers of its Board. The Company’s financial institutions are thereafter required to act on the instructions of the IRP. Thus, the mere fact that the Petitioners continued to be described as directors is not determinative. What matters is whether, when the offence under Section 138 was complete, they had any authority to act for the Company or exercise control over its accounts. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 4 of 7 10. P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd.2 holds that the moratorium under Section 14 of the IBC operates only in respect of the corporate debtor. It does not extend to the natural persons referred to in Section 141 of the NI Act, against whom proceedings under Sections 138/141 may continue. However, in P. Mohanraj, the cause of action under Section 138 had already arisen before the commencement of the moratorium. As the Supreme Court subsequently distinguished in Vishnoo Mittal, the demand notices in P. Mohanraj had been issued and the prescribed period of fifteen days had expired before the moratorium came into effect. That distinction is material and bears directly on the issue before this Court. 11. In Vishnoo Mittal, the cheques had been drawn and dishonoured before commencement of the insolvency proceedings, but the demand notice under Section 138 of the NI Act was issued thereafter. The Supreme Court held that the return of the cheques dishonoured, simpliciter, does not create an offence under Section 138. In terms of clause (c) of the proviso to Section 138, the cause of action arises only when the demand notice is served, and the drawer fails to make payment within the stipulated period of fifteen days. In that case, by the time the demand notice was issued, the IRP had been appointed and the appellant stood suspended from his position as Director. The powers of the Board were thereafter to be exercised by the IRP and the corporate debtor’s bank accounts were being operated under the IRP’s instructions. The Supreme Court, therefore, quashed the complaint case and the summoning order. 1 (2025) 9 SCC 417. 2 (2021) 6 SCC 258. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 5 of 7 12. The present case stands on an even stronger footing. On the complainant’s own showing, the three cheques were to be presented on 31st March, 2020 only if payment was not made by 27th March, 2020. The IRP had, however, been appointed on 26th February, 2020. Thus, by the time the complainant was, under the pleaded arrangement, to present the cheques, the Petitioners had already ceased to exercise control over the Company’s management and accounts. The statutory notice was issued thereafter, followed by the expiry of the fifteen-day period contemplated under Section 138. This conclusion does not depend upon any disputed defence; it follows from the complaint read with the NCLT order dated 26th February, 2020. 13. Section 141 must be applied against this chronology. Liability under Section 141(1) attaches to a person who, at the time the offence was committed, was in charge of and responsible to the Company for the conduct of its business. The complaint contains allegations concerning the Petitioners’ role before the commencement of CIRP. Those allegations may explain the issuance of the cheques, but they do not establish that the Petitioners continued to be in charge of and responsible for the conduct of the Company’s business when the offence under Section 138 was committed. By then, Section 17 of the IBC had vested the management of the Company in the IRP and suspended the powers of its Board. 14. Nor does the fact that Accused No. 2 was stated to be the signatory of the cheques alter the position. In Vishnoo Mittal, the appellant himself had drawn the cheques while he was the Director of the corporate debtor. However, by the time the statutory demand was made, he was no longer in charge of the corporate debtor. The powers of the Board were to be exercised by the IRP and the bank accounts of the corporate debtor were This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 6 of 7 being operated under the IRP’s instructions. The Supreme Court held that the appellant did not have the capacity to fulfil the demand raised under Section 138 of the NI Act and consequently quashed the proceedings against him. The position of Accused No. 3 is no different. His liability is founded only on his alleged role as a director, and the complaint does not attribute to him any act of consent, connivance or neglect in relation to the failure to meet the statutory demand after commencement of CIRP. 15. This Court in Ravindra Dhariwal & Ors. v. Kotak Mahindra Bank Ltd. & Anr.3 applied Vishnoo Mittal where the petitioners had been in charge of the corporate debtor when the cheques were issued and presented, but the demand notices were served only after commencement of CIRP. The Court held that, by the time the offence under Section 138 was completed upon expiry of the statutory period, the petitioners were no longer in charge of the corporate debtor’s affairs or authorised to operate its bank accounts. 16. The distinction is, thus, clear. Section 141 cannot fasten vicarious criminal liability for a statutory default committed after the director had, by operation of law, ceased to exercise control over the Company and its accounts. The admitted chronology set out above places the present case squarely in the latter category. 17. The continuation of the criminal proceedings against the Petitioners cannot, therefore, be sustained. The summoning order dated 26th October, 2021, insofar as it concerns the Petitioners, is set aside. CC No. 8933/2020, and all proceedings emanating therefrom, is quashed qua the Petitioners. 18. It is clarified that nothing stated in this order shall be construed as an expression of opinion on the underlying debt or on any claim which the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31 CRL.M.C. 1398/2023 Page 7 of 7 Respondents may have pursued, or may be entitled to pursue, in accordance with the provisions of the IBC. 19. The petition, along with the pending application, is disposed of in the above terms. SANJEEV NARULA, J SEPTEMBER 23, 2026 nk 3 2026 SCC OnLine Del 3358. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/09/2026 at 11:05:31