Nagpur: Clarifying the interplay between insolvency and criminal liability, the Nagpur bench of Bombay high court recently ruled that insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) do not exempt company directors or signatories from prosecution under Section 138 of the Negotiable Instruments Act (NI Act) in case of cheque dishonour.Justice MM Nerlikar, allowing a petition filed by a Nagpur-based hospital against Amravati Distilleries’ directors, observed that the pendency of insolvency proceedings cannot nullify the personal liability of natural persons. “It makes no difference whether the proceedings are initiated prior to the IBC proceeding or thereafter. The Supreme Court has in unequivocal terms held that…
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