Team  SoOLEGAL

NCLT: Proceedings Under Section 138 NI Act Have Nothing To Do With Insolvency Application Under The Code

Team SoOLEGAL 28 Jul 2017 12:47pm

NCLT: Proceedings Under Section 138 NI Act Have Nothing To Do With Insolvency Application Under The Code

The Bench of Kolkata of the National Company Law Tribunal(NCLT) recently ruled that disclosure of the fact of initiation of proceedings under Section 138 of the Negotiable Instruments Act is not necessary while filing an Application for Insolvency under the Insolvency and Bankruptcy Code, 2016.

“It is to be made clear that the proceedings under section 138 of Negotiable Instrument Act are a different proceeding and liability occurs when a cheque is dishonored,” the Bench, comprising Judicial Members Mr. Vijai Pratap Singh and Ms. Manorama Kumari observed.

The Court was hearing an Application filed under Section 7 of the Insolvency and Bankruptcy Code and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Application had been filed by 10 Financial Creditors for initiation of corporate insolvency resolution process against M/s R.G. Shaw & Sons Pvt. Ltd. on account of its failure to make payments to several creditors, having incurred a debt of more than Rs. 3 crores.

The Corporate Debtor had opposed the Application contending that the Creditors had not come to the Tribunal with clean hands, having suppressed the fact that they had initiated proceedings under Section 138 of the Act.

The Tribunal, though, refused to accept this contention, observing that the fact, in fact, “supports the petitioners’ case regarding default committed by the Corporate Debtor”. If, thereafter, allowed the Application, declaring the moratorium under Section 14 of the Code.

Read the Order Here:

Section 138 Act   Bankruptcy Code  

Did you find this write up useful? YES 11 NO 3
×

C2RMTo Know More

Something Awesome Is In The Work

0

DAYS

0

HOURS

0

MINUTES

0

SECONDS

Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.
×

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail info@soolegal.com