Whether the institution or continuation of a proceeding u/s 138/141 of the Negotiable Instruments Act can be said to be covered u/s 14 of the IBC?

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Last updated: 10 March 2021
Quick Summary
The Supreme Court has considered whether proceedings under Section 138/141 of the Negotiable Instruments Act (NI Act) are encompassed by Section 14 of the Insolvency and Bankruptcy Code (IBC). This case involved a company that defaulted on payments for steel supplies, leading to dishonoured cheques and subsequent demand notices issued under the NI Act against the company and its directors. The court's decision clarifies the application of these laws when both are potentially invoked.

Court :
Supreme Court of India

Brief :
Steel products were supplied by the respondent to one M/s.Diamond Engineering Pvt. Ltd. [“the company”] from 21.09.2015 to11.11.2016, as a result of which INR 24,20,91,054/- was due and payableby the company. As many as 51 cheques were issued by the company infavour of the respondent towards amounts payable for supplies, all ofwhich were returned dishonoured for the reason “funds insufficient” on03.03.2017.

Citation :
CIVIL APPEAL NO.10355 OF 2018

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