In a landmark ruling, the Himachal Pradesh High Court, under Justice Sandeep Sharma, has clarified that personal criminal liability under Section 138 of the Negotiable Instruments Act (NI Act) remains intact, even if insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) are initiated. The case centered around petitioner Tushar Sharma, who challenged criminal proceedings related to dishonoured cheques, claiming that the IBC moratorium should protect him from such prosecution. However, the court ruled otherwise.
The court highlighted that while the IBC moratorium prevents legal actions against a corporate debtor’s assets, it does not shield individuals from personal criminal liabilities. Justice Sharma emphasized the importance of the NI Act in maintaining the integrity of financial instruments like cheques, making it clear that criminal liability for dishonoured cheques remains separate from the corporate insolvency framework.
The ruling reaffirmed that insolvency protections are meant for corporate restructuring and do not extend to personal accountability for actions like issuing dishonoured cheques. The court dismissed Tushar Sharma’s petition, allowing criminal proceedings by the State Bank of India to continue, emphasizing that personal responsibility cannot be evaded through corporate insolvency proceedings.
This decision serves as a reminder that individuals remain accountable for criminal actions, even during corporate financial distress.
Case Title: Tushar Sharma v. State Bank of India
Bench: Justice Sandeep Sharma
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