Directors Not Liable for Cheque Bounce After Liquidation Begins | HC

  • Blog|News|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 14 July, 2025

Latest from Taxmann

Section 138 NI Act moratorium

Case Details: Yatendra Singh v. Ganga Iron and Steel Trading Company Ltd. - [2025] 176 taxmann.com 242 (HC-Bombay)

Judiciary and Counsel Details

  • Urmila Joshi-Phalke, J.
  • Yash Venkatraman, Counsel & Ms Pragya Nawandar, Adv. for the Applicant.
  • Darasingh Sindhu, Counsel for the Respondent.

Facts of the Case

In the instant case, the corporate debtor company entered into a business with the non-applicant company for purchasing goods. The corporate debtor issued cheques to a non-applicant company for the payment of goods, but the same were dishonoured.

The non-applicant company filed a complaint under section 138 of the Negotiable Instruments Act against the corporate debtor and its directors. Meanwhile, the corporate debtor was liquidated and a liquidator was appointed.

The applicants/directors of the corporate debtor filed an application for quashing of the complaint filed by the non-applicant company.

It was noted that since the moratorium was declared and the liquidation process was initiated much prior to the issuance of cheques, the directors of the corporate debtor could not be held liable for the dishonour of cheques.

High Court Held

The High Court held that once a moratorium was declared and liquidation proceedings had been completed, the directors of the corporate debtor company ceased to be in charge of the company and the powers of the Board of Directors were to be exercised by the liquidator/Resolution Professional in accordance with the provisions of the IBC. Thus, the application filed by the directors of the corporate debtor for the quashing of the complaint filed by the non-applicant company was to be allowed.

List of Cases Reviewed

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied