Shashank Pathak vs Ashish Maheswari
- Court
- Delhi High Court
$~70 to 72
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 31.07.2026
Uploaded on : 03.08.2026
# CNR No. DLHC010072052026
+ CRL.M.C. 1549/2026 & CRL.M.A. 22918/2026
SHASHANK PATHAK .....Petitioner
Through: Mr. Manoj Singh, Mr. Abhay Singh,
Mr. Sanjay Kumar and Ms. Shaarika
Singh, Advs.
versus
ASHISH MAHESWARI .....Respondent
Through: Ms. Jyoti Dutt Sharma, Ms. Esha, Mr.
Mani Kant and Ms. Shikha Singh,
Advs.
71
# CNR No. DLHC010072062026
+ CRL.M.C. 1550/2026 & CRL.M.A. 22917/2026
SHASHANK PATHAK .....Petitioner
Through: Mr. Manoj Singh, Mr. Abhay Singh,
Mr. Sanjay Kumar and Ms. Shaarika
Singh, Advs.
versus
ASHISH MAHESWARI .....Respondent
Through: Ms. Jyoti Dutt Sharma, Ms. Esha, Mr.
Mani Kant and Ms. Shikha Singh,
Advs.
72
# CNR No. DLHC010073992026
+ CRL.M.C. 1589/2026 & CRL.M.A. 22921/2026
SHASHANK PATHAK .....Petitioner
Through: Mr. Manoj Singh, Mr. Abhay Singh,
Mr. Sanjay Kumar and Ms. Shaarika
Singh, Advs.
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
19:44:14
CRL.M.C. 1549/2026 and connected matters. Page 1 of 13
versus
ASHISH MAHESWARI .....Respondent
Through: Ms. Jyoti Dutt Sharma, Ms. Esha, Mr.
Mani Kant and Ms. Shikha Singh,
Advs.
CORAM:
HON'BLE MS. JUSTICE MADHU JAIN
MADHU JAIN, J. (Oral)
1. This hearing has been done through hybrid mode.
2. With the consent of learned counsel for both the parties, the main
petitions are taken up for final hearing today.
3. These three petitions raise a common question concerning the effect of
a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as the ‘IBC’) on proceedings under Sections 138 and
141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the
‘NI Act’) against a Director and signatory of the corporate debtor. The
petitions are, accordingly, being decided by this common order.
4. The Petitioner has invoked Section 528 of the Bharatiya Nagarik
Suraksha Sanhita, 2023, corresponding to Section 482 of the Code of Criminal
Procedure, 1973, seeking quashing of:
i. The summoning order dated 26.04.2019 passed in C.C. No. 4275/2019 ,
challenged in CRL.M.C. 1549/2026 ;
ii. The summoning order dated 26.07.2019 passed in C.C. No. 7492/2019 ,
challenged in CRL.M.C. 1550/2026 ; and
iii. The summoning order dated 11.09.2019 passed in C.C. No. 9180/2019 ,
challenged in CRL.M.C. 1589/2026 .
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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CRL.M.C. 1549/2026 and connected matters. Page 2 of 13
FACTUAL MATRIX
5. The Respondent/Complainant had booked a residential unit in a project
being developed by M/s Unnati Fortune Holdings Ltd. (hereinafter referred to
as the ‘Company’). On account of the delay in completion of the project, the
parties entered into a Memorandum of Settlement dated (‘MOS’) dated
07.12.2018.
6. Under the said MOS, the amount payable to the Respondent was
quantified at Rs.2,60,00,000/-. A sum of Rs.70,00,000/- was recorded as
having already been paid. The balance amount was agreed to be discharged
in the manner set out in the MOS, including through post-dated cheques.
7. The Petitioner signed the MOS on behalf of the Company. The subject
cheques were also handed over under the said MOS. The complaints allege
that the Petitioner was a director and authorised signatory of the Company,
was responsible for its affairs and had signed the cheques in question.
8. On 27.03.2019, the National Company Law Tribunal, Principal Bench,
New Delhi, admitted the insolvency proceedings against the Company in C.P.
No. (IB)-45(PB)/2018 . A moratorium under Section 14 of the IBC was
declared and an Interim Resolution Professional (‘IRP’) was appointed.
Consequently, the powers of the Board of Directors stood suspended under
Section 17 of the IBC.
9. The particulars of the cheques forming the subject matter of the three
complaints are set out below in a tabular form:
COMPLAINT
CHEQUE DETAILS DATE OF
DEMAND
CASE
PRESENTATION AND
NOTICE
DISHONOUR
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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CRL.M.C. 1549/2026 and connected matters. Page 3 of 13
C.C. No.
Cheque Nos. 730249
Presented on 05.03.2019
4275/2019
and 730250, both dated
and dishonoured on
13.03.2019
20.12.2018, for
06.03.2019 with the
Rs.21,00,000/- and
endorsement “ Account
Rs.3,60,000/-,
Blocked ”.
respectively.
C.C. No.
Cheque No. 730181
Presented and dishonoured
7492/2019
dated 20.05.2019 for
on 22.05.2019 with the
30.05.2019
Rs.25,00,000/-
endorsement “ Account
Blocked ”
C.C. No.
Cheque No. 730183
Presented on 02.07.2019
9180/2019
dated 20.06.2019 for
and dishonoured on
29.07.2019
Rs.25,00,000/-
03.07.2019 with the
endorsement “ Account
Blocked ”
SUBMISSIONS ADVANCED BY THE PARTIES
10. Learned counsel for the Petitioner submits that the petitions rest
entirely upon the decision of the Supreme Court in Vishnoo Mittal v. Shakti
Trading Company, MANU/SC/0345/2025 . He vehemently submits that an
offence under Section 138 of the NI Act is completed only upon the failure of
the drawer to make payment within fifteen days from the receipt of the
statutory demand notice. Since the said period expired after the declaration of
the moratorium on 27.03.2019, it is contended that the cause of action arose
only thereafter.
11. Learned counsel for the Petitioner further submits that once the IRP
was appointed, the Petitioner ceased to control the affairs and bank accounts
of the Company. He was, therefore, legally incapable of complying with the
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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CRL.M.C. 1549/2026 and connected matters. Page 4 of 13
demand notices. On this basis, it is contended that the complaints and the
summoning orders deserve to be quashed.
12. Per contra , learned counsel for the Respondent submits that the
moratorium under Section 14 of the IBC operates only in favour of the
corporate debtor. It does not extend to Directors, signatories or other natural
persons covered by Section 141 of the NI Act. Reliance is placed upon P.
Mohanraj v. Shah Brothers Ispat (P) Ltd., MANU/SC/0132/2021 and Ajay
Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India
Ltd., MANU/SC/0244/2023 .
13. Learned counsel for the Respondent submits that the Petitioner
obtained the order dated 23.04.2026 passed by this Court granting exemption
from personal appearance by incorrectly representing that he was not a
director when the cheques were drawn. Learned counsel refers to the MOS
dated 07.12.2018 and the Petitioner’s plea of defence recorded under Section
251 CrPC. She submits that the Petitioner admitted that the cheques belonged
to the Company and bore his signatures. Furthermore, the Petitioner also
admitted that the amount paid by the Respondent had not been refunded and
that a liability of Rs.1,30,00,000/- remained outstanding.
FINDINGS AND ANALYSIS
14. This Court has heard the learned counsel for the parties and perused the
material on record.
15. The question before this Court is a short one. It is whether the
moratorium imposed against the corporate debtor under Section 14 of the
IBC, by itself, requires the quashing of proceedings under Sections 138 and
141 of the NI Act against the Petitioner, who is alleged to have signed and
issued the subject cheques.
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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16. The scope of Section 14 of the IBC in relation to proceedings under
Sections 138 and 141 of the NI Act was considered by a three Judge Bench
of the Supreme Court in P. Mohanraj (supra) . After holding that proceedings
against the corporate debtor are covered by the moratorium, the Supreme
Court drew a clear distinction between the corporate debtor and the natural
persons liable under Section 141 of the NI Act. Paragraph 77 of the said
judgment reads as under:
“77. Since the corporate debtor would be covered by
the moratorium provision contained in Section 14 of
the IBC, by which continuation of Sections 138/141
proceedings against the corporate debtor and
initiation of Sections 138/141 proceedings against the
said debtor during the corporate insolvency resolution
process are interdicted, what is stated in paras 51 and
59 in Aneeta Hada would then become applicable. The
legal impediment contained in Section 14 IBC would
make it impossible for such proceeding to continue or
be instituted against the corporate debtor. Thus, for the
period of moratorium, since no Sections 138/141
proceeding can continue or be initiated against the
corporate debtor because of a statutory bar, such
proceedings can be initiated or continued against the
persons mentioned in Sections 141(1) and (2) of the
Negotiable Instruments Act. This being the case, it is
clear that the moratorium provision contained in
Section 14 IBC would apply only to the corporate
debtor, the natural persons mentioned in Section 141
continuing to be statutorily liable under Chapter XVII
of the Negotiable Instruments Act.”
17. The declaration in P. Mohanraj (supra) is categorical. The moratorium
operates against the corporate debtor. During the same period, proceedings
may be initiated or continued against the natural persons mentioned in
Sections 141(1) and 141(2) of the NI Act. Significantly, the principle is not
confined to proceedings which commenced before the moratorium. Para 77
expressly recognises that proceedings may be “ initiated or continued ” against
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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the natural persons during the Corporate Insolvency Resolution Process
(‘CIRP’).
18. The same position was reiterated by another three Judge Bench in Ajay
Kumar Radheyshyam Goenka (supra) . The Supreme Court held that no
provision of the IBC bars the continuation of criminal prosecution against the
Directors and officials of the corporate debtor. It was further held that the
personal penal liability of a director or signatory does not stand extinguished
merely because the corporate debtor has undergone insolvency resolution.
19. The law has thereafter been restated in Rakesh Bhanot v. Gurdas Agro
Pvt. Ltd., MANU/SC/0447/2025 . Although the said case arose in the context
of an interim moratorium under Section 96 of the IBC, the Supreme Court
expressly compared the scope of Sections 14 and 96 and held:
“10.1. ……That apart, the object of interim
moratorium can be no different from that of the
moratorium specified Under Section 14. It is also clear
from Section 14 that the protection from legal action
during the period of moratorium is not available to the
surety or in other words, to a personal guarantor. The
use of the words "all the debts" and "in respect of any
debt" in Sub-section (1) of Section 96 is not without a
purpose, as the moratorium is intended to offer
protection only against civil claim to recover the debt.
Hence, such period of moratorium prescribed Under
Section 14 or 96 is restricted in its applicability only
to protection against civil claims which are directed
towards recovery and not from criminal action. ”
20. The Supreme Court in Rakesh Bhanot (supra) further clarified that
proceedings under Section 138 of the NI Act are distinct from insolvency
proceedings and that the personal statutory liability of Directors under Section
141 of the NI Act continues irrespective of any moratorium applicable to the
corporate debtor. The relevant paragraph of the judgment are reproduced
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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hereinbelow:
“13. On the other hand, the proceedings Under Section
138 of the N.I. Act, 1881, pertain to the dishonor of
cheques issued by the respective
Appellants/Petitioners in their personal capacity.
These proceedings are distinct from the corporate
insolvency proceedings and are aimed at upholding the
integrity of commercial transactions by holding
individuals accountable for their personal actions. The
scope and nature of the proceedings under the IBC
may result in extinguishment of the actual debt by
restructuring or through the process of liquidation. But
such extinguishment will not absolve its directors from
the criminal liability. Section 141 of the N.I. Act, 1881
enables the prosecution of the persons in charge of the
affairs and responsible for the conduct of the business
of the company along with the company. The statutory
liability against the directors Under Section 138 of
the N.I. Act, 1881, is personal and hence, continues
to bind natural persons, irrespective of any
moratorium applicable to the corporate debtor. The
acceptance of the resolution plan Under Section 31
IBC or its implementation thereof will have no effect
on the prosecution Under Section 138 of the N.I. Act,
1881.”
21. The legal position which emerges is, therefore, that insolvency
proceedings may restrict proceedings against the corporate debtor and its
assets. They do not, merely by reason of the moratorium, extinguish the
statutory liability of natural persons under Section 141 of the NI Act.
22. The Petitioner places reliance upon Vishnoo Mittal (supra) . In that
case, although the cheques had been dishonoured before the declaration of the
moratorium, the statutory demand notice was issued after the IRP had
assumed control over the corporate debtor. The Supreme Court distinguished
P. Mohanraj (supra) on the ground that the cause of action had arisen after
the declaration of the moratorium and that the Director had ceased to exercise
control over the accounts of the corporate debtor. In those facts, the complaint
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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CRL.M.C. 1549/2026 and connected matters. Page 8 of 13
and the summoning order were quashed.
23. The decision in Vishnoo Mittal (supra) does not, however, lay down
that every complaint against a Director or signatory is liable to be quashed
merely because the statutory period under Section 138 of the NI Act expired
after the declaration of the moratorium. The larger Bench declaration in P.
Mohanraj (supra) that proceedings may be initiated or continued against
natural persons covered by Sections 141(1) and 141(2) of the NI Act continues
to hold the field. Further, in the subsequent decision in Rakesh Bhanot
(supra) , the Supreme Court reiterated that the statutory liability of Directors
under the NI Act is personal and continues “ irrespective of any moratorium
applicable to the corporate debtor ”.
24. Thus, the fact that the cause of action arose after the declaration of the
moratorium is a relevant circumstance, but is not, by itself, conclusive of the
liability of a natural person sought to be prosecuted under Section 141 of the
NI Act. The complaint, the role attributed to such person and the admitted or
undisputed material on record must also be considered.
25. In the present cases, the MOS and the delivery of the subject cheques
preceded the commencement of the CIRP. The complaints contain specific
averments regarding the Petitioner’s role, and the Petitioner admits that the
cheques bear his signatures. In these circumstances, the subsequent
suspension of the powers of the Board does not, by itself, render the
complaints legally untenable against the Petitioner. The defences available to
him under Section 141 of the NI Act may be established before the learned
Trial Court in accordance with law.
26. The complaints specifically allege that the Petitioner was a director and
authorised signatory, was responsible for the affairs of the Company and had
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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signed and issued the subject cheques. The case is, therefore, not founded
merely upon the Petitioner holding a formal designation in the Company.
27. The suspension of the powers of the Board under Section 17 of the IBC
affects the authority of the erstwhile management to operate the affairs and
accounts of the corporate debtor. It does not retrospectively erase the acts
performed by the Petitioner before the moratorium or extinguish the statutory
liability which may arise from those acts. The questions as to whether the
offence was committed without the Petitioner’s knowledge, whether he
exercised due diligence, or whether the appointment of the IRP otherwise
affords him a defence are matters to be examined at trial. These issues cannot
be conclusively decided in a petition under Section 528 of the BNSS when
the complaints contain the necessary averments and the Petitioner is
admittedly the signatory of the cheques.
28. A perusal of the Petitioner’s plea of defence under Section 251 CrPC,
though not being treated as proof of guilt, shows that the present cases cannot
be treated as cases where the complaints, even if accepted in their entirety,
disclose no offence against the Petitioner. The nature of the liability, the
circumstances in which the cheques were issued, the effect of the moratorium
and the defences available to the Petitioner must be determined on the
evidence led before the learned Trial Court.
29. Accordingly, this Court finds no ground to interfere with the
summoning orders dated 26.04.2019, 26.07.2019 and 11.09.2019 insofar as
they relate to the Petitioner.
CRL.M.A. 22918/2026 in CRL.M.C. 1549/2026
CRL.M.A. 22917/2026 in CRL.M.C. 1550/2026
CRL.M.A. 22921/2026 in CRL.M.C. 1589/2026
Signature Not Verified
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NEGI
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30. Learned counsel for the Respondent asserts that the Petitioner obtained
the order dated 23.04.2026 by representing that he was not a director when
the subject cheques were drawn and had resigned before the dates mentioned
on the cheques. The said order dated 23.04.2026 is reproduced hereinbelow:
“Since according to the petitioner, he was not the
Director when the cheques were drawn and had
already resigned prior to the date mentioned on the
cheque, he would be exempted from personal
appearance before the learned Trial Court till the
disposal of the present petitions.”
31. A perusal of the pleadings of the Petitioner makes it evident that they
do not contain any such assertion. On the contrary, the petitions specifically
state that the Petitioner joined the Board of the Company on 01.03.2018 as a
director and authorised signatory. The petitions also rely upon the MOS dated
07.12.2018 bearing the Petitioner’s signatures on behalf of the Company.
32. The plea that a director had resigned much before the dates of the
cheques was taken by the co-accused, Anil Mithas, in CRL.M.C. Nos.
3499/2023 and 3500/2023 . The order dated 16.05.2023 passed in those
petitions records that Anil Mithas claimed to have resigned on 08.02.2014.
33. The written pleadings of the Petitioner are inconsistent with the recital
contained in the order dated 23.04.2026. The plea that a director had resigned
before the dates of the cheques was raised by the co-accused, Anil Mithas, in
CRL.M.C. No. 3499/2023 . Apart from the recital in the order dated
23.04.2026, no material has been placed before this Court to establish that the
Petitioner deliberately made a false statement or suppressed his status as a
director and authorised signatory.
34. In these circumstances, this Court is not persuaded to return an adverse
finding of deliberate suppression or misrepresentation against the Petitioner.
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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The decisions in K.D. Sharma v. Steel Authority of India Ltd., (2008) 12
SCC 481 and Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari
Patsansta Ltd., 2025 INSC 399 , do not assist the Respondent on the facts of
the present case.
CONCLUSION
35. The moratorium imposed under Section 14 of the IBC operates in
favour of the corporate debtor. It does not suspend or extinguish the statutory
liability of a Director, authorised signatory or other natural person falling
within Sections 141(1) and 141(2) of the NI Act.
36. The Petitioner is alleged to have signed and issued the subject cheques
pursuant to the MOS dated 07.12.2018. The complaints contain specific
averments regarding his role. He has also admitted before the learned Trial
Court that the cheques bear his signatures. The matters, therefore, require trial
and do not warrant interference under Section 528 of the BNSS.
37. Accordingly, CRL.M.C. 1549/2026, CRL.M.C. 1550/2026 and
CRL.M.C. 1589/2026 are dismissed. Pending application(s), if any, also stand
disposed of.
38. All interim orders operating in favour of the Petitioner in these petitions
stand vacated.
39. The Petitioner shall appear before the learned Trial Court on the date
fixed or on such date as may be directed by the learned Trial Court. The
learned Trial Court shall proceed with the complaint cases in accordance with
law.
40. It is clarified that the observations made herein are only for deciding
the present petitions. The learned Trial Court shall decide the complaints on
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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their own merits, without being influenced by any observation touching upon
the final guilt or innocence of the Petitioner.
41. Next date of hearing i.e., 02.09.2026 stands cancelled.
42. The order be uploaded on the website forthwith .
MADHU JAIN
(JUDGE)
JULY 31, 2026/JYH/m
Signature Not Verified
Signed By:RENUKA
NEGI
Signing Date:03.08.2026
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