Amarjeet Singh vs Hardeep Singh

* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 20.07.2026
Pronounced on: 30.07. 2026
Uploaded on: 30.07.2026
+ CRL.M.C. 2494/2023
SHRI AMARJEET SINGH .....Petitioner
Through: Mr.Praveen Suri, Adv. (through VC)
versus
SHRI HARDEEP SINGH .....Respondent
Through: None.
CORAM:
HON'BLE MS. JUSTICE MADHU JAIN
J U D G M E N T
MADHU JAIN, J.
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the petitioner under Article 227
of the Constitution of India read with Section 482 of the Code of Criminal
Procedure, 1973, assailing the order dated 17.11.2022 passed by the learned
Metropolitan Magistrate, NI Act-05, West District, Tis Hazari Courts, Delhi
in Complaint Case No. 11995/2018 , titled Shri Amarjeet Singh v. Shri
Hardeep Singh , whereby the proceedings in the said complaint case were
stayed.
FACTUAL MATRIX
3. The dispute arises out of a friendly loan transaction between the
parties. The petitioner alleges that, in June 2015, the respondent approached
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him for a loan of ₹30 lakhs owing to financial difficulties. Pursuant thereto,
the petitioner advanced the said amount and the parties executed a loan
agreement dated 06.07.2015. Towards repayment of the loan, the respondent
issued six post-dated cheques of ₹5 lakhs each.
4. Two of the cheques were honoured, while the petitioner, at the request
of the respondent, deferred presentation of the remaining four cheques.
When the said cheques were eventually presented in July 2018, all four were
dishonoured with the remarks "Insufficient Funds" and "Payment Stopped by
Drawer". Consequently, after issuance of the statutory demand notice dated
08.08.2018 and the respondent's failure to make payment within the
prescribed period, the petitioner instituted Complaint Case No. 11995/2018
under Section 138 of the Negotiable Instruments Act, 1881. The respondent
was summoned in the complaint and, after the mediation proceedings failed,
notice under Section 251 Cr.P.C. came to be framed against him.
5. During the pendency of the complaint proceedings, the parties arrived
at a settlement on 13.03.2020. According to the petitioner, although the
respondent made certain payments pursuant thereto, he repeatedly defaulted
in complying with the settlement terms despite furnishing successive
undertakings before the learned Trial Court assuring payment of the
outstanding amount.
6. In view of the repeated defaults, the petitioner moved an application
under Sections 421 and 431 Cr.P.C. seeking recovery of the unpaid
settlement amount. By a detailed order dated 21.03.2022, the learned
Metropolitan Magistrate allowed the application and directed the concerned
SDM to recover the remaining amount of ₹13 lakhs as fine in the manner of
arrears of land revenue by attachment of the respondent's movable and
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immovable properties.
7. While the recovery proceedings were pending, the respondent
continued to seek time for payment and, on 23.09.2022, once again
undertook before the learned Trial Court to clear the outstanding amount in
instalments. It is the petitioner's case that, despite receiving a total sum of
₹13.50 lakhs out of the settled amount of ₹20 lakhs, the respondent failed to
pay the remaining ₹6.50 lakhs.
8. On 17.11.2022, the respondent produced before the learned
Metropolitan Magistrate certain orders passed by the National Company
Law Tribunal and the National Company Law Appellate Tribunal in
proceedings initiated under the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as ‘ IBC’ ). Relying upon the order dated 26.04.2022
passed by the NCLT, whereby an interim moratorium under Section 96 of
the IBC had come into operation, the learned Metropolitan Magistrate vide
order dated 17.11.2022 stayed further proceedings in Complaint Case No.
11995/2018.The relevant extracts of the impugned judgment are reproduced
hereinbelow:
“Ld. Counsel for the accused has furnished an order
dt. 26.04.22, passed by NCLT Bench, u/s 95 IBC,
wherein moratorium has been initiated against the
accused from 30.03.22 and any pending legal action
or proceeding in respect of any debt of the personal
guarantor has been stayed. The appointment letter of
insolvency resolution professional has been
submitted. Further, an order dt. 31.10.22 passed by
the NCLAT has been furnished wherein liberty has
been given to the accused to move an application u/s
12A of IBC. The accused has also furnished order dt.
12.07.22, passed by the NCLT wherein the firm of the
accused persons has been declared under moratorium
in terms of Section 14 IBC. All the documents are
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taken on record. Let a copy of all the documents be
supplied to the Ld. Counsel for the complainant.
Ld. Counsel for the complainant has submitted that
the matter was settled for Rs. 20 lakhs out of which
the complainant has received Rs. 13.50 lakhs till date.
It has been submitted on behalf of the accused that
since the firm of the accused and the accused himself
has undergone insolvency proceedings, further time is
sought to make the remaining payment of Rs. 6.50
lakhs to the complainant.
In view of the order dt. 26.04.22, passed by the NCLT,
the proceedings against the accused are hereby
stayed.”
9. Aggrieved thereby, the petitioner has filed the present petition
contending, inter alia, that the learned Trial Court erroneously stayed the
proceedings under Section 138 of the Negotiable Instruments Act,1881 and
that the impugned order was passed without affording the petitioner an
effective opportunity of hearing.
SUBMISSIONS ON BEHALF OF THE PETITIONER
10. Learned counsel for the petitioner submits that the learned Trial Court
has erred in staying the proceedings under Section 138 of the Negotiable
Instruments Act,1881 solely on the ground that an interim moratorium under
Section 96 of the Insolvency and Bankruptcy Code, 2016 had come into
operation. It is contended that the issue is no longer res integra in view of
the judgment of the Supreme Court in Rakesh Bhanot v. Gurdas Agro (P)
Ltd., (2025) 6 SCC 781 , wherein it has been categorically held that the
moratorium contemplated under Sections 96 and 101 of the IBC does not
bar the continuation of criminal proceedings under Section 138 of the
Negotiable Instruments Act, 1881. Reliance is placed, inter alia, on
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paragraphs 25 and 31 of the said judgment, wherein the Supreme Court has
held that while the moratorium may postpone civil proceedings for recovery
of debt, it does not impede criminal prosecution under Section 138 of the
Negotiable Instruments Act.
11. It is further submitted that the respondent had entered into a
settlement with the petitioner and had paid a substantial portion of the
settled amount. However, despite repeatedly undertaking before the learned
Trial Court to clear the remaining liability, the respondent failed to honour
the terms of the settlement and, instead, sought stay of the proceedings by
relying upon the insolvency proceedings initiated under the IBC.
12. Learned counsel submits that the learned Metropolitan Magistrate, by
the impugned order dated 17.11.2022, stayed the complaint proceedings
merely on the basis of the order dated 26.04.2022 passed by the NCLT,
without appreciating that the moratorium under Section 96 of the IBC has no
application to criminal proceedings under Section 138 of the Negotiable
Instruments Act, 1881.
13. It is also contended that the impugned order was passed without
supplying copies of the orders relied upon by the respondent and without
affording the petitioner an effective opportunity of being heard, thereby
causing serious prejudice to the petitioner.
14. Learned counsel further submits that in view of the law subsequently
declared by the Supreme Court in Rakesh Bhanot (supra), the very
foundation of the impugned order no longer survives. It is, therefore, prayed
that the order dated 17.11.2022 be set aside and the learned Trial Court be
directed to proceed further with Complaint Case No. 11995/2018 in
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accordance with law, including the proceedings initiated pursuant to the
order dated 21.03.2022.
ANALYSIS AND FINDINGS
15. I have heard the learned counsel for the petitioner and have gone
through the material on record.
16. The principal issue which arises for consideration in the present
petition is whether the learned Trial Court was justified in staying the
proceedings under Section 138 of the Negotiable Instruments Act, 1881 by
invoking the interim moratorium under Section 96 of the Insolvency and
Bankruptcy Code, 2016.
17. Before adverting to the rival submissions, it would be apposite to
briefly examine the scope of Section 96 of the Insolvency and Bankruptcy
Code, 2016. Section 96 provides for an interim moratorium upon the filing
of an application under Sections 94 or 95 of the Code. During the period of
such moratorium, any pending legal action or proceeding in respect of any
debt is deemed to have been stayed, and no creditor is entitled to initiate or
continue legal proceedings in respect of such debt.
18. At this stage, this Court deems it apposite to refer to Section 96 of the
Insolvency and Bankruptcy Code, 2016. The relevant provision is extracted
hereinbelow:
“96. Interim moratorium .—(1) When an application
is filed under section 94 or section 95—
(a) an interim-moratorium shall commence on the
date of the application in relation to all the debts and
shall cease to have effect on the date of admission of
such application; and 70(b) during the interim-
moratorium period—
(i) any legal action or proceeding pending in
respect of any debt shall be deemed to have been
stayed; and
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(ii) the creditors of the debtor shall not initiate any
legal action or proceedings in respect of any debt.
(2) Where the application has been made in
relation to a firm, the interim-moratorium under sub-
section (1) shall operate against all the partners of
the firm as on the date of the application.
(3) The provisions of sub-section (1) shall not
apply to such transactions as may be notified by the
Central Government in consultation with any
financial sector regulator.”
19. The controversy, however, is whether the expression " legal action or
proceeding in respect of any debt " occurring in Section 96 encompasses
criminal proceedings initiated under Section 138 of the Negotiable
Instruments Act.
20. The aforesaid issue is no longer res integra . The Supreme Court, in
Rakesh Bhanot v. Gurdas Agro (P) Ltd., (2025) 6 SCC 781 , has
authoritatively held that the moratorium contemplated under Sections 96 and
101 of the Insolvency and Bankruptcy Code does not extend to criminal
prosecution under Section 138 of the Negotiable Instruments Act,1881 . The
Supreme Court has observed that while the moratorium postpones civil
actions for recovery of debt, it does not impede criminal proceedings, which
are intended to ensure the credibility of negotiable instruments and maintain
commercial discipline.
21. The Supreme Court in Rakesh Bhanot (supra) , held that the object of
the moratorium is not to obstruct criminal prosecution but merely to defer
civil proceedings for recovery of debt. The Court observed as under:
“31. For the foregoing discussion, we are of the
opinion that the object of moratorium or for that
purpose, the provision enabling the debtor to
approach the Tribunal under Section 94 is not to stall
the criminal prosecution, but to only postpone any
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civil actions to recover any debt. The deterrent effect
of Section 138 is critical to maintain the trust in the
use of negotiable instruments like cheques in business
dealings. Criminal liability for dishonouring cheques
ensures that individuals who engage in commercial
transactions are held accountable for their actions,
however subject to satisfaction of other conditions in
the NI Act, 1881. Therefore, allowing the respective
appellant-petitioners to evade prosecution under
Section 138 by invoking the moratorium would
undermine the very purpose of the NI Act, 1881,
which is to preserve the integrity and credibility of
commercial transactions and the personal
responsibility persists, regardless of the insolvency
proceedings and its outcome.”
22. In view of the law declared by the Supreme Court in Rakesh Bhanot
( supra ), the basis on which the impugned order came to be passed cannot be
sustained. The proceedings before the learned Trial Court arise out of a
complaint under Section 138 of the Negotiable Instruments Act, ,1881
which are criminal in nature. Mere initiation of insolvency proceedings
against the respondent under the Insolvency and bankruptcy code, 2016 does
not constitute a valid ground for staying the complaint proceedings.
23. The petitioner has also contended that the impugned order was passed
without supplying copies of the NCLT and NCLAT orders relied upon by
the respondent and without affording an effective opportunity of hearing.
However, in view of the authoritative pronouncement of the Supreme Court
on the legal issue involved, this Court does not consider it necessary to
examine the said contention in detail, as the impugned order is liable to be
set aside on the substantive legal ground itself.
24. In the opinion of this Court, once the impugned order staying the
proceedings is set aside, it would be for the learned Trial Court to consider
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the stage of the proceedings and pass appropriate orders in accordance with
law. This Court refrains from issuing any specific direction in that regard,
leaving it open to the learned Trial Court to proceed from the stage at which
the proceedings came to be stayed.
CONCLUSION
25. Consequently, the impugned order dated 17.11.2022 cannot be
sustained and is accordingly set aside.
26. The complaint proceedings are restored to the file of the learned Trial
Court, which shall proceed further in accordance with law, uninfluenced by
the observations contained in the impugned order.
27. Accordingly, the petition is allowed. Pending application(s), if any,
also stand disposed of in the above terms.
28. A copy of this order be sent to the concerned learned Trial Court for
necessary compliance and information.
MADHU JAIN
(JUDGE)
JULY 30, 2026/ys//RM
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