MRUDULA SUHAS SHUKLAversusD S KULKARNI AND CO

                                                 18-WP-2223-2025.DOC




          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                CRIMINAL APPELLATE JURISDICTION
                  WRIT PETITION NO.2223 OF 2025


Suhas Gopal Shukla                                 …Petitioner
       Versus
D. S. Kulkarni & Co. & Anr.                        …Respondents

                              WITH
                  WRIT PETITION NO.2225 OF 2025

Mrudula Suhas Shukla                               …Petitioner
       Versus
D. S. Kulkarni & Co. & Anr.                        …Respondents


Mr. Lakshyaved R. Odhekar a/w. Mr. Omkar N. Mhasde and Mr.
Sujen Shaikh, for the Petitioners.
Mr. P. P. Jadhav, APP, for Respondent No.3-State.


                      CORAM:      MADHAV J. JAMDAR, J.
                      DATED :     1st SEPTEMBER 2026
P. C.:


1.       Heard Mr. Odhekar, learned Counsel appearing for the

Petitioners and Mr. Jadhav, learned APP appearing for Respondent

No.2-State.



2.       In Writ Petition No.2223 of 2025, the challenge is to the

legality and validity of the order dated 31st October 2023 passed by

the learned Additional Chief Judicial Magistrate, Nashik, below




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Exhibit-73 in SCC No.4270 of 2017, by which the said Application

bearing Exhibit-73 filed by accused No.2 to stay the matter till the

pendency of the proceedings before the National Company Law

Tribunal (“NCLT”), Mumbai was allowed.



3.       In Writ Petition No.2225 of 2025, the challenge is to the

legality and validity of the order dated 31st October 2023 passed by

the learned Additional Chief Judicial Magistrate, Nashik, below

Exhibit-74 in SCC No.4269 of 2017, by which the said Application

bearing Exhibit-74 filed by accused No.2 to stay the matter till the

pendency of the proceedings before the NCLT, Mumbai was

allowed.



4.       It is the submission of Mr. Odhekar, learned Counsel

appearing for the Petitioners that the NCLT proceedings filed under

the provisions of the Insolvency and Bankruptcy Code, 2016

(“IBC”) are still pending. However, he submits that the Supreme

Court in the case of Dineshchand Surana vs. UCO Bank1 has

clarified that as far as the proceedings under Section 138 of the

Negotiable Instruments Act, 1881 (“NI Act”) are concerned, they


1        2026 SCC OnLine SC 987




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are divided into two parts. One part is regarding criminal aspect

and other part is regarding compensation aspect. He submits that

the Supreme Court has clarified that the moratorium which is

contemplated under Section 96 of the IBC is not applicable to the

criminal aspects of the offence under Section 138 of the NI Act and

the same may apply to the compensation aspect of Section 138 of

the NI Act and that stage has not yet arrived at. He more

particularly relied on paragraph Nos.198 to 202 of the decision of

the Supreme Court in the case of Dineshchand Surana (supra). He

also relied on the decision of the learned Single Judge dated 18 th

August 2026 in the case of Jagmohan Garg vs. National Spot

Exchange Limited & Anr2 and connected matters and more

particularly, on paragraph Nos.78 to 94.



5.       Before considering the rival contentions, it is necessary to set

out the order dated 30th June 2026, passed by this Court:



             “1) A learned Single Judge by order dated 19 th
             June, 2024 has issued notice to the Respondents
             and further directed that the notice to indicate
             that the Petition be disposed of finally.



2        2026 SCC OnLine Bom 10654




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            2) The office note indicates that Respondent
            Nos.1 and 2 have been duly served. Despite
            service of notice, none has appeared on behalf of
            Respondent Nos.1 and 2. By way of a last
            opportunity, stand over to 6th July, 2026. To be
            shown fairly high on board.

            3) It is made clear that if, inspite of this
            opportunity, Respondent Nos.1 and 2 fail to
            appear, this Court shall proceed to hear and
            decide both these Writ Petitions finally.”

         Thus, although the Respondents are served, none appears for

the Respondent No.1 and 2, even after granting opportunity, none

appears.



6.       By the impugned orders, the learned Trial Court stayed the

criminal cases filed under Section 138 of the NI Act on the ground

that proceeding under IBC Act are pending before the NCLT. In

view of the said reasoning given by the learned Trial Court, it is

necessary to set out the paragraph Nos.198 to 202 of Dineshchand

Surana (supra) on which the learned Counsel appearing for the

Petitioners relied, which read as under:



            “198. However, we have also noted the decisions
            of this Court and the 2008 Amendment to the NI
            Act which place emphasis on the compensatory
            and remedial framework of Section 138 of the NI
            Act. Upon examination of the nature and dual



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         objectives of Section 138, we found it prudent to
         treat the legal action taken under Section 138 as
         tiered proceedings. Tier I of the proceeding under
         Section 138 is without any doubt, criminal and
         culminates      into    punishment     of    either
         imprisonment, fine or both, if the drawer of the
         cheque is convicted. Tier I is mandatory in nature
         unlike Tier II which is dependent upon the
         discretion of the courts to order compensation.
         Tier II is the compensatory aspect of Section 138
         which causes an inevitable overlap between
         criminal and civil actions.

         II. Whether the proceedings under Section 138 of
         the NI Act are protected during the moratorium
         period provided under Part-III of the IBC?

         199. Having discussed the dual objective and
         nature of the proceedings under Section 138 of
         the NI Act, we have found that the applicability
         of moratorium provisions to the same is rife with
         complexity. If Section 138 proceeding in its
         entirety is stayed by the operation of moratorium,
         then it would do violence to the avowed object of
         attaching criminal consequences to the wrong of
         cheque dishonour. On the other hand, if the
         Section 138 proceedings are kept outside the
         purview of moratorium, then it would be
         detrimental to the interests of the debtor as well
         as other creditors whose claims are similarly
         placed but are kept secondary due to adoption of
         methods of payments other than cheques.

         200. Therefore, it is imperative to balance
         between the objectives sought to be achieved by
         both the legislations. We have attempted to
         balance the provisions of both the NI Act and the
         IBC by bifurcating the offence of cheque
         dishonour into (i) criminal aspect of the offence




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            (Tier I), and (ii) compensatory aspect of the
            Section 138 proceedings (Tier II).

            201. The criminal aspect of Section 138
            proceedings results in punishment including
            imprisonment, fine or both. This makes it
            sufficiently clear that moratorium provisions
            under Part III of the IBC cannot be made
            applicable on the criminal impact of Section 138
            of the NI Act. We have said so because Section
            79(15) of the IBC which defines “excluded debts”
            has excluded the ‘liability to pay fine’ from debts
            in respect of which legal actions and proceedings
            are stayed by the operation of moratorium under
            Part III of the IBC. We are of the view that
            allowing Section 138 proceedings to enjoy the
            benefit of moratorium, especially in light of such
            express exclusion of criminal liability, is not a
            good law.

            202. We have also dealt with the compensatory
            aspect of Section 138 proceedings and have taken
            the view that the same is in the nature of a civil
            remedy that would result in the depletion of the
            assets of the individual debtor if not stayed.
            Therefore, we are of the view that the
            moratorium provisions under Part III of the IBC
            must be made applicable in respect of recovery of
            compensation in Section 138 proceedings.”

                                            (Emphasis added)


         Thus, it is very clear that as held by the Supreme Court,

criminal aspect of Section 138 proceedings results in punishment

including imprisonment, fine or both and that moratorium




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provisions under Part III of the IBC cannot be made applicable on

the criminal aspect of Section 138 of the NI Act.



7.       Learned Single Judge in Jagmohan Garg (supra) after

considering the Supreme Court’s decision in the case of

Dineshchand Surana (supra) and Ajay Kumar Radheshyam Goenka

vs. Tourism Finance Corporation of India3 and in the case of

Rakesh Bhanot vs. M/s. Gurdas Agro Pvt. Ltd.4 has observed in

paragraph No.85 as under:



            “85. In the respectful understanding of this Court,
            the two-judge Bench decision of the Supreme
            Court in the case of Dineshchand Surana (supra),
            cannot be said to have taken a view which is
            completely contrary to the one recorded in the
            decisions in the cases of Ajay Kumar
            Radheyshyam Goenka (supra) and Rakesh
            Bhanot (supra). Nay the two-judge Bench
            observed in no unequivocal terms that the
            criminal aspect of the prosecution under Section
            138 of the Act, 1881 would not be affected by the
            moratorium provisions of the IBC 2016 and the
            directors of the corporate debtor cannot escape
            personal criminal liability.”

                                            (Emphasis added)


3 (2023) 10 SCC 545


4 (2025) 6 SCC 781




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8.       Thus, in view of the law laid down by the Supreme Court in

the case of Dineshchand Surana (supra), it is very clear that the

criminal aspect of the prosecution under Section 138 of the NI Act,

will not be affected by the moratorium provisions of the IBC and

the directors of the corporate debtor cannot escape personal

criminal liability.



9.       Thus, in view of the law laid down by the Supreme Court,

both these Writ Petitions are disposed of by passing the following

order:


                                ORDER

               Writ Petition No.2223 of 2025:

         (a)   The order dated 31st October 2023 passed by the

               learned Additional Chief Judicial Magistrate, Nashik,

               below Exhibit-73 in S.C.C. No.4270 of 2017 is

               quashed and set aside and the said Application

               bearing Exhibit-73 is dismissed.

               Writ Petition No.2225 of 2025:

         (b)   The order dated 31st October 2023 passed by the

               learned Additional Chief Judicial Magistrate, Nashik,




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                             below Exhibit-74 in S.C.C. No. 4269 of 2017 is

                             quashed and set aside and the said Application

                             bearing Exhibit-74 is dismissed.

                       (c)   As the said criminal cases are pending since the year

                             2017, the learned Trial Court is requested to

                             expeditiously dispose of the said criminal cases on or

                             before 31st December 2027.


              10.      The Writ Petitions are disposed of in above terms with no

              order as to costs.



                                                          [MADHAV J. JAMDAR, J.]



   SONALI
   MILIND
   PATIL
Digitally signed by
SONALI MILIND PATIL
Date: 2026.09.03
10:34:26 +0530




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