Case Title: Narinder Garg v. Kotak Mahindra Bank Ltd

The Hon'ble Supreme Court bench while adjudicating in this case through its judgement dated March 28th, 2022, has held that the purview of section 14 of the Insolvency and Bankruptcy Code would be restricted only to the corporate debtor. However, the code would not affect the rights of the natural persons inscribed in Section 141 of the Negotiable Instruments Act.

The counsel on behalf of the appellant contended that the accepted resolution plan in regard to the dues of the original complainant would be only to obliterate any pending trial under sections 138 and 141 of the Negotiable Instruments Act.

In this case, the bench relied on the decision made in the case of P. Mohanraj & Others v. Shah Brothers Ispat Private Limited, which dealt with the matter pertaining to the procedure under sections 138 and 141 of the Negotiable Instruments Act, 1881, when the moratorium was made effective in regard to the same.

Furthermore, in the aforementioned case, another issue was also raised about the liability of natural persons i.e. Directors of a company, wherein the court in paragraph no. 77 of its judgement observed that the natural persons covered under section 141 of the Negotiable Instruments Act, 1881 would continue to be made liable under the aforementioned Act and, thereby, Section 14 of the IBC, 2016 would be confined to dealing with the corporate debtor in Insolvency Proceedings.

The court in the present case came to the conclusion upon highlighting the subsidiary issue, that the liability of natural persons such as Directors of the Company and upheld the decision of P. Mohanraj. The final verdict of the Hon'ble court is as follows, "The decision rendered in P. Mohanraj is quite clear on the point and, as such, no interference in this petition is called for."