Rainbow Papers Limited sought loans from Tourism Finance Corporation of India Limited and issued post-dated cheques which stood dishonoured. Criminal Complaint was filed before Chief Metropolitan Magistrate, Saket Courts, New Delhi.

Neeraj Paper Agencies Limited requested initiation of Corporate Insolvency Resolution Process against Rainbow Papers Limited.

The scope of nature of proceedings are quite different. Promoter and Managing Director-Ajay Kumar Radheyshyam Goenka seeks to escape criminal liability.

The distinction between a strict construction and a more free one has disappeared in modern times. A criminal prosecution initiated against natural persons under Section 138 read with Section 141 of The Negotiable Instruments Act, 1881 read with Section 200, CrPC would not stand terminated by operation of The Insolvency and Bankruptcy Code, 2016.  

Where proceedings under Section 138, NI Act had already commenced, Directors cannot escape penal liability citing dissolution. The personal penal liability is not dissolved.

– Hon’ble Justice J.B. Pardiwala, Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Limited, [Criminal Appeal No. 172 of 2023].