IBC Proceedings Do Not Shield Directors from Cheque Bounce Prosecution U/S 138 NI Act : Bombay High Court

The Bombay High Court has ruled that insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) do not protect company directors from prosecution for dishonoured cheques under Section 138 of the Negotiable Instruments Act (NI Act).

The Court emphasised that while a corporate debtor may be shielded during insolvency, the personal liability of its directors persists despite liquidation.

Justice MM Nerlikar of the Nagpur Bench delivered this judgment on October 1, 2025, overturning a trial court's decision that had discharged the directors of Anand Distilleries. 

The Court clarified that Section 32A of the IBC offers protection only to the corporate debtor, and does not extend immunity to company officers, who remain personally liable.

[Ortho Relief Hospital and Research Centre Vs Anand Distilleries]