A Comment on Ajay Kumar Radheyshyam Goenka vs Tourism Finance Corporation of India Limited

The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) prescribes a procedure for Corporate Insolvency. The state of insolvency of a company is associated with its inability to pay off its debts. In certain circumstances even before the insolvency proceedings have begun, the effort to discharge a debt may result in dishonour of negotiable instruments entailing a liability of the insolvent company as well as the officials involved in such dishonour under the Negotiable Instruments Act, 1881 (hereinafter referred to as “NI Act”). The effect of subsequent insolvency proceedings upon pending criminal proceedings under the NI Act was the subject matter of the dispute in Ajay Kumar Radheyshyam Goenka vs Tourism Finance Corporation Of India Limited . The judgment throws light on various aspects of the liability of a corporate debtor and its officials for offences committed under NI Act prior to the commencement of corporate insolvency proceedings under the IBC. Many questions revolving around such liability, the continuation of it and its nature have been categorically answered in this judgment. In addition to setting the record straight in the issue, the judgment also has implications on the Clean Slate Theory, Theory of Corporate Veil and the principle of estoppel against creditors that participate in the Corporate Insolvency Resolution Process. The present comment is an attempt to analyse the judgments on all these points