Corporate Immunity Vs. Individual Accountability: Navigating Criminal Proceedings Under Insolvency & Bankruptcy Code And Negotiable Instruments Act

Shagun Gupta, LL.B (Hons.), O.P. Jindal Global University, Jindal Global Law School

Shivanshi Ratnakar, LL.B (Hons.), O.P. Jindal Global University, Jindal Global Law School

ABSTRACT

This article traces a complex legal interplay between the Negotiable Instruments Act (NI Act), the Insolvency and Bankruptcy Code (IBC), and the Companies Act, particularly looking at cases of a company facing criminal liability under the NI Act for cheque dishonour, and simultaneously undergoing an insolvency resolution process under the IBC. The question sought to be addressed is the effect of dissolution of such a company, and whether it absolves natural persons associated with the company from criminal liability under the NI Act. The article investigates the ongoing debate around Section 32A of the IBC and its impact on the principle of independent corporate personality. While acknowledging the potential concerns about diluting this principle, it argues that the provision serves a crucial role in facilitating efficient insolvency resolution in India.