Dena Bank v. C. Shivakumar Reddy
Supreme Court of India(2021) 10 SCC 330Bench: J. L. Nageswara Rao, J. S. Ravindra Bhat, J. Hima Kohli
The Supreme Court held: (1) An IBC resolution plan approved by the NCLT and which extinguishes all pre-CIRP debts and liabilities of the corporate debtor also extinguishes the criminal liability of the company as a corporate entity under Section 138 NI Act for the dishonoured cheques forming part of those extinguished pre-CIRP liabilities. The criminal complaint against the company shall abate upon production of the approved resolution plan. (2) However, the independent personal liability of directors under Section 141 NI Act does NOT abate on account of the IBC resolution plan — the personal criminal liability of natural persons under S.141 is not a "liability of the corporate debtor" that the resolution plan extinguishes. Directors must separately establish any defence to their personal liability. The Court distinguished between civil/financial liability (extinguished by resolution plan) and personal criminal liability of natural persons (not extinguished).