The Supreme Court of India has dismissed a Special Leave Petition challenging a Bombay High Court order which held that criminal liability under Section 138 of the Negotiable Instruments Act, 1881, remains unaffected by the initiation of liquidation proceedings against a company under the Insolvency and Bankruptcy Code (IBC), 2016.
A Bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan declined to interfere with the High Court’s decision to set aside the discharge of the accused directors, noting that the contentions regarding the merits of the case remain open for the trial court.
Background of the Case
The dispute originated when the petitioners, Abhaykumar Anandkumar Bhambore and another, allegedly took a loan of ₹15,00,000 from the respondent, Ortho Relief Hospital and Research Centre. To repay this amount, a post-dated cheque dated December 12, 2018, was issued. The cheque was signed by Petitioner No. 1 in his capacity as a director and authorized signatory of the respondent No. 2 company. Petitioner No. 2 was also a director of the said company.
The cheque was dishonoured on December 14, 2018. Subsequently, on February 18, 2019, the complainant filed a criminal complaint under Section 138 of the Negotiable Instruments Act, which was registered as S.C.C. No. 7281/2019.
Judicial History and Trial Court Discharge
During the pendency of the criminal proceedings, an order of liquidation was passed against the respondent No. 2 company on April 8, 2019. Citing this development, the petitioners filed an application for discharge.
The Trial Court allowed the discharge application on January 31, 2025. The Trial Court’s reasoning was based on the observation that since the petitioners had lost their positions as directors of the company following the liquidation order, they could no longer be held liable for the company’s prior actions.
High Court Intervention
The complainant (Respondent No. 1) challenged the discharge order before the Bombay High Court, Nagpur Bench, in Criminal W.P. No. 251/2025. On October 1, 2025, the High Court quashed the Trial Court’s order.
The High Court observed that “liability under S.138 of the NI Act would subsist despite the initiation of proceedings under the Insolvency and Bankruptcy Code, 2016.” Consequently, the High Court set aside the discharge of the petitioners, leading them to approach the Apex Court.
Supreme Court’s Analysis and Decision
The Supreme Court, after hearing the counsel for both the petitioners and respondents at length, found no merit in the appeal.
The petitioners were represented by Mr. Nitin Bhardwaj, AOR. The respondents were represented by a legal team including Mr. Saahiil Dewani, Adv., Mr. Shakul R. Ghatole, Adv., Mr. Shyam Dewani, Adv., Mr. Vatsalya Vigya, AOR, Mr. Sachet Makhija, Adv., and Mr. Dashang Doshi, Adv.
The Court stated:
“We do not find any reason to interfere with the impugned order. Special Leave Petition is hence, dismissed.”
The Court further clarified that its dismissal does not prejudice the rights of the parties to argue their case on merits during the trial.
“It is needless to observe that all other contentions on both sides are left open to be advanced before the trial court.”
With the dismissal of the Special Leave Petition, the petitioners will now have to face trial under the Negotiable Instruments Act.
Case Details
- Case Title: Abhaykumar Anandkumar Bhambore & Anr. vs. Ortho Relief Hospital and Research Centre & Anr.
- Case No.: Special Leave to Appeal (Crl.) No. 19823/2025
- Bench: Justice B.V. Nagarathna, Justice Ujjal Bhuyan
- Date: April 16, 2026
