Moratorium under the Insolvency and Bankruptcy Code, 2016 – Scope and Recent Developments

Arushi Gupta
DES Law College, Pune University, India

Volume II – Issue I, 2020

The Insolvency and Bankruptcy Code, 2016 recognizes the complexity of insolvency proceedings and thus, ensures that the rights of corporate debtors are protected by providing a period of moratorium. The period of moratorium prohibits the institution or continuation of any suits or proceedings which keeps the assets of the debtor together during the insolvency period. At the same time, it ensures the rights of certain entities like licensee and other similar grantee are secured.

The purpose of the period of moratorium is to prevent the complexity of multiple proceedings and keep the insolvency procedure as simple as possible. The moratorium period starts at the when the insolvency resolution process begins and ends at the conclusion of such proceeding. This not only to protect the assets of a corporate debtor, but at the same time prohibit them to dispose off the assets is an unauthorized manner.

The period of moratorium is to prohibit the institution or continuation of proceedings against the corporate debtor. However, this is only limited to the proceedings which are of the nature of recovery of debt. This ensures that certain suits or proceedings like writ proceedings in High Courts and the Supreme Court, criminal proceeding under Section 138 of the Negotiable Instruments Act and proceedings under Section 34 of the Arbitration and Conciliation Act remain intact. Moreover, recent amendments in the statute recognizes the importance of certain services like the supply of essential goods and services and protects such rights.


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