The moment the NCLT admits a company into insolvency, it declares a moratorium under Section 14 of the Insolvency and Bankruptcy Code. The idea is simple: while the company's future is being decided, creditors should not be able to grab its assets one by one or drain its value through litigation. The company is given breathing space.
The moratorium is wide. It stops suits and recovery proceedings, execution of decrees, enforcement of security and recovery of property by owners and lessors. But it has limits. It protects the company, not its directors or guarantors. Some supplies cannot be cut off. Some proceedings continue. If you are dealing with a company in insolvency, as a lender, landlord, supplier or litigant, you need to know where the lines are.
हिंदी में सारांश
जब NCLT किसी कंपनी को दिवाला पà¥à¤°à¤•à¥à¤°à¤¿à¤¯à¤¾ में सà¥à¤µà¥€à¤•à¤¾à¤° करता है, तो धारा 14 के तहत मोरेटोरियम लागू होता है। इसके दौरान कंपनी के खिलाफ नठमà¥à¤•à¤¦à¤®à¥‡, डिकà¥à¤°à¥€ का निषà¥à¤ªà¤¾à¤¦à¤¨, संपतà¥à¤¤à¤¿ की वसूली, SARFAESI कारà¥à¤°à¤µà¤¾à¤ˆ और कंपनी के कबà¥à¤œà¤¼à¥‡ वाली संपतà¥à¤¤à¤¿ वापस लेना रà¥à¤• जाता है। लेकिन यह सà¥à¤°à¤•à¥à¤·à¤¾ केवल कंपनी को है — निदेशकों और निजी गारंटरों को नहीं। ज़रूरी सपà¥à¤²à¤¾à¤ˆ à¤à¥€ बंद नहीं की जा सकती। मोरेटोरियम पà¥à¤²à¤¾à¤¨ मंज़ूर होने या परिसमापन आदेश तक चलता है।
Is this your situation?
- You have a pending suit, arbitration or recovery case against a company that has just been admitted into insolvency
- You are a bank that has issued a SARFAESI notice to the company
- You are a landlord and the company is in your premises without paying rent
- You supply electricity, raw materials or services and want to stop supplies
- You filed a cheque bounce case against the company and its directors
- You hold a personal guarantee from the company's promoter
What the moratorium freezes
Suits and proceedings
Starting or continuing suits or proceedings against the company, including execution of any decree or order of a court, tribunal or arbitral panel.
Transfers of assets
The company cannot transfer, encumber, alienate or dispose of its assets or legal rights, except as the resolution professional manages in the ordinary course.
Enforcement of security
Foreclosure, recovery or enforcement of any security interest over the company's property, including action under SARFAESI.
Recovery of property
Recovery by an owner or lessor of property occupied by or in possession of the company.
Termination of licences
Licences, permits and similar grants from government cannot be suspended or terminated on the ground of insolvency, provided current dues are paid.
Arbitration against the company
Money claims in arbitration against the company are frozen; the claimant files a claim in the insolvency instead.
What the moratorium does not cover
Guarantors
Section 14(3)(b) keeps sureties under contracts of guarantee outside the moratorium. Lenders can proceed against personal and corporate guarantors. See personal guarantor insolvency.
Directors personally
Criminal proceedings against directors, and personal claims against them, are not frozen by the company's moratorium.
Notified financial transactions
Certain transactions notified by the government in consultation with financial regulators, such as some market transactions, are excluded.
Proceedings by the company
The company, through the resolution professional, can continue its own suits and claims against others.
Writs and regulatory action
Purely regulatory proceedings that are not about recovering money may continue, though the line can be fine and is often litigated.
After plan approval
Once a plan is approved, the moratorium ends and the plan governs. Claims not in the plan are extinguished.
Cheque bounce cases and the moratorium
Many creditors have pending cases under Section 138 of the Negotiable Instruments Act against the company and its directors. In P. Mohanraj v Shah Brothers Ispat (2021), the Supreme Court held that Section 138 proceedings against the company are covered by the moratorium, because they are essentially about recovering money. Proceedings against the directors and signatories personally can continue.
So if you have a cheque bounce case, the case against the company is paused, but the case against its directors may proceed. After a plan is approved, the company itself may also get protection from liability for past offences under Section 32A, if control has passed to new, unconnected management.
Suppliers and essential services
Essential goods and services
Supply of essential goods or services, such as electricity, water, telecommunication and information technology services (to the extent not a direct input to output), cannot be terminated, suspended or interrupted during the moratorium.
Critical supplies
If the resolution professional considers a supply critical to protect and preserve the company's value and manage operations as a going concern, that supply also cannot be terminated, suspended or interrupted during the moratorium, except if the company fails to pay for supplies during the moratorium.
Payment for continuing supplies
Suppliers who keep supplying during the moratorium are paid for those supplies as insolvency resolution process costs, which rank first in priority.
Old dues
Dues for supplies made before insolvency are claims in the process. They cannot be used as a reason to stop supplies the professional treats as critical.
Landlords and lessors
A lessor cannot recover premises or equipment from the company during the moratorium. This is often the hardest part for landlords. However, rent for the period of the moratorium, if the resolution professional continues to use the premises, is generally treated as an insolvency process cost and paid in priority. Arrears before admission are a claim in the process.
If the premises are not needed, the landlord can ask the resolution professional to hand them back, and in suitable cases can apply to the NCLT. Each case turns on its facts, including whether the lease was validly terminated before admission.
What to do if you are affected
Stop and check
Do not take fresh enforcement steps against the company after admission. Actions in breach of the moratorium can be set aside and may expose you to consequences.
File your claim
Lodge your claim with the resolution professional within the time in the public announcement. See file your claim.
Pursue guarantors where available
Consider action against personal or corporate guarantors, which is not frozen.
Seek clarification from the NCLT
If you are unsure whether a proceeding is covered, or need permission (for example to recover property not in the company's possession), apply to the NCLT.
Watch for the end of the moratorium
The moratorium ends with approval of a plan or a liquidation order. In liquidation, a separate bar on suits against the company applies.
Time and typical cost
Fees are agreed in writing and do not depend on the outcome.
| Task | Usual time | What it involves |
|---|---|---|
| Advice on effect of moratorium | 2 to 5 days | Review of your case or contract |
| Application to NCLT for directions | Weeks to months | Drafting and hearing |
| Claim filing | Within announcement deadline | Form and supporting proof |
Documents to keep ready
Your proceedings
- Pleadings and orders in your suit, arbitration or recovery case
- Notices issued under SARFAESI or the contract
Your contract
- Lease, supply or service agreement
- Invoices for supplies made after admission
Insolvency papers
- Admission order and public announcement
- Correspondence with the resolution professional
A landlord and a moratorium
Here's a made-up example. A Delhi landlord had leased a floor to an IT company that stopped paying rent. Before the landlord could file an eviction suit, the company was admitted into insolvency.
We advised the landlord that eviction was barred during the moratorium. We filed a claim for the pre-admission arrears and wrote to the resolution professional asking whether the premises were needed. The professional continued to use part of the floor for three months, and rent for that period was paid as an insolvency process cost. When the professional vacated, the landlord recovered possession and later received a share of the old arrears under the resolution plan.
Mistakes creditors make during a moratorium
- Continuing enforcement after admission: SARFAESI sales, execution steps or seizures after admission can be set aside, and may expose you to costs.
- Cutting off supplies the professional treats as critical: this can breach the moratorium if you are being paid for current supplies.
- Not filing a claim: the moratorium freezes recovery; the claim is how you get paid. File it within the deadline.
- Forgetting the guarantor: the moratorium does not protect sureties. Pursue the guarantor if that is your best recovery route.
- Assuming all proceedings are frozen: some regulatory and criminal proceedings continue. Take advice before withdrawing or abandoning a case.
- Not tracking when the moratorium ends: on plan approval, old claims not in the plan are extinguished; in liquidation, a separate bar on suits applies.
Moratorium at a glance
| Action against the company | During the moratorium |
|---|---|
| Civil suits and arbitration for money | Frozen |
| Execution of decrees and awards | Frozen |
| SARFAESI and enforcement of security | Frozen |
| Recovery of premises by the landlord | Frozen |
| Termination of essential or critical supplies | Not allowed, if current supplies are paid |
| Cheque bounce case against the company | Frozen (case against directors continues) |
| Action against personal guarantors | Not frozen |
| Company's own suits against others | Continue |
Government licences and permits
An Explanation added to Section 14 protects licences, permits, registrations, quotas and similar grants given by the government or regulators. They cannot be suspended or terminated on the ground of insolvency during the moratorium, provided there is no default in payment of current dues for their use or continuation. The 2026 amendment strengthens this further after plan approval: licences cannot be suspended or terminated for past defaults during their remaining term, if the conditions are met. This protection is often what makes a company attractive to bidders.
Checklist for a party affected by the moratorium
- Get the admission order and note its date; the moratorium runs from then
- List every case, recovery step or enforcement you have against the company
- Inform each court or authority that the moratorium applies
- File your claim with the IRP within the time in the public announcement
- If you supply goods or services, check whether you are a critical supplier
- If you are a landlord, note that recovery of property occupied by the debtor is barred
- Keep records of any supplies made during CIRP, as these may be CIRP costs
- Check whether a guarantor or co-borrower can still be pursued separately
What the moratorium does not stop
Clients are often surprised by what the moratorium does not cover. It protects the corporate debtor, not its directors or guarantors: the Supreme Court in SBI v V. Ramakrishnan (2018) held that action against personal guarantors can continue during the corporate debtor's CIRP. Criminal proceedings against directors, including cheque bounce complaints, may also continue against the individuals, as explained in P. Mohanraj v Shah Brothers Ispat (2021), which held that Section 138 proceedings against the company itself are covered by the moratorium.
Transactions notified by the central government in consultation with a financial regulator are excluded. Essential supplies such as electricity and water cannot be cut off during the moratorium. If you are a director facing parallel proceedings, see rights of suspended directors; if you are a guarantor, see defending a personal guarantor case.
A landlord and a factory lease
Here's a made-up example. A Noida company leased its factory from a private landlord. Rent was unpaid for eight months when the company was admitted into CIRP. The landlord wanted to take back the premises.
Section 14(1)(d) bars recovery of property occupied by the corporate debtor, so the landlord could not evict during CIRP. But rent for the period of CIRP, while the IRP kept using the factory, counted as CIRP costs and had to be paid in priority. We filed the landlord's claim for pre-CIRP arrears with the IRP and separately pressed for CIRP-period rent. The IRP paid current rent from the company's cash, and the landlord's arrears were dealt with in the resolution plan.
Frequently Asked Questions
When does the moratorium start and end?
It starts on the date of the admission order and ends when a resolution plan is approved or a liquidation order is passed.
Can I continue my civil suit against the company?
No. Suits and proceedings against the company are frozen. You file a claim in the insolvency instead.
Does the moratorium protect the promoters?
No. It protects the company. Personal guarantors and directors can still be proceeded against.
Can a bank continue SARFAESI action?
Not against the company's assets during the moratorium.
Can I stop supplying to the company?
Essential supplies and supplies the resolution professional treats as critical cannot be stopped, provided you are paid for supplies during the moratorium.
What happens to my cheque bounce case?
The case against the company is paused; the case against the directors can continue.
Can a landlord take back premises?
Not during the moratorium, but rent for the period the premises are used is generally paid as a process cost.
How are your fees decided?
By the work involved, agreed in writing. They do not depend on the result.
Affected by a Moratorium?
Send us the admission order and details of your claim or proceeding. We will tell you what is frozen, what is not and what to do next.
This page gives general information about the law as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. IBC rules and NCLT procedures change often, so outcomes depend on your own documents, dates and facts.
Need help with Moratorium - What Is Frozen During Insolvency?
Send us the notice, the petition or the order. We will tell you where you stand, which bench hears it and the date the next step is due, in plain words.
