Supreme Court Clarifies IBC Moratorium Scope in Corporate Insolvency Cases

The Supreme Court has clarified that the statutory moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 applies exclusively to the corporate debtor and cannot extend to promoters, directors, landowners or other respondents unless explicitly provided by law.

A Division Bench of Justices Vikram Nath and Sandeep Mehta noted that the protective scope of the moratorium must remain confined within the IBC framework and cannot be enlarged to restrict remedies available under the Consumer Protection Act, 2019.

The Court set aside an order by the National Consumer Disputes Redressal Commission that had declined to proceed against non-corporate debtor respondents, directing it to adjudicate consumer complaints against those parties in accordance with law.