IBC Penalties after 2026: Sections 64A, 67B and 67C

The 2026 Amendment moved the Code away from prosecution towards civil penalties imposed by the adjudicating authority. Contravening the moratorium or an approved plan, and concealing a dispute in a section 9 application, are no longer offences but attract penalties of up to two crore rupees or more. Serious wrongdoing by officers remains criminal. Questions test which regime applies, who imposes it, and what happens to pending prosecutions.

1. The Law in Brief

Figure 1: Civil penalties under the Code after 2026

• Omitted. Section 74 (contravention of the moratorium or a plan) and section 76 (concealment by an operational creditor) were omitted in 2026; Explanation II to section 235A saves prosecutions pending on commencement and punishments already imposed.
• Civil penalties. Imposed by the adjudicating authority under sections 64A, 65, 67B, 67C and 235A.
• Criminal offences. Remain for concealment, fraud and falsification by officers (sections 68 to 73), false information in applications (sections 75 and 77) and Part III offences; tried by the Special Court on a complaint by the IBBI or the Central Government (section 236)

2. What Is the Penalty for Breaching the Moratorium?

• Issue. The consequences of enforcing security during the moratorium after the 2026 Amendment.
• Law. Section 14(1)(c) bars any action to enforce security during the moratorium. Under section 67B(1) and (2), inserted in 2026, where a creditor contravenes the moratorium, the officer or person who committed, authorised or permitted it is liable to a penalty of not less than one lakh rupees, extendable to two crore rupees. Section 74, which earlier made this an offence, has been omitted.
• Application. The sale on 10 July was enforcement of a security interest during the moratorium, authorised by Mr E.
• Conclusion. The NCLT may direct CD Finance to restore the value of the shares to AB Ltd's estate, and may impose a penalty of between one lakh and two crore rupees on Mr E, and on CD Finance as the person that committed the contravention. No criminal prosecution under section 74 is available.

3. What Is the Penalty for Hiding a Dispute in Section 9?

• Issue. The consequence of concealing a notice of dispute after 2026, and the fate of pending prosecutions under section 76.
• Law. Section 67C, inserted in 2026, makes an operational creditor that conceals a notice of dispute or full and final payment in a section 9 application, and any person who authorised, permitted or acted on the concealment, liable to a penalty of one lakh to two crore rupees. Section 76, which made such concealment an offence, was omitted, but Explanation II to section 235A saves prosecutions pending on the date of commencement. The false affidavit may also attract section 64A for a frivolous or vexatious proceeding.
• Application. FG Ltd and its managing director concealed HJ Ltd's notice of dispute in August 2026. The 2025 prosecution was pending on 26 May 2026.
• Conclusion. HJ Ltd may ask the NCLT to impose a penalty under section 67C on FG Ltd and its managing director, and costs. The pending section 76 prosecution may continue, being saved by Explanation II to section 235A.

Figure 2: Civil penalties and criminal offences

4. What Is the Penalty for Frivolous IBC Filings?

• Issue. The penalties for initiating insolvency proceedings for an improper purpose.
• Law. Section 65 imposes a penalty of one lakh to one crore rupees on a person who initiates a CIRP fraudulently or with malicious intent for a purpose other than resolution or liquidation. Section 64A, inserted in 2026, allows the adjudicating authority to impose a penalty of one lakh to two crore rupees on a person who initiates frivolous or vexatious proceedings. A pre-existing dispute defeats the application (Mobilox, 2017)
• Application. JK Ltd bought a disputed debt to use the Code as a weapon against a competitor, not to resolve insolvency.
• Conclusion. The section 9 application should be rejected for the pre-existing dispute. The NCLT may impose penalties under section 65 for malicious initiation and section 64A for a vexatious proceeding. LM Ltd may also pursue civil remedies for defamation or unfair trade practices outside the Code.

5. How Are Officers Prosecuted for Hiding Assets?

• Issue. Which offences apply, and how a prosecution under the Code is begun.
• Law. Section 68 punishes an officer who, within twelve months before the commencement date, conceals or removes property of the corporate debtor; section 71 punishes falsification of books; and section 70 punishes misconduct in the course of the CIRP, including failure to deliver records. These offences remain criminal after 2026. Under section 236, they are tried by the Special Court, and no court may take cognizance except on a complaint by the IBBI, the Central Government or a person authorised by it.
• Application. Mr P's conduct falls within sections 68, 70 and 71. The creditor's complaint to a magistrate is not by an authorised person.
• Conclusion. The magistrate cannot take cognizance of the creditor's complaint. The resolution professional should report the matter to the IBBI for a complaint before the Special Court, apply to the NCLT under section 19 for directions to hand over records, and pursue recovery of the inventory as a preferential, undervalued or section 66 matter.

6. Frequently Asked Questions

What is the maximum penalty for contravening an approved plan?

Under section 67B(3), up to one crore rupees or 20 per cent of the amount to be distributed under the plan, whichever is higher, with a minimum of one lakh rupees.

Is there a penalty for frivolous proceedings under Part III?

Yes, under section 183A, inserted in 2026, of one lakh to two crore rupees.

What does section 235A cover after 2026?

Any contravention of the Code, rules or regulations for which no penalty is specified: at least one lakh rupees a day, up to three times the loss or unlawful gain, or five crore rupees where these cannot be quantified.

7. Related Topics

• Topic 76: Offences and Penalties after 2026. The full scheme.
• Topic 140: IBC Answer Writing Practice I. Initiation to resolution.
• Topic 141: IBC Answer Writing Practice II. Liquidation, guarantors and appeals.