Section 14 IBC Moratorium: What It Bars, Solved Cases

The moratorium is the most frequently tested consequence of admission. A good answer identifies which clause of section 14(1) applies, checks whether the action is against the corporate debtor or by it, and fixes the timing: before admission, during the CIRP, or after a plan or liquidation order. The four questions below cover security enforcement, lessors, statutory authorities and timing.

1. The Law in Brief

Figure 1: The four prohibitions in section 14(1)

• Declaration. The NCLT must declare the moratorium in its order of admission; it runs from the insolvency commencement date until approval of a resolution plan or a liquidation order (section 14(4))
• Exclusions. Notified financial transactions (section 14(3)(a)) and sureties (section 14(3)(b)); essential and critical supplies continue (sections 14(2) and (2A); Topic 107)
• Liquidation, 2026. After a liquidation order, a narrower moratorium applies, and suits against the corporate debtor need the NCLT's leave (section 33(6); Topic 53)

2. Can a SARFAESI Auction Continue after CIRP Admission?

• Issue. Whether a secured creditor may complete a SARFAESI sale after the moratorium begins, where possession was taken before admission.
• Law. Section 14(1)(c) prohibits any action to foreclose, recover or enforce any security interest created by the corporate debtor, including any action under the SARFAESI Act. Section 14(1)(b) also bars transfer of the debtor's assets. The moratorium applies from the commencement date regardless of when enforcement began.
• Application. On 1 July 2026, title to the factory remained with CD Ltd; the bank had only taken possession. The auction is a further act of enforcement after the commencement date.
• Conclusion. The auction cannot proceed and the factory must be handed to the interim resolution professional. AB Bank files its claim as a secured financial creditor and votes in the committee; its security is respected in any plan or in liquidation under section 52 (Topic 56)

3. Can a Landlord Recover Premises during the Moratorium?

• Issue. Whether an owner or lessor can recover property in the corporate debtor's possession during the moratorium.
• Law. Section 14(1)(d) bars the recovery of any property by an owner or lessor where it is occupied by or in the possession of the corporate debtor. In Rajendra K. Bhutta v MHADA (2020), the Supreme Court held that land handed over under a joint development agreement and in the debtor's possession could not be recovered during the moratorium, since clause (d) turns on possession, not title.
• Application. Both the office premises and the land are in EF Ltd's possession. The eviction suit is also a proceeding against the debtor under clause (a)
• Conclusion. Neither the landlord nor the authority can recover possession during the moratorium. The landlord's unpaid pre-admission rent is a claim in the CIRP, while rent for the period of use during the process is generally paid as part of the insolvency resolution process costs. Both may pursue their remedies once the moratorium ends, subject to the plan.

Figure 2: What the moratorium does not bar

4. Can Customs Sell the Debtor's Goods during CIRP?

• Issue. Whether a statutory authority may sell the debtor's goods to recover dues during the moratorium, and whether the debtor's own appeal is stayed.
• Law. In Sundaresh Bhatt v Central Board of Indirect Taxes and Customs (2022), the Supreme Court held that customs authorities cannot sell a corporate debtor's goods during the moratorium; they may assess the duty and file a claim in the process. The moratorium protects the corporate debtor and bars proceedings against it, not proceedings by it, and section 60(6) excludes the moratorium period from limitation for suits and applications by or against the debtor.
• Application. The auction would be recovery of a claim against GH Ltd's assets. The High Court appeal is a proceeding by GH Ltd seeking to increase its estate.
• Conclusion. The customs authority must file a claim with the resolution professional and cannot auction the goods. GH Ltd's appeal may continue, represented by the resolution professional.

5. Does the Moratorium Apply before Admission or after the Plan?

• Issue. Whether the moratorium operates between filing and admission, and whether claims can be pursued after the moratorium ends on approval of a plan.
• Law. The moratorium begins on the insolvency commencement date, the date of admission (sections 5(12) and 14(1)); there is no interim moratorium for corporate debtors. It ends on approval of the plan (section 14(4)). However, under section 31 and Ghanashyam Mishra (2021), the approved plan binds all stakeholders and extinguishes claims not provided for in it.
• Application. The April attachment was made before the commencement date and was not then barred, though from 1 June the lender could not enforce it further, and the attached funds form part of LM Ltd's assets for the process. The October suit is filed after the moratorium ended, but on a claim that the plan has extinguished.
• Conclusion. The attachment was valid when made but cannot be enforced during the moratorium. The October suit is not barred by section 14, which has ceased, but it must fail because the claim was extinguished by the approved plan.

6. Frequently Asked Questions

Does the moratorium protect the personal guarantor?

No. Section 14(3)(b) excludes sureties, as SBI v V. Ramakrishnan (2018) had held (Topic 104).

Can the debtor sell its assets during the moratorium?

Section 14(1)(b) bars transfers of assets, but sales in the ordinary course of business by the resolution professional to keep the company running are permitted, and certain transactions need the committee's approval under section 28.

Can an arbitration be started against the debtor during the moratorium?

No. It is a proceeding against the debtor under section 14(1)(a) (Topic 105).

7. Related Topics

• Topic 22: Moratorium under Section 14. Scope, exceptions and cases.
• Topic 107: Essential Supplies and Contract Termination. Essential supplies and termination.
• Topic 108: Section 138 Cheque Cases and Suits during IBC Moratorium. Proceedings during the moratorium.