CLL_Art630 - Taxpublishers.in

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The Tax Publishers Non-Applicability of Moratorium to Criminal Proceedings Pragya Bhandari The learned author attempts at discussing the issue via the judgement given under Tayal Cotton (P.) Ltd. v. State of Maharashtra (2019) 53 CLL 326 (Bombay High Court) as to whether moratorium prohibits institution of a proceeding as provided for in section 14 of the Insolvency and Bankruptcy Code, 2006 applies to criminal proceedings or confined to civil proceedings only. 1. Prelude A financial creditor, an operational creditor or a corporate debtor may itself initiate corporate insolvency resolution process by filing application in respect of a corporate debtor who commits a default. After admission of application, the Adjudicating Authority is required under section 14 of theInsolvency and Bankruptcy Code, 2016 to declare a moratorium. The word 'moratorium' though not defined under the provisions of the Code, generally means a temporary prohibition of an activity. In terms of law, moratorium means a legal authorisation to debtors to postpone payment. An Adjudicating Authority would, by an order, declare moratorium that imposes a stay for the actions stipulated under section 14(1) of the Code. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Non-Applicability of Moratorium to Criminal Proceedings

Pragya Bhandari

The learned author attempts at discussing the issue via the judgement given under Tayal Cotton (P.) Ltd. v. State of Maharashtra (2019) 53 CLL 326 (Bombay High Court) as to whether moratorium prohibits institution of a proceeding as provided for in section 14 of the Insolvency and Bankruptcy Code, 2006 applies to criminal proceedings or confined to civil proceedings only.

1. Prelude

A financial creditor, an operational creditor or a corporate debtor may itself initiate corporate insolvency resolution process by filing application in respect of a corporate debtor who commits a default. After admission of application, the Adjudicating Authority is required under section 14 of theInsolvency and Bankruptcy Code, 2016 to declare a moratorium. The word 'moratorium' though not defined under the provisions of the Code, generally means a temporary prohibition of an activity. In terms of law, moratorium means a legal authorisation to debtors to postpone payment. An Adjudicating Authority would, by an order, declare moratorium that imposes a stay for the actions stipulated under section 14(1) of the Code.