Is the provision of moratorium in Section 14(1)A of Insolvency and Bankruptcy Code, 2016 only applicable to civil suits filed against the corporate debtor?, the Supreme Court has issued a notice in an SLP which raises this issue.
The Special Leave Petition is filed against a Bombay High Court order contending that the High Court erred in its interpretation of Section 14(1)A of Insolvency and Bankruptcy Code, 2016. The bench comprising Justices L. Nageswara Rao, Hemant Gupta and Ajay Rastogi issued notice in this SLP on Thursday.
Section 14(1)A empowers the Adjudicating Authority to declare moratorium for prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.
The Delhi High Court has held that moratorium under Section 14 of the Insolvency and Bankruptcy Code will not bar trial of suit by the corporate debtor and a counter-claim in such suit if issues and facts in both are intertwined. Similarly, a division bench of Madras High Court has also held that the moratorium order passed under Section 14 of the Insolvency and Bankruptcy code would prohibit all the proceedings including the proceedings initiated by the corporate debtor.
Case: MALAYAN BANKING BERHAD vs. USHDEV INTERNATIONAL LTD. & ORS. [Diary No(s).5960/2020]Coram: Justices L. Nageswara Rao, Hemant Gupta and Ajay Rastogi