MORATORIUM PERIOD: A CONUNDRUM OF IBC ACT, 2016
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https://doi.org/10.55662/Abstract
IBC is an assimilation of different legislations which has brought a sea change in the economically stressed market. It has facilitated the mechanism and eased out the procedure for going concern without adversely affecting the valuation of its assets. Section 14 read with S. 238 acts as a shield for the bankrupt entities to conclude its insolvency proceeding without any judicial stress.
However, the semantic ambiguity in the application of bar by moratorium has garnered much attention and has become the center piece of conundrum. Addition of section 14 in 2018 has barred institution of any suit or proceeding against the corporate debtor making it completely immune. Section 14 enables the resolution professional to carry out its activity without judicial nemesis.
But a complete bar has affected other stakeholders which has arbitration clause in it. Also section 238 act as a defense mechanism for the corporate debtor to quash any suit against it vis-à-vis criminal proceeding or any act of fraudulent transaction per se.
In this paper, the author(s) will predominantly discuss the effect of the moratorium period, whether it has helped the corporate debtor keeping up the spirit of this act or has impaired different stakeholders per se.
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