Does Moratorium Apply To Action For Bounced Cheque?

Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC), means a period when no judicial proceedings for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can be instituted or continued against the corporate debtor. Once a petition under the IBC is admitted against the corporate debtor, the moratorium kicks in on the insolvency commencement date and remains in force during the corporate insolvency resolution process (CIRP) period. An interesting question is whether the moratorium applies to the proceedings under section 138 of the Negotiable Instruments Act, 1881 (NI Act).

As per the IBC, a petition for insolvency against a corporate debtor can be triggered by a financial creditor, an operational creditor or by the corporate debtor itself in cases where the default amount is more than ₹100,000 (US$1,500).