The Effect Of Moratorium On Parallel Criminal Proceedings

I. Introduction

While the term moratorium has not been defined under the Insolvency and Bankruptcy Code, 2016 ("IBC"), it implies a period wherein no judicial proceedings for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can be initiated or proceeded against the corporate debtor.

The extent and applicability of moratorium has caused severe confusion amongst creditors regarding the admissibility of such proceedings against corporate debtors, especially in quasi-criminal proceedings such as cheque bounce cases. The permissibility of such proceedings during moratorium allows creditors to have two bites at the cherry to recover their dues (i.e., in the insolvency proceedings as well as by initiating cheque bounce proceedings).