• Written by: admin
• October 31, 2026

For a bank or NBFC, the moratorium under Section 14 IBC is the moment recovery stops. Once the NCLT admits a borrower into the corporate insolvency resolution process (CIRP), most enforcement against that company must pause. This guide explains its scope, duration and the 2026 changes.

What Is the Moratorium Under Section 14 IBC?

Section 14 gives the corporate debtor a calm period so the resolution professional can run the CIRP. The NCLT declares the moratorium in its admission order. Creditors must then file claims in the CIRP instead of suing separately.

What the Moratorium Prohibits: A Quick List

Section 14(1) bars four kinds of action against the corporate debtor:

1. Legal proceedings: creditors cannot start or continue suits, recovery cases, arbitrations or execution against the company.
2. Asset transfers: the company cannot transfer, encumber or sell its assets or legal rights.
3. Security enforcement: secured creditors cannot foreclose, recover or enforce security, including under the SARFAESI Act.
4. Recovery of property: owners and lessors cannot take back property that the company occupies.

In addition, suppliers of essential goods and services must keep supplying during the moratorium, but the company must pay current dues.

How Long Does the Moratorium Last? (Timeline)

1. Start: the insolvency commencement date, when the NCLT admits the Section 7, 9 or 10 application.
2. End: it ends when the NCLT approves a resolution plan under Section 31 or passes a liquidation order under Section 33.

Notably, the IBC (Amendment) Act, 2026 now requires the NCLT to admit applications within 14 days where debt and default exist. As a result, lenders may see the moratorium begin sooner than before.

Who the Moratorium Does Not Protect

Section 14(3) expressly excludes guarantors to the corporate debtor. Therefore, banks can still sue personal and corporate guarantors, invoke guarantees, and enforce security that a third party has given.

Moreover, the 2026 Amendment removed the interim moratorium that personal guarantors earlier got when someone filed an insolvency application against them. Consequently, a guarantor can no longer use that filing to stall a bank’s recovery.

Key Changes Under the IBC (Amendment) Act, 2026

The Amendment Act received Presidential assent on 6 April 2026. Reports state that the Ministry of Corporate Affairs brought most provisions into force from 26 May 2026. For the moratorium, the key changes are:

• Liquidation: the bar on enforcing security now extends into liquidation, subject to a secured creditor’s right to realise security under Section 52.
• Decriminalisation: a breach of the moratorium now attracts monetary penalties rather than criminal prosecution.
• Personal guarantors: the interim moratorium for personal guarantors no longer applies.

Key Case Law on the Section 14 Moratorium

SBI v. V. Ramakrishnan (2018): The Supreme Court held that the Section 14 moratorium does not stop creditors from proceeding against personal guarantors.

P. Mohanraj v. Shah Brothers Ispat (2021): The Court held that a Section 138 NI Act cheque case against the corporate debtor falls within the moratorium. However, cases against its directors can continue.

Central Transmission Utility of India v. Sumit Binani (23 March 2026): The Court ruled that, once the moratorium applies, a creditor cannot set off the debtor’s security deposit against pre-CIRP dues. The deposit stays an asset of the corporate debtor.

Tejas J. Shah v. Mantri Technology Constellations (27 July 2026): A Bench of Justices Vikram Nath and Sandeep Mehta confirmed that the moratorium protects only the corporate debtor. Thus, consumer complaints against promoters, directors and landowners can proceed.

What Banks and NBFCs Should Do

First, pause SARFAESI and DRT steps against the company once the NCLT admits the case. Next, file your claim with the resolution professional on time. Meanwhile, pursue guarantors in parallel and report any breach to the NCLT. Our complete guide to NCLT insolvency proceedings in Delhi NCR explains the wider process.

Frequently Asked Questions

What is the moratorium under Section 14 of IBC?

It is a statutory freeze that bars suits, recovery, asset transfers and security enforcement against a corporate debtor once the NCLT admits a CIRP.

When does the IBC moratorium start and end?

It starts on the insolvency commencement date. It ends when the NCLT approves a resolution plan or orders liquidation.

Can a bank take SARFAESI action during the moratorium?

No. Section 14(1)(c) bars enforcing security interest, including under SARFAESI, against the corporate debtor’s assets.

Does the moratorium protect personal guarantors and directors?

No. The Supreme Court has held that it covers only the corporate debtor, so creditors can still pursue guarantors, promoters and directors.

Does the moratorium stop cheque bounce cases?

It stops a Section 138 case against the company, but not against its directors and signatories.

Does the moratorium apply during liquidation?

Yes. After the 2026 Amendment, the liquidation-stage bar also stops security enforcement, subject to secured creditors’ Section 52 rights.

Lex Pleaders advises banks, NBFCs and businesses on IBC moratorium issues, CIRP claims, guarantor recovery and NCLT litigation. Write to us at lexpleadersindia@gmail.com to discuss your matter.

Disclaimer: This article offers general information only and does not constitute legal advice.