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2025 Supreme(Online)(NCLAT) 22
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Arun Baroka (Member (Technical)) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
ANIL KUMAR (RESOLUTION PROFESSIONAL) – Appellant
Versus
Mukund Choudhary – Respondent
38/ND/2025 COMPANY APPEAL(AT)(INS)
The statutory Moratorium period under Section 101(1) of the IBC is mandatory and cannot be extended beyond 180 days.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 94, 96, 101, and 112 - Appeal against the order of the Adjudicating Authority regarding extension of Personal Insolvency Resolution Process (PIRP) - The court held that the statutory period of Moratorium under Section 101(1) is mandatory and cannot be extended beyond 180 days as prescribed. (Paras 21-25)
(B) Jurisdiction of Adjudicating Authority - The court emphasized that the statutory scheme delineated by Section 101(1) does not allow for extension of the Moratorium period, which is clearly defined. (Paras 21-25)
Facts of the case:
The Resolution Professional filed an appeal challenging the Adjudicating Authority's order that granted a 90-day extension for PIRP but did not extend the Moratorium, which was set to expire on 28.10.2024.
Findings of Court:
The court found that the Moratorium period is statutorily limited to 180 days and cannot be extended, dismissing the appeal.
Issues: The main issue was whether the Moratorium could be extended beyond the statutory limit of 180 days.
Ratio Decidendi: The court ruled that the language of Section 101(1) is clear and unambiguous, establishing that the Moratorium ceases after 180 days, and any extension would contradict the statutory intent.
Result: Appeal dismissed.
Certainly. Based on the provided legal document, here are the key legal points:
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The statutory Moratorium period under Section 101(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), is mandatory and cannot be extended beyond 180 days from the date of admission of the application or until an order is passed on the repayment plan, whichever is earlier (!) (!) .
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The language of Section 101(1) is clear and unambiguous, establishing that the Moratorium ceases after 180 days, and any extension beyond this period would contradict the statutory intent (!) (!) .
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The provisions of the IBC, including Section 101(1), are to be interpreted in a literal and plain manner, emphasizing that mandatory periods prescribed by statute are to be followed unless explicitly stated otherwise (!) (!) (!) .
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The statutory scheme delineates specific start and end points for the Moratorium, and the language used indicates that the period of 180 days is a definitive limit, not subject to extension by the Adjudicating Authority or the Appellate Tribunal (!) (!) .
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The interpretation of the relevant provisions suggests that the period of Moratorium is not merely directory but mandatory, with clear consequences for non-compliance, and cannot be extended beyond the prescribed timeframe (!) (!) .
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The Court emphasizes that when the statute provides a specific period with a clear cessation point, this period must be adhered to, and extension beyond this period is not permissible unless explicitly authorized by the statute (!) .
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The reliance on case law principles underscores that the language of the statute must be given its plain meaning, especially when consequences are explicitly provided, and the legislative intent is to limit the Moratorium to 180 days (!) (!) .
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In this case, the Moratorium, which commenced on 30.04.2024, ended on 28.10.2024, and no legal basis exists for extending it beyond this statutory period. Therefore, the Adjudicating Authority's order to extend the PIRP without extending the Moratorium was not sustainable (!) .
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Consequently, the appeal challenging the order to extend the PIRP but not the Moratorium was dismissed, affirming that the statutory limit of 180 days for the Moratorium period is binding and cannot be extended (!) (!) .
In summary, the legal principles reaffirm that the Moratorium period under Section 101(1) of the IBC is mandatory, with a fixed maximum duration of 180 days, and cannot be legally extended beyond this period by the adjudicating authority or appellate tribunal.
O R D E R
ASHOK BHUSHAN, J.
This Appeal has been filed by the Resolution Professional (RP) of the Corporate Debtor, challenging the Order dated 04.12.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Court –V, Division Bench), disposing of I.A. No. 5719/2024 filed by the RP.
2. Brief facts necessary to be noticed for deciding the Appeal are:
i. On an Application filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 (for short ‘The Code’ or ‘The IBC’) by the Personal Guarantor, Respondent herein, Adjudicating Authority passed an Order on 08.04.2021, declaring Interim Moratorium in terms of Section 96 of the IBC. By the same Order, the Appellant herein was appointed the Resolution Professional.
ii. Appellant filed a Report under Section 99 of the IBC, which Report was considered by the Adjudicating Authority and by Order dated 30.04.2024, Section 94 Application filed by the Personal Guarantor was admitted and Personal Insolvency Resolution Process (PIRP) was initiated as per the Order dated 30.04.2024, fresh Moratorium in terms of Section 101 was to commence which was contemplated to cease to have effect at the end of period of 180 days.
iii. Public announcement was made by RP on 03.05.2024.
iv. Draft Repayment Plan was also submitted by the Personal Guarantor.
v. RP recommended the convening of the Meeting of the Creditors in terms of Section 106(2)(c) of the IBC.
vi. First Meeting of Creditors was rescheduled on 23.10.2024, when the Creditor discussed the Repayment Plan and requested the Personal Guarantor to improve the financial proposal and reduce the timeline.
vii. On 28.10.2024, RP was authorised to file an appropriate Application for extending PIRP by 90 days beyond 180 days.
viii. Appellant thereafter filed an I.A. 5719/2024 seeking extension of the PIRP by 90 days beyond 180 days, which Application came to be rejected by Adjudicating Authority on 04.12.2024, by which Application, the Adjudicating Authority has granted 90 days extension to complete the process, however, no views were expressed on the Moratorium.
ix. Aggrieved by the Order dated 04.12.2024, this Appeal has been filed.
3. We have heard Mr. Milan Singh Negi, Learned Counsel appearing on behalf of the Appellant and Ms. Purti Gupta, Learned Counsel appearing on behalf of the Respondent.
4. Learned Counsel for the Appellant challenging the Order submits that Insolvency Resolution Process without Moratorium shall render the entire exercise of personal Resolution Process as futile. Adjudicating Authority erred in not extending the Moratorium beyond 180 days which 180 days was expiring on 28.10.2024. The extended period of PIRP with effect from 29.10.2024 without Moratorium shall enable the Creditors to take recovery action or execute enforced security interest which shall defeat the entire exercise of PIRP. In the present case, Repayment Plan has already been received within 180 days during the Moratorium provided under Section 101. The period of 180 days as provided in Section 101 is directory and the Adjudicating Authority has jurisdiction to extend the said period. Learned Counsel for the Appellant has placed reliance on the Judgment of this Tribunal in the matter of ‘Vikas Gautamchand Jain’ in Comp. App. (AT) (Ins.) No. 1173/2024, decided on 20.08.2024 to support his submissions. Learned Counsel for the Appellant has also relied on the Judgment of the Hon’ble Supreme Court in the matter of ‘P. Mohanraj & Ors.’ Vs. ‘Shah Brothers Ispat Pvt. Ltd.’ reported in (2021) 6 SCC 258.
5. Learned Counsel Ms. Purti Gupta appearing for the Personal Guarantor also supported the submission of the Appellant and submits that prescription of 180 days under Section 101 is only directory and is not mandatory. In appropriate case Adjudicating Authority has full jurisdiction to extend the period of 180 days. It is submitted that without extension of Moratorium proceeding under Personal Guarantor shall not yield any favourable results.
6. We hav
