GROUP NO.

2
MEMBERS
ANUJA KULKARNI L15011
DIKSHA MORE L15017
MAITHILI BHOSALE L15004
SANJANA MISHRA L15015
PRAGATI ZORE L15040
ADITYA GAIKWAD L 2041704
MORATORIUM & IT’S DECLARATION
Who can initiate CIR process?
A. Financial Creditor (FC)
B. Operational Creditor (OC)
C. Corporate debtor itself (CD)

When Can an application be filed?

A. Occurance of default
B. OC to deliver 10 days 10 days demand notice to CD

Who cannot apply?

A. A CD who is already undergoing CIR
B. A CD who has completed CIR 12 months preceding the date of making of the
application.
C. A CD or a FC who has violated any of the terms of a resolution plan which was
approved 12 months before the date of making an application
D. A CD in respect of whom a liquidation order has been made.
Initiation of CIRP by Financial Creditor (Section 7)

FC by himself or by jointly with other FC may file an application to

Adjudicating Authority on the occurrence of default.

FC will make application with such form and manner with such fee
as may be prescribed

FC shall Furnish Record of default, name of RP to act as IRP, and

other other information as specified

Adjudicating Authority within 14 days of the receipt of application

will ascertain the existence of default
 Adjudicating Authority if satisfied with the default and if the
application is complete shall admit such application, but if it is not
satisfied with the default and if the application is incomplete will
reject such application however chance of rectification will be given
within 7 days of receipt of such notice.

CIRP shall commence from the date of admission of the application.

Adjudicating Authority shall communicate regarding occurrence of

default to FC and CD and regarding non occurrence of default to FC
within 7 days of admission or rejection of such application.
Insolvency resolution by operational
creditor (Section 8)

(a) Serving of demand Notice.

(b) On receipt of demand notice by corporate debtor.
Application for initiation of corporate insolvency resolution
process by operational creditor (Section 9)

(a) Filing of application by operational creditor.

(b) Providing of documents/ information.
(c) An operational creditor propose for an intirim resolution
professional during resolution process.
(d) Order of an adjudicating authority.
(e) Commencement of insolvency resolution process.
 Application by corporate applicant-
section 10
◈ where a corporate debtor has committed a default, a corporate applicant thereof may file an
application for initiating CIRP with Adjudicating Authority.
◈ The RP proposed to be appointed as an IRP.
◈ The Adjudicating Authority shall, within a period of fourteen days of the receipt of the
application, by an oeder-
(a) admit the application, if it is complete; or
(b) reject the application, if it is incomplete:
◈ Provided that adjudicating authority shall, before rejecting an application, give a notice to the
applicant to rectify the defects in his application within seven days from the date of receipt
of such notice
◈ The CIRP shall commence from the date of admission of application
 SECTION.13: Declaration Of
Moratorium & Public Announcement.
◈ Came into effect immediately after the application
made under section 7,9 or 10 of the code.
◈ “INSOLVENCY COMMENCEMENT DATE”.
◈ EX.
• Appointment Of IRP • Public Announcement
 SECTION.14: MORATORIUM
• Moratorium literally mean TEMPORARY
PROHIBITION OF AN ACTIVITY.
i. Declaration of MORATORIUM Period.
Recovering Recovery of any
Legal Cases Dealing with ASSETS property by an
Against the any ASSETS. which were owner where such
CD. property is
given as occupied by
security. debtor.
ii. Business activity shall not be TERMINATED or
SUSPENDED.

iii. Prohibited Acts.

iv. Effect of the order of MORATORIUM.

V. when moratorium period shall cease to have effect

THE ENTIRE PROCESS SHOULD BE COMPLETED WITHIN RESOLUTION
PERIOD(180 DAYS + MAY EXTEND TO 90 DAYS)

1 2 3 4

● order of admission ● interim ● first meeting of ● 75% of coc to

of application by resolution coc. approve the
NCLT professional to ● coc may accept plan and
● declaration of appoint the the IRP submit it to
moratorium committee of appointed by NCLT
● public creditors.(financ NCLT or appoint ● NCLT may
announcement as ial creditors) new RP . accept or
per the order of ● COC+RP to reject the plan
NCLT prepare ● if approved
● appointment of resolution plan. moratorium
interim resolution cease to have
professional effect.
 Section 31: Approval of Resolution Plan
● Approval of Resolution plan by the Adjudicating Authority.

● Rejection of Resolution Plan.

(a)After the Order of Approval:-
▪ Moratorium Order
▪ Forward all records
 Section 32: Appeal
On the grounds mentioned under Sub-sec (3) of Sec 61,
namely:-
Approved Resolution Plan is in contravention of any law.

Material irregularity in exercise of the powers by the Resolutional Professional.

Debts have not been provided for in the plan.

Costs have not been provided for repayment in priority to all other debts.

The plan does not comply with any other criteria.

Case Laws
Moratorium Period
DHAIVAT ANJARIA V.S DIRECTORS OF MINES, STATE OF
ODISHA & OTHERS NCLT Kolkata Bench.
Facts- The Petition has been filed by the Resolution Professional of the Corporate
Debtor, with a prayer to direct the respondents to not withhold the permission to the
Corporate Debtor, to procure/store and transport iron ore and coking coal which are
essentials materials for running the business of the debtor.
The respondent had sent a reply to the Resolution Professional that the procurement of raw
materials by the Corporate Debtor can be allowed on receipt of Consent to Operate (CTO)
issued by the Jharkhand State Pollution Control Board(JSPCB).
The CTO had not expired when the CIRP was initiated and moratorium declared.
The NCLT observed that the question that arises is that whether the respondent can deny
permission which seems to have expired while the moratorium is in force for want of renewal
of CTO by the JSPCB.
The Corporate Debtor had made an application to the JSPCB for issuing CTO, but the
JSPCB has neither rejected nor allowed the application.
The counsel for the Resolution Professional submitted that since the application has neither
been rejected nor allowed, within three months from date of filing the application, the deemed
consent to operate has to be inferred as per the provisions of the Air act and the Water Act.
Order- The NCLT observed that it is legitimate to infer the deemed consent to operate in terms of the
provisions of the Air and Water Act.
It further observed that since the period of the CTO expires after the declaration of moratorium and
before the expiry of moratorium, the status of the CTO as on the date of declaration of moratorium
shall continue up till the completion of the CIRP.
The NCLT referred to the decision of the Supreme Court in Innoventive Industries V. ICICI Bank &
Anr to establish the supremacy of the I&B Code, 2016 over any other legislation.
Further it observed that the application deserves consideration in light of section 20(1) of the I&B
Code, 2016 wherein the resolution professional is made duty bound to make every endeavor to
maintain the Corporate debtor as a going concern.
Finally, the NCLT concluded that withdrawal of permission for want of CTO while the moratorium is in
force as illegal and as inoperative and found it to be in violation of section 14 of the I&B Code, 2016
and issued directions to the respondents to maintain status quo as at the start of CIRP and to issue
necessary permission.
(2018) 16 SCC 94
Section 14- Commencement of moratorium after admission of petition
under code-Effect of-
Held- Once moratorium comes into effect, Sec. 14(1)(a) expressly stops
institution or continuation of pending proceedings against corporate
debtors.
State Bank of India v. V.Ramakrishnan & Anr.
3595 / 2018 SC
Facts- I. Proceeding before the NCLT, Chennai Bench:
Initially, the Managing Director and Promoter of M/S Veesons Energy
Systems Private Limited (Corporate debtor) had filed an application before
the NCLT, Chennai Bench. The Applicant had given his personal property
against the loans secured by the Corporate Debtor company. The
guarantor contends that under the order of initiation of CIRP and
declaration of moratorium passed by the same bench on 04.08.2017, the
first meeting of Committee of Creditors was held. Appointment of
Resolution professional was also done. After the public announcement,
State of Bank of India filed a claim before the IRP and involved itself in the
process. Being a part of CIRP, as financial creditor, State Bank of India
issued auction notice under SARFAESI Act in order to sell the property of
personal guarantor of debtor.
Held- • The Court observed that Section 14 did not make any reference
to personal guarantors and it was only the corporate debtor, which was
referred to therein. A plain reading of Section 14 would lead to the
conclusion that the period of moratorium would have no application to
the personal guarantors of a corporate debtor.
Vinod Kumar v. Noesis Industries Limited 201 / 2018
NCLT New Delhi Bench
Vinod Kumar (Operational Creditor) filed an application u/s 9 of the I&B Code, 2016 for
initiation of CIRP against Noesis Industries Limited (Corporate Debtor). The Creditor was
an Advocate and provided continuous professional services to various companies in the
Company Secretariat Department for a period of 20 years and thereafter, he provided
consulting services to the companies for their company law compliances. Subsequently,
the Creditor provided consulting services to the Debtor for the matters pending before
the Debt Recovery Tribunal and had entered into a Retainership Agreement. Thereby,
various invoices were raised for such services provided and the Creditor issued a notice
to the Debtor to clear all its outstanding dues. The Debtor had assured payment but
later, failed to do the same. Subsequently, the Creditor issued a final notice to the
Debtor but it was unanswered. Therefore, the Creditor was constrained to stop the
services and the same was informed to the Debtor. Subsequently, the Creditor issued a
demand notice u/s 8 of the I&B Code, 2016 which was also unanswered. Hence, an
application for initiation of CIRP against the Debtor was filed by the Creditor. Further, an
affidavit stating that the Creditor had not received any payment with respect to the
amount claimed u/s 9(3)(b) of the I&B Code, 2016 and a supporting affidavit with the
copy of bank account of ICICI Bank was filed. The Debtor stated that the company was
not in business for the past few years and it was unable to clear the outstanding debt.
Held- The NCLT observed that the debt was not barred by limitation and the
Creditor was entitled to its claim as it remained uncontroverted by the
Debtor. Therefore, the NCLT had admitted the application as the default
was proved beyond doubt and ordered for the initiation CIRP against the
Debtor. Further, the NCLT imposed moratorium on the Debtor, according to
Section 14(1) of the I&B Code 2016.
Jaya Patel v. Gas Jeans Ltd, NCLAT Mumbai
308/2018
A two-member Bench of Justice S.J. Mukhopadhyay(Chairperson) and Justice Bansi Lal
Bhat(Judicial Member) allowed an appeal filed against an order on NCLT. The
respondent preferred an application under Ss. 433 and 434 of the Companies Act, 1956
before the Bombay High Court for Winding up the Coporate Debtor pertaining to a debt of
Rs. 21,63,359. The case was transferred pursuant to R.5 of the Companies(Transfer of
Pending Proceedings) Rules,2016 before NCLT Mumbai. The respondent therein filed
Form 5 to treat the same as an application under Sec.9 of the IBC,2016 for initiation of
Corporate Insolvency Resolution Process against the Corporate Debtor.
By Order impugned, NCLT admitted the application, passed an order of moratorium and
appointed Interim Resolution Professional. The appellant Director of the Corporate
Debtor, challenged the order on the ground that notice under Sec. 8(1) of the I&B code
was issued on the same date when Form 5 was filed. The Appellate Tribunal perused
Sec.9 of I&B Code and observed that an application under the said section preferred
before the completion of 10 days from the giving of notice U/Sec. 8(1) cannot be
entertained and admitted by the Adjudicating Authority. Holding the Application u/Sec. 9
as not maintainable on the date on which it was filed, the High Court set aside the Order
impugned. Resultantly, the order passed by NCLT appointing IRP, declaring Moratorium,
freezing of Account etc. were declared illegal. Accordingly the Appeal was Allowed.