From Moratorium To Immunity: A Doctrinal Study Of Sections 14 And 32a IBC And Their Applicability To Quasi-Criminal Proceedings Under Special Penal Statutes
Milan Tyagi, O.P. Jindal Global University
ABSTRACT
The Insolvency and Bankruptcy Code, 2016 (IBC) aims to revive financially distressed companies and maximise the value of their assets rather than merely recover debts. During the Corporate Insolvency Resolution Process (CIRP), Section 14 imposes a moratorium which pauses civil suits and all the proceedings of recovery nature against the corporate debtor. Albeit, the Supreme Court has clarified that certain proceedings under special statutes such as the Negotiable Instruments Act, 1881 and the Prevention of Money Laundering Act, 2002 are quasi-criminal in nature and therefore may continue even during the moratorium period. This creates an uncertainty as to how we interpret Section 32A of the IBC, which provides that once a resolution plan is approved, the corporate debtor gets immunity from past offences and is given a “clean slate”. This research addresses a simple but important question: if quasi-criminal proceedings are not halted during CIRP, whether these proceedings are terminated or not after the resolution plan has been approved under section 32A of the IBC? Using case laws and scholarly theories, this study explains that the law prioritises revival of the company and confidence of new investors.
Keywords: Insolvency and Bankruptcy Code, Moratorium, Clean Slate Doctrine, Quasi-Criminal Proceedings, Corporate Debtor Liability, Resolution Plan, Penal Statutes.
