Top Stories Moratorium period u/s 101 of IBC cannot be Extended Beyond 180 Days: NCLAT [Read Order] The National Company Law Appellate Tribunal (NCLAT)  New Delhi has held that the  moratorium period under section 101 of the Insolvency Bankruptcy Code (IBC), 2016 cannot be extednded beyond 180 days By Yogitha S. Yogesh – On January 26, 2025 2:55 pm – 3 mins read The National Company Law Appellate Tribunal ( NCLAT ) New Delhi has held that the  moratorium period under section 101 of the Insolvency Bankruptcy Code ( IBC ), 2016 cannot be extednded beyond 180 days. Following the Adjudicating Authority’s admission of an application submitted under section 94 of the code, an interim moratorium was imposed under section 96 of the code.

The Resolution Professional then filed a report under section 99 of the IBC, which the AA reviewed and accepted the section 94 application. Afterwards, the RP was given permission to submit an application to extend the PIRP period by 90 days beyond the initial 180-day period.The appellant then filed I.A. 5719/2024, requesting a 90-day extension of the PIRP beyond the 180-day period. The Adjudicating Authority rejected the application on 04.12.2024, granting a 90-day extension to finish the process, but no opinions were voiced regarding the moratorium.

The Future of Tax and Finance: Upskill with Us The appellant argued that the AA erred by failing to extend the moratorium’s duration, which would have allowed the creditors to exercise their security interest or start recovery proceedings, thus negating the PIRP’s main goal. It was argued that during the 180-day moratorium allowed by section 101 of the code, a repayment plan had already been received in this particular situation. Lastly, it was submitted that the period provided under section 101 is directory and not mandatory therefore the AA has jurisdiction to extend this time period. Reliance was placed on ‘Vikas Gautamchand Jain’ (2024) and the Supreme Court judgment in ‘P. Mohanraj & Ors.’ Vs. ‘Shah Brothers Ispat Pvt. Ltd.’ (2021).

The submissions of the appellant were also supported by the personal guarantor. The Future of Tax and Finance: Upskill with Us The tribunal was asked to decide whether section 101’s moratorium period could be prolonged. Referencing section 101 of the law, the tribunal noted that it stipulates that the moratorium would apply to all debts when an application for insolvency under section 94 is accepted and will end after 180 days. This clause specifies when the moratorium period will begin and end, and the word “shall” has been used accordingly. According to section 101(1) of the code, the moratorium will start as soon as the application under section 94 is accepted and will last for 180 days, or until the Adjudicating Authority issues an order on the repayment plan under section 114 of the code, whichever comes first. It was decided that when the statutory scheme is unambiguous and clear, no interpretive procedure can determine the NCLT’s jurisdiction to extend the moratorium period. When the statute specifies a date for the moratorium to end, neither the Adjudicating Authority nor this Tribunal can extend it against the statutory intent under Section 101(1).

The Future of Tax and Finance: Upskill with Us While section 101 of the code explicitly states that the moratorium will end 180 days after the date of admission of the insolvency application, the tribunal consisting of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member), and Mr. Arun Baroka (Technical Member) held that the judgment in “Vikas Gautamchand Jain” was rendered while interpreting section 54D of the code, which provides no automatic termination of the PPIRP after the expiration of the time period provided under this section. The tribunal concluded that 180 days from commencement of the Moratorium has come to an end on 28.10.2024 and the Moratorium has statutorily come to an end and could not be extended