NCLT Moratorium Under Section 14 IBC: What Happens to Your Pending DRT Case or Recovery Suit

Your recovery suit against a company has been running in a Delhi commercial court for two years. Evidence is nearly over. On the next date, the company’s counsel hands up an order of the National Company Law Tribunal (NCLT) admitting the company into insolvency, and the court adjourns your case without a date.

The same thing happens to banks and NBFCs before the Debts Recovery Tribunal (DRT). An original application that was close to a recovery certificate stops, and so does the Recovery Officer’s attachment of the company’s property.

The reason is the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC). It does not cancel your claim, and it does not protect everyone connected with the company. What you do in the first few weeks after the NCLT order decides whether you recover anything at all.

What the Section 14 Moratorium Covers

When the NCLT admits an application under Section 7, 9 or 10 of the IBC, it declares a moratorium. While it lasts, Section 14(1) prohibits:

• starting or continuing any suit or proceeding against the company, including execution of any judgment, decree or order of a court, tribunal, arbitral tribunal or other authority;
• the company transferring, selling or otherwise disposing of its assets;
• any action to enforce a security interest over the company’s property, including action under the SARFAESI Act;
• recovery of property that the company occupies, by its owner or lessor.

The moratorium starts on the date of admission, which the IBC calls the insolvency commencement date. In a corporate insolvency there is no interim moratorium while the application is pending, so your suit or DRT case can continue until the NCLT actually admits the application.

It lasts until the NCLT approves a resolution plan or passes a liquidation order. Since 26 May 2026, a liquidation order also comes with its own moratorium, discussed below.

What Happens to Your Pending DRT Case

Proceedings against the company stop

An original application before the DRT against the company cannot continue once the moratorium is in force, whatever stage it has reached. DRTs usually adjourn the matter sine die or keep it in abeyance. An order passed against the company in breach of the moratorium can be challenged.

If you already hold a recovery certificate, the Recovery Officer cannot attach or sell the company’s assets. A bank also cannot continue SARFAESI action against the company’s secured property. If a DRT order has already been passed and an appeal is pending, that appeal against the company is caught by the moratorium as well.

Proceedings against guarantors continue

The moratorium protects the company alone. In State Bank of India v. V. Ramakrishnan (2018), the Supreme Court held that Section 14 does not stop proceedings against a personal guarantor. A lender can keep its DRT case going against guarantors and co-borrowers who are not themselves in insolvency.

The 2026 amendment strengthened the lender’s hand here. Before 26 May 2026, a personal guarantor could file for their own insolvency and get an interim moratorium that froze recovery against them. Sections 96(4) and 124(4) now take that interim moratorium away from personal guarantors to a corporate debtor, and the Bombay High Court held in Tata Capital Financial Services Ltd. v. Neel Motors LLP (2026) that the change applies to pending cases too.

The amendment also added an Explanation to Section 14(3)(b). A guarantor who pays the lender cannot turn around and proceed against the company during the moratorium to recover what it paid.

What Happens to Your Pending Recovery Suit

Suits against the company stop

A money recovery suit, a commercial summary suit under Order XXXVII, an arbitration claim and a consumer complaint against the company all stop. So does execution of a decree you already hold. You cannot file a fresh suit against the company either.

The moratorium bars proceedings against the company only. A suit filed by the company against someone else continues.

Directors, promoters and other defendants

In Tejas J. Shah v. Mantri Technology Constellations Pvt. Ltd. (2026), the Supreme Court held that the moratorium operates only against the corporate debtor. Where directors or promoters are separately liable, the case against them continues. In that matter, the consumer complaint against the developer’s promoters went ahead while the developer itself stayed protected.

In IL&FS Financial Services Ltd. v. Serveall Constructions Pvt. Ltd., the Supreme Court allowed a summary suit to continue against the principal borrower even though its corporate guarantor was under a Section 14 moratorium. The protection follows the company in insolvency, not the transaction.

Cheque bounce cases split the same way. In P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. (2021), the Supreme Court held that a Section 138 complaint against the company is covered by the moratorium, but the case against its directors and signatories continues.

Your Next Step: File a Claim With the Resolution Professional

Once the company is admitted, your recovery depends on a claim filed in the insolvency process, not on your suit or DRT case. The interim resolution professional publishes a public announcement (Form A) that sets a last date for claims, ordinarily 14 days from their appointment.

File your claim in the right form:

• Form B for operational creditors, such as suppliers and service providers
• Form C for financial creditors, such as banks and NBFCs
• Form F for other creditors

Attach everything that proves the debt: the decree, DRT order or recovery certificate if you have one, the plaint or original application, the statement of account, invoices and correspondence. Since 26 May 2026, the resolution professional has to verify each claim and, where required, decide its value. A claim backed by a judgment or a full set of documents is much harder to cut down.

Do not treat the deadline casually. A claim filed after the date in the announcement, but up to seven days before the committee of creditors meets to vote on a resolution plan, can still be verified. Anything later needs the NCLT to condone the delay. In April 2026, the NCLT’s Chandigarh bench refused to take a claim filed 1,267 days late, after the committee had already approved the plan, even though the debt appeared in the company’s own books.

Alongside the claim:

1. File a copy of the NCLT order in your suit or DRT case so the record shows why it stopped.
2. Ask the court or DRT to proceed against guarantors, directors or co-defendants who are not covered by the moratorium.
3. Track the NCLT case and the resolution professional’s updates on the IBBI website and the public announcement.

How the Moratorium Ends and What Happens to Your Case

A resolution plan is approved

An approved plan binds every creditor under Section 31. In Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021), the Supreme Court held that claims not included in the plan are extinguished. Your pending suit or DRT case against the company cannot be revived for the old debt. You receive only what the plan pays, which is why the claim filing matters more than the suit.

Guarantors are not released. In Lalit Kumar Jain v. Union of India (2021), the Supreme Court held that approval of a plan does not discharge a personal guarantor, so a DRT case or suit against guarantors can still go on for the unpaid balance.

The company goes into liquidation

Since 26 May 2026, the NCLT declares a moratorium when it passes a liquidation order. It applies the bar on suits and on enforcement of security under Section 14(1) to the liquidation as well. Claims go to the liquidator.

A secured creditor must tell the liquidator about its security interest and identify the secured asset within 14 days of the liquidation commencement date. Miss that and the security is deemed relinquished to the liquidation estate.

The insolvency is withdrawn or set aside

If the application is withdrawn or the NCLAT sets aside the admission order, the moratorium ends and your suit or DRT case revives. Under Section 60(6) of the IBC, the time the moratorium was in force is excluded when computing limitation for a suit or application against the company, so a claim close to its limitation deadline is protected.

Note that withdrawal after admission is now limited. Since 26 May 2026, Section 12A bars withdrawal before the committee of creditors is formed and after resolution plans are invited.

Talk to a Debt Recovery Lawyer in Delhi

Raizada Law Associates acts for banks, NBFCs and businesses in debt recovery before the DRT and civil courts in Delhi, and in insolvency proceedings before the NCLT. If a company you are suing has gone into insolvency, we file and defend your claim with the resolution professional and keep your case alive against guarantors and other parties the moratorium does not cover.