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What is Section 14 of the Insolvency and Bankruptcy Code, 2016?
 Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) provides for a
declaration of moratorium by the Adjudicating Authority in regards to a Corporate
Debtor undergoing Corporate Insolvency Resolution Process (CIRP).
 The order of declaration of moratorium would prohibit the following:

1. In any court of law, tribunal, arbitration panel or other authority,
   (a) Institution of suits against the Corporate Debtor
   (b) Continuation of pending suits against the Corporate Debtor
   (c) Proceedings against the Corporate Debtor
   (d) Execution of any judgement, decree or order
2. Transferring, encumbering, alienating or disposing of any assets or any legal right
   or beneficial interest vesting in the asset by the Corporate Debtor.
3. Any action to foreclose, recover or enforce any security interest created by the
   Corporate Debtor in respect of its property.
4. Recovery of any property by an owner or lessor where such property is occupied
   by or in the possession of the corporate debtor.
   What is moratorium and why is it necessary?
    Literally, the word moratorium means temporary suspension of an activity. Under IBC,
   Section 14 provides for moratorium during CIRP whereas Section 33(5) provides for
   moratorium during the process of liquidation of a corporate debtor.
    Moratorium under IBC can be seen as a firewall to protect and safeguard the assets of
   the Corporate Debtor during CIRP and to prevent attachment of such assets by any
   competent court of law during the CIRP of the corporate debtor.
    This firewall protects the assets of the corporate debtor and ensure that the CIRP or
   the process of liquidation are smoothly and successfully completed.
   Are Directors/Officers of the Corporate Debtor also protected under Section 14?
   Case – Ansal Crown Heights Flat Buyers Association vs. M/s Ansal Corwn Infrabuild Pvt. Ltd.
   & Ors. [C.A. No. 4247 of 2023]
   Court – Supreme Court of India
   Key Issue – Whether a judgement can be executed against the directors/officers of a
   corporate debtor undergoing CIRP?

DELHI -NCR- 3FCS-70, Third Floor, Ansal Plaza, Sector-1, Vaishali, Ghaziabad – 201010, U.P Email: – marketing@alacritycorp.com
Website: – ww.alacritycorp.com
Bench – Justice Mr. Abhay S. Oka and Justice Mr. Ujjal Bhuyan
Date of Pronouncement of Order – 17.01.2024
Prayer of the Appellant – To set aside the order issued by the National Consumer Disputes
Redressal Commission (NCDRC) wherein the NCDRC held that a decree cannot be executed
against the directors/officers of the company undergoing CIRP due to the operation of the
moratorium under Section 14 of the IBC.
Facts of the matter –
The appellant filed a complaint with the NCDRC against the respondents and an order was
issued by the NCDRC directing the respondents to complete the project and handover the
possession of the allotted apartments to the members of appellant with the specified time
along with a direction giving an option to the homebuyers to get a refund from the
respondents along with interest and a sum of Rs. 25,000/- as costs.
The appellant filed an execution application for execution of the decree of the NCDRC but the
same was denied by the impugned order wherein the NCDRC held that the decree cannot be
executed against the company due to the operation of the moratorium under Section 14 of
IBC and that in view of the same, it would not be appropriate to proceed in the same
execution against the other respondents (directors/officers of the corporate debtor). Another
observation made by the NCDRC was that the other respondents were not parties in the main
complaint.
The appellants pled that under the provisions of the IBC, there is no prohibition on proceeding
against the directors/officers of the company under Section 14 of the IBC whereas the
respondents contended that under the order sought to be executed, there is no liability
fastened on the respondents other than the company i.e., the directors and the officers of
the company.
The Hon’ble Supreme Court relied on multiple judgements and concluded that
notwithstanding moratorium, the liability, if any, of the directors/officers will continue. The
Court held that only because there is a moratorium under Section 14 of the IBC against the
company, it cannot be said that no proceedings can be initiated against the directors/officers
of the corporate debtor for execution, provided they are otherwise liable to abide by and
comply with the order, which is passed against the company. The Hon’ble Supreme Court also
held that the protection of the moratorium will not be available to the directors/officers of
the company. Based on their observations and conclusions, the court set aside impugned
judgements and orders and remitted the execution application to the NCDRC ordered that the
execution will continue against the directors/officers of the corporate debtor i.e., respondents other
than the company.
To read the complete order, click here.

DELHI -NCR- 3FCS-70, Third Floor, Ansal Plaza, Sector-1, Vaishali, Ghaziabad – 201010, U.P Email: – marketing@alacritycorp.com
Website: – ww.alacritycorp.com
Conclusion
Section 14, when simply read, nowhere mentions that the protection or safeguard of
moratorium is also accorded to the directors or officers of the corporate debtor. In the above
judgement, the Hon’ble Supreme Court of India has demolished the ambiguity in the provision
and expressly held that “The protection of the moratorium will not be available to the
directors/officers of the company”. Thus, it can be concluded that the corporate veil is lifted
once CIRP is initiated against a corporate debtor and a suit or proceedings against the
directors and officers of such a corporate debtor can be instituted or continued and
judgements or decrees can be executed.
DISCLAIMER:     
i)This opinion/clarification note is based on the facts provided to us and the same is
being issued without any knowledge of intent, prejudice, non-disclosure,
misrepresentation, or concealment of facts if any.   
  
ii)We have not done investigation of correctness of facts and the limited opinion
represents our understanding of the provisions of the law on the matter. The
compliance mentioned above is not exhaustive and other compliance may also be
involved depending on case to case basis.  
  
iii)The conclusions reached and views expressed are matters of opinion based on
our understanding of the related laws, rules, notifications, Citations, circulars, etc.  
  
iv)Pranav Kumar & Associates, Company Secretaries, its partners, associates,
employees or staff shall not be held liable for any action/ consequence arising out
of any contrary view(s) taken by any other party or statutory authority