Moratorium under IBC does not invalidate the creditor’s claim

The Supreme Court clarified that a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, prohibits legal proceedings, asset transfers, or enforcement actions against a corporate debtor. However, claims by creditors remain valid.

The court rejected the arguments that claims under documents like deeds of hypothecation are extinguished, highlighting that liabilities persist and creditors can file claims during the CIRP process.

This ensures that secured obligations, such as promissory notes or negotiable instruments, are enforceable post-moratorium, even though recovery actions are temporarily barred.