Order of stay/moratorium under the Companies Act, 2013 prohibits the initiation of any proceedings; Parties cannot be referred to Arbitration: Delhi High Court

Corporate Laws

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30st December, 2022

The Delhi High Court ruled that the moratorium granted by the NCLAT, staying the institution of suits and proceedings against the Corporate Debtor, after the resolution process was initiated against it under Sections 241 and 242 of the Companies Act, 2013, was akin to an order of moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016.

Delhi High Court: In a case where a petition was filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator for the resolution of disputes between the parties, a Single Judge Bench of V. Kameswar Rao, J. held that the moratorium granted by the NCLAT staying the institution of suits and proceedings after the resolution process was initiated under Sections 241 and 242 of the Companies Act, 2013 was similar to an order of moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC).

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