Strict Interpretation of Section 101 of the IBC: NCLAT Says No Scope for Extending Moratorium Beyond 180 Days

Introduction

In its recent decision in Anil Kumar v. Mukund Choudhary[i], the Hon’ble National Company Law Appellate Tribunal, Principal Bench, New Delhi (‘NCLAT’), addressed a crucial issue concerning the Personal Insolvency Resolution Process (‘PIRP’) under the Insolvency and Bankruptcy Code, 2016 (‘IBC’). The case arose from an appeal filed by the Resolution Professional (‘RP’), challenging the order of the National Company Law Tribunal (‘NCLT’). The NCLAT scrutinised the applicability and extension of the statutory moratorium under s. 101 of the IBC in the context of the PIRP, raising important questions about judicial discretion, statutory interpretation, and the broader policy objectives of the IBC.

The crux of the dispute centred on whether the NCLT has the jurisdiction to extend the statutory moratorium beyond the 180-day limit, particularly when the insolvency resolution process is still ongoing.

Brief Facts

• The case originated from an application filed under s. 94(1) of the IBC by Mr. Mukund Choudhary, the Personal Guarantor (‘PG’) and Respondent in this appeal. The NCLT passed an order on 08.04.2021, imposing an interim moratorium under s. 96 of the IBC and, subsequently, appointed the RP.
• On 30.04.2024, the RP submitted a report under s. 99 of the IBC, which was considered by the NCLT. The application under s. 94 was admitted on the same day and a fresh moratorium under s. 101 of the IBC was imposed for 180 days, set to expire on 28.10.2024.
• The RP made a public announcement on 03.05.2024, inviting creditors’ claims. The PG, in consultation with the RP, formulated a draft repayment plan to restructure the outstanding debts, and the RP recommended convening a meeting of the Committee of Creditors (‘CoC’) under s. 106(2)(c) of the IBC.
• The first CoC meeting was held on 23.10.2024, where the repayment plan was discussed. The CoC requested the PG to improve the financial proposal and shorten the repayment timeline. Thereafter, the CoC authorised the RP to file an application seeking an extension of the PIRP beyond the 180-day period by an additional 90 days.
• The RP filed an application before the NCLT, seeking a 90-day extension of the PIRP beyond the statutory 180-day period. By order dated 04.12.2024, the NCLT?granted the 90-day extension for completing the PIRP but did not extend the moratorium. Aggrieved by this order, the RP filed the present appeal before the NCLAT, contending that extending the PIRP without a corresponding extension of the moratorium would render the process ineffective, as creditors could initiate recovery actions or enforce security interests during this period.

Held

• The NCLAT dismissed the appeal filed by the RP and held that the moratorium period under s. 101(1) of the IBC is mandatory and cannot be extended beyond 180 days. The Tribunal observed that where a statute prescribes clear consequences, it must be interpreted as mandatory, and that s. 101(1) unambiguously states that the moratorium ends at 180 days or upon an order under s. 114 of the IBC.
• However, the NCLAT, after examining the legislative framework under s. 101(1) of the IBC reiterated that the statutory language is clear and does not permit any judicial discretion to extend the moratorium beyond 180 days. It emphasised that s. 101 of the IBC explicitly provides that the moratorium ‘shall cease to have effect’ at the end of 180 days or on the date the NCLT passes an order on the repayment plan, whichever is earlier. The Tribunal cited its ruling in Babu Ram Upadhyay[ii] to reiterate that statutory provisions must be interpreted according to its legislative intent.
• The Tribunal further clarified that there is no scope for interpretative discretion when the statute provides a clear date of cessation for the moratorium. The NCLAT relied on its decisions in Newtech Promoters & Developers[iii] and A. Balakrishnan[iv] to emphasize that courts should not infer unstated provisions and cannot add or subtract words from a statute. It further cited its judgment in Rajsekhar Gogoi[v], wherein it was held that a provision containing express consequences for non-compliance must be treated as mandatory and not discretionary.

Our Analysis

Through this decision, the NCLAT has reinforced a significant principle: the statutory moratorium period is absolute and cannot be extended beyond the prescribed 180 days. It emphasises that the IBC’s legislative intent is clear in providing a fixed moratorium period for personal guarantors, which contrasts with the more flexible approach applicable to the corporate insolvency resolution process (CIRP).

This ruling reinforces the strict time-bound nature of PIRP under the IBC, ensuring predictability and certainty in the process while maintaining a balance between debtor protection and creditor rights.

The NCLAT also clarified that Courts and Tribunals must strictly adhere to the statutory framework unless explicitly empowered by legislative amendments. This serves as a clear reminder for adjudicating authorities to rely on the literal interpretation of the law, except in cases where the facts and circumstances warrant a different approach – which was not applicable in this case. By maintaining judicial restraint, the Tribunal upheld the doctrine of separation of powers, ensuring that legislative provisions are implemented as intended by the Parliament.

End Notes

[i] Company Appeal (AT) (Insolvency) No. 38 of 2025.

[ii] State of Uttar Pradesh v. Babu Ram Upadhyay, AIR 1961 SC 751.

[iii] Newtech Promoters & Developers (P) Ltd. v. State of Uttar Pradesh, (2021) 18 SCC 1.

[iv]?Kotak Mahindra Bank Ltd. v. A. Balakrishnan, (2022) 9 SCC 186.

[v] Rajsekhar Gogoi v. State of Assam, (2001) 6 SCC 46.

Authored by Siddharth Jha , Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.