Interplay Between Insolvency Moratorium and Criminal Prosecution for Cheque Dishonour: Supreme Court’s Landmark Ruling

By Abhishek Jat, Advocate Case Title and Citation Rakesh Bhanot v. Gurdas Agro (P) Ltd., 2025 SCC OnLine SC 728 Background and Legal Context The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to streamline insolvency resolution and provide a structured mechanism for the revival or liquidation of financially distressed entities and individuals. Central to the IBC is the concept of a moratorium, which temporarily suspends certain legal actions against the debtor to facilitate an orderly resolution process. For companies, Section 14 of the IBC imposes a moratorium upon commencement of the corporate insolvency resolution process, barring legal proceedings against the corporate debtor. For individuals, Section 96 provides for an interim moratorium from the moment an insolvency application is filed under Section 94, typically invoked by personal guarantors. This interim moratorium is designed to halt ongoing or new proceedings in respect of any debt, thereby protecting the debt...