NCLT Ahmedabad: Freezing Bank Accounts During IBC Moratorium Illegal, Orders IDBI Bank to Lift Liens on Wind World Accounts

April 1, 2026 : The Ahmedabad Bench of the National Company Law Tribunal (NCLT) has held that freezing the bank accounts of a corporate debtor during the subsistence of a moratorium under the Insolvency and Bankruptcy Code, 2016 (IBC) is impermissible in law, as it amounts to enforcement of recovery proceedings barred under Section 14 of the Code.

The ruling came in an application filed by the Resolution Professional (RP) of Wind World (India) Ltd., seeking directions against IDBI Bank Ltd. and the Mining Engineer (Recovery), Mines and Geology Department, Jaisalmer, for alleged violation of the moratorium.

A Division Bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, by order dated April 1, 2026, directed IDBI Bank to immediately remove all liens placed on the accounts of the corporate debtor and restore their full operation.

The Tribunal noted that the Corporate Insolvency Resolution Process (CIRP) against Wind World (India) Ltd. had commenced on February 20, 2018, and a moratorium under Section 14 was in force, prohibiting institution or continuation of proceedings, including execution of any judgment or order against the corporate debtor.

Despite this, the bank had frozen multiple accounts and marked substantial liens, including amounts exceeding ₹1,12 crore, acting on directions issued by the mining authorities. The RP argued that such actions severely disrupted the company’s operations by preventing access to its own funds required for day-to-day functioning, thereby undermining its status as a going concern.

The Tribunal accepted this contention and drew a clear distinction between determination of statutory dues and their enforcement. It held that while statutory authorities are entitled to assess and determine liabilities, any coercive recovery action during the moratorium period is strictly prohibited.

Rejecting the defence of the bank that it was bound to comply with directions of a statutory authority, the Bench observed that placing a lien and freezing bank accounts effectively amounts to execution or enforcement of recovery, which is barred under Section 14(1)(a) of the IBC.

On the jurisdictional objection raised by the Mining Department, relying on Embassy Property Developments Pvt. Ltd. v. State of Karnataka, the Tribunal clarified that it was not examining the legality of the underlying demand. Instead, the limited issue was whether enforcement of such claims during moratorium was permissible. Since the impugned actions directly impacted the CIRP, the Tribunal held that it had jurisdiction under Section 60(5) of the Code.

The Bench emphasised that the moratorium is a critical safeguard intended to preserve the assets of the corporate debtor and ensure continuity of business. Any action restricting access to funds, such as freezing bank accounts, would defeat the objective of the insolvency framework and disrupt the resolution process.

It further observed that allowing individual authorities to earmark or appropriate funds outside the insolvency process would violate the principle of equitable treatment of creditors.

Accordingly, the NCLT held the action of IDBI Bank in freezing the accounts to be unsustainable and directed immediate removal of all liens, enabling the corporate debtor to operate its accounts freely during CIRP.

The Tribunal, however, clarified that it had not adjudicated upon the nature or validity of the dues claimed by the mining department, leaving those issues open to be decided within the insolvency framework in accordance with law.

Case Title: Wind World (India) Ltd. v. IDBI Bank Ltd. & Mining Engineer (Recovery), Mines and Geology Department, Jaisalmer
Case Number: IA No. 1278 of 2023 in C.P.(IB) No. 14/7/(AHM)/2018