April 1, 2026 : The Ahmedabad Bench of the National Company Law Tribunal (NCLT) has held that statutory authorities cannot enforce recovery of dues against a corporate debtor during the subsistence of a moratorium under the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal directed IDBI Bank to remove all liens and defreeze the bank accounts of Wind World (India) Ltd., observing that such actions violate Section 14 of the Code.
The ruling was delivered by a Division Bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma in an application filed by the Resolution Professional under Sections 60(5) and 14 of the IBC.
Background
Wind World (India) Ltd. was admitted into the Corporate Insolvency Resolution Process (CIRP) on February 20, 2018, and a moratorium was imposed. Despite this, the Mining Engineer (Recovery), Mines and Geology Department, Jaisalmer, issued directions to banks to freeze the company’s accounts and mark liens for recovery of alleged dues.
Acting on these directions, IDBI Bank imposed multiple liens across several accounts, including a lien of ₹25.75 crore pursuant to the Mining Department’s communication. The Resolution Professional argued that such actions prevented access to funds necessary for running the company as a going concern and amounted to execution of recovery proceedings barred under Section 14(1)(a) of the IBC.
Tribunal’s Findings
Rejecting the Mining Department’s objection on maintainability based on Embassy Property Developments Pvt. Ltd. v. State of Karnataka, the Tribunal clarified that the issue before it was not the validity of the statutory demand but the legality of enforcement during the moratorium.
The Bench held that:
- Directing banks to freeze accounts and create liens constitutes “execution of a judgment, decree or order,” which is expressly prohibited during the moratorium.
- Such actions interfere with the Resolution Professional’s control over the corporate debtor’s assets and disrupt the CIRP.
- Section 238 of the IBC gives overriding effect to the Code over conflicting laws, thereby restraining statutory authorities from enforcing recovery outside the IBC framework during moratorium.
The Tribunal further noted that freezing of accounts had severely impacted the day-to-day operations of the corporate debtor, undermining the objective of preserving it as a going concern.
Directions Issued
Allowing the application, the NCLT:
- Directed IDBI Bank to immediately remove all liens and defreeze the corporate debtor’s bank accounts;
- Quashed the recovery actions taken pursuant to the Mining Department’s directions;
- Restrained the respondents from initiating or continuing coercive recovery measures during the moratorium period.
At the same time, the Tribunal clarified that the Mining Department is entitled to submit its claim before the Resolution Professional in accordance with the IBC. It declined to adjudicate on the Department’s claim of secured creditor status, holding that such issues fall outside the scope of the present proceedings.
Key Takeaway
The ruling reinforces the primacy of the IBC framework during the moratorium period and reiterates that all creditors, including statutory authorities, must channel their claims through the resolution process rather than pursue parallel recovery actions.
Cause Title: Wind World (India) Ltd. v. IDBI Bank Ltd. & Anr.
Case No.: IA No. 1278 of 2023 in CP (IB) No. 14 of 2018
Coram: Shammi Khan (Judicial Member); Sanjeev Sharma (Technical Member)
