INSOLVENCY AND BANKRUPTCY CODE, 2016 — Section 14 — Moratorium — Scope — Adjustment of dues Para 3, 4, 20, 25 Moratorium under Section 14 — Effect — Adjustment/appropriation of amounts after insolvency commencement date — Impermissible insofar as pre-CIRP dues — Any recovery or adjustment of pre-CIRP dues after commencement violates moratorium — Only post-CIRP dues permissible for adjustment.

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INSOLVENCY AND BANKRUPTCY CODE, 2016 — Section 14 — Moratorium — Scope — Adjustment of dues

Para 3, 4, 20, 25
Moratorium under Section 14 — Effect — Adjustment/appropriation of amounts after insolvency commencement date — Impermissible insofar as pre-CIRP dues — Any recovery or adjustment of pre-CIRP dues after commencement violates moratorium — Only post-CIRP dues permissible for adjustment.

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SET-OFF — Applicability under IBC — CIRP stage

Para 15, 16, 17, 24
Set-off — Not generally permissible during CIRP — Insolvency set-off not recognised under IBC — Only limited contractual set-off permissible prior to commencement of CIRP — Post-CIRP adjustment of pre-CIRP dues barred — Set-off contrary to pari passu principle.

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SECURITY DEPOSIT — Nature — Whether security interest

Para 4, 22
Security deposit made in lieu of Letter of Credit — Remains property of Corporate Debtor till valid appropriation — Not equivalent to bank guarantee or independent security contract — Cannot be treated as secured interest permitting enforcement during moratorium.

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OPERATIONAL CREDITOR — Rights during CIRP

Para 3, 22, 24
Operational creditor — Entitled to submit claim before Resolution Professional — Cannot unilaterally recover dues outside CIRP framework — Recovery must follow statutory mechanism under IBC.

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MORATORIUM — Effect on contractual rights

Para 20, 22
Even contractual rights (including security enforcement) stand restricted post commencement of CIRP — Moratorium overrides contractual stipulations — No enforcement or appropriation of pre-CIRP dues permissible.

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IBC — Scheme — Priority and pari passu principle

Para 24
IBC envisages collective resolution and equitable distribution — Allowing set-off or unilateral adjustment would defeat pari passu principle and statutory scheme.

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RESOLUTION PLAN — Finality — Binding nature

Para 23, 24
Resolution plan approved and implemented — Claims stand crystallised — Assets (including deposits) form part of insolvency estate — Cannot be altered subsequently by unilateral action of creditor.

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RESULT

Para 26
Appeals dismissed — Orders of NCLT and NCLAT affirmed — Adjustment of pre-CIRP dues held illegal — Direction for re-adjustment in accordance with IBC upheld.