Statutory moratorium under insolvency law bars recovery proceedings, and a shareholder may challenge a jurisdictional breach by writ.

A shareholder of a corporate debtor can maintain a writ petition under Article 226 to challenge a jurisdictional illegality affecting the company, particularly where a tribunal is alleged to have acted contrary to a statutory moratorium. The moratorium under the Insolvency and Bankruptcy Code bars continuation of recovery proceedings against the corporate debtor or its assets, and Section 238 gives the Code overriding effect. On that basis, DRAT proceedings continued during the moratorium were held impermissible, and the resulting order was treated as without jurisdiction. The impugned DRAT order was set aside and the matter was restored for reconsideration in accordance with law after the moratorium ceased.

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Issues: (i) Whether a shareholder of a corporate debtor could maintain a writ petition under Article 226 challenging a tribunal order said to have been passed in breach of the moratorium under the Insolvency and Bankruptcy Code, 2016. (ii) Whether continuation of the DRAT proceedings during the subsisting moratorium was barred by Section 14 of the Insolvency and Bankruptcy Code, 2016 and, if so, whether the DRAT order was without jurisdiction.

Issue (i): Whether a shareholder of a corporate debtor could maintain a writ petition under Article 226 challenging a tribunal order said to have been passed in breach of the moratorium under the Insolvency and Bankruptcy Code, 2016.

Analysis: A shareholder who remains interested in the company may invoke writ jurisdiction to assail a jurisdictional error affecting the company, especially where the complaint is that a statutory authority or quasi-judicial tribunal acted contrary to a statutory command. The availability of such a challenge is not excluded merely because the corporate debtor is under insolvency resolution, though the Court would ordinarily be circumspect in entertaining such a petition.

Conclusion: The writ petition was maintainable at the instance of the shareholder-petitioner.

Issue (ii): Whether continuation of the DRAT proceedings during the subsisting moratorium was barred by Section 14 of the Insolvency and Bankruptcy Code, 2016 and, if so, whether the DRAT order was without jurisdiction.

Analysis: The moratorium under Section 14, read with the overriding effect of Section 238 and the ancillary embargo reflected in Section 231, prohibited continuation of proceedings for recovery against the corporate debtor or its assets before any forum. Once the moratorium had come into force, the DRAT could not validly proceed with the appeal, and doing so amounted to acting in disregard of a statutory bar.

Conclusion: The DRAT proceedings were barred during the moratorium and the impugned order was without jurisdiction.

Final Conclusion: The impugned DRAT order was set aside and the matter was restored to the DRAT for further consideration in accordance with law, with the bank left free to seek appropriate relief after the moratorium ceased to operate.

Ratio Decidendi: A quasi-judicial order passed in violation of a subsisting statutory moratorium is void for want of jurisdiction, and a shareholder may maintain a writ challenge to such jurisdictional illegality affecting the corporate debtor.

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