Moratorium under the Insolvency Code bars interference with corporate debtor possession and blocks termination during resolution process.

During the moratorium under the Insolvency and Bankruptcy Code, any action that disturbs the corporate debtor's possession or occupation of property, or interferes with the resolution process, is barred. An order issued during the corporate insolvency resolution process that affected such possession was therefore not valid or operative in law and had to be set aside. A further attempt to terminate the corporate debtor's appointment as developer during the moratorium was also prohibited. The Code prevailed over inconsistent State action under Section 238, so the termination could not stand.

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Issues: (i) Whether the order dated 17.07.2019 issued during the corporate insolvency resolution process was operative and valid in law; (ii) Whether the appointment of the corporate debtor as developer could be terminated during the pendency of the corporate insolvency resolution process.

Issue (i): Whether the order dated 17.07.2019 issued during the corporate insolvency resolution process was operative and valid in law.

Analysis: On commencement of the corporate insolvency resolution process, the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 came into force. The property was in the possession and occupation of the corporate debtor, and the impugned order had the effect of disrupting that possession during the moratorium. Section 238 of the Insolvency and Bankruptcy Code, 2016 gives the Code overriding effect over inconsistent laws, and the action taken under the State slum rehabilitation regime could not survive when it conflicted with the moratorium.

Conclusion: The order dated 17.07.2019 was not valid or operative in law and was liable to be set aside.

Issue (ii): Whether the appointment of the corporate debtor as developer could be terminated during the pendency of the corporate insolvency resolution process.

Analysis: The termination of the developer's appointment during the moratorium amounted to an action against the corporate debtor that interfered with its occupation of the property and with the corporate insolvency resolution process. Such action was prohibited by Section 14 of the Insolvency and Bankruptcy Code, 2016. The State authority could not proceed with a terminating action during the subsistence of the moratorium.

Conclusion: The appointment of the corporate debtor as developer could not be terminated during the pendency of the corporate insolvency resolution process.

Final Conclusion: The impugned termination order could not stand against the moratorium regime under the Insolvency and Bankruptcy Code, and the application succeeded against the contesting respondents.

Ratio Decidendi: During moratorium, any action that disturbs the corporate debtor's possession or occupation of property, or otherwise interferes with the insolvency resolution process, is barred, and the Insolvency and Bankruptcy Code prevails over inconsistent statutory actions.

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