Insolvency moratorium bars suit institution and supports threshold rejection of a plaint when the statutory bar is clear.

A suit instituted during an operative insolvency moratorium is barred by the overriding provisions of the Insolvency and Bankruptcy Code, and a later lifting of the moratorium does not cure the defect in institution. Where the bar is evident from the record, the plaint is liable to rejection at the threshold under Order VII Rule 11 read with Section 151 CPC, because civil court jurisdiction yields to the insolvency regime for proceedings against the corporate debtor.

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Issues: (i) Whether the suit filed during the subsistence of the moratorium under the Insolvency and Bankruptcy Code was barred by law. (ii) Whether the plaint was liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908 read with Section 151.

Issue (i): Whether the suit filed during the subsistence of the moratorium under the Insolvency and Bankruptcy Code was barred by law.

Analysis: The moratorium commenced on admission of the insolvency process and continued until approval of the resolution plan. During that period, the statutory bar covered institution of suits and recovery proceedings against the corporate debtor, including recovery of property in its possession. The suit was instituted while the moratorium was operating, and the later lifting of moratorium did not validate an institution that was barred on the date of filing. The Code also had overriding effect over inconsistent law, and civil court jurisdiction could not be exercised over matters covered by the insolvency regime.

Conclusion: The suit was barred when instituted and could not be sustained in view of the moratorium.

Issue (ii): Whether the plaint was liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908 read with Section 151.

Analysis: Since the institution of the suit itself was prohibited during the moratorium, the defect went to the maintainability of the proceedings. The Court held that the pleadings and the admitted chronology showed the bar under the insolvency law, making rejection of the plaint appropriate. The special statute prevailed over the general civil procedure and justified rejection of the plaint at the threshold.

Conclusion: The plaint was liable to be rejected.

Final Conclusion: The civil revision succeeded, the impugned order was set aside, and the plaint was rejected because the suit had been filed in breach of the subsisting moratorium under the insolvency framework.

Ratio Decidendi: A suit instituted during an operative insolvency moratorium is barred by the overriding provisions of the insolvency and its plaint can be rejected at the threshold when the bar is evident from the record.

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