Summary: Section 14(1)(a) of the IBC protects the corporate debtor from specified proceedings during the moratorium, but that protection does not automatically extend to directors. In P. Mohanraj v. Shah Brothers Ispat, the Supreme Court held that Section 138 NI Act proceedings against the corporate debtor fall within the moratorium, while subsequent decisions including Ajay Kumar Radheyshyam Goenka and Rakesh Bhanot maintain the exposure of natural persons. Dineshchand Surana v. UCO Bank has introduced a further issue by distinguishing the punitive and compensatory components of Section 138 proceedings in the context of personal insolvency and referring the matter to a larger bench. Section 32A separately gives the corporate debtor immunity from pre-CIRP offences after approval of a resolution plan, subject to its conditions, without protecting persons responsible for those offences. The IBC (Amendment) Act, 2026 also introduces changes concerning moratorium protection and enforcement. In the homebuyer context, Pioneer Urban Land v. Govindan Raghavan and Experion Developers v. Sushma Ashok Shiroor address one-sided standard-form terms and consumer remedies, while Pioneer Urban Land v. Union of India establishes homebuyers’ position as financial creditors. Their interaction in CIRP raises questions concerning the valuation and admission of claims based on contractual compensation clauses.
The Section 14 Moratorium, Criminal Exposure and Unfair Contract Terms: Pioneer and Experion in CIRP
The moratorium protects the company, not its directors
Section 14(1)(a) of the IBC bars suits and proceedings against the corporate debtor. In P. Mohanraj v. Shah Brothers Ispat(2021) 6 SCC 258, a three-judge bench held that Section 138 NI Act proceedings are quasi-criminal and fall within that bar. The Court reasoned that Section 138 is a hybrid with a recovery function. That reasoning does not extend to every criminal prosecution of a company.
Natural persons get no such shield. Mohanraj, Ajay Kumar Radheyshyam Goenka (2023) 10 SCC 545 and Rakesh Bhanot(2025) 6 SCC 781 hold that directors liable under Section 141 remain exposed. The Bombay High Court reaffirmed in 2025 that it makes no difference whether the IBC proceedings began first.
Surana (May 2026) unsettles the compensation question
In Dineshchand Surana v. UCO Bank (27 May 2026), Pardiwala and Viswanathan JJ. called Section 138 predominantly criminal. They split it into two tiers: punishment (Tier I) and compensation (Tier II). They were prima facie of the view that the Part III moratorium cannot stay Tier I but does stay recovery of compensation, including from a director in personal insolvency. They referred the matter to a three-judge bench.
Two cautions apply. It is a reference and the observations are prima facie. It also arose under personal insolvency (Sections 96 and 101), where Section 79(15) excludes fines. Section 14 has no equivalent, so the larger bench must explain how the split applies to a corporate debtor. In my reading, since a company can only be fined, staying Tier I would undercut Mohanraj‘s rationale, and keeping it alive lets a fine compete with creditors. Both outcomes are awkward.
Section 32A and the 2026 Amendment
Section 32A gives the corporate debtor immunity from pre-CIRP offences once a plan is approved, but not the people who ran it. Whether it automatically lifts a PMLA attachment is still unsettled. The Supreme Court set aside JSW’s Bhushan Power plan on 2 May 2025, recalled that judgment, and upheld the plan on 26 September 2025 without resolving the question. Bidders should price residual attachment risk and address it in plan conditions.
The IBC (Amendment) Act, 2026 (assent 6 April 2026) adds an Explanation to Section 14(3)(b) applying the moratorium to sureties. It also inserts penal provisions on moratorium violations, among other things. Commencement is staggered, so check the current notifications.
Unfair standard-form terms
In Pioneer Urban Land v. Govindan Raghavan (2019) 5 SCC 725, the Supreme Court held a builder’s clauses wholly one-sided and not binding on the buyer. It treated their incorporation as an unfair trade practice under Section 2(r) of the Consumer Protection Act, 1986, and ordered a refund with interest. In Experion Developers v. Sushma Ashok Shiroor (7 April 2022), the Court held that consumer fora may declare a term unfair as part of their power to stop unfair trade practices. It also held that the Consumer Protection Act and RERA are concurrent remedies, and it upheld a refund of ₹2.06 crore with 9% interest.
The doctrine has limits
The doctrine has limits:
- It rests on consumer law, not a general doctrine of unconscionability.
- It operates case by case, after the dispute.
- It is strongest before consumer commissions and RERA. NCLT is not a consumer forum.
Where they collide
Homebuyers are financial creditors, a point settled in the separate case Pioneer Urban Land v. Union of India (2019) 8 SCC 416. In CIRP, consumer proceedings against the developer are stayed, and buyers must file claims. The 2026 Act makes the IRP verify and determine claim values. The open question is whether an RP can disregard a capped delay-compensation clause when admitting a claim. I know of no authority. My view is that buyers with a pre-CIRP decree or RERA order are far better placed than those without, though that is a prediction and not a holding.
Reference and source-
Surana (LiveLaw), IBC Amendment Act 2026 (SCC Times), Bhushan Power, Sept 2025 (SCC Times), Pioneer (Indian Kanoon), Experion (Indian Kanoon).
