Update - IBC Moratoriums, Personal Insolvency, and Cheque Bounce Cases

About a year ago, the blog covered a decision of the Supreme Court [Rakesh Bhanot v. Gurdas Agro, 2025 INSC 445] dealing with the issue of interim moratoriums under the Insolvency and Bankruptcy Code, 2016 [IBC] and prosecutions for offences under the Negotiable Instruments Act, 1881 [NI Act]. It took the view that the decision in Rakesh Bhanot did not sufficiently explain its conclusions, especially in light of existing precedent in the field. At the same time, the post also noted that the concerns animating the decision were, arguably, originating in poor legislative design of the IBC.Over the past year, it appears that the correctness of the view taken in Rakesh Bhanot has come under a cloud. The most recent doubts were raised when in May 2025 a bench of Three Justices — headed by the Chief Justice — issued notice and granted interim reliefs in a petition which has, at least going by the news article, directly challenged the correctness of Rakesh Bhanot [Karan Bhatia, W.P. (Crl.) 131/2026]. There are tons of such fact scenarios playing out causing much grief to (some) litigants. A Three Justices Bench granting an interim relief in the face of the existing judgment, is a decent sign of which way the wind may blow. Additionally, it would be nice if, this time, the issue can also get the clarity that it requires. As the previous post discussed, there are some thorny law and policy issues involved here. It requires careful reading of the Indian Contract Act, the IBC, as well as precedent (such as P. Mohanraj). One can only hope that the issue thus gets finally resolved soon, one way or another. That is eminently more desirable than a Vijay Madanlal kind of scenario where the Court is kicking the proverbil can down the road which clogs the docket, as more and more persons move for interim reliefs, and also continues the confusion in courts below.