Public CIRP Announcement Creates Presumption Of Knowledge Of Moratorium: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has held that the public announcement of a company's insolvency process, along with the uploading of the admission order on the National Company Law Tribunal website, creates a deemed presumption that the appellant had knowledge of the moratorium imposed on the company.

The tribunal made the observation while dismissing an appeal by Moving Pixels Pvt. Ltd. against an order directing it to return ₹80 lakh received from NDS Art World Pvt. Ltd. during the moratorium period.

A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey observed,

"As this order of admission of CIRP dated 25.07.2023 was available on the website of NCLT, as uploaded on 27.07.2023 and also made public by public announcement as prescribed under Section 13 (2) Section 15 of the Code. There would be a deeming presumption that, there had been a concrete and a positive knowledge of the imposition of moratorium and invocation of Section 14 of the Code, owing to the effect of Section 13 to be read with Section 15 of the Code."

NDS Art World Pvt. Ltd. was admitted into the Corporate Insolvency Resolution Process, or CIRP, on July 25, 2023.

CIRP is the process through which a financially distressed company undergoes insolvency resolution. Its commencement also triggered a moratorium.

The moratorium restricts the transfer, disposal or dealing with the company's assets in ways prohibited under the insolvency law while the process is underway.

The admission order was uploaded on the National Company Law Tribunal website on July 27, 2023. A public announcement was also made in local Mumbai dailies on July 28, 2023.

The Resolution Professional later found that about ₹1.01 crore lying in the company's bank account had been transferred to several parties during the moratorium period.

According to the Resolution Professional, the transfers were made without his knowledge.

Of this amount, ₹80 lakh was transferred to Moving Pixels. The Resolution Professional maintained that the payment related to work carried out before the insolvency process began.

However, the money was transferred after the moratorium came into force.

He called upon Moving Pixels to return the ₹80 lakh. The company did not return the money despite notices and a reminder.

The Resolution Professional then approached the National Company Law Tribunal. He sought directions for the return of the money along with interest at 18 per cent.

The Mumbai bench allowed the application. Moving Pixels challenged that order before the appellate tribunal.

Moving Pixels argued that it was not aware that NDS Art World had entered CIRP.

It also contended that the ₹80 lakh was money held in trust by the corporate debtor. On this basis, it argued that the amount could not be treated as the company's asset for the purpose of the moratorium.

Rejecting the plea of ignorance, the appellate tribunal noted that the CIRP admission order had been uploaded on the National Company Law Tribunal website.

The commencement of the process had also been publicly announced as required under the insolvency law.

Taken together, these steps created a deemed presumption that Moving Pixels had knowledge of the moratorium, the tribunal observed.

The bench also rejected the claim that the money was held in trust.

It observed that the moratorium provision does not create an exception for money allegedly held in trust.

"This is an altogether an alien philosophy, because Section 14 of the Code, itself doesn't carves out any exception of this nature under law as such.", it ruled.

The tribunal further found that Moving Pixels had failed to establish the existence of a trust relationship.

It had also failed to show that the ₹80 lakh was money held in trust by the corporate debtor.

Moving Pixels also argued that the alleged violation of the moratorium should have been dealt with under the provision that provided for punishment for contravening the moratorium.

The tribunal noted that this argument had not been raised before the National Company Law Tribunal.

It also observed that the issue had not been properly raised as a ground in the appeal.

The provision relied on by Moving Pixels had since been omitted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026.

According to the judgment, the omission took effect on April 6, 2026.

The tribunal found that the transfer made during the moratorium had been established.

It saw no legal reason to interfere with the order directing Moving Pixels to return ₹80 lakh.

The appeal was accordingly dismissed for lack of merit.