NCLT Orders Return of Pledged Shares, Declares Invocation Loan‑cum‑Pledge Agreement During CIRP Moratorium Void

NCLT Orders Return of Pledged Shares

The National Company Law Tribunal (NCLT) has ordered the return of pledged shares, asserting that the invocation of a loan-cum-pledge agreement during the Corporate Insolvency Resolution Process (CIRP) moratorium is void. This ruling serves to protect the interests of the debtor during insolvency proceedings.

The tribunal rejected penal actions under Section 74 of the IBC, stating that the respondents had not sold the pledged shares and had expressed a willingness to comply with the imposed moratorium. The judgment underscores the sanctity of the CIRP moratorium, highlighting the importance of protecting the assets of debtors during this sensitive period.

This ruling significantly impacts creditors and debtors, as it establishes clear boundaries regarding the enforcement of agreements during the CIRP, emphasizing that legal actions must adhere to prescribed moratorium regulations.