Section 74 IBC: Punishment for Contravention of Moratorium or Resolution Plan
Section 74 of the Insolvency and Bankruptcy Code, 2016 (IBC) prescribes criminal punishment for specified knowing or wilful violations of the moratorium under Section 14 and for knowing and wilful contravention, or abetment of contravention, of an approved resolution plan binding under Section 31.
Updated: 30 September 2026
Section 74(1): Contravention by corporate debtor or its officer
Where the corporate debtor or any of its officers violates Section 14, an officer who knowingly or wilfully committed, authorised or permitted the contravention is punishable with imprisonment for not less than three years and up to five years, or a fine of not less than Rs. 1 lakh and up to Rs. 3 lakh, or both.
Section 74(2): Contravention by a creditor
Where a creditor violates Section 14, a person who knowingly and wilfully authorised or permitted that contravention is punishable with imprisonment for not less than one year and up to five years, or a fine of not less than Rs. 1 lakh and up to Rs. 1 crore, or both.
Section 74(3): Contravention of an approved resolution plan
Where the corporate debtor, any of its officers or creditors, or any person on whom the approved resolution plan is binding under Section 31, knowingly and wilfully contravenes any term of that resolution plan or abets such contravention, the corporate debtor, officer, creditor or person is punishable with imprisonment of not less than one year and up to five years, or a fine of not less than Rs. 1 lakh and up to Rs. 1 crore, or both.
What is the Section 14 moratorium?
Section 14 requires the Adjudicating Authority, on the insolvency commencement date and subject to the statutory exceptions, to declare a moratorium. Among other matters, Section 14(1) prohibits institution or continuation of proceedings against the corporate debtor, transfer or disposal by the corporate debtor of its assets or legal or beneficial interests, enforcement of security interests against its property, and recovery of property by an owner or lessor where such property is occupied by or in possession of the corporate debtor.
The moratorium generally continues until completion of the corporate insolvency resolution process, but ceases earlier if the Adjudicating Authority approves a resolution plan under Section 31(1) or passes a liquidation order under Section 33.
What does Section 31 provide?
Section 31 deals with approval of a resolution plan by the Adjudicating Authority. Once a qualifying resolution plan is approved under Section 31(1), it becomes binding on the corporate debtor and the stakeholders specified by that provision. Section 74(3) attaches penal consequences to a knowing and wilful contravention of the terms of such an approved plan, or abetment of that contravention.
Elements relevant to Section 74
| Provision | Conduct covered | Maximum punishment |
|---|---|---|
| Section 74(1) | Knowing or wilful commission, authorisation or permission by an officer of a Section 14 violation by the corporate debtor or its officer. | 5 years imprisonment or Rs. 3 lakh fine, or both. |
| Section 74(2) | Knowing and wilful authorisation or permission of a Section 14 violation by a creditor. | 5 years imprisonment or Rs. 1 crore fine, or both. |
| Section 74(3) | Knowing and wilful contravention, or abetment of contravention, of an approved resolution plan. | 5 years imprisonment or Rs. 1 crore fine, or both. |
Official legal resources
For the authoritative legal framework and current amendments, refer to the India Code portal and the Insolvency and Bankruptcy Board of India Legal Framework.