Restraint on coercive steps does not bar insolvency proceedings or injunction suits against competent forum action.

A restraint limited to coercive steps did not prevent the lender from pursuing insolvency proceedings, because the term "recovery" was read broadly to include lawful remedies for realising dues and proceedings under the Insolvency and Bankruptcy Code were treated as a statutory insolvency process, not coercive action. The suit for injunction was also viewed as hit by the statutory bar against restraining proceedings before a competent forum, so interim relief could not be granted where a permanent injunction would be impermissible. The bank's clarification was therefore accepted, the alleged breach of the earlier orders was rejected, and the contempt case had no merit.

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Issues: (i) Whether the earlier orders restrained the bank from initiating or maintaining proceedings under the Insolvency and Bankruptcy Code, 2016 against the appellant. (ii) Whether the suit seeking injunction against such proceedings was maintainable in view of the statutory bar against restraining proceedings before a court of coordinate or superior jurisdiction.

Issue (i): Whether the earlier orders restrained the bank from initiating or maintaining proceedings under the Insolvency and Bankruptcy Code, 2016 against the appellant.

Analysis: The earlier restraint order was limited to coercive steps, and the modified order permitted the bank to take recourse to legal remedies for recovery of outstanding dues. The term "recovery" was treated as a broad expression covering lawful remedies available to realise the debt. Proceedings under the Insolvency and Bankruptcy Code were held not to be coercive in nature, but a statutory process for insolvency resolution and therefore outside the prohibition contained in the earlier orders.

Conclusion: The bank was not barred from initiating or maintaining proceedings under the Insolvency and Bankruptcy Code, 2016.

Issue (ii): Whether the suit seeking injunction against such proceedings was maintainable in view of the statutory bar against restraining proceedings before a court of coordinate or superior jurisdiction.

Analysis: A lender has a legal right to proceed against a guarantor before competent forums, including the insolvency forum. The statutory prohibition against injunctions restraining institution or prosecution of proceedings before a court not subordinate to the court granting injunction was applicable. On that basis, the Court expressed grave doubts about the maintainability of the suit and agreed with the view that interim injunction could not be granted where permanent injunction itself would be impermissible.

Conclusion: The injunction suit faced a serious statutory bar and no interim restraint could be granted.

Final Conclusion: The clarification sought by the bank succeeded, the alleged violation of the earlier orders was negated, and the contempt proceedings had no merit.

Ratio Decidendi: A restraint against coercive steps does not, by itself, bar a creditor from pursuing insolvency proceedings or other lawful remedies to recover dues, and an injunction cannot be used to prevent institution or prosecution of proceedings before a competent forum protected by statute.

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