Premature personal insolvency petition and collusive filing to trigger interim moratorium were upheld.

A Section 95 Insolvency and Bankruptcy Code petition was held premature where the guarantee deed allowed the guarantor 60 days from demand notice to pay, and the petition was filed before that period expired; the agreed contractual timeline prevailed on the facts. The filing was also treated as collusive because it was timed to trigger the interim moratorium under Section 96 and stall pending High Court proceedings, with the surrounding conduct supporting that inference. The appeal therefore failed, and the dismissal of the personal insolvency petition and the cost order were left undisturbed.

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Issues: (i) Whether the personal insolvency petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 was premature in view of the guarantee deed requiring payment within 60 days from demand notice. (ii) Whether the filing of the petition was collusive and intended to trigger the interim moratorium to stall pending proceedings before the High Court.

Issue (i): Whether the personal insolvency petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 was premature in view of the guarantee deed requiring payment within 60 days from demand notice.

Analysis: The guarantee deed expressly provided that the guarantor would pay the demanded amount within 60 days from the date of demand notice. That contractual stipulation governed the time available to the guarantor after invocation of the guarantee. The petition under Section 95 was filed about one month after the demand notice, before expiry of the agreed 60-day period. The statutory timeline could not override the specific contractual arrangement governing invocation and payment in the facts of the case.

Conclusion: The petition under Section 95 was premature and the finding against the appellant is sustained.

Issue (ii): Whether the filing of the petition was collusive and intended to trigger the interim moratorium to stall pending proceedings before the High Court.

Analysis: The sequence of events showed that the arbitration-related proceedings were at an advanced stage before the High Court when the Section 95 petition was filed. The timing of the insolvency filing caused the operation of interim moratorium under Section 96, resulting in adjournment of the pending proceedings. The surrounding conduct, including the appellant's alignment with the personal guarantor in earlier proceedings, supported the inference that the insolvency process was used to obstruct the pending adjudication.

Conclusion: The finding of collusion is upheld and the appellant's challenge fails on this ground as well.

Final Conclusion: The appeal fails in full, and the dismissal of the personal insolvency petition together with the cost order is left undisturbed.

Ratio Decidendi: Where the guarantee deed grants a specific period for payment after demand, a Section 95 petition filed before expiry of that period is premature, and a petition timed to activate interim moratorium and impede pending proceedings may be treated as collusive.

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