Interim moratorium under the Insolvency Code bars fresh Section 95 proceedings and cannot be cured by later withdrawal of the prior application.

An interim moratorium under Section 96 begins on the filing of a Section 95 application and bars fresh creditor proceedings in respect of the same debt. A later Section 95 application filed while that moratorium was operating was non-maintainable, and the defect was not cured by the subsequent withdrawal of the earlier application, because proceedings instituted in breach of the statutory bar are non est when filed and cannot be validated retrospectively. The resulting admission orders could not stand, and the issue was resolved in favour of the appellants.

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Issues: Whether a Section 95 application filed by a financial creditor during the subsistence of an interim moratorium triggered by an earlier Section 95 application remained non-maintainable even after the earlier application was later withdrawn.

Analysis: Interim moratorium under Section 96 commences on the date of filing of an application under Section 95 and stays pending proceedings while prohibiting initiation of fresh proceedings by creditors in respect of the same debt. The earlier application filed by another creditor had already triggered interim moratorium when the subsequent Section 95 applications were filed. The later withdrawal of the earlier application ended the moratorium prospectively, but it did not cure the legal defect attaching to proceedings instituted during the currency of the moratorium. An application initiated in breach of the statutory bar was non est when filed and could not be validated retrospectively by the later withdrawal of the prior proceeding.

Conclusion: The subsequent Section 95 applications were not maintainable and the admission orders could not stand. The issue was decided in favour of the appellants.

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