Insolvency moratorium is confined to the debtor in proceedings and does not protect a separate principal borrower.

An insolvency moratorium under Section 14 of the IBC applies only to the corporate debtor against whom CIRP is initiated, while the interim moratorium under Section 96 applies only to the debtor who is the subject of the Part III insolvency application. Read with Sections 94, 95 and 101, the statutory scheme confines protection to the relevant debtor and the debts forming the application's subject matter. Principles of coextensive liability and subrogation do not extend that protection to a separate principal borrower against whom no insolvency proceedings are pending. The suit may therefore continue against the principal borrower.

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Issues: Whether the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, and the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016, operating against the corporate guarantor and personal guarantors respectively, extend to the principal borrower against whom no insolvency proceedings have been initiated.

Analysis: Section 14 operates only against the corporate debtor against whom CIRP is initiated and stays proceedings against that debtor alone. Section 96, though expressed in relation to "all the debts" and "any debt", is triggered in proceedings under Part III and protects the debtor who is the subject of the insolvency application. Read with the scheme of Sections 94, 95, 101 and the definitions in Section 3, the interim moratorium is confined to the debts of the debtor against whom the application is filed. The principles of coextensive liability and subrogation do not enlarge the moratorium so as to discharge or protect a separate principal borrower who is not before the insolvency forum. The authorities relied upon support the distinction between moratoriums operating on the debtor concerned and any broader reading that would sever the contractual and statutory allocation of liability.

Conclusion: The moratoriums applicable to the corporate guarantor and the personal guarantors do not extend to the principal borrower, and the suit may proceed against the principal borrower.

Final Conclusion: The proceeding is stayed only to the extent of the defendants against whom insolvency moratoriums operate, while the claim against the principal borrower continues.

Ratio Decidendi: An insolvency moratorium under Section 96 is confined to the debtor and the debts that form the subject of the insolvency application, and it cannot be extended to a separate principal borrower against whom no insolvency proceedings are pending.

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