Interim moratorium under insolvency law begins on registration of a Section 95 petition, not mere filing.

Interim moratorium under the Insolvency and Bankruptcy Code, 2016 commences only when a Section 95 petition is registered after scrutiny, not on mere filing while defects remain. The Bombay HC held that the moratorium operated from the registration date and could not be defeated by the secured creditor's lack of notice. It further held that the Debts Recovery Tribunal had to consider the legal effect of the registered petition and resulting moratorium on ongoing recovery and auction steps. The Tribunal's rejection of the interim applications was therefore unsustainable, and the impugned orders were set aside.

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Issues: (i) Whether the interim moratorium under the Insolvency and Bankruptcy Code, 2016 is triggered only on registration of a petition under Section 95, and not by mere filing of the petition; (ii) Whether the Debts Recovery Tribunal could reject the petitioners' interim applications without considering the effect of the interim moratorium.

Issue (i): Whether the interim moratorium under the Insolvency and Bankruptcy Code, 2016 is triggered only on registration of a petition under Section 95, and not by mere filing of the petition.

Analysis: The statutory scheme was examined along with the earlier directions governing scrutiny of petitions under Rule 28 of the National Company Law Tribunal Rules, 2016. The filing of a petition under Section 95 does not, by itself, conclude the matter for the purpose of interim moratorium where the petition remains at the scrutiny stage with defects. The operative event is registration of the petition after the prescribed scrutiny process. On the facts, the petition was registered on 04.11.2025, and the interim moratorium commenced from that date by operation of law.

Conclusion: The interim moratorium was triggered on registration of the petition on 04.11.2025 and not from the earlier date of mere filing.

Issue (ii): Whether the Debts Recovery Tribunal could reject the petitioners' interim applications without considering the effect of the interim moratorium.

Analysis: The Debts Recovery Tribunal proceeded mainly on the ground that the bank had not been informed of the petition before the National Company Law Tribunal. That approach did not accord with the statutory effect of Section 96, because commencement of interim moratorium cannot depend on notice to the secured creditor. Once the petition stood registered and the moratorium came into force, the Tribunal was bound to consider its legal effect on the recovery steps already in progress and on the auction-related consequences.

Conclusion: The rejection of the interim applications was unsustainable and the impugned orders were liable to be set aside.

Final Conclusion: The writ petition succeeded, the orders of the Debts Recovery Tribunal were set aside, and the respondents were left free to seek appropriate relief before the National Company Law Tribunal regarding the operation of interim moratorium.

Ratio Decidendi: Interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 operates from registration of a validly processed petition under Section 95, and its legal effect cannot be defeated merely because notice of filing was not conveyed to the secured creditor.

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