TaxTMI 
TaxTMI 
2024 (10) TMI 728
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....317 of 2024 filed by the Appellant seeking restraint on the Respondent in the conduct of auction of sale notices dated 15.12.2023 under SARFAESI Act. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant. 2. We have heard Shri Mohit Chaudhary, Ld. Counsel appearing for the Appellant and Shri Neeraj Malhotra, Ld. Senior Counsel representing the Respondent. 3. The Ld. Counsel for the Appellant outlining the facts of the case submitted that a Company Petition under Section 95 of the IBC was filed by Operational Creditor-White Line Enterprises against Mr. Ramesh Kumar Chugh-Appellant who stood as a Personal Guarantor for repayment of the operational debt owed by M/s Sahil Home Loomtex Pvt. Ltd. With the filing of Section 95 petition on 22.12.2023, interim moratorium under Section 96 of IBC commenced and an Interim Resolution Professional was appointed in the Section 95 proceedings vide order dated 12.02.2024 of the Adjudicating Authority. The Appellant-Mr. Ramesh Kumar Chugh ("RKC" in short) was also a partner in a partnership firm named M/s Sheena Exports which firm had availed of loan facilities from HSBC and Citi Bank. The Appellant was also a....
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....urity Interest (Enforcement Rules), this would amount to violation of the provisions of moratorium under Sections 96 and 178 of IBC. 6. It was contended that when an application is filed under Section 95 of the IBC, interim moratorium commences from the date of filing the application to all the debts and during the interim moratorium period any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed and the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. Though the initiation of moratorium was intimated to the Respondent, the Respondent has proceeded ahead in dealing with the assets of the Appellant in violation of Section 96 of IBC. It was submitted that the Appellant had therefore filed an application before the Adjudicating Authority to direct the Respondent to withdraw the notices issued under Rule 8(6) of Security Interest (Enforcement Rules) and to restrain them from taking any further action pursuant to these notices in respect of property put to auction which has been erroneously dismissed by the Adjudicating Authority. 7. Refuting the contentions of the Appellant, the Ld. Sr. Cou....
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....refore, when the Section 95 application was not filed against the partnership firm, consequently, the property and assets of partnership firm, M/s Sheena Exports did not constitute the subject matter of Section 95 application. Since M/s Sheena Exports and its properties is unrelated and unconnected with Section 95 application hence the question of applicability of interim moratorium does not arise. 10. It is also the contention of the Respondent that the Appellant has concealed from the Adjudicating Authority the material fact that two Securitization Application Nos. 17/2024 and 18/2024 have been filed before the DRT-II, New Delhi, challenging the sale notices dated 15.02.2023. It was therefore contended that the Appellant is indulging in forum shopping which is an abuse of the process of law. In SA 17/2024, the stay application has already been dismissed on 14.08.2024 and the remedy therefore lies by way of appeal to DRAT and not before the NCLT. 11. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 12. The primary question before us for consideration is whether in the backdrop of Section 95 proce....
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....assets and the properties of the partnership firm are distinguishable and separate from the personal/individual assets of the Partners. The properties in respect of which proceedings have been taken up under SARFAESI Act are mortgage properties which stand in the name of the partnership firm and not in the name of Appellant in his personal capacity. It has been contended by the Respondent that as they are not taking any action either against Appellant or against any of his personal properties, the interim moratorium cannot apply to the subject property which has no bearing with the personal guarantee of the Appellant. 15. In support of their contention, the Respondent has relied on two judgements. One of them is the Bajoria judgement supra of the Hon'ble Apex Court wherein it has been held : "It is trite law that the partners of a firm are entitled only to the profits of the firm and upon dissolution of the firm they are entitled to the surplus of the sale proceeds of the assets and properties of the firm, if any, after meeting the liabilities of the firm, in the share agreed upon in the partnership deed. The partners do not have any right, title or interest in respect ....
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....nce on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application; and (b) during the interim-moratorium period- (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. (2) Where the application has been made in relation to a firm, the interim - moratorium under sub-section (1) shall operate against all the partners of the firm as on the date of the application. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator." We have already noticed that by the order of the Adjudicating Authority dated 12.02.2024, interim moratorium had commenced from the date of Section 95 application which is 22.12.2023. 19. Going deeper into the provisions of Section 96(1)(a), we find that it provides that interim-moratorium shall commence on the date of the application in relation "to all the debts". This is ....
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....ppreciation and clarity, at this stage, we may notice the relevant paragraphs from the Jiwrajka judgment which explains the essence of interim moratorium under Section 96 of IBC which reads to the effect: "57. Section 96, as its marginal note indicates, deals with an "interim - moratorium". In terms of section 96, the interim moratorium takes effect on the date of the application. In other words, the very submission of an application under section 94 or section 95 triggers the interim moratorium which then ceases to have effect on the date of the admission of the application (under section 100). The consequences which flow from an interim moratorium are specified in clause (b) of subsection (1) of section 96. The impact of the interim-moratorium under section 96 is that a legal action or proceeding pending in respect of any debt is deemed to have been stayed and the creditors or the debtors shall not initiate any legal action or proceedings in respect of any debt. The crucial words which are used both in clause (b)(i) and clause (b)(ii) of subsection (1) of section 96 are "in respect of any debt". These words indicate that the interim-moratorium which is intended to operat....
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....ve gone through the Partnership Deed of M/s Sheena Exports as placed at pages 320-323 of Appeal Paper Book ("APB" in short) which at Clause 7 provided that the profit of partnership was to be divided amongst the four partners equally in the ratio of 25% for each of the four partners. At Clause 8, it states that the partnership shall not be responsible for any of the liabilities or losses incurred by any of the partners through their separate business or profession nor shall take into account profits earned by them. In the present case it is manifestly clear that the personal guarantee given qua the debt owed by Sahil Home Loomtex to White Line Enterprises was personal to the Appellant and not a guarantee given by the partnership firm. We have also noticed the dissolution notice of the partnership firm was sent by RKC on 06.02.2024 to the other 3 original partners as may be seen at page 341 of the APB. The Notice of Dissolution only mentions about dissolving the partnership so that the assets/liabilities can be distributed in appropriate shares as per the Partnership Agreement/Deed and makes no mention of the Section 95 application though the same was clearly filed prior to the noti....