TaxTMI 
TaxTMI 
2026 (3) TMI 1645
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....5 in Catalyst Trusteeship Ltd. vs. Sushant Chhabra; and CP(IB)-446/ND/2025 in Catalyst Trusteeship Ltd. vs. Verinder Kumar Chhabra. 2. Company Appeal (AT) (Insolvency) No. 443 of 2026 has been filed by Sushant Chhabra challenging order dated 17.02.2026 admitting Section 95 application on the basis of report submitted by RP by IA No.5571/ND/2025, whereas Company Appeal (AT) (Insolvency) No. 444 of 2026 has been filed by Verinder Kumar Chhabra challenging order dated 17.02.2026 admitting Section 95 application on the basis of report submitted by RP by IA No.4652/ND/2025. The facts and question of law in both the Appeals being common, both the Appels have been heard together and are being decided by this common judgment. It shall be sufficient to refer to the pleadings in Company Appeal (AT) (Insolvency) No. 443 of 2026 for deciding both the Appeals. 3. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) Both the Appellant(s) Sushant Chhabra and Verinder Kumar Chhabra executed an unconditional and irrevocable Deed of Personal guarantee on 28.12.2024 in respect of debt arising out of non-convertible debentures issued by M/s UM Automotive Pvt.....
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....d Senior Counsel appearing for the Appellant; Shri Gaurav Mitra, learned Counsel has appeared on behalf of Respondent No.1; Shri Abhinav Mathur, learned Counsel has appeared for the RP. 5. Learned Counsel for the Appellant in support of the Appeal submits that Section 95 application filed by Catalyst Trusteeship Ltd. against the Appellant on 05.08.2025 was not maintainable due to subsistence of statutory interim moratorium triggered by CP(IB)122/ND/2025 filed by Canara Bank on 12.01.2025 against Sushant Chhabra and CP(IB)121/ND/2025 filed by Canara Bank on 12.01.2025 against the Appellant - Verinder Kumar Chhabra. It is submitted that interim moratorium triggered on 12.01.2025 in Section 95 applications filed by Canara Bank, which applications were pending for adjudication on the day when Catalyst Trusteeship Ltd. filed Section 95 applications against the Appellants on 05.08.2025. Section 95 applications filed by Respondent No.1 was non-est and non-maintainable due to moratorium having already triggered in the applications filed by Canara Bank. The filing of applications by Catalyst Trusteeship Ltd. being non-est filing, Section 95 applications filed by Respondent No.1 deserved ....
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....iled by Catalyst Trusteeship Ltd. against the Appellants during the period when interim moratorium had already been triggered on Section 95 applications filed by Canara Bank and was subsisting on the date of filing of Section 95 application by Catalyst Trusteeship Ltd. The applications under Section 95 sub-section (1) were filed by Canara Bank against both the Appellants, which were CP(IB)122/ND/2025 and CP(IB)121/ND/2025, which were filed on 12.01.2025. Section 96 of the IBC contemplates issuance of interim moratorium when application is filed under Section 94 or Section 95. Section 96, sub-section (1) is as follows: "96. Interim- moratorium. - (1) When an application is filed under section 94 or section 95 - (a) an interim-moratorium shall commence 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 pending legal action or proceeding 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 d....
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....tion 101 and thereafter 'Public Notice', is issued and 'Claims' from 'Creditors', are invited under Section 102. Section 103 provides for registering of 'Claims' by Creditors. Section 104 provides for preparation of list of Creditors and thereafter repayment Plan is contemplated under Section 105. Thus, when an 'Insolvency Resolution Process', commences against the 'Personal Guarantor', all 'Creditors' of the 'Personal Guarantor', are taken care of in the proceedings under Chapter-III. The Code does not contemplate multiplicity of 'Applications', against the same 'Personal Guarantor'. This 'Tribunal', is of the earnest view that when the 'Insolvency Resolution Process', commences against a 'Personal Guarantor', 'Claims of all 'Creditors', are taken care of under the scheme of the I & B Code, 2016." 14. Another judgment of this Tribunal relied by learned Counsel for the Appellant is Indian Bank vs. T Prabhakar - Company Appeal (AT) (CH) (Ins.) No.121 of 2025 decided on 30.04.2025. In the above judgment, this Tribunal while considering Section 96 laid down following in Paragraph 4: "4. Section 96(1)(b) of the I & B Code, 2016, quite explicitely provides that for any legal....
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....sed whereas against the Personal Guarantor, personal insolvency had already commenced, which was pending consideration. Due to the above reason, the subsequent application was held to be not maintainable and order was confirmed. In Paragraph-18 of the judgment, it was held: "18. Owing to the above, the view expressed by the Tribunal in the impugned order dated 13.12.2024 rejecting the proceedings drawn under Section 95 of the I & B Code, 2016, by the Appellant because of the embargo created due to Section 96 of the I & B Code, 2016, do not suffer from any apparent error of fact and law." 16. The Appellant has further relied on judgment of the Hon'ble Supreme Court in Civil Appeal No.16929 of 2017 in - Alchemist Asset Reconstruction Company Ltd. vs. M/s. Hotel Gaudavan Pvt. Ltd. & Ors. decided on 23.10.2017. In the above case, the Hon'ble Supreme Court had occasion to consider effect of moratorium under Section 14 of the IBC with respect to an arbitration proceeding. The Hon'ble Supreme Court set aside the order of District Judge and held that the effect of Section 14(1)(a) is that the arbitration proceedings instituted after the aforesaid moratorium is non- est in law. ....
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....s withdrawn under s. 373 with permission to bring a fresh suit the effect of such permission is to leave matters in the position in which they would have stood if no such suit had been instituted " It was held that, on such withdrawal, it is as if there was no such suit at all. The court relied on the judgments of the Madras High Court and of the very same court in Venkata Shetti v. Ranga Nayak, [ILR (1882) 10 Mad 160], Bakhsh v. Imam Bakhsh, [ILR (1875) 1 All 324], Mul Chand v. Bhikari Das, [ILR (1885) 7 All 624]. In Paramanand (Dead) Subs. By L.Rs. v. The Prescribed Authority (Munsiff West), Meerut, (2001 All LJ 2277) the court, referring to the earlier judgments of the Allahabad and Calcutta High Courts which expressed a similar view held:- "..... In the case of Bihari Lal Pal v. Smt. Baran Mai Dasi, it was held that where a suit is withdrawn with permission to bring a fresh suit, the effect of such permission, is to leave parties in the same position in which they would have been if no such suit had been instituted. Similarly a Full Bench of Calcutta High Court in the case of Becharam Choudhuri v. Puran Chandra Chatterji, held that when a suit was allowed to b....
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.... to be withdrawn all the proceedings taken therein including the judgment passed by the trial court have been wiped out. A judgment given in a suit which has been permitted to be withdrawn with the liberty of filing a fresh suit on the same cause of action cannot constitute res judicata in a subsequent suit filed pursuant to such permission of the court." 20. The above judgments relied by learned Counsel for the Respondent were the judgments dealing with the cases, where suits were permitted to be withdrawn. The judgment of the Hon'ble Supreme Court in K. Sivaramaiah (supra) was a case where Hon'ble Supreme Court held that when a suit was withdrawn, the same cannot constitute res judicata in a subsequent suit. The other judgments relied by the Respondent indicate that when a suit is withdrawn, the parties are relegated to the stage prior to filing of suit, when suit has no existence in the eyes of law. The Respondent has also relied on judgment of this Tribunal in Union Bank of India vs. P.K. Balasubramanian - Company Appeal (AT) (CH) (Ins.) No.293 of 2022, where Section 95 application was rejected by Adjudicating Authority observing that an application had already been filed ag....
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....e case of the Appellant, rather the said judgment has clearly upheld the order rejecting Section 95 application, when another Section 95 application has already been filed and was pending consideration. 23. From the facts noted above, it is clear that although on the date when Section 95 application was filed by the Catalyst Trusteeship Ltd. against the Appellant herein on 05.08.2025, interim moratorium was already operating in Section 95 application filed Canara Bank against the Appellant. The judgment referred above, clearly prohibit any such institution. The distinguishing feature, which Respondent is contending herein is that even though application was filed by Canara Bank, prior in time and moratorium had triggered, but the application having been withdrawn on 10.11.2025, there was no inhibition in admitting Section 95 application filed by Financial Creditor against the Appellants herein. The real question to be considered and answered is whether due to withdrawal of Section 95 application by Canara Bank, the prohibition which triggered due to interim moratorium shall come to an end. When application under Section 95 filed by Canara Bank was withdrawn on 10.11.2025, admitt....