AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bankruptcy Code, 2016 (Code). Factual Matrix 2. Facts of this appeal in brief are that Respondent-PNB Housing Finance Ltd. has sanctioned loan facilities totalling Rs. 275 Crores vide sanction letter dated 04.01.2017 in favour of Supertech Ltd. (Corporate Debtor) and the terms and condition of the sanction letter was stated to be modified vide sanction letter dated 08.03.2017 and the loan agreement was executed on 10.03.2017 between the CD along with its co-borrowers namely Sarv Realtors Pvt. Ltd. and ASP Sarin Realty Pvt. Ltd. and Mr. Mohit Arora along with Mr. RK Arora and Ms. Sangita Arora who had provided their personal guarantees in favour of the creditor to secure these credit facilities availed by the CD. 3. It is further reflected that the CD has defaulted in payment of the monthly instalment due and payable to the creditor on various dates and the creditor served a demand notice under Section 13(2) of the SARFAESI Act, 2002 on the CD and the personal guarantors demanding repayment of complete outstanding amount of Rs. 279.20 Crore along with future interest. 4. The creditor has also issued demand notice dated 09.07.2021, in requisite Form-B as required under R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fore different Benches. 9. It is further submitted that in the impugned judgment it has been acknowledged that the PNB petition has been filed during the commencement of the interim moratorium by filing IFCI petition and even then the application has been accepted which in the light of the law propounded in Krishna Kumar Basia vs. SBI, CA (AT) (Ins) No. 721 of 2022, decided on 14.07.2022 and the Dilip B. Jiwrajka vs. Union of India & Ors., (2023) SCC Online SC 1530 could not be passed. Reliance is also being placed on E.S. Krishnamurthy vs. Bharat Hi-Tecch Builders Pvt. Ltd., (2022) 3 SCC 161 and Arun Kumar Jagatramka vs. Jindal Steel and Power Ltd. (2021) 7 SCC 474. 10. It is further submitted that there was no occasion for the Ld. Adjudicating Authority to have invoked the inherent powers and the usage of inherent powers cannot be used contrary to the statue or by-passing the prescribed procedure. Reliance in this regard has been placed on the following judgments: (i) Lokhandwala Kataria Construction Pvt. Ltd. vs. Nisus Finance & Investment Manager LLP, 2017 SCC Online NCLAT 406. (ii) Lokhandwala Kataria Construction Pvt. Ltd. vs. Nisus Finance & Investmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 16. It is further submitted that the second petition [CP (IB) No. 395 of 2021] filed by the PNB on 24.07.2021 would relate back to the first petition [CP (IB) No. 203 of 2021] filed by it and the same was withdrawn with the liberty to file afresh vide order dated 08.07.2021 and both these petitions would be treated as separate and independent and in any case the IFCI petition was filed prior to the PNB's second petition and during the commencement of the interim moratorium triggered by filing the IFCI petition. 17. It is further submitted that the Ld. Adjudicating Authority has stepped out of its jurisdiction in looking into the record of the another case which was not the subject matter of dispute before it and have completely given go by to the Principle that interim moratorium triggered by the institution of the petition under Section 95 of the Code shall remain in operation till final culmination of the petition. 18. It is also submitted that Ld. Adjudicating Authority has also committed a mistake in relying on email dated 28.07.2021 in order to return a finding against the appellant while no service was affected on appellant on 28.07.2021 with regard to the IFCI Pet....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2021 was a non-est petition and may not cause any interim moratorium thereafter. 25. Ld. Counsel for the Respondent Bank while drawing the attention towards the report of the Insolvency Law Committee (February, 2020) submits that the discretion granted to the Ld. Adjudicating Authority for interim moratorium has been devised as a safeguard from abuse and the inherent power of the Tribunal would also include the power to modify or withdraw the order of interim moratorium in preventing an unjustifiable harm to a creditor. Reliance in this regard has been laid on NUI Pulp and Papers Industries Pvt. Ltd. vs. M/s Roxcel Trading GMBH, CA (AT) (Ins) No. 664 of 2019. 26. It is further submitted that reliance of the appellant on the judgment of Krishna Kumar Basia (supra) is of no use as the same has been passed on 14.07.2022 whereas the RP in the above proceeding was appointed on 29.09.2021. 27. Ld. Counsel for the Respondent Bank also relied on the law laid down by the Hon'ble Supreme Court in Goan Real Estate and Construction Ltd. & Ors. vs. Union of Indian (2010) 5 SCC 388 and Managing Director ECIL Hyderabad and Ors. vs. B Karunakar & Ors. (1993) 4 SCC 727. Ld. Counsel for Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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. 30. At this juncture, we recall celebrated Judgment of Hon'ble Supreme Court passed in Dilip B. Jiwrajka vs. Union of India, (2024) 5 SCC 435 wherein in para no. 10,11,19, 20, 30.4 and 57 the Hon'ble Supreme Court has highlighted the scheme of Section 96 of the Code in the following words: "10. Chapter III provides for the insolvency resolution process. Under Chapter III, the insolvency resolution process can be initiated by a debtor or a creditor. Section 94(1) enables a debtor who commits a default to apply, either personally or thr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 sub-section (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 sub-section (1) of Section 96 are "in respect of any debt". These words indicate that the interim moratorium which is intended to operate by the legislature is primarily in respect of a debt as opposed to a debtor. Clause (b) of sub-section (1) indicates that the purpose of the interim moratorium is to restrain the initiation or the continuation of legal act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Section 99 of the IBC. 34. It is further reflected that an appeal being CA (AT) (Ins) No. 151 of 2024, was filed by the appellant-Mohit Arora against the order dated 20.12.2023 passed in CP (IB) No. 428/2021 and vide order dated 05.04.2024 on the submissions made by Ld. Counsel for the Appellant-Mohit Arora that the Resolution Professional has already been appointed in CP IB No. 395/ND/2021 filed against the personal guarantor Mohit Arora on 29.09.2021 allowed the appeal and the order dated 20.12.2023 was set aside and on the basis of the aforesaid order passed by this Appellate Tribunal, the Ld. Adjudicating Authority vide order dated 13.06.2024, closed the CP IB No. 428 of 2021. 35. It may be recalled that after withdrawing the CP IB No. 203 of 2021 on 08.07.2021 with the liberty to file afresh, the PNB filed second petition being CP IB No. 395 of 2021 on 24.07.2021 against the appellant -Mohit Arora under Section 95 of the Code and in this petition also the RP was appointed on 29.09.2021. 36. Thus, the submission of Ld. Counsel for the appellant is that the second petition under Section 95 of the Code was filed by the Respondent PNBHFL on 24.07.2021, during the inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is Appellate Tribunal dated 05.04.2024 Ld. Adjudicating Authority has closed the CP IB No. 428 of 2021 filed by the IFCI against the Appellant - Mohit Arora vide order dated 13.06.2024. 41. It appears to be an admitted situation that the petition no. 428 of 2021 was filed by the IFCI on 02.06.2021. Thus the same was filed during the pendency of the first petition filed by the PNB being CP IB No. 203 of 2021 which according to us was filed on 26.03.2021. Thus, the petition no. 428 of 2021 filed by the IFCI was filed during the interim moratorium commenced by the filing of the first petition by the PNB being CP IB No. 203 of 2021 on 26.03.2021. Therefore, in our considered opinion the petition filed by the IFCI i.e. 428 of 2021 on 02.06.2021 was barred by the interim moratorium commenced by the filing of the first PNBHFL petition being CP IB No. 203 of 2021 and thus was non-est in the eye of law and therefore the non-est petition being CPIB No. 428 of 2021 filed by the IFCI may not commence any interim moratorium under Section 96 of the Code. 42. The view which has been taken by us herein before is supported by the decision of a co-ordinate Bench of this Appellate Tribunal in S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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, admittedly moratorium came to an end and there was no prohibition and the interim moratorium no longer existed, but what is the consequence of withdrawal of Section 95 application on 10.11.2025 on the moratorium, which was in operation on 05.08.2025, when Section 95 application filed by Catalyst Trusteeship Ltd. against the Appellants. 24. The statutory moratorium which has triggered on 12.01.2025, continued to operate till 10.11.2025 when application filed by Canara Bank was withdrawn. Section 101 of the IBC provides that when application under Section 100 is admitted, a moratorium shall commence, which shall cease to have effect at the end of period of 180 days. Thus, moratorium comes to an end on the day when application is admitted or rejected. The interim moratorium which commences on filing an application, is a statutory moratorium provided by enactment. During the interim moratorium various actions are prohibited as enu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erating on the day when Section 95 application filed by Catalyst Trusteeship Ltd. is no longer existed after 10.11.2025. Parties shall bear their own costs. 43. The facts of the aforesaid Sushant Chhabra's case are identical with the facts of the instant case and therefore in our considered opinion when the IFCI petition being CP IB No. 428 of 2021 was filed on 02.06.2021 during the interim moratorium commenced by the filing of the petition by the PNB being 203 of 2021 the petition filed by the IFCI on 02.06.2021 would be deemed to be non-est in the eye of law and therefore cannot commence any interim moratorium. Therefore, we do not find any force in the submissions of Ld. Counsel for the Appellant that the second petition filed by the PNB CP IB No. 395 of 2021 on 24.07.2021 is barred by the interim moratorium of CP IB No. 428 of 2021, for the reason that CP IB No. 428 of 2021 is/was non-est in the eye of law and could not commence any interim moratorium. 44. The other submissions which has been raised by the appellants is that the liability of the appellant -guarantors is discharged upon change of the borrower. It is submitted by Ld. Counsel for the Appellant that vide orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad stood guarantor to the loan jointly taken by all the borrowers namely Supertech, Sarv Realtors Pvt. Ltd. and ASP Sarin and since the liability of the Principal borrower and guarantor is co-extensive and the loan has not been paid by the Principal Borrowers the liability to pay that loan would always be of the guarantors. 48. Ld. Counsel for the Appellant has vehemently submitted that there was no occasion for the Tribunal to have looked into the record of the CP IB No. 428 of 2021 without providing any opportunity to the appellant to address on the same and moreover there was no jurisdiction vested in the adjudicating authority to have used the inherent powers vested in it and there was absolutely no material concealment made or fraud played by the appellant and the Ld. Adjudicating Authority has committed an illegality in returning the finding of fraud against the appellant without providing any opportunity to him to defend the said charge. 49. Ld. Counsel for the appellant in support of his submissions has relied on the following case laws: (i) Mr. Ravi Ajit Kulkarni vs. State Bank of India, CA (AT) (Ins) No. 316 of 2021. (ii) Krishna Kumar Basia vs. St....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FCI dismissed by this Appellate Tribunal by submitting that the RP has already been appointed in petition no. 395 of 2021 (the second petition filed by the PNBHFL) and thereafter taken a defence before the Ld. Adjudicating Authority that petition no. 395 of 2021 is also not maintainable in view of the fact that the same has been filed during the interim moratorium commenced by the petition no. 428 of 2021 filed by IFCI, rendering the financial creditors without any remedy. 53. We have considered the rival submissions made by Ld. Counsel for the parties and have also perused the findings given by the Ld. Adjudicating Authority pertaining to the concealment of fact and alleged fraud committed by the appellant and we find that the Ld. Adjudicating Authority has noted sequence of events in paragraph no. 10,11, 12 and 13 of the impugned judgment and found that the instant case is of the material concealment of facts by the Respondent/Personal Guarantor (appellant before us) regarding pendency of Section 95 proceedings against him by another creditor in another Bench of the Tribunal which has led to the appointment of RP in the petition which was filed subsequently and thereafter by l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, 2016 has been used by the Ld. Adjudicating Authority and as a general rule it has been noticed that the fraud vitiates all the judicial acts and the interim moratorium is not an exception. 55. We are of the considered view that the finding returned by the Ld. Adjudicating authority against the appellant is pertaining to the abuse of the process and of material concealment of facts which in our opinion also is evident on record. So far as the act of the Ld. Adjudicating Authority in looking into the record of another petition is concerned we do not find any illegality therein as well. 56. No litigant could be permitted to play hide and seek with the Courts and who so ever is coming before the Court of law is duty bound to disclose all the material facts which are in his or her knowledge and the act of the appellant in not informing the Tribunal with regard to the pendency of the IFCI petition certainly amounts to the abuse of the process and material concealment of fact, if not fraud. What the appellant has done is that he got the petition filed by the IFCI dismissed on the ground that RP has already been appointed in the second petition of PNBHFL pertaining to which impug....