TaxTMI 
TaxTMI 
2026 (8) TMI 243
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..... 2, 3 and 4 are individuals who are partners of Respondent No. 1 which is a limited liability partnership i.e. a body corporate. Respondent No. 5 is a distinct limited liability partnership and is a guarantor akin to Respondent Nos. 2, 3 and 4. 3. It is common ground that the Letters of Guarantee extended by the respective guarantor-Respondents contain an arbitration clause with the seat of arbitration being Mumbai. The existence of an arbitration agreement governing such indebtedness is writ large on the face of the record. 4. While this Petition had been filed way back in 2021, it is noteworthy that just about a month prior to this Petition being filed, the very same Petitioner also initiated Corporate Insolvency Resolution Process ("CIRP") against Respondent No. 1, which led to a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 ("IBC") taking effect. The CIRP having failed, it is common ground that Respondent No. 1 is now subject to liquidation proceedings pursuant to liquidation order dated April 1, 2022 passed by the adjudicating authority namely, the National Company Law Tribunal, Mumbai ("NCLT"). 5. Thereafter, the very same Petitioner also f....
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....way of relief in terms of way of clauses (c) and (d) which read thus: "(c) that pending the hearing and final disposal of the Arbitral proceedings, this Hon'ble Court be pleased to direct the Respondents to disclose on oath and/or on affidavit, the assets and properties, movable and/or immovable, owned by each of them giving complete details and this Hon'ble Court be pleased to attach such assets/properties of the Respondents; (d) that pending the hearing and disposal of Arbitration proceedings, making of the Arbitral Award and until final execution of the Arbitral Award, the Respondents, by themselves, their employees, servants and/or agents or otherwise howsoever be restrained by an order and injunction from in any manner selling, transferring, disposing-off, or alienating or encumbering or pledging or mortgaging or hypothecating or charging or parting with possession of or transferring or creating any right, title or interest or license in favour of anyone else in respect of the assets/properties either movable and/or immovable, that may be disclosed by the Respondents on oath and/ or on Affidavit;" 9. Mr. Yayha Batatawala, Learned Advocate on behalf of Resp....
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....y opinion, this provision would squarely fit within the ambit of a retroactive application. The reading of the words "is filed" as including those that have been filed and are pending, will not give retrospective effect, but will have prospective effect from the date on which the provision takes effect. Therefore, in my opinion, any Application that is filed for initiating an insolvency resolution process in respect of a personal guarantor to a corporate debtor would not fall within the ambit of Section 96(1) and related provisions with effect from May 26, 2026. In other words, anything that "is filed" would include within its sweep anything that has been filed and is continuing to remain under adjudication under the IBC. 12. In Rajkumar Nagpal1, in near-identical circumstances, the Supreme Court considered the introduction of a condition in relation to restructuring of debentures by issuance of a circular. The Supreme Court quoted from Principles of Statutory Interpretation by Justice G.P. Singh (14th Edn., 2016 at p. 583) as follows: "The rule against retrospective construction is not applicable to a statute merely because "a part of the requisites for its action is d....
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.... in the past or requisites which had been drawn from antecedent events." 101. The terms "retrospective" and "retroactive" are often used interchangeably. However, their meanings are distinct. This Court succinctly appreciated the difference between these concepts in State Bank's Staff Union (Madras Circle) v. Union of India [State Bank's Staff Union (Madras Circle) v. Union of India, (2005) 7 SCC 584 : 2005 SCC (L&S) 994]: "Retroactivity" is a term often used by lawyers but rarely defined. On analysis it soon becomes apparent, moreover, that it is used to cover at least two distinct concepts. The first, which may be called "true retroactivity", consists in the application of a new rule of law to an act or transaction which was completed before the rule was promulgated. The second concept, which will be referred to as "quasi-retroactivity", occurs when a new rule of law is applied to an act or transaction in the process of completion....The foundation of these concepts is the distinction between completed and pending transactions...." [T.C. Hartley, The Foundations of European Community Law 129 (1981).] 102. Many decisions of this Court define "retroactivi....
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....96 to frustrate the Petitioner's recovery proceedings. However, the provisions of Section 96, as amended, are agnostic to the person at whose behest the application under Section 95 of the IBC was filed. 17. I am also conscious that by legislative design, in a given situation, a lender with substantial interest may constitute a significant majority vote in the Committee of Creditors that would oversee the resolution process, and therefore in litigation between the individual undergoing insolvency and such creditor, there can arise a conflict of interest with the same creditor controlling both parties to the litigation. However, this is a matter of legislative design and the Court cannot import its notions of fairness in applying clearly articulated provisions of law. Besides, the absence of automatic moratorium under Section 96 for guarantors of corporate debtors undergoing corporate insolvency resolution process would only cover the temporary time period until the moratorium commences under Section 101 when the application filed under Section 95 of the IBC is adjudicated. 18. That said, I must mention that the only reason that the Section 9 Petition has not been considered t....