TaxTMI 
TaxTMI 
2026 (9) TMI 1429
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.... For the Petitioner in WP/3374/2026: Mr. Charles D'Souza a/w Mr. Archit Virmani, Ms. Pragati Gothi, Ms. Richa Shukla, Mr. Atul Gupta, and Mr. Rupak Sawangikar i/b Archit Virmani. For the Respondent Nos. 1 to 4: Mr. Rohit Agarwal a/w Ms. Kruti Bhavsar, Mr. Abhishek Pandey and Ms. Angel Pandey in WP/3374/2026. For the Petitioner: Mr. Rohaan Cama a/w Mr. Charles D'Souza, Mr. Rupak Sawangikar, Ms. Pragati G. and Ms. Somya Tripathi i/b T N Tripathi & Co. in WP/7805/2026. For the Respondents: Mr. Harish Adwant (through V.C.) in WP/7805/ 2026. For the Petitioner: Mr. Charles D'Souza a/w Ms. Pragati Gothi, Mr. Nikhil Rajani, Ms. Mrunalini Deshpande and Ms. Arya Chougule i/b M/s. V. Deshpande & Co. in WP/7587/2026, WP/7598/2026 & WP/7600/ 2026. For the Respondent: Mr. Viraj Parekh a/w Mr. Shamant Satiya, Ms. Shubhra Swami, Mr. Priyansh R. Jain and Mr. Punit Agarwwal Nos. 2 to 4 in WP/7587/2026 and Respondent No. 2 in WP/7598/2026. For the Respondent No. 2: Mr. Shamant Satiya a/w Mr. Priyansh R. Jain and Mr.Punit Agarwwal in WP/7600/2026. For the Petitioner: Mr. Shadab S. Jan a/w Ms. Sabeena Mahadik, Mr. Pankaj Uttaradhi and Mr. Bhargav Samant in WPL/22742/2026 and for....
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....missions on the said question of law in the context of the respective factual matrix of each writ petition. Therefore, in this judgement in Part-I, the question of law is being discussed and decided and thereafter, in Part-II, the facts pertaining to individual writ petitions are considered to dispose of the writ petitions in the light of the findings on the question of law and application of the findings to the facts of each case. 4. The submissions of the counsel are being referred hereinbelow on the aforesaid question of law. While dealing with individual writ petitions, the factual submissions would be referred, so as to dispose of the writ petitions, inter alia, in the light of findings rendered on the aforesaid question of law. PART-I SUBMISSIONS ON THE QUESTION FOR CONSIDERATION 5. Mr. Cama, learned counsel appearing for the petitioner in Writ Petition No.7805 of 2026 submitted as follows:- (a) Sub-section (4) to Section 96 of the IBC was introduced by way of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 and by Notification issued by the Central Government, it was made effective from 26.05.2026. It was specifically submitted that the said prov....
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....ceased to operate upon the aforesaid amendment coming into operation with effect from 26.05.2026. In this context, reliance was also placed on the said recent judgement of a learned Single Judge of this Court in the case of Tata Capital Financial Services Limited Vs. Neel Motors LLP and others (supra). (e) The learned counsel for the petitioner made elaborate submissions on the mischief sought to be addressed by Legislature by introducing sub-section (4) to Section 96 of the IBC. In this context, reference was made to the report of the Select Committee on the IBC (Amendment) Bill 2025 presented to the Lok Sabha. By referring to the relevant portions of the said report, particularly the recommendations made therein, it was submitted that the whole purpose of introducing the amendment was to address the mischief of misuse of interim moratorium under Section 96 of the IBC by unscrupulous debtors, which had resulted in frustrating the object of the IBC. It was submitted that when the purpose of introducing the amendment was to cure such a mischief, not applying the same to pending proceedings would be a travesty. (f) The learned counsel for the petitioner addressed th....
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.... IBC was procedural in nature was to be accepted for the sake of argument, the same cannot be a determinative factor to hold in favour of the petitioner. (d) Reliance was placed on judgement of the Supreme Court in the case of Rakesh Bhanot Vs. Gurdas Agro Private Limited, (2025) 6 SCC 781, to emphasize upon the critical importance of interim moratorium under Section 96 of the IBC, which provides an opportunity to the debtor to reorganize financial affairs without immediate threat of creditor's actions. On this basis, it was submitted that such a critical protection could not be taken away by introduction of the said amendment and addition of sub-section (4) to Section 96 of the IBC. Reliance was also placed on a judgement of the Division Bench of Calcutta High Court in the case of Ambootia Tea Exports Pvt. Ltd. and others Vs. Sri Rani Sati Abasan Pvt. Ltd., 2026 SCC OnLine Cal 10219, to contend that the aforesaid amendment was not applied by the Calcutta High Court to a pending suit. On this basis, it was submitted that the question of law deserves to be answered by holding that the aforesaid amendment applies prospectively and that, it cannot apply to pending proceedings....
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....gement of the Supreme Court in the case of Dilip B. Jiwrajka Vs. Union of India, (2024) 5 SCC 435, to contend that till the stage of Section 100 of the IBC pertaining to admission of an application is reached, no judicial determination takes place. On this basis, it was reiterated that the amendment in the present case introduced in sub-section (4) of Section 96 of the IBC is clearly procedural in nature and hence, it must operate retroactively. In order to emphasize the said aspect, reliance was placed on judgements of the Supreme Court in the cases of Shanti Conductors Private Limited Vs. Assam Electricity Board, (2019) 19 SCC 529; Trimbak Damodhar Raipurkar Vs. Assaram Hiraman Patil, 1961 SCC OnLine SC 397; Dilip Vs. Mohd. Azizul Haq and another, (2000) 3 SCC 607; State Bank's Staff Union (Madras Circle) Vs. Union of India, (2005) 7 SCC 584; and J. S. Yadav Vs. State of Uttar Pradesh, (2011) 6 SCC 570. (e) It was submitted that the contesting respondent is not justified in relying on Section 6 of the General Clauses Act, 1897 because in the present case, we are not concerned with repealing of an Act. It was sought to be emphasized that mere filing of a petition under Se....
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....rties, including the petitioner, as the benefit of extension of limitation under Section 179(3) of the IBC would be taken away. It was submitted that therefore, such an existing right or benefit for the creditor would also be adversely affected, which cannot be countenanced and this further demonstrates the error on the part of the petitioner in insisting that the said amendment should apply retroactively. (d) It was further submitted that sub-section (4) of Section 96 of the IBC introduced by way of amendment, creates a sub-class within a class, as it applies only to debts of personal guarantors to a corporate debtor as opposed to the pre-amendment situation, when the interim moratorium applied to all debts. If it is applied retrospectively or retroactively, Section 96(4) of the IBC would be rendered susceptible to challenge as being violative of Article 14 of the Constitution of India. (e) It was submitted that the said amendment cannot be said to be clarificatory or declaratory in nature. It was submitted that since an existing right was being taken away, it ought to apply only prospectively. (f) It was submitted that prior to IBC being enacted and com....
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....by creditors legitimately for recovery of their dues. (c) In this regard, reliance was placed on recent judgment and order of this Court in the case of Rozina Firoz Hajiani Vs. Union of India and others (supra), as also Bank of Baroda vs. Union of India & Anr., 2024 SCC OnLine Bom 3964 and Kapole Advertising Agency & Ors. vs. Standard Chartered Bank & Ors., 2026 SCC OnLine Bom 2673. (d) Reliance was also placed on the reports of the Insolvency Law Committee of February 2020 and the Select Committee, that ultimately led to introduction of sub-section (4) in Section 96 of the IBC. It was submitted that all these reports indicated an urgent requirement of addressing the aforesaid mischief in an appropriate manner, thereby demonstrating that failure to apply the said amendment to pending proceedings/ applications would defeat the very purpose of the amendment. (e) Reliance was placed on Mischief Rule / Heydon's Rule to contend that since the amendment was aimed at striking at such a mischief, there was no reason not to apply it to pending proceedings as mischief perpetuated in the pending proceedings, would continue to operate while applications filed after 2....
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....ated in good faith and they had suppressed the initiation of proceedings under Sections 94 and 95 of the IBC, only to divulge the same at the fag end of the proceedings, thereby indicating the mischief. Reliance was placed on the judgment of the Supreme Court in the case of Celier LLP vs. Sumati Prasad Bafna & Ors., 2024 SCC OnLine SC 3727, to contend that litigation must be conducted by the parties in good faith and no party can be permitted to abuse the process of law. (j) It was submitted that the attempt on the part of the respondents in these writ petitions to demonstrate that introduction of sub-section (4) to Section 96 of the IBC was prospective, by comparing amendments to other provisions, was not of much use to take their case forward. It was submitted that the effect of applying the said amendment prospectively would create an anomalous situation where the mischief perpetrated in applications in pending proceedings, at the time when the amendment was introduced, would continue unabated. This would frustrate the very object of introduction of the said amendment. On the basis of the said submissions, it was asserted that the said amendment must apply to pending pr....
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....rence was made to provisions added by way of amendment, which replaced existing provisions. In such new provisions added after deletion of the existing provisions, explanations were appended to make them operate retrospectively. Fourthly, those provisions added by way of amendment wherein while notifying the amendment, it was clarified that such provisions would come into effect from an anterior date. (d) It was emphasized that the amendment in the present case introducing sub-section (4) in Section 96 of the IBC, does not fall in any of the aforementioned four categories and it is silent about retroactive or retrospective operation. In this situation, it was insisted that the said provision introduced by way of amendment, must apply prospectively. (e) Much emphasis was also placed on fact that the words used in Section 96(4) of the IBC added by way of amendment were 'is filed', which is in simple present tense. It was submitted that the learned Single Judge of this Court in the recent judgment and order passed in the case of Tata Capital Financial Services Limited Vs. Neel Motors LLP and others (supra) has placed much emphasis on the said words, while holding tha....
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....e petitioners in other writ petitions. He added that the protection of interim moratorium under Section 96 of the IBC could never be given exalted status of a vested right, so as to be immune from the operation of the said amendment. At best, it could be said to be an existing right and in this regard, reliance was placed on the judgment of the Supreme Court in the case of Trimbak Damodhar Raipurkar Vs. Assaram Hiraman Patil (supra). (b) It was submitted that the interim moratorium under Section 96 of the IBC was only for the period till the stage of Section 100 of the IBC was reached. In such a situation, it cannot be said that once such an interim moratorium commenced, the beneficiary thereof had a vested right. (c) It was submitted that the effect of the amendment from 26.05.2026 on the pending proceedings was only that the interim moratorium ceased to exist and if there had been any breach of the interim moratorium till 26.05.2026, it could still be remedied. But, going forward the said interim moratorium would no longer be available and this would be in consonance with the very object of introduction of the said amendment. 12. Ms. Bhavsar, learned counsel ....
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....the doctrine of vested rights recognized by the Supreme Court in the case of Garikapatti Veeraya Vs. N. Subbiah Choudhury (supra). It was further submitted that the principles laid down in SEBI Vs. Rajkumar Nagpal (supra) were also applied in an erroneous manner and relevant judgments of the Supreme Court were not applied while interpreting the effect of the said amendment on pending proceedings. On this basis, it was submitted that the contentions raised on behalf of the petitioners in this regard deserve to be rejected. 13. In Writ Petition (Lodging) No. 22742 of 2026, Mr. Shadab Jan, learned counsel appearing for the petitioner reiterated his submissions recorded hereinabove in Writ Petition (Lodging) No. 24045 of 2026. He submitted that the amendment has to be applied retroactively even to proceedings pending on the date on which the amendment came into effect i.e. 26.05.2026. 14. On the other hand, Mr. Haryani, learned counsel appearing for respondent No. 2 in the said writ petition submitted as follows:- (a) By placing reliance on judgments of the Supreme Court in the cases of Keshavan Madhava Menon vs. State of Bombay, AIR 1951 SC 128, Govind Das & Ors. vs. In....
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....eliance placed on behalf of the petitioners on the judgment in the case of Vineeta Sharma vs. Rakesh Sharma & Ors. (supra) is misplaced because in the said case, the amendment did not divest any accrued rights. The amendment being beneficiary in nature was applied retroactively and therefore, the petitioners are not justified in relying upon the said judgment. Thereupon, the learned counsel proceeded to distinguish the judgements upon which the petitioners placed reliance, in order to contend that the said contentions deserve to be rejected. 15. In Writ Petition No. 3374 of 2026, Mr. D'Souza, learned counsel for the petitioner, reiterated his submissions recorded hereinabove on the issue of retroactive applicability of the said amendment. He further made submissions on the factual matrix of the case. 16. Mr. Agarwal, learned counsel appearing for the contesting respondents in the said writ petition, adopted the contentions raised by the learned counsel for the respondents in the connected writ petitions, to contend that the amendment cannot apply to pending proceedings and that the protection of the interim moratorium ought to continue. The learned counsel then proceeded to m....
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....fect to matters that have occurred in the past. - Also termed retrospective. (Black's Law Dictionary, 7th Edn., 1999) '"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, Foundations of European Community Law, p. 129 (1981). * * * Retrospective.-Looking back; contemplating what is past. Having operation from a past time. 'Retrospective' is somewhat ambiguous and that good deal of confusion has been caused by the fact that it is used in more senses than one. In general, however, the courts regard as retrospective any statute which operates on cases or facts coming....
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....equisites which had been drawn from antecedent events. Under the amended Section 6, since the right is given by birth, that is, an antecedent event, and the provisions operate concerning claiming rights on and from the date of the Amendment Act." 21. Thereafter, in the case of SEBI Vs. Rajkumar Nagpal (supra), while considering the applicability of a Circular issued by the Board to pending cases, the Supreme Court held as follows:- "99. We are of the opinion that the SEBI Circular has retroactive application. In Principles of Statutory Interpretation by Justice G.P. Singh (14th Edn., 2016 at p. 583), it is stated that: "The rule against retrospective construction is not applicable to a statute merely because "a part of the requisites for its action is drawn from a time antecedent to its passing". If that were not so, every statute will be presumed to apply only to persons born and things which come into existence after its operation and the rule may well result in virtual nullification of most of the statutes." (emphasis supplied) 100. In Vineeta Sharma v. Rakesh Sharma [Vineeta Sharma v. Rakesh Sharma, (2020) 9 SCC 1 : (2021) 1 SCC (....
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....cently in the case of M. Rajendran and others Vs. KPK Oils and Proteins India Private Limited and others (supra), while discussing the principles concerning retrospective applications of legislation, made an observation even with regard to retroactive operation. The relevant portion reads as follows:- "192. We may summarize the principles on retrospective application of legislations as under: (i) Presumption against retrospectivity is not applicable to enactments which merely affect procedure or change the forum or are declaratory; (ii) Retroactive/retrospective operation can be implicit in a provision construed in the context where it occurs; (iii) Given the context, a provision can be held to apply to cause of action after such provision comes into force, even though the claim on which the action may be based may be of an anterior date; (iv) A remedial statute applies to pending proceedings and such application may not be taken to be retrospective if application is to be in future with reference to a pending cause of action; and (v) The SARFAESI Act is a remedial statute intended to deal with problem of pre-existing loan trans....
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.... of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does not constitute vested rights. In Webster's Comprehensive Dictionary (International Edn.) at p. 1397, 'vested' is defined as: '[L]aw held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests.' " 21. The word "vest" is normally used where an immediate fixed right in present or future enjoyment in respect of a property is created. With the long usage the said word "vest" has also acquired a meaning as "an absolute or indefeasible right". It had a "legitimate" or "settled expectation" to obtain right to enjoy the property, etc. Such "settled expectation" can be rendered impossible of fulfilment due to change in law by the legislature. Besides this, such a "settled expectation" or the so-called "vested right" cannot be countenanced against public interest and convenience which are sought to be served by amendment of the law. (Vide Howrah Municipal Corpn. v. Ganges Rope Co. Ltd. [(2004) 1 SCC 663])" 27. In the said judge....
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....fore, be a provision dealing with the execution of arbitral awards. This being the case, we need to refer to some judgments in order to determine whether execution proceedings and proceedings akin thereto give rise to vested rights, and whether they are substantive in nature. 61. In Lalji Raja and Sons v. Firm Hansraj Nathuram [Lalji Raja and Sons v. Firm Hansraj Nathuram, (1971) 1 SCC 721], this Court was concerned with a judgment-debtor's right to resist execution of a decree. Section 20(1)(b) of the Code of Civil Procedure (Amendment) Act, 1951 was extended to Madhya Bharat and other areas, as a result of which the judgment-debtor's right to resist execution of a decree was protected. In this context, this Court held that the Amendment Act, 1951 made decrees, which could have been executed only by courts in British India, executable in the whole of India. Stating that the change made was one relating to procedure only, this Court held: (SCC p. 728, paras 15-16) "15. This provisions undoubtedly protects the rights acquired and privileges accrued under the law repealed by the Amending Act. Therefore the question for decision is whether the non-executability of th....
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....he decree-holders in executing their decree in that court on the earlier occasion and not because of any vested rights of the judgment-debtors. Even if the judgment-debtors had not objected to the execution of the decree, the same could not have been executed by the court at Morena on the previous occasion as that court was not properly seized of the execution proceedings. By the extension of "the Code" to Madhya Bharat, want of jurisdiction on the part of the Morena Court was remedied and that court is now made competent to execute the decree. 16. That a provision to preserve the right accrued under a repealed Act "was not intended to preserve the abstract rights conferred by the repealed Act.... It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute"-see Lord Atkin's observations in Hamilton Gell v. White [Hamilton Gell v. White, (1922) 2 KB 422 (CA)]. The mere right, existing at the date of repealing statute, to take advantage of provisions of the statute repealed is not a "right accrued" within the meaning of the usual saving clause-see Abbott v. Minister for Lands [Abbott v. Minister for Lands, 1....
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....pondents. It has been argued, relying upon a number of judgments, that since Section 36 is a part of the enforcement process of awards, there is a vested right or at least a privilege accrued in favour of the appellants in the unamended 1996 Act applying insofar as arbitral proceedings and court proceedings in relation thereto have commenced, prior to the commencement of the Amendment Act. The very judgment strongly relied upon by the Senior Counsel for the appellants, namely, Garikapati Veeraya [Garikapati Veeraya v. N. Subbiah Choudhry, 1957 SCR 488 : AIR 1957 SC 540], itself states in Proposition (v) at p. 515, that the vested right of appeal can be taken away only by a subsequent enactment, if it so provides specifically or by necessary intendment and not otherwise. We have already held that Section 26 does specifically provide that the court proceedings in relation to arbitral proceedings, being independent from arbitral proceedings, would not be viewed as a continuation of arbitral proceedings, but would be viewed separately. This being the case, it is unnecessary to refer to the judgments such as Union of India v. A.L. Rallia Ram [Union of India v. A.L. Rallia Ram, (1964) 3 ....
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....ty (NCLT), either recommending the approval or rejection of the application. Section 100 of the IBC provides that the adjudicating authority shall within 14 days from the date of submission of the report under Section 99 thereof pass an order, either admitting or rejecting the application referred to in Section 94 or 95, as the case may be. It is crucial to note that upon the application being admitted by the adjudicatory authority under Section 100 of the IBC, a moratorium commences under Section 101 thereof for a period of 180 days. It is crucial to note that if the application filed under Section 94 or 95 of the IBC is rejected by the adjudicating authority under Section 100(4) thereof, on the basis of the report submitted by the resolution professional that the application was made with the intention to defraud creditors, the order of the adjudicating authority under Section 100(1) of the IBC shall record that the creditor is entitled to file for a bankruptcy order under Chapter IV. Section 121 of the IBC, under Chapter IV pertaining to Bankruptcy Order for Individuals and Partnership Firms, in sub-section (1) thereof specifically provides that an application for bankruptcy of ....
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....arily a transitory arrangement, during the period when the insolvency professional is in the process of preparing a report under Section 99 of the IBC, to place the same for consideration before the adjudicating authority. The journey of the application under Section 94 or 95 of the IBC towards its culmination in the form of the same being either admitted or rejected by the adjudicating authority under Section 100 of the IBC, upon consideration of the report submitted by the resolution professional under Section 99 thereof, is purely procedural in nature and there is no question of the interim moratorium under Section 96 giving rise to a 'vested right' in the debtors. 33. Once the aforesaid aspect of the matter is appreciated in the correct perspective, the ratio of the aforementioned judgement of the Supreme Court in the case of BCCI Vs. Kochi Cricket Private Limited and others (supra), applies with full force. As a matter of fact, the other aforementioned judgements, clarifying the concept of retroactive amendment of a statute, also apply, thereby demonstrating that the creditors in these cases, are justified in contending that although the amendment adding sub-section 4 to Se....
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....etion, we are of the opinion that the beneficiaries of the interim moratorium cannot claim any vested right. We are unable to accept the contention that such parties have a vested right in such a procedural realm, of not being proceeded against in accordance with law or that there is a corresponding duty upon the creditors not to proceed against them. As held in the case of BCCI Vs. Kochi Cricket Private Limited and others (supra), the amendment has merely removed a clog on the right of the creditors to proceed in accordance with law. The debtors do not have a right to stay of such proceedings. 36. Moreover, consideration of the rival submissions cannot be divorced from the whole purpose for which the aforesaid amendment had to be introduced. The purpose for which the amendment was introduced can be gathered from the material that triggered the legislature to introduce sub-section 4 in Section 96 of the IBC. In this context, the petitioners/creditors are justified in referring to and relying upon the relevant portion of the report of the Select Committee on the IBC (Amendment) Bill, 2025. The aforesaid Bill ultimately culminated into the amending Act. The relevant portion of the....
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.... prevent such wrongful disposal of assets by PG, provisions for moratorium may be introduced to prohibit alienation of assets by the guarantors post filing of the application. 47.5 Examination by the Committee: 47.5.1 The Ministry in their written replies to the corresponding suggestions above have submitted as under: (i) The interim moratorium under section 96 provides that upon the filing of an application, all legal actions or proceedings pending in respect of the concerned debt shall remain stayed, and creditors shall not initiate any legal action or proceeding in respect of such debt. Concerns have been expressed regarding the misuse of initiation of the individual insolvency resolution process (IIRP)by PGs to take advantage of the interim moratorium. To remove any perverse incentives to initiate IIRP, the proposed amendment seeks to dispense with the concept of interim moratorium for the insolvency of PG to CD. Hence, the provision in the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 may be retained without any change. (ii) Additionally, Part III currently applies to personal guarantors, who may or may not be MSMEs. Hence, the provi....
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....ervations / Recommendations of the Committee: The Committee note that Clause 47 seeks to amend Section 96 to exclude personal guarantors to corporate debtors from the scope of the interim moratorium. The Committee observe that this amendment is aimed at addressing a persistent concern flagged by the Adjudicating Authority and insolvency practitioners namely, the misuse of interim moratorium by personal guarantors who file applications solely to obstruct or delay legitimate recovery proceedings, a major loophole confirmed by NCLT members to be responsible for significant value erosion. The Committee, having considered detail submissions of the Ministry and IBBI, underscore that removing this unnecessary pre-admission shield is essential. The Committee observe that the law, consistent with SARFAESI Act and Supreme Cour judgements, treats the borrower and the guarantor on the same footing upon default, and the proposed amendment does not deprive personal guarantors of the right to seek insolvency resolution or bankruptcy under Part Ill of the Code. In view of the above, and recognising the need to curb strategic filings and strengthen the integrity of the insolvency process, ....
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....dment for adding sub-section 4 to Section 96 of the IBC, was to address the mischief of rampant and deliberate misuse of the interim moratorium triggered under Section 96 of the IBC, merely by filing of applications under Sections 95 and/or 96 of the IBC. 41. As a matter of fact, judicial notice of such gross misuse was also taken by the Courts. It was found that the route of filing applications under Sections 94 and/or 95 of the IBC, was being taken, not with the purpose of triggering the procedure for examination of applications and preparation of report by the resolution professional, for the applications to be considered for admission or rejection by the adjudicating authority, but only with the sole intention of triggering and enjoying interim moratorium under Section 96 of the IBC. It was found that the applications under Section 94 and 95 were being indiscriminately filed, certain papers being collected and eventually thrown into the Registry of the NCLT, to claim that the moment such applications were filed, interim moratorium was triggered under Section 96 of the IBC. It came to notice that creditors had started adopting this path at stages, when the creditors were on t....
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....16 (hereinafter referred to as 'the IBC' for short) to frustrate secured creditors and auction purchasers from proceeding, in accordance with law, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Securitisation Act' for short). 2. In a number of such matters, it is found that the borrowers/ guarantors act as fence sitters and do not take any steps when the secured creditors proceed under Section 13(2) of the Securitisation Act and take further consequential steps, till the culmination of the process and auction purchasers coming into the picture. At the stage when the auction sale has been conducted and the auction purchaser has come into the picture, in a few instances, even after the sale certificate is issued, when physical possession of the secured asset is about to be handed over to the auction purchaser, the original borrowers/guarantors initiate collusive proceedings under Section 94 or Section 95 of the IBC, claiming triggering of moratorium under Section 96 thereof, the moment such proceedings are filed before the National Company Law Tribunal (NCLT). A....
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....e very object of the IBC, apart from paralyzing the whole process of lawful steps taken by secured creditors in respect of secured assets under the provisions of the Securitisation Act. As noted hereinabove, chronic defaulters of loan and financial facilities, when facing the heat of proceedings initiated by secured creditors reaching culmination, scamper to file proceedings under Sections 94 and 95 of the IBC in a collusive manner, so as to claim that the moment such proceedings are initiated, moratorium is triggered under Section 96 thereof, as a result of which further lawful proceedings are stayed. The filing of such proceedings under the IBC is only with the object of frustrating the legal process and it has nothing to do with the object with which the IBC was enacted." 45. Thus, judicial notice was taken of the manner in which applications under Sections 94 and/or 95 of the IBC were being filed, not with the intention and purpose for which Chapter III Part III of the IBC, was enacted, but with the sole intention of somehow seeking benefit of interim moratorium triggered under Section 96 of the IBC. The 'mischief' was noticed by the legislature as well as the judiciary. On ....
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....in our legal system and hence, it is an accepted Rule of interpretation. We find that the said Rule applies in the facts of the present case, to advance the proposition that sub-section 4 to Section 96 of the IBC introduced by way of amendment, must apply retroactively to pending proceedings also. This would advance the cure and remedy of addressing the mischief and it would not be appropriate to apply the same only prospectively, in the context of applications filed on or after 26.05.2026. 48. In this context, an attempt was made on behalf of the parties in these cases, advancing the proposition that the amendment ought to be applied prospectively, to claim that the applications filed bona fide, under Sections 94 or 95 of the IBC for insolvency resolution of personal guarantors to a corporate debtor, should not be adversely affected and painted in the same brush as mischievously initiated applications. We are of the opinion that when the legislature has acted, specifically taking note of the rampant mischief and misuse of the said provisions and larger and considerable public interest is involved in bringing about the said amendment, it ought to be applied in such a manner that....
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....ontention that the aforesaid amendment ought to be applied prospectively from 26.05.2026. It was claimed on behalf of the respondents that a bare reading of sub-section 4 to Section 95 of the IBC, added by way of amendment, shows that the words used therein on a literal interpretation, indicate that it must apply prospectively. It was claimed that the words 'is filed' used in the said provision being in simple present tense, demonstrate that it cannot operate retrospectively. 54. We find that the contentions raised by the creditors/petitioners in these petitions, concern retroactive operation of amendment and hence, the said contention that literal reading would show that the amendment cannot apply retrospectively, is without any substance. The said submission made on the basis that use of the words 'is filed' must necessarily mean that the amendment can only apply prospectively, is found to be without any substance. There is nothing to indicate that use of the words in sub-section 4 of Section 96 of the IBC, would necessarily mean that it would apply to the applications to be filed in future. If that was the case, the legislature would have used words such as 'to be filed' or o....
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....lanation is not appended to make it operate retrospectively or because the amendment does not notify an anterior date of its coming into effect, the subject amendment must be applied prospectively. We are unable to accept the said contention for the reason that a plain reading of sub-section (4) added by way of amendment to Section 96 of the IBC shows that it must apply retroactively. The said elaborate exercise of categorization of provisions and comparing them with the Section 96(4) of the IBC is based on a misconception that the said provision is being applied retrospectively. We are of the opinion that there is a fundamental difference between the concepts of retrospectivity on the one hand and retroactivity on the other. Since we have come to the conclusion that the subject amendment in these cases pertaining to Section 96(4) of the IBC applies retroactively, the said contention raised on behalf of the respondents deserves to be rejected. Accordingly, it is rejected. 58. We also do not find much substance in the contentions raised on behalf of some of the respondents in these petitions by placing reliance on the judgment of the Supreme Court in the case of Manish Kumar vs. ....
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.... and ineffective. We find that Section 96(1)(b)(ii) of the IBC cannot be read to oust the jurisdiction of a Court or tribunal which would otherwise have jurisdiction. It only prevents a proceeding filed to have any effect during the interim moratorium and obviously such a proceeding if filed cannot be labeled as void ab initio. 61. In the light of the discussion hereinabove, in the context of the principle of retroactive operation of the amendment, we do not find any substance in reliance placed on behalf of the respondents on judgments in the cases of Vijaya Kumari Vs. Union of India (supra), Ambootia Tea Exports Pvt. Ltd. and others Vs. Sri Rani Sati Abasan Pvt. Ltd. (supra), Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited (supra), State of Maharashtra & Ors. vs. Prism Cement Limited & Anr., (2025) 4 SCC 300, Keshavan Madhava Menon vs. State of Bombay (supra), Govind Das & Ors. vs. Income Tax Officer & Anr. (supra), State of Punjab & Ors. vs. Bhajan Kaur & Ors. (supra), State of Punjab vs. Mohar Singh, (1954) 2 SCC 483, Shyam Sunder & Ors. vs. Ram Kumar & Anr. (supra), Garikapatti Veeraya Vs. N. Subbiah Choudhury (supra) and Sree Sankarach....
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....e findings rendered by the learned Single Judge of this Court in the judgment in the case of Tata Capital Financial Services Limited Vs. Neel Motors LLP and others (supra) and order of the learned Single Judge of Delhi High Court in the case of IDBI Trusteeship Services Limited vs. Manish Jain & Ors. (supra). PART-II CONSIDERATION & DISPOSAL OF WRIT PETITIONS 66. Since the aforesaid question arose in all these petitions, its effect shall be applied to the said petitions, apart from dealing with the individual factual matrix thereof. In that light, the writ petitions are now taken up for consideration. WRIT PETITION NO. 7805 OF 2026 (A.S.) (Assets Reconstruction Co. India Limited & Ors. vs. Veer Gurjar Aluminum Industries Private Limited & Ors.) 67. By this petition, the petitioners (creditors) have prayed for a clarification that filing of a petition against respondent No. 2, one of the Directors of the respondent No. 1-borrower company, by one Yuvraj Mate, under Section 95 of the IBC, does not operate as a stay to hearing of regular appeals filed by the petitioners against the respondents before the Debts Recovery Appellate Tribunal (DRAT), Mumbai. The petitioner....
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.... writ petition, are disposed of. WRIT PETITION NO. 2819 OF 2026 (O.S.) (Indian Bank Vs. Shabbir Abbas Patel) 72. The petitioner bank (secured creditor) has challenged orders dated 03.10.2024 and 13.03.2026 passed by the Debts Recovery Tribunal-I, Mumbai, whereby the petitioner bank was restrained from going ahead with auction proceeding and the said order was subsequently continued. A further declaration is sought regarding discontinuation of interim moratorium under Section 96 of the IBC in the light of an order dated 18.02.2026 passed by NCLT, Mumbai, whereby the company petition filed under Section 95 of the IBC was dismissed. The petitioner has sought further ancillary directions for declaration that the actions of the petitioner bank in confirming sale in terms of auction conducted on 30.09.2024 and issuance of sale certificate and registration thereof in favour of the auction purchaser are legal and binding. The petitioner bank has also sought a consequential relief of directing respondent Nos.1 to 3 (borrowers / occupants of the secured asset) to handover vacant physical possession to the petitioner bank and / or the auction purchaser. 73. At the root of the chal....
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....02.2026, which stood registered on 06.05.2026, would be in the teeth of the position of law clarified hereinabove and it would be a travesty of justice to allow the said respondents to repeatedly indulge in such mischief, which definitely needs to be cured by application of the amendment. 77. In view of the above, Writ Petition No. 2819 of 2026 is allowed in the following terms:- (A) Impugned orders dated 03.10.2024 and 13.03.2026 are quashed and set aside. Hence, the restraining order issued by DRT-I shall cease to operate. (B) It is held that in the light of order dated 18.02.2026 passed by the NCLT dismissing the company petition filed earlier, interim moratorium had ceased to operate and DRT-I ought not to have continued the restraining order in the subsequent order dated 13.03.2026. (C) In any case, in the light of the position of law clarified hereinabove, as to the effect of the amendment, adding sub-section (4) to Section 96 of the IBC, interim moratorium triggered by filing of subsequent petition under Section 95 thereof before the NCLT, registered on 06.05.2026, ceased to operate with effect from 26.05.2026 i.e. the date of the said amendment....
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....pecial Leave Petition, appeared before the Supreme Court and filed an application for vacation of the interim order passed by the Supreme Court. After hearing the parties, the Supreme Court was pleased to confirm the interim order dated 18.06.2026 passed in the Special Leave Petition. It was directed that the same would operate till the disposal of the present writ petition. The petitioner herein was directed to handover possession of the subject property to the respondents herein, on or before 22.07.2026. After noting that the writ petition was listed for hearing before this Court on 31.07.2026, the Supreme Court requested this Court to make an endeavour to dispose of the said writ petition itself on the said date or on such other earlier date, as this Court may deem fit. Accordingly, the Special Leave Petition was disposed of. 81. Thereafter, when the present writ petition came up for consideration on 21.07.2026, having noted the directions issued by the Supreme Court, this Court directed that possession of the subject property should be handed over to the respondents, subject to the result of the writ petition. Thereupon, the writ petition was directed to be listed on 27.07.2....
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....und that interim moratorium was operating under Section 96 of the IBC. It is to be noted that the petition under Section 95 of the IBC was filed by proprietor of German Garments against respondent No. 1, who is not the owner of the subject property and it was kept pending only to trigger and enjoy the interim moratorium. The said petition was filed on 20.07.2025, three days after filing of the Securitisation Application before the DRT, and kept in defects, obviously with the intention of claiming interim stay of physical possession by relying upon interim moratorium under Section 96 of the IBC. It is an admitted position that the registration of the said petition was declined, on account of non-removal of defects, by the Registry of the NCLT. 86. On 02.01.2026, the Competent Magistrate passed an order extending the time period for obtaining physical possession of the secured asset and on 11.02.2026, the Court Commissioner scheduled the taking of physical possession on 05.03.2026. 87. On 01.03.2026, the respondents filed an interim application for amendment of the securitisation application and also an application, seeking stay of the aforesaid notice issued by the Court Commi....
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.... are rejected. 91. But, the other aspects of the matter need consideration. Mr.D'Souza, learned counsel for the petitioner submitted that the impugned order was wholly without jurisdiction as restoration of possession cannot be directed by way of interim order, during pendency of the securitisation application before the DRT. It was submitted that the observations of the DRT about 'oral directions' was without any substance, particularly in the light of the specific recording of the fact in the order dated 05.03.2026 that the respondents did not press the application for stay bearing Interim Application No. 721 of 2026, obviously because possession of the secured asset was already taken by the petitioner. It was submitted that the contention that possession of the secured asset was taken at 9:00 a.m. itself on 05.03.2026 is not borne out from the record, as the panchanama recorded while taking possession specifically records that the action of taking possession started at 11:00 a.m. and continued upto 12:15 p.m. There is nothing on record to show that the DRT at any point in time considered the three pronged test of strong prima facie case, balance of convenience and grave and i....
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....the present petition. A perusal of the order/proceeding recorded on 05.03.2026 by the DRT shows that the application for stay bearing Interim Application No. 721 of 2026 was disposed of as not pressed. Nothing in the said proceeding indicates that any submissions were made on behalf of the respondents about alleged highhandedness on the part of the petitioner, while taking physical possession of the secured asset, as per notice issued by the Court Commissioner in terms of the order passed by the Competent Magistrate under Section 14 of the Securitisation Act. 95. It was only in the application filed by the respondents bearing Interim Application No. 785 of 2026, seeking restoration of possession that allegations were made about 'oral directions' of the DRT being flouted. The petitioner filed reply to the said application, resisting the relief claimed therein, emphasizing that restoration of the possession cannot be directed at the interim stage by the DRT. 96. A perusal of the impugned order shows that the DRT observed that intimation was given to the Court Commissioner about 'oral directions', but possession was taken and that such an act was not 'appreciable to the law' whe....
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....ing at all about the respondents having made out even a prima facie case in their favour for either protecting the possession or seeking restoration of the possession of the secured asset. The admitted chronology of events shows that the respondents chose to file the securitisation application after the proceedings under the Securitisation Act had reached the stage of execution of the order passed by the Competent Magistrate under Section 14 of the Securitisation Act. The initial stay was obtained on the basis of merely orchestrating filing of a mischievous petition under Section 95 of the IBC, only to obtain the protection of interim moratorium under Section 96 thereof. The petition was not even pursued by the entity, which filed it, and registration of the same was declined by the NCLT. 99. Thereafter, merely four days prior to the possession of the secured asset being taken on 05.03.2026, the aforesaid second mischievous petition was orchestrated under Section 95 of the IBC to claim interim moratorium, thereby indicating the conduct of the respondents and lack of any submission on the merits of the matter. We are unable to agree with the respondents that the impugned order of....
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.... & ors.) WRIT PETITION NO.7598 OF 2026 (A.S.) (Apna Sahakari Bank Ltd. & anr. Vs. M/s. Warna Industries Limited & ors.) WRIT PETITION NO.7600 OF 2026 (A.S.) (Apna Sahakari Bank Ltd. & anr. Vs. M/s. Gandharv Farms & Resorts Pvt. Ltd. & ors.) 103. The petitioner in these three writ petitions is a bank, which is a secured creditor and the petitions have been filed impugning identical orders passed by the Debts Recovery Tribunal, Pune (DRT) in interim applications filed by the contesting respondents (borrowers / guarantors), preventing the petitioner bank from accepting balance 75% amount from the auction purchaser and further restraining it from issuing sale certificate. 104. According to the petitioner bank, such unreasoned orders having the drastic effect of stalling the logical consequences of action taken by the petitioner bank under the provisions of the Securitisation Act and that too, without hearing the auction purchaser, which is a vital party, demonstrates that the writ petitions filed directly challenging the impugned orders deserve to be entertained and allowed. It was submitted on behalf of the petitioner bank that even if ad-interim orders were to be pa....
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....ready rendered hereinabove against the contesting respondents. We have already held that sub-section (4) introduced in Section 96 of the IBC applies to pending proceedings, and therefore, the interim moratorium triggered by filing of the petition under Section 95 of the IBC ceased to exist from 26.05.2026 onwards. Accordingly, the contesting respondents cannot claim any interim reliefs and / or protection on the basis of such interim moratorium, which has ceased to operate. 108. The said respondents in these petitions have submitted that there is no indication of any mischief or connivance between the bank that filed the petition under Section 95 of the IBC and the contesting respondents herein. But, in the light of our finding rendered hereinabove that the amendment applies across the board as larger public interest cannot be ignored, particularly in the light of the opinion of stakeholders in such proceedings recorded in the aforesaid report of the Select Committee that triggering of interim moratorium under Section 96 had become the number one mechanism to siphon of crores of rupees by debtors, we are inclined to hold against the contesting respondents on the said aspect. ....
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....ion in the impugned orders on the question as to whether the contesting respondents satisfy the three pronged test of strong prima facie case, grave and irreparable loss and balance of convenience. Even if the DRT were to pass an ad-interim order, discussion on the said aspects was necessary, particularly in the light of the earlier securitisation applications filed by the contesting respondents and the history of the litigation between the parties. Such perfunctory orders having a drastic adverse effect on the petitioner bank (secured creditor) and the auction purchaser cannot be countenanced and therefore, the impugned orders deserve to be set aside. Accordingly, Writ Petition Nos.7587 of 2026, 7598 of 2026 and 7600 of 2026 are allowed and the orders impugned therein are quashed and set aside. WRIT PETITION (L) NO. 22742 OF 2026 (O.S.) (RBL Bank Limited Vs. State of Maharashtra & Ors.) WRIT PETITION (L) NO. 24045 OF 2026 (O.S.) (RBL Bank Limited Vs. State of Maharashtra & Ors.) 112. The petitioner bank has filed these two petitions for directions to the Court Commissioner to carry out the commission for execution of orders passed by competent Magistrates for taking....