Case Note & Summary
The appellant, Indian Bank, a Financial Creditor, filed a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 against the respondent, T. Prabhakar, who was the Personal Guarantor of a Corporate Debtor. The National Company Law Tribunal (NCLT), Chennai Bench, dismissed the petition vide order dated 13.12.2024 in C.P (IB) 83/2024. The dismissal was on the ground that another petition under Section 95, being C.P. (IB) No. 785/2020, had already been filed by IDBI Trusteeship Services Limited against the same Personal Guarantor, and an interim moratorium under Section 96 of the I&B Code was in force. The NCLT held that in light of the moratorium, no other legal proceedings could be initiated against the Personal Guarantor by any other Financial Creditor. Aggrieved, Indian Bank appealed to the National Company Law Appellate Tribunal (NCLAT), Chennai. The NCLAT framed the issue as whether, during the subsistence of a moratorium under Section 96, any other legal proceedings can be initiated by another Financial Creditor. The NCLAT answered in the negative, affirming the NCLT's order. The appeal was dismissed, upholding the dismissal of the Section 95 petition.
Headnote
A) Insolvency and Bankruptcy Code - Personal Guarantor - Moratorium under Section 96 - Bar on Subsequent Petitions - The issue was whether a Financial Creditor can file a petition under Section 95 of the I&B Code, 2016 against a Personal Guarantor when another petition under Section 95 is already pending and an interim moratorium under Section 96 is in force - The NCLAT held that once a moratorium under Section 96 is imposed, no other legal proceedings can be initiated against the Personal Guarantor by any other Financial Creditor - The appeal was dismissed as the impugned order correctly dismissed the petition (Paras 2-3).
Issue of Consideration
Whether, at the stage when the moratorium has been imposed under Section 96 of the I & B Code, 2016, any other legal proceedings can be initiated by any other Financial Creditor against the Personal Guarantor
Final Decision
The appeal is dismissed. The impugned order dated 13.12.2024 passed by NCLT, Chennai Bench in C.P (IB) 83/2024 is upheld.
Law Points
- Moratorium under Section 96 IBC bars initiation of any other legal proceedings against the personal guarantor
- Section 95 petition cannot be filed when another Section 95 petition is already pending and interim moratorium is in force
