Section 96 of IBC – Interim moratorium commences only after application is given regular case number by NCLT

IBC – SARFAESI – Insolvency resolution and bankruptcy for individuals & Partners – Sections 94 and 96 of IBC – No interim moratorium until application is formally numbered by NCLT.

The petitioner is sleeping partner and has 20% share in the respondent no.3 LLP Firm – corporate debtor.

On 31.10.2022, the account of respondent no.3 LLP was rendered NPA and thereafter, the Bank initiated SARFAESI proceedings with notice to the borrower and the petitioner being a guarantor.

The Bank had filed application under Section 14 of SARFAESI before the Chief Judicial Magistrate.  Although the petitioner filed affidavit on 15.7.2019 and mentioned about pending proceedings before NCLT, the CJM allowed by the order dated 30.6.2022 and appointed Commissioner to assist Bank to take possession of the property.

According to the petitioner, any action to foreclose, recover or enforce any security interest under the Act of 2002 shall be deemed to have been stayed on filing of the application for insolvency.

On 21.8.2022, the petitioner filed application for insolvency resolution process under Section 94 of IBC and the NCLT assigned a diary number.

HELD that the interim moratorium will come into play only after the application is formally numbered by NCLT.

Jeny Thankchan Vs. Union of India and others Judgment dated 17.11.2023 in W.P. (Civil) No.31502 of 2023