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TMI Blog2023 (11) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... the application or on the date the adjudicating authority passes an order on the repayment plan under Section 114, whichever is earlier. Section 101 provides that during the moratorium period, any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed. For an interim or final moratorium under Section 96 to come into force, the application filed by the debtor should be complete in all respects and without any procedural defects. In the case of the petitioner herein, the petitioner has only uploaded Ext.P4 application, which by itself cannot be treated as filing of an application as contemplated by Section 96. Unless there is any repugnancy between the provisions of the IBC 2016 and the provisions of the Act, 2002, there is no question of IBC 2016 overriding the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in totality - the petitioner is not entitled to urge the overriding effect of IBC 2016 based on the facts of the case for yet another reason. As far as the proceedings under the Act, 2002 initiated by the Bank, the petitioner has been proceeded against in his capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Chief Judicial Magistrate, invoking Section 14 of the Act, 2002. The petitioner would submit that along with Ext.P5 MC, the 6th respondent has not filed an affidavit in accordance with proviso to the Section 14(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Chief Judicial Magistrate, without ascertaining the maintainability of Ext.P5 MC, has passed Ext.P6 order dated 30.06.2022 allowing Ext.P5 MC. 4. Though the petitioner submitted Ext.P7 affidavit dated 15.07.2019 before the Chief Judicial Magistrate and intimated about the proceedings pending before the NCLT, the proceedings pursuant to Ext.P6 order has not been suspended. 5. The petitioner submits that any action to foreclose, recover or enforce any security interest under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 shall be deemed to have been stayed and any legal action or proceedings in respect of any debt shall be deemed to have been stayed as per Section 96(b) of the IBC 2016, on the petitioner filing an application under Section 94 of the IBC 2016 before the NCLT. The petitioner wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been admitted by the NCLT. The application has not been assigned a regular case number by the Tribunal. Therefore, the petitioner cannot contend that there is a deemed moratorium even for the corporate debtor. The writ petition is therefore liable to be dismissed, contended the Standing Counsel representing the Bank. 10. I have heard Sri. Shaji Chirayath, learned counsel for the petitioner, Sri. S. Manu, the learned Deputy Solicitor General of India representing the 1st respondent and Sri. Renjith R., the learned Standing Counsel appearing for the 4th respondent-Bank. 11. The pleadings in the writ petition would disclose that the 3rd respondent-LLP of which the petitioner is a Partner approached the 4th respondent-Bank and availed a loan of ₹65,10,000/-. The LLP defaulted in repayment of the loan and the account of the partnership was rendered NPA on 31.10.2022. Thereafter, the Bank initiated Section 13 proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and issued Section 13(2) notice to the borrower and to the petitioner, the petitioner being a guarantor. 12. The Bank approached the Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Sections 94 to 187 of the IBC 2016 shall come into force. 16. Section 94 of the IBC 2016 reads as follows:- 94. Application by debtor to initiate insolvency resolution process - (1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application. (2) Where the debtor is a partner of a firm, such debtor shall not apply under this Chapter to the Adjudicating Authority in respect of the firm unless all or a majority of the partners of the firm file the application jointly. (3) An application under sub-section (1) shall be submitted only in respect of debts which are not excluded debts. (4) A debtor shall not be entitled to make an application under sub-section (1) if he is (a) an undischarged bankrupt; (b) undergoing a fresh start process; (c) undergoing an insolvency resolution process; or (d) undergoing a bankruptcy process. (5) A debtor shall not be eligible to apply under sub-section (1) if an application under this Chapter has been admitted in respect of the debtor during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioner has filed Ext.P4 application invoking Section 94 of the IBC 2016 on 21.08.2023 and therefore as contemplated by Section 96(1)(b)(i), any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed. As a consequence, the proceedings initiated by the 1st respondent-Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 shall stand stayed in view of the statutory mandate of Section 96(1)(b)(i). 20. Section 14 of the IBC 2016 relates to moratorium which will come into play in the corporate Insolvency Resolution Processes initiated by Financial Creditors, Operational Creditors and by Corporate Applicants. Section 14 contemplates that the adjudicating authority shall by order declare moratorium for prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor. Under Section 14, an order of declaration of moratorium by the adjudicating authority is necessary. 21. However, in the Insolvency Resolution Processes under Part III Chapter III relating to individuals and partnership firms, the interim moratorium under Section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not duly numbered by the NCLT, the interim moratorium contemplated under Section 96(1)(b)(i) cannot come into operation. Therefore, the petitioner is not entitled to contend that the respondents cannot go ahead with the securitisation proceedings. 27. The argument of the petitioner that the IBC 2016 shall have overriding effect over the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 cannot be of any avail to the petitioner. It is true that in view of Section 238 of the IBC 2016, the IBC 2016 will have overriding effect. But, Section 238 of the IBC 2016 cannot oust the operation of the Act, 2002 for the reason that the IBC 2016 and the Act, 2002 operate in different fields. Therefore, unless there is any repugnancy between the provisions of the IBC 2016 and the provisions of the Act, 2002, there is no question of IBC 2016 overriding the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in totality. 28. The petitioner is not entitled to urge the overriding effect of IBC 2016 based on the facts of the case for yet another reason. As far as the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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