Moratorium Commences on First Financial Creditor’s Application, Regardless of Subsequent Registrations | NCLAT

Case Details: Sangita Arora v. IFCI Ltd. [2024] 166 taxmann.com 202 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Ashok Bhushan, J Arun Baroka
• Gaurav Mitra, Lokesh Malik, Adit Singh, Advs. for the Appellant.
• Amish Tandon, Ms Anushree Kulkarni, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant-personal guarantor had executed personal guarantees for a loan provided to the corporate debtor by respondent no.1-i.e. the financial creditor. Thereafter, the corporate debtor defaulted on loan and, financial creditor recalled loan and issued a demand notice against the appellant, initiating proceedings u/s 95 of the IBC to start a Corporate Insolvency Resolution Process (CIRP) against the appellant.

Meanwhile, another financial creditor, i.e., PNB Housing Finance Ltd. (PNBHFL), filed an application u/s 95 of the IBC, which was registered but, no order had yet been passed in the said application filed by PNBHFL.

The NCLT, vide the impugned order, appointed a Resolution Professional (RP), prompting the appellant to file an instant appeal challenging the NCLT’s order. Aggrieved by the NCLT’s order, the appellant filed an instant appeal on the ground that PNBHFL filed an application against the Personal Guarantor, which was registered on 02.08.2021.

Further, when the application of ‘PNBHFL’ was registered on 02.08.2021, the application was complete, and an interim moratorium was enforced; hence, no order should have been passed by the NCLT.

It was noted that there was no dispute between the parties regarding the date on which the application was filed by ‘PNBHFL’, which was subsequent to an application filed by respondent no.1 , i.e., on 24-7-2021. Still, it was registered on 2-8-2021, earlier than 9-8-2021, when the application of IFCI was registered.

It was further noted that filing of the application by IFCI, was prior in time and, the mere fact that an application filed by PNBHFL was registered earlier was inconsequential, and a moratorium would commence on the filing of the application by IFCI.

NCLAT Held

The NCLAT held that the application filed under section 95 by the respondent was a complete application, with all relevant documents, including demand notice, deed of Personal Guarantee, Recall Notice, and Notice for invocation of Personal Guarantee, brought on record. Thus, there was no defect in the application, which could be termed a skeleton application.

Further, the NCLAT held that there was no substance in the appellant’s submission that the order passed by NCLT appointing RP was without jurisdiction and, thus, no grounds have been made to interfere with the impugned order.

List of Cases Reviewed

• IFCI Bank Ltd. v. Sangita Arora [2024] 166 taxmann.com 131 (NCLT -New Delhi) [para 13] affirmed
• Krishan Kumar Basia v. State Bank of India (para 11) followed
• Kerala High Court Jeny Thankachan v. Union of India & Ors. (para 14) reversed