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2022 (11) TMI 297 - DELHI HIGH COURTCIRP - scope of interim moratorium - application to co-guarantors - Seeking recovery from the defendants no.1 and 2, the ex-promoters of Bhushan Steel Limited - HELD THAT:- It is clear that Section 179(1), which provides the jurisdiction for the DRT with respect to insolvency matters of individuals and firms, is subject to Section 60 of the IBC. Sub-section (1) of Section 60 of the IBC provides that in relation to insolvency resolution for corporate persons, including corporate debtors and personal guarantors, the Adjudicating Authority shall be the NCLT. Sub-section (2) of Section 60 provides that where the CIRP of a corporate debtor is pending before an NCLT, an application relating to the insolvency of a personal guarantor of such corporate debtor shall be filed before the same NCLT. Sub-section (3) of Section 60 further provides that the insolvency resolution process in respect of a personal guarantor pending in any Court or Tribunal, shall stand transferred to the adjudicating authority dealing with the insolvency resolution process of the corporate debtor. The NCLT would be the appropriate adjudicating authority in respect of insolvency proceedings initiated against the defendants in their capacity as personal guarantors for the corporate debtor, Bhushan Steel - the insolvency proceedings against the defendant no.2 under Section 95 of the IBC were initiated before the NCLT on 4thMarch, 2020, before filing of the present suits and in view thereof, the interim moratorium under Section 96 would be operable insofar as the defendant no.2 is concerned. In the present case, the application against the defendant no.1 has been filed under Section 95 of the IBC by State Bank of India on 28th May, 2022, as a creditor of the corporate debtor/borrower for whom the defendant no.1 stood as a guarantor. Therefore, the relevant date on which the interim moratorium under Section 96 would kick in would be 28th May, 2022. This is not a case where the insolvency application has been filed with a mala fide intention by a debtor/guarantor himself so as to take the benefit of the interim moratorium under Section 96 of the IBC. The language of Section 96(1) of the IBC cannot be stretched so as to include all co-guarantors within the ambit of the interim moratorium. The reference to ‘all the debts’ in Section 96(1)(a) has to be in respect of all debts of a particular debtor. This is clear from the language used in Section 96(1)(b)(ii) to the effect that ‘the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt.’ Therefore, the effect of the interim moratorium is only in respect of the debts of a particular debtor. By no stretch of imagination can it be said to include other independent guarantors in respect of the same debt of a corporate debtor. Merely because an interim moratorium under Section 96 is operable in respect of one of the co-guarantors, the same would not apply to the other co-guarantor(s). The interim moratorium under Section 96 in respect of one of the guarantors would not ipso facto apply against a co-guarantor - the clear statutory mandate under Section 96 of the IBC, the proceedings in the present suit are stayed against both the defendants. Application disposed off.
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