9911796707
TMI Blog2024 (5) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... phold the essence of the provisions, including the timelines provided, it is the duty of the Respondents to ensure that proper procedure is in place and rules pertaining to filing, re-filing, registration and numbering be complied with. The Petitioner has highlighted the extreme delay in compliance with objections and further delay in declining of matters for non-compliance by the Respondent No. 2 which has resulted in the interim moratorium continuing against the personal guarantors for an extremely unreasonable period of time. This, in turn, hampers recovery proceedings for the Banks and Financial Institutions such as the Petitioner. 2. Before referring to the submissions made by the Petitioner and the Respondents, it would be appropriate to set out facts in brief which form the basis of the present Petition: 3. The Petitioner is the Bank of Baroda and is a bank within the meaning of section 2(1) (c) & (d) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act"). The Petitioner has claimed that there are several matters pending before the Hon'ble NCLT under Section 94 and Section 95 of the IBC which are at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February 2023 was to be conducted, the Petitioner received a communication dated 27th March 2023 from the advocates of the Mr. J Shah and Mr. N Shah. Vide the said notice, it was claimed that they have filed a personal insolvency application under Section 94 of the IBC on 18th March 2023. The application under Section 94 filed by Mr. J Shah has Filing Number 2709138023972023 and the application under Section 94 filed by Mr. N Shah has Filing Number 2709138023982023 ("collectively referred to as "Section 94 Applications"). i. It was further stated that an interim moratorium has commenced with effect from 18th March 2023. j. As a result of the interim moratorium, there has been a stay against the Petitioner from proceeding with its action and measures under SARFAESI Act. k. From a perusal of the Section 94 Applications and the status of the same on the official website of the Hon'ble NCLT as on the date of filing of the present writ petition, it was submitted that the Section 94 Applications have been pending on e-filing number since 18.03.2023 and objections were raised on 21.04.2023 which were not removed till the date of filing of the present Petition. Therefore, the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interim moratorium to be initiated upon filing of the application under Section 94 or Section 95 of IBC. In order to uphold the essence of the provisions, including the timelines provided, it is the duty of the Respondents to ensure that proper procedures are in place and rules pertaining to filing and re-filing are enforced. It is essential for the Respondents to comply with the existing rules and avoid a situation where the provisions are being misused by a section of individuals. f. It is submitted that the failure of the Respondents to enforce the filing procedure and rules and failure to ensure that timelines are adhered to, has resulted in failure to uphold the essence of the timelines mentioned under the IBC and the interim moratorium (which bars the creditors from initiating any legal action or proceeding in respect of any debt during the interim moratorium). g. It is submitted that Respondent No. 2 ought to take timely action against the failure of the Applicants filing Section 94 and Section 95 Applications in complying with objections and not diligently pursuing the case. It is submitted that substantial time has passed since filing of applications but no action un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be in such form and manner and accompanied with such fee as may be prescribed." "Section 95: Application by creditor to initiate insolvency resolution process. (1) A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application. (2) A creditor may apply under sub-section (1) in relation to any partnership debt owed to him for initiating an insolvency resolution process against- (a) any one or more partners of the firm; or (b) the firm. (3) Where an application has been made against one partner in a firm, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority in which the first mentioned application is pending for adjudication and such Adjudicating Authority may give such directions for consolidating the proceedings under the applications as it thinks just. (4) An application under sub-section (1) shall be accompanied with details and documents relating to- (a) the debts owed by the debtor to the creditor or credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be placed before the Registrar who may pass appropriate orders. (3) The Registrar may for sufficient cause return the said document for rectification or amendment to the party filing the same, and for this purpose may allow to the party concerned such reasonable time as he may consider necessary or extend the time for compliance. (4) Where the party fails to take any step for the removal of the defect within the time fixed for the same, the Registrar may, for reasons to be recorded in writing, decline to register the pleading or document. 9. Rule 28 provides that once a document has been filed by a party, and the registry has scrutinized the documents and objections notified for compliance, the party ought to comply within seven days from the date of return (notification of the objections). In the event there is a failure to comply within seven days, then the document shall be placed before the Registrar who may pass appropriate orders. The Registrar may grant extension of time for compliance at his discretion based on sufficient cause being established. Rule 28 (4) clearly stipulates that when a party fails to take any step for removal of the defect within the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removed within 7 days failing which suitable orders would be passed in accordance with Rule 28 (3). This notice was pertaining to matters pending between 1st January 2024 and 31st January 2024. 12. It is pertinent to note that the applications mentioned in the petition were also part of the list. The Section 94 Applications of Mr. N Shah and Mr. J Shah were declined to be registered after being pending on e-filing number for a period of 339 days. The Section 95 Applications against Mr. SB Shah was declined to be registered after being pending on e-filing number for a period of 181 days. This indicates that the interim moratorium in these mentioned matters itself was lasting for the said period of time. 13. In order to address the issue pertaining to delay in compliance with Rule 28 of NCLT Rules, and to ensure that the scheme of the provisions pertaining to personal guarantors is not defeated by an extended interim moratorium, to streamline the procedure and to ensure expeditious listing of the matters before the Tribunal, the following timelines and process are being laid down to be applicable for proceedings filed under Section 94 and Section 95 of the IBC: a. Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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