The principles applied in Corporate Insolvency cannot be applied to Personal Insolvency. Recovery proceedings or proceedings under Section 96 of the IBC, 2016 would not absolve the borrower who has been found to be a wilful defaulter – Adarsh Jhunjhunjwala Vs. State Bank of India & Anr. – High Court of Calcutta
December 31, 2021
The Court held that the very purpose of separation of corporate insolvency under Part II of the IBC from individual insolvency under Part III must be understood. They are separate and distinct and aim to achieve different ends. The principles applied the incorporate insolvency cannot be applied to personal insolvency. It is essentially for this purpose that this Legislature has applied the moratorium under Section 14 to the corporate debtor as a whole and moratorium under Section 96 is restrictively applied only to the debt. The object and purpose of a moratorium is to invite resolution applicants for revival of corporate debtors under Part II. Under Part III however the purpose of moratorium is to facilitate repayment/resolution of the debt to all categories of debtors.
To stay wilful defaulter proceedings, criminal proceeding or quasi criminal proceeding under any Moratorium under Section 96 would defeat the object and purpose of the part III of the IBC.
Recovery proceedings or proceedings under Section 96 of the IBC, 2016, or the borrower’s success therein, would not absolve the borrower who has been found to be a wilful defaulter.
