For an moratorium u/s 96 of IBC to come into force, insolvency application should be complete in all respects and without any procedural defects, mere uploading of an application cannot be taken as filing of an application | Unless there is any repugnancy between the provisions of IBC 2016 and the provisions of SARFAESI Act, 2002, there is no question of IBC 2016 overriding the provisions of the SARFAESI Act, 2002 in totality – Jeny Thankachan Vs. Union of India and Ors. – Kerala High Court
Hon’ble High Court held that:
(i) In the Insolvency Resolution Processes under Part III Chapter III relating to individuals and partnership firms, the interim moratorium under Section 96 and moratorium under Section 101 are automatic by operation of law and is not dependent on any declaration of moratorium by the adjudicating authority.
(ii) Mere uploading of an application under Section 96 of the IBC 2016 cannot be taken as filing of an application.
(iii) In the case of the petitioner, admittedly the NCLT has not treated the application as a valid application by assigning regular case number to the application. As long as the petitioner’s application is not duly numbered by the NCLT, the interim moratorium contemplated under Section 96(1)(b)(i) cannot come into operation.
(iv) 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 SARFAESI Act, 2002 in totality.
(v) Initiation of a Section 94 (IBC 2016) proceedings by a Partner of an LLP in his capacity as a guarantor, cannot be averted to the proceedings initiated by the Bank against the petitioner, but in his capacity as a guarantor, under the SARFAESI Act, 2002.
