The expression used in Section 96(1)(b) is “in respect of any debt” and not for recovery of a debt – Kirankumar Moolchand Jain Vs. TransUnion CIBIL Ltd. – Madras High Court
On reading the Section 96 of IBC, it is evident that the interim moratorium applies to any pending legal action or proceeding in respect of any debt and to the initiation of any legal action or proceeding by the creditors of the debtor in respect of any debt. The expression used in Section 96(1)(b) is “in respect of any debt” and not for recovery of a debt. Although on a purely textual reading, the embargo on fresh proceedings will apply only to creditors of the debtor and not to a guarantor, when interpreted in context, the interim moratorium applies not only to proceedings for recovery of a debt but to proceedings in which the liability of the borrower and guarantor are determined in relation to the credit facility. Turning to the facts of this case, the petitioner seeks the constitution of an arbitral tribunal to adjudicate the dispute pertaining to information put out by the first and second respondents in respect to the alleged default by the borrower and the petitioner. Whether the information provided by the first and second respondents, as the credit information company and credit institution, respectively, is correct or incorrect, in turn, depends on the scope of the personal guarantee provided by the petitioner in relation to credit facilities availed of by the borrower and, consequently, on the liability arising thereunder. Hence, an arbitral tribunal cannot decide whether the information is accurate or inaccurate without examining the scope of the personal guarantee(s) and the liabilities arising thereunder, and the NCLT is seized of the said dispute. Thus, the constitution of an arbitral tribunal, at this juncture, would be premature. After the moratorium ends, in case the petitioner were to succeed in the defence before the NCLT and the NCLT concludes that the petitioner did not guarantee the relevant debts, it would be open to the petitioner to initiate proceedings for the constitution of an arbitral tribunal to adjudicate the dispute relating to the credit information provided by the first and second respondents in terms of Section 18 of the Act of 2005.