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Section 96 of IBC does not provide any immunity to Debtor in the matter of proceedings under RBI Master Circular for Willful Default | Recovery proceedings or insolvency proceedings will have no bearing on willful default proceedings under RBI Master Circular against Debtor – Jagdish Prasad Saboo v. IDBI Bank Ltd. – Gujarat High Court

Hon’ble Gujarat High Court held that:
(i) A careful reading of Section 96 would indicate that the interim moratorium which commences on the date of the application is ‘debtcentric’. It will apply in relation to all the debts and the legal action or proceedings pending in respect of the debt which shall deemed to have been stayed. The creditors of the debtor are prohibited from initiating any legal action or proceedings in respect of any debt. Section 96 does not provide any immunity to the debtor in the matter of the proceedings under the RBI Master Circular for ‘willful default’.
(ii) The interim moratorium commenced under Section 96 will apply only to such legal action or proceedings, which are in respect of recovery of any debt and does not apply to any action against the debtor, which does not have any relation to the restructuring of debts, which would have to be included in the repayment plan to be prepared under Section 105 of the Code on admission of the application by the adjudicating authority.
(iii) Recovery proceedings or the proceedings under Section 96 of the IBC or the insolvency proceedings, in our considered opinion, would have no bearing on the willful default proceedings, which only aim at dissemination of information of the default already committed.

Section 96 of IBC does not provide any immunity to Debtor in the matter of proceedings under RBI Master Circular for Willful Default | Recovery proceedings or insolvency proceedings will have no bearing on willful default proceedings under RBI Master Circular against Debtor – Jagdish Prasad Saboo v. IDBI Bank Ltd. – Gujarat High Court Read Post »

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