IBC Section 96 Moratorium Is Debtor-Centric, Not Debt-Specific: NCLT Guwahati
The National Company Law Tribunal (NCLT) at Guwahati on 14 August held that the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC) protects a personal guarantor as a whole, and not just against a particular debt. It therefore barred a fresh insolvency application against the guarantor while an earlier application was pending.
A Bench comprising Judicial Member Rammurti Kushawaha and Technical Member Yogendra Kumar Singh, rejected UCO Bank's insolvency petition against Satyawan Sarma, personal guarantor to Lohit Construction Private Limited, holding that the expression “any debt” under Section 96 cannot be restricted to the particular debt involved in the first insolvency application. It observed:
“During the subsistence of the interim moratorium, Section 96(1)(b)(i) deems any pending legal action or proceeding in respect of “any debt” to be stayed, and Section 96(1)(b)(ii) prohibits the creditors of the debtor from initiating “any legal action or proceedings in respect of any debt”.
UCO Bank filed an insolvency petition against Satyawan Sarma, personal guarantor to Lohit Construction Private Limited, concerning an alleged default of Rs. 141.15 crore.
The Bank stated that Lohit Construction had availed credit facilities from it, for which Sarma had executed multiple guarantees. After the account was classified as a non performing asset, the Bank initiated proceedings before the Debt Recovery Tribunal. The parties subsequently entered into a compromise for Rs. 12.65 crore, but the dues remained unpaid and the Recovery Certificate issued in 2018 continued to remain pending.
UCO Bank filed the present petition on 31 March 2026. The Tribunal thereafter appointed a Resolution Professional, who recommended admission of the petition.
Sarma opposed the proceedings, pointing out that UCO Bank had already filed an earlier insolvency petition against him concerning his guarantee for another company, Berial Engineers Private Limited. The earlier petition was pending when the present petition was filed. He contended that the earlier proceeding had triggered the interim moratorium under Section 96 of the IBC, thereby barring the subsequent petition.
UCO Bank, however, contended that the two proceedings concerned different corporate debtors, guarantees and debts, and therefore the earlier proceeding did not bar the present petition.
Referring to Section 96(1), the Tribunal noted that the interim moratorium commences from the date of filing of an application under Section 94 or Section 95 of the IBC and continues until its admission or rejection.
The Tribunal noted that the Legislature had deliberately used the expression “any debt”, rather than “the debt”, in Section 96(1)(b). Emphasising the legislative intent, it observed:
“Had the Legislature intended to confine the protection of the interim moratorium to the specific debt forming the subject matter of the first application, it would have said so in express terms, as it has done elsewhere in the Code where a debt-specific or creditor-specific moratorium is intended.”
The Bench held that the use of the expression “any debt” showed that the interim moratorium under Section 96 is debtor centric. It protects a personal guarantor from being subjected to multiple parallel insolvency applications concerning different debts while the first application remains pending. It also noted that UCO Bank was aware of the earlier proceeding but had not disclosed its pendency while filing the subsequent application. It noted:
“The Financial Creditor, being fully aware of the pendency of CP (IB)/11/GB/2025 and having itself instituted the same, was under a duty of candor to disclose this fact to this Tribunal at the time of filing the present Petition. It failed to do so.”
The Tribunal held that the subsequent petition was barred by the interim moratorium and that the Resolution Professional's recommendation for its admission therefore could not be acted upon.
Accordingly, the NCLT rejected UCO Bank's petition and set aside the appointment of the Resolution Professional and the consequential proceedings, including the report recommending admission.
For Petitioner: Advocate S Chamaria
For Respondent: Advocates R Dubey and A.B Kayastha
For RP: Amit Pareek