The case, Sangita Arora v IFCI, discusses whether the date of filing of an application under Section 95 under Part III (Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms) of the Insolvency and Bankruptcy Code (IBC), 2016, should be considered as the date of its e-filing or from the date when the application is registered and numbered by the Registry, for the purpose of triggering the interim moratorium under Section 96 of the IBC. This decision clarifies a significant point of law, especially in light of conflicting rulings on the issue.
The NCLAT was tasked with resolving an issue involving IFCI Ltd. and PNB Housing Finance Ltd., both of which had filed applications under Section 95 against the personal guarantor of Supertech Ltd. The crux of the appellant’s argument was that PNB’s application was registered earlier and should have precluded the NCLT from considering IFCI’s application, which was registered later, but filed earlier.
The NCLAT relied on its earlier judgment in Krishan Kumar Basia v State Bank of India, where it was held that the relevant date for filing under Section 95 is the date of submission and not the date of registration.[1] The tribunal emphasized that the NCLT Rules, 2016, clearly outline the definition of ‘filed’, and under these rules, an application is considered filed on the date it is electronically submitted. Consequently, the interim moratorium under Section 96 begins from the date of filing, irrespective of when the application is registered.
The appellant had cited a Kerala High Court judgment in Jeny Thankachan v Union of India, wherein it was held that the moratorium should commence only after the application is defect-free and registered.[2] However, the NCLAT rejected this interpretation, noting that it conflicted with the statutory framework of IBC. The NCLAT clarified that while the registration date might affect procedural aspects, the substantive legal effect, namely, the imposition of the moratorium begins from the filing date. This interpretation supports the intent of the IBC, which seeks to provide protection through the moratorium as soon as an application is filed, ensuring that delays in registration do not undermine the process. Ultimately, the NCLAT dismissed the appeal, holding that the application filed by IFCI triggered the interim moratorium as it was filed earlier.
The decision settles a vital question of law and ensures consistency with the broader objective of the IBC, ensuring that technicalities do not hinder the protective mechanisms available to creditors and debtors alike.
[1] Company Appeal (AT) (Insolvency) No 721 of 2022.
[2] WP(C) NO. 31502 OF 2023