Interim moratorium shall continue to be in effect: Delhi HC in challenge to insolvency proceedings against personal guarantors

The interim moratorium under Section 96 Insolvency & Bankruptcy Code (IBC) shall continue to be in effect in all cases where an application under Sections 94, 95 has been filed, Delhi High Court said today as it listed the challenge to personal insolvency proceedings for arguments on November 10. (Anil Ambani vs SBI & Ors).The order was passed by a Divison Bench of Justices Vipin Sanghi and Rajnish Bhatnagar. .The Court was dealing with a batch of petitions challenging the vires of the provisions pertaining to personal insolvency against personal guarantors under Part III IBC..Petitions have been moved by Chairman of the Reliance ADA Group, Anil Ambani, ex-Chairman of Bhushan Power and Steel Ltd, Sanjay Singal and several others. .Delhi HC issues notice in Sanjay Singal's challenge to IBC provisions on insolvency proceedings against personal guarantors.Considering that the issues before it were legal in nature, the Court stated that it would hear the petitions on merits and dispose it of as soon as possible. .Appearing for State Bank of India in Anil Ambani's petition, Senior Advocate Neeraj Kishan Kaul apprehended that certain Chinese Banks might move for the execution of awards passed against Ambani by UK-based courts. .Delhi HC stays IBC proceedings Anil Ambani for being personal guarantor; Issues notice in challenge to provisions on personal insolvency.Arguing that nothing would be left for public sector banks in that contingency, Senior Advocate Kaul pressed for a clarification that interim moratorium under Part III was still in place. .In response, Senior Advocate Harish Salve for Ambani stated that he has moved an application for impleadment of the Chinese Banks in the present case. ."I don't want to be caught in between two jurisdictions..", Senior Advocate Salve said as he explained that Ambani ran the risk of a "roving contempt" in connection with the proceedings by Chinese Banks before the UK courts. .The Court issued notice in the application and sought SBI's response to it. .It nonetheless recorded in the order, .It goes without saying that the said provision (Section 96 on interim moratorium) shall continue to remain in effect in all cases where an application under Sections 94, 95 IBC has been filed..In August, the High Court had stayed the personal insolvency proceedings against Anil Ambani under Part III of IBC and directed him to not transfer and/or dispose of any assets..No such order of stay was, however, issued in Sanjay Singal's petition.