2024:BHC-AS:24125 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7477 OF 2024 Tata Capital Limited A Company incorporated under the Companies Act, 1956, having its Registered office at Peninsula Business Park, 11^th Floor Tower A, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013. ...Petitioner Versus

1. Geeta Passi Having address at 1/23-B, Asaf Ali Road, New Delhi 110002

2. Sanjay Passi Having address at Pasco House, 6 Industrial Estate, Palam Gurgaon Road, Gurugram, 122015, Haryana

3. Sharuk Passi Having address at 1/23-B Asaf Ali Road New Delhi 110002 ...Respondents ….

Dr. Birendra Saraf a/w Mr. Jehaan Mehta, Ms. Sanaya Dadachanji, SAJAKALI LIYAKAT Ms. Maithili Prabhu i/by Manilal Kher Ambalal & Co., for the JAMADAR Petitioner. Digitally signed by SAJAKALI LIYAKAT JAMADAR Mr. Rajeev Kumar Pandey i/by PRS Legal for Respondent No.1 Date: 2024.06.20 19:15:26 +0530 Ms. Ruchi Magoo a/w Mr.Dhiren Durante and Mr.Sagar Pillai i/by Lexicon Law Partners, for Respondent No.3.

….

CORAM : AVINASH G. GHAROTE, J.

DATE : 20^th JUNE 2024 JUDGMENT :

1. The petition questions the order dated 07.10.2022 (page-48) by which the learned arbitrator has kept the proceedings before him in abeyance as long as the moratorium under Section 95 of the IB Code 2016 operates in respect of the debts owed by the respondent No.2/Tarun Kapoor were concerned and the subsequent order dated 20.03.2023 refusing to vacate the aforesaid order (page -51).

2. The facts leading to the present petition in brief are as under:

i) The present petitioner which is a finance company had granted channel finance facility to Sterling Motor Company of Noida, Uttar Pradesh under various documents. One Mr. Tarun Kapoor is the Proprietor of Sterling Motor Company (SMC for short hereinafter), who had executed the aforesaid documents as a Proprietor and had also stood as guarantor for repayment of the finance. Mrs. Pavan Kapoor, Mr. B.L. Passi and Rameshwar Sweets and Namkeens Pvt. Ltd. stood as guarantors. As there was default on part of SMC its account was categorized as NPA on 04.09.2019 and by a notice dated

15.10.2019 the loan was recalled by the petitioner.

ii) The Petitioner thereafter initiated arbitration proceedings before Gulnar A. Mistry, Advocate who was appointed as Arbitrator.

iii) During the pendency of the arbitration proceedings an application namely C.P. (IB) – 1097(ND)/2020 came to be filed by Volkswagen Finance Pvt. Ltd against SMC Mr. Tarun Kapoor, as a result of which an application came to be filed by Mr. Tarun Kapoor and Mrs.Pavan Kapoor before the Arbitral Tribunal, contending that in view of Sec.96 of the IB Code, a moratorium had come into effect due to the above proceedings on account of which the Arbitral proceedings were required to be kept in abeyance. The learned Arbitrator by the order dated 11/1/2021 (pg.64) accorded the benefit of the moratorium to Mr. Tarun Kapoor, the proprietor of SMC and one of the guarantors Smt. Pavan Kapoor and proceedings against them were directed to remain in abeyance, but the arbitration proceedings against the respondents 4 & 5 were directed to continue.

iv) The NCLT proceedings continued and the Member Judicial (NCLT) New Delhi, Court – III, by the order dated 04.01.2021 (Page-52) appointed Mr. Kamal Agarwal as the Resolution Professional (RP) and also passed an interim moratorium order in the following terms:

“10. It is made known to everyone that one filing this application by the Applicant/Creditor the interim-moratorium commences as is stipulated under Section 96 (1)(a) in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application and during the interim moratorium period the following is prohibited:

a. Any pending legal action or proceedings in respect of any debt of the personal guarantor shall be deemed to have been stayed; and b. The creditors of the personal guarantor shall not initiate any legal action or proceedings