Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Bom) 970

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MANISH PITALE, SHREERAM V. SHIRSAT, JJ.
M/s. Kapole Advertising Agency, Through Proprietor, and others - Petitioner
Vs.
Standard Chartered Bank and others - Respondent
Writ Petition No. 685 of 2026 With Interim Application No. 336 of 2026
Decided On : 21-04-2026
Advocate Appeared :
For the Petitioner : Mr. Anirudh Hariani a/w. Ms. Kruti Bhavsar and Mr. Pratik Barot
For the Respondent : Mr. R. L. Motwani

Advocates:
For the Appellants/Petitioners: Anirudh Hariani, Kruti Bhavsar, Pratik Barot
For the Respondents: R. L. Motwani

Interim moratorium under IBC Section 96 triggers upon registration of Section 95 petition after scrutiny, despite registry irregularities; binds Securitisation proceedings from that date irrespective of notice to creditor; DRT must consider its effect.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95, 96 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4), 14 - National Company Law Tribunal Rules, 2016 - Rule 28 - Interim moratorium under Section 96 triggers upon filing but effectively from registration after scrutiny per directions and SOP; operates despite procedural irregularities by registry if registered; DRT erred in rejecting applications solely for lack of notice to secured creditor post-registration on 04.11.2025; further steps under Securitisation Act halted during moratorium. (Paras 17, 22, 27, 29-33)

(B) Writ Jurisdiction - Interference with tribunal orders - Where tribunal fails to appreciate statutory effect of moratorium commencing by operation of law, orders set aside; liberty to approach adjudicating authority to challenge moratorium application against specific parties. (Paras 10, 30, 34)

Facts of the case:
Borrowers defaulted on loan repayment leading secured creditor to issue notice under Section 13(2), take symbolic and physical possession of secured assets (flats), conduct auction sale on 24.10.2025 with sale certificate issued. Third party filed petition under Section 95 on 09.07.2025, defects noted, irregularly re-opened and registered on 04.11.2025 triggering moratorium. Borrowers filed securitisation application and interim applications before DRT claiming moratorium effect, rejected on 09.01.2026 for non-intimation to creditor.

Findings of Court:
Impugned DRT orders set aside; moratorium operative from 04.11.2025; no further steps by respondents till moratorium ceases or adjudicating authority rules otherwise; directions to registry for strict procedural compliance.

Issues: Whether interim moratorium triggers merely on filing or post proper scrutiny and registration; effect on ongoing Securitisation Act proceedings; DRT's consideration of moratorium despite lack of notice to creditor; validity of registry's procedural handling.

Ratio Decidendi: Moratorium commences by operation of law upon registration post-scrutiny even with irregularities, not contingent on notice; petitioners not liable for third party filing or registry lapses; allegations of collusion examinable by adjudicating authority; DRT must examine moratorium details, not reject on irrelevant grounds.

Result: Writ petition allowed.

Table of Content
1. sarfaesi auction challenged post-ibc s95 filing and drt rejection (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. dispute over moratorium validity, collusion, and nclt procedural compliance (Para 10 , 11 , 12 , 13 , 14)
3. drt erred ignoring automatic ibc s96 interim moratorium trigger (Para 15 , 16 , 17)
4. nclt sop and prior directions mandate scrutiny before moratorium (Para 18 , 19 , 20 , 21 , 22)
5. registry irregularities but moratorium activates on petition registration (Para 23 , 24 , 25 , 26 , 27)
6. moratorium binding despite lapses or lack of creditor notice (Para 28 , 29 , 30 , 31 , 32)
7. set aside drt orders; mandate nclt sop compliance (Para 33 , 34 , 35 , 36 , 37 , 38)

Order :

(Per Manish Pitale, J)

1.The petitioners are the original borrowers and they have approached this Court challenging two orders dated 09.01.2026 passed by the Debts Recovery Tribunal-II, Mumbai (DRT), whereby Interim Application Nos.2524 of 2025 and 2526 of 2025 filed by them in pending Securitisation Application No.411 of 2025, have been rejected. It is the case of the petitioners that the DRT failed to appreciate the effect of pendency of a petition filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal, Mumbai (NCLT) and consequently, the existence of interim moratorium under Section 96 of the IBC. It is claimed that the applications were rejected by the impugned orders on irrelevant considerations.

2. In this petition, the petitioners also moved an interim application seeking urgent interim relief, in the light of the fact that respondent No.1 – bank (secured creditor) had already proceeded under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act), as a consequence of which auction of the secured assets was conducted and sale certificate was issued in favour of respondent Nos.2 and 3. On 14.01.2026, this Court took into account the submissions made on behalf of the petitioners as well as respondent No.1 – bank, in the backdrop of the provisions of IBC and National Company Law Tribunal Rules, 2016 (NCLT Rules) and judgement of this Court in the case of Bank of Baroda vs. Union of India and another (2024 SCC OnLine Bom 3964). It was found that even if the interim moratorium could not have been triggered by mere filing of the petition on 09.07.2025 before the NCLT under Section 95 of the IBC, the documents on record demonstrated that the petition was indeed registered on 04.11.2025. On this basis, this Court found a prima facie case in favour of the petitioners regarding triggering of moratorium at least from 04.11.2025 and hence, limited interim relief of status quo was granted as on the said date.

3. But, at the same time, this Court was of the opinion that the Registrar of NCLT ought to submit a report to this Court with regard to the manner in which the aforesaid petition filed before the NCLT on 09.07.2025 had been processed, to demonstrate as to whether it was in line with the directions issued by this Court in the aforesaid judgement in the case of Bank of Baroda vs. Union of India and another (supra).

4. Respondent No.1 – bank filed its reply affidavit. The Assistant Registrar, NCLT submitted report along with forwarding letter dated 16.02.2026 and in that light, the petitioners also filed an additional affidavit in the present petition. The ad-interim order granted by this Court has continued to operate and in this backdrop, the petition is taken up for consideration.

5. It is an admitted position that the petitioners defaulted in repayment of loan amount and in that backdrop, respondent No.1 – bank was constrained to take recourse to Section 13(2) of the Securitisation Act. Notice under the said provision was issued on 24.03.2023 and thereafter, on 27.06.2023, the said respondent took symbolic possession of the secured assets under Section 13(4) of the Securitisation Act. The se

Click Here to Read the rest of this document

2026 Supreme(Bom) 970

Interim moratorium under IBC Section 96 triggers upon registration of Section 95 petition after scrutiny, despite registry irregularities; binds Securitisation proceedings from that date irrespective of notice to creditor; DRT must consider its effect.

Cases Referred (1)