Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 14

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan, J
Sushant Chhabra – Appellant
Versus
Catalyst Trusteeship Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 443 of 2026|Company Appeal (AT) (Insolvency) No. 444 of 2026

Advocates:
For the Appellants/Petitioners: Mr. Neeraj Malhotra, Mr. Rajiv Singh, Mr. Nimish Gupta, Mr. Neeraj Kumar, Mr. Somesh Narayan
For the Respondents: Mr. Abhinav Mathur, Mr. Gourav Asati, Ms. Ishita Arora, Mr. Gaurav Mitra, Mr. Atul Sharma, Ms. Renuka Iyer, Mr. Anmol Bansal

Section 95 applications filed during interim moratorium under Section 96 are non est ab initio; subsequent withdrawal of triggering applications does not validate them.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95, 96, 99 - Personal guarantors - Interim moratorium - Section 95 applications filed by financial creditor during subsistence of interim moratorium triggered by prior Section 95 applications (filed on 12.01.2025 and pending) held non est in law ab initio - Subsequent withdrawal of prior applications (on 10.11.2025) does not validate proceedings initiated during moratorium period - Statutory bar under Section 96(1)(b) prohibits initiation of legal actions during interim moratorium, rendering such proceedings void from inception even if moratorium ends later - Applications dismissed with liberty to file fresh applications post-moratorium. (Paras 9, 10, 16, 23, 24)

(B) Effect of withdrawal of proceedings - Withdrawal of Section 95 application extinguishes moratorium prospectively but does not retroactively cure invalidity of proceedings commenced during its operation - Proceedings initiated in violation of moratorium remain non est, obliterated proceedings do not revive barred actions. (Paras 11, 17-19, 24)

Facts of the case:
Personal guarantors executed deeds of guarantee for corporate debtor's non-convertible debentures. Financial creditor filed Section 95 applications on 05.08.2025 while interim moratorium subsisted from earlier Section 95 applications by another creditor (filed 12.01.2025, RP appointed 27.02.2025, withdrawn 10.11.2025). Adjudicating authority admitted applications on RP report dated 17.02.2026, against which appeals filed.

Findings of Court:
Impugned orders set aside; Section 95 applications dismissed as non-maintainable; liberty granted to financial creditor to file fresh applications post-cessation of moratorium.

Issues: Whether Section 95 applications filed during ongoing interim moratorium under Section 96 are maintainable; effect of subsequent withdrawal of triggering applications on such proceedings.

Ratio Decidendi: Interim moratorium under Section 96 commences on filing of Section 95 application, barring all creditors from initiating proceedings in respect of any debt; actions during moratorium are non est, unaffected by later withdrawal which only ends moratorium prospectively without validating prior invalid filings. (Paras 9, 23-24)

Result: Appeals allowed.

Table of Content
1. background of personal guarantor insolvency appeals (Para 1 , 2 , 3)
2. parties' contentions on moratorium maintainability (Para 4 , 5 , 6 , 7)
3. interim moratorium under section 96 ibc operative (Para 8 , 9 , 10 , 11 , 12)
4. proceedings during moratorium non-est in law (Para 13 , 14 , 15 , 16)
5. withdrawal effects do not retroactively validate filings (Para 17 , 18 , 19 , 20)
6. prior pending applications bar subsequent ones (Para 21 , 22)
7. withdrawal ends moratorium but not prior invalidity (Para 23 , 24)
8. appeals allowed, fresh filings permitted (Para 25)

JUDGMENT

Ashok Bhushan, J.

These Appeals have been filed by Personal Guarantors of Corporate Debtor (“CD”) M/s UM Autocomp Pvt. Ltd. (Now M/s UM Automotive Pvt. Ltd.) challenging order dated 17.02.2026 passed by National Company Law Tribunal, New Delhi Bench, Court-II admitting Section 95 application filed by Catalyst Trusteeship Ltd. being CP(IB)-450/ND/2025 in Catalyst Trusteeship Ltd. vs. Sushant Chhabra; and CP(IB)-446/ND/2025 in Catalyst Trusteeship Ltd. vs. Verinder Kumar Chhabra.

2. Company Appeal (AT) (Insolvency) No. 443 of 2026 has been filed by Sushant Chhabra challenging order dated 17.02.2026 admitting Section 95 application on the basis of report submitted by RP by IA No.5571/ND/2025, whereas Company Appeal (AT) (Insolvency) No. 444 of 2026 has been filed by Verinder Kumar Chhabra challenging order dated 17.02.2026 admitting Section 95 application on the basis of report submitted by RP by IA No.4652/ND/2025. The facts and question of law in both the Appeals being common, both the Appels have been heard together and are being decided by this common judgment. It shall be sufficient to refer to the pleadings in Appeals.

3. Brief facts of the case necessary to be noticed for deciding the Appeal are:

(i) Both the Appellant(s) Sushant Chhabra and Verinder Kumar Chhabra executed an unconditional and irrevocable Deed of Personal guarantee on 28.12.2024 in respect of debt arising out of non-convertible debentures issued by M/s UM Automotive Pvt. Ltd. Debenture Trust Deed was also executed on 28.12.2024.

(ii) CD defaulted in its obligation, hence Respondent No.1 Catalyst Trusteeship Ltd. issued a default-cum-legal notice dated 01.04.2025 to the CD and Personal Guarantors, demanding the payment of an amount of Rs.36,14,50,354/-. The CD UM Autocomp Pvt. Ltd. vide its Novation Agreement dated 12.05.2025, transferred its liabilities of the NCDs to UM Automotive Pvt. Ltd. – (CD).

(iii) Canara Bank has filed a CP(IB) No.122/ND/2025 under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) against Sushant Chhabra on 12.01.2025. Similarly, Canara Bank also filed an application being CP(IB)No.121/ND/2025 under Section 95(1) against the Personal Guarantor - Verinder Kumar Chhabra. By order dated 27.02.2025, the Adjudicating Authority appointed one Mr. Prabhjit Singh Soni as Resolution Professional (“RP”) in CP(IB)122/ND/2025 and CP(IB)121/ND/2025. Interim moratorium commenced with effect from 12.01.2025 when application was filed by Canara Bank against the Appellants.

(iv) On 05.08.2025, Respondent No.1 - Catalyst Trusteeship Ltd. filed CP(IB)450/ND/2025 and CP(IB)446/ND/2025 against the Appellants herein. By order dated 23.09.2025, the Adjudicating Authority appointed one Mr. Anil Kohli as RP in Section 95 application filed by Respondent No.1 against the Appellants. The RP filed report being IA No.5571/ND/2025 in CP(IB)450/ND/2025 and IA No.4652/ND/2025 in CP(IB)446/ND/2025 recommending for admission of Section 95 application.

(v) The company petitions filed by Canara Bank against the Appellants, came to be withdrawn by order dated 10.11.2025 (vi) On the report submitted by the RP in Section 95 applications, notices were issued. The Appellant raised an issue of maintainability due to moratorium under Section 96 coming into operation by Section 95 application filed by the Canara Bank. Written submissions were filed by the App

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2026 Supreme(Online)(NCLAT) 14

NATIONAL COMPANY LAW APPELLATE TRIBUNALAshok Bhushan, JSushant Chhabra – AppellantVersusCatalyst Trusteeship Ltd. – RespondentCompany Appeal (AT) (Insolvency) No. 443 of 2026|Company Appeal (AT) (Insolvency) No. 444 of 2026

Section 95 applications filed during interim moratorium under Section 96 are non est ab initio; subsequent withdrawal of triggering applications does not validate them.

Cases Referred (1)

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan, J
Sushant Chhabra – Appellant
Versus
Catalyst Trusteeship Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 443 of 2026|Company Appeal (AT) (Insolvency) No. 444 of 2026