Authority: High Court of Judicature at Bombay

Order Date: 18 September 2026

Case Overview

  • The judgment consolidates several writ petitions filed in 2026, notably WP‑2819 (Indian Bank vs. Shabbir Abbas Patel), WP‑3374 (Godrej Finance Ltd. vs. Ashok Rajkumar Gupta), WP‑7805 (Asset Reconstruction Co. India Ltd. vs. Veer Gurjar Aluminium Industries), WP‑7587, WP‑7598, WP‑7600 (Apna Sahakari Bank Ltd. vs. various respondents), and two lodging writ petitions (WPL‑22742 and WPL‑24045) filed by RBL Bank Ltd. against the State of Maharashtra.
  • All petitions revolved around the operation of the interim‑moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC), after the amendment inserting sub‑section 4 on 26 May 2026, which bars the moratorium for applications concerning personal guarantors of corporate debtors.
  • Petitioners (primarily banks and secured creditors) argued that the amendment should apply retroactively to pending applications, thereby extinguishing the moratorium that was being misused to stall creditor actions. Respondents contended that the amendment was prospective and that the moratorium, once triggered, constituted a vested right.
  • Extensive submissions were made by counsel on both sides, invoking the literal rule, mischief rule, precedents from the Supreme Court (e.g., BCCI v. Kochi Cricket Pvt. Ltd., M. Rajendran v. KPK Oils, Vineeta Sharma v. Rakesh Sharma, SEBI v. Rajkumar Nagpal, Tata Capital Financial Services v. Neel Motors), and the General Clauses Act.
  • The Court examined the nature of the amendment (procedural, remedial, aimed at curbing abuse), the distinction between vested rights and procedural steps between Sections 94‑99, and the legislative intent expressed in the Select Committee report on the IBC (Amendment) Bill 2025.
  • The Court concluded that the amendment must be interpreted to operate retroactively (or “retroactively in operation”) on all pending insolvency applications filed under Sections 94 or 95 before 26 May 2026, because the mischief‑rule demands that the cure apply to the very cases that gave rise to the mischief.

Final Outcome

  • The Court held that sub‑section 4 of Section 96 of the IBC, effective 26 May 2026, applies retroactively to pending proceedings, causing the interim‑moratorium to cease for all such applications.
  • Accordingly, the Court quashed and set aside restraining orders issued by various Debt Recovery Tribunals (DRTs) and the Debts Recovery Tribunal‑I, Mumbai, that had stayed auction or possession actions on the basis of the moratorium.
  • Specific disposals:
  • WP‑7805 – The interim moratorium was held not to apply; the DRAT was directed to hear the pending appeals and recovery proceedings by 31 Oct 2026.
  • WP‑2819 – Orders dated 03 Oct 2024 and 13 Mar 2026 were quashed; the auction sale dated 30 Sep 2024 and sale certificate dated 25 Feb 2026 were upheld; possession was ordered to be handed over with police assistance.
  • WP‑3374 – The DRT’s order restoring possession was set aside; possession of the mortgaged flat was ordered to be handed to the secured creditor within four weeks.
  • WP‑7587, WP‑7598, WP‑7600 – The DRT’s restraining directions were quashed; the banks were allowed to accept the balance of auction proceeds and issue sale certificates.
  • WPL‑22742 & WPL‑24045 – Court Commissioners were directed to fix dates for taking physical possession of the secured assets (a flat in Borivali East and a row‑house in Chembur East) with police assistance; the interim moratorium was held not to impede these actions.
  • The Court affirmed the reasoning of the Single Judge in Tata Capital Financial Services v. Neel Motors and the Delhi High Court order in IDBI Trusteeship Services v. Manish Jain.
  • All pending applications in the listed writ petitions were disposed of.

Topics: Insolvency Law, Interim Moratorium, Legislative Interpretation