Tata Capital Financial Services Limited Vs Neel Motors LLP (Bombay High Court)
The Bombay High Court considered a petition under Section 9 of the Arbitration and Conciliation Act, 1996 arising from arbitration agreements contained in a Channel Finance Agreement under which financial assistance was extended to Respondent No. 1, with Respondent Nos. 2 to 5 acting as guarantors. Respondent Nos. 2, 3 and 4 were individuals who were partners of Respondent No. 1, a limited liability partnership, while Respondent No. 5 was a distinct limited liability partnership and guarantor.
The Section 9 Petition had been filed in 2021. Around a month earlier, the Petitioner had initiated CIRP against Respondent No. 1, resulting in a Section 14 moratorium. Following failure of the CIRP, Respondent No. 1 became subject to liquidation. In June 2022, the Petitioner also initiated proceedings under Section 95 of the IBC against Respondent Nos. 2, 3 and 4, triggering the interim moratorium under Section 96.
The Petitioner relied on the insertion of Section 96(4), effective from 26.05.2026, which provides that Section 96 does not apply where an application is filed for initiating an insolvency resolution process in respect of a personal guarantor to a corporate debtor. The Respondents contended that applying the amendment to proceedings already filed would make it retrospective.
