Karnataka High Court
Mrs Sujaya Anil vs Union Bank Of India on 11 March, 2026
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WP No. 4916 of 2026
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
WRIT PETITION NO. 4916 OF 2026 (GM-DRT)
BETWEEN:
1. MRS SUJAYA ANIL
W/O LATE KM ANIL,
AGED ABOUT 62 YEARS,
R/AT, NO. 2031,
HIG 3RD STAGE, 4TH B CROSS,
YELAHANKA NEW TOWN,
BANGALORE NORTH,
YELAHANKA,
BENGALURU 560064.
...PETITIONER
(BY SRI. MANOJ K., ADVOCATE)
AND:
Digitally
signed by 1. UNION BANK OF INDIA
SUVARNA T ASSET RECOVERY BRANCH,
Location: BANGALORE-SOUTH,
HIGH HAVING OFFICE AT #2/3,
COURT OF
KARNATAKA RAJA BUILDING N.R.ROAD,
BANGALORE - 560 002.
...RESPONDENT
(BY SRI. VIGNESH SHETTY, ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF THE
CONSTITUTION OF INDIA, PRAYING TO QUASH AND SET
ASIDE THE ORDER DATED 21/10/2025 PASSED IN OA
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WP No. 4916 of 2026
HC-KAR
NO.341/2023 BY DEBTS RECOVERY TRIBUNAL - II,
KARNATAKA, AT BENGLAURU, PRODUCED AT ANNX-A.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
ORAL ORDER
The present Writ Petition is filed seeking following prayer-
"WHEREFORE, the petitioner most respectfully prays that this Hon'ble Court may be pleased to:
a. To issue a writ of certiorari, or any other appropriate writ, order or direction, quashing and setting aside the order dated 21.10.2025 passed in O.A.No.341/2023 by Debts Recovery Tribunal-II, Karnataka, at Bengaluru, produced at Annexure-A. b. Grant the costs of this Writ Petition.
c. Grant such other and incidental reliefs as may be deemed appropriate under the facts and circumstances, including the cost of the writ petition."
2. It is the case of the petitioner that the petitioner company entered into a duly executed loan agreement with the respondent pursuant to which the respondent extended a term loan facility for an amount of Rs.4,00,00,000/-, UGECL term loan of Rs.75,80,000/- and funded interest term loan of -3- NC: 2026:KHC:14682 WP No. 4916 of 2026 HC-KAR Rs.9,72,000/-. In view of the default on the part of the petitioner, the account was classified as NPA and the demand notice under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act', for short), was issued. The Bank has filed O.A.No.341/2023 to recover the dues payable from the company. Petitioner, being the guarantor to the loan availed by the company, filed petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 ('IBC Act', for short) before the National Company Law Tribunal, Bengaluru, on 18.09.2025 and same came to be numbered on 28.11.2025. It is stated that the respondent-Bank even after being aware of the NCLT proceedings has proceeded with the O.A.No.341/2023 and has obtained an ex parte order for the recovery of the dues payable on 21.10.2025.
3. Learned counsel appearing for the petitioner submits that when once an application is filed under Section 94 of IBC Act, from that day the moratorium will be in effect and no proceedings shall be initiated or carried out against the applicant during the said moratorium period. It is submitted that the order that is passed by the Debts Recovery Tribunal -4- NC: 2026:KHC:14682 WP No. 4916 of 2026 HC-KAR ('DRT', for short) on 21.10.2025. When the order was passed on 21.10.2025, the moratorium is in force. It is submitted that the order passed by DRT needs to be set aside.
4. Learned counsel appearing for the respondent-Bank submits that though they filed an application on 18.09.2025, the same came to be numbered on 28.11.2025. The order of the DRT is on 21.10.2025. It is submitted that mere filing of the application is not sufficient. He had relied on an order passed by the Kerala High Court in Jeny Thankachan v. Union of India and Others, arising out of W.P.(C)No.31502/2023 dated 17.11.2023. He has relied on paragraphs no.23, 24, 25 and 26, which reads as follows:-
"23. The operation of interim and final moratorium-under Sections 96 and 101 of the IBC 2016 have serious repercussions. Legal actions and proceedings pending against the debtor will be deemed to have been stayed and the creditors of the debtor will not be able to initiate any legal action proceeding in respect of any debt of the debtor., once an application is filed. Therefore, the provisions of Sections 96 and 101 will have to be strictly construed.
24. Therefore, for an interim or final moratorium under Section 96 to come into force, the application filed by the debtor should be complete in all respects and without any procedural defects. In the case -5- NC: 2026:KHC:14682 WP No. 4916 of 2026 HC-KAR of the petitioner herein, the petitioner has only uploaded Ext.P4 application, which by itself cannot be treated as filing of an application as contemplated by Section 96.
25. In view of the serious consequences that will follow on filing of an application under Section 96 by a debtor, on the creditors who will be disabled and disentitled from initiating or proceeding with any debt recovery legal mechanism, Section 96 should be construed strictly. Mere uploading of an application under Section 96 of the IBC 2016 cannot be taken as filing of an application. The filing of an application as contemplated under Section 96 should be defectless and devoid of any procedural lapses. Only when an application is filed without any defects and satisfying the statutory procedural requirements of filing and only when the adjudicating authority numbers the application, there can be a legal and acceptable filing of application.
26. In the case of the petitioner, admittedly the NCLT has not treated the application as a valid application by assigning regular case number to the application. As long as the petitioner's application is not duly numbered by the NCLT, the interim moratorium contemplated under Section 96(1)(b)(i) cannot come into operation. Therefore, the petitioner is not entitled to contend that the respondents cannot go ahead with the securitisation proceedings."
5. Relying on this order, it is submitted that filing of the application under Section 94 of IBC Act, itself is not sufficient. It is also the contention that nothing has been brought to the notice of the Bank and in that view of the -6- NC: 2026:KHC:14682 WP No. 4916 of 2026 HC-KAR matter, the order passed by the DRT is valid and no interference is called for.
6. In response to that, learned counsel appearing for the petitioner submits that by an email dated 18.09.2025, they have brought this to the notice of the respondent which is not denied by the learned counsel for the respondent.
7. Having heard the counsels on either side, perused the material on record. Before going into the merits of the matter, it is appropriate to look at Sections 94 and 96 of the IBC, which read as follows-
"94. Application by debtor to initiate insolvency resolution process.--
(1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application.
(2) Where the debtor is a partner of a firm, such debtor shall not apply under this Chapter to the Adjudicating Authority in respect of the firm unless all or a majority of the partners of the firm file the application jointly.
(3) An application under sub-section (1) shall be submitted only in respect of debts which are not excluded debts.
(4) A debtor shall not be entitled to make an application under sub-section (1) if he is---7-
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(a) an undischarged bankrupt;
(b) undergoing a fresh start process;
(c) undergoing an insolvency resolution process; or
(d) undergoing a bankruptcy process. (5) A debtor shall not be eligible to apply under sub-section (1) if an application under this Chapter has been admitted in respect of the debtor during the period of twelve months preceding the date of submission of the application under this section.
(6) The application referred to in sub-section (1) shall be in such form and manner and accompanied with such fee as may be prescribed.
96. Interim Moratorium.--
(1) When an application is filed under section 94 or section 95--
(a) an interim-moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application; and
(b) during the interim-moratorium period--
(i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and
(ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt.
(2) Where the application has been made in relation to a firm, the interim-moratorium under sub-section (1) shall operate against all the partners of the firm as on the date of the application.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator."
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8. Admittedly, in this case, the application is filed under Section 94 of IBC Act on 18.09.2025 and the impugned order is passed on 21.10.2025 when the moratorium is in effect. The moment the application is filed under Section 94 of IBC Act, the moratorium under Section 96 of IBC Act, will come into effect and as on the day the order is passed by the Debt Recovery Tribunal, the moratorium is in effect.
ORDER
i. The order impugned passed in
O.A.No.341/2023 dated 21.10.2025 by
DRT-II, Karnataka, Bengaluru, is set aside. ii. The Bank is at liberty to take appropriate steps in accordance with law.
iii. Accordingly, the Writ Petition is allowed. iv. All Pending IAs., if any, in the petition shall stand closed.
Sd/-
(LALITHA KANNEGANTI) JUDGE HNM List No.: 1 Sl No.: 15