# In the matter of Sanjeev Shriya Vs. State Bank of India & 6 Ors. WRIT -C Nos. 30285 & 30033-2017

> HC judgment dated 2017-09-06. Citation: TCN-2017-HC-00007. The case involves two writ petitions (Writ C No. 30285 of 2017 and Writ C No. 30033 of 2017) filed…

- **Court:** HC
- **Order date:** 6 Sept 2017
- **Citation:** TCN-2017-HC-00007
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/sanjeev-shriya-vs-state-bank-of-india-6-ors-writ-c-nos-30285-30033-2017-ccddf485

## Summary

### Background

The case involves two writ petitions (Writ C No. 30285 of 2017 and Writ C No. 30033 of 2017) filed by Sanjeev Shriya and Deepak Singhania (along with another), respectively, challenging orders passed by the Debt Recovery Tribunal (DRT), Allahabad. The DRT orders pertained to Original Application No. 238/2017 filed by the State Bank of India (SBI) against LML Limited and its guarantors, including the petitioners. LML Limited was declared a 'Sick Industrial Company'. The SBI sought recovery of Rs. 72,75,29,053.71. The petitioners, being directors and guarantors, argued that proceedings against them should be stayed due to a moratorium imposed by the National Company Law Tribunal (NCLT), Allahabad, on LML Limited under Section 14 of the Insolvency and Bankruptcy Code

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## Facts

1. LML Limited was declared a 'Sick Industrial Company' by the Board of Industrial and Financial Reconstruction on 8.5.2007.
2. The State Bank of India (SBI) filed Original Application No. 238 of 2017 before the Debt Recovery Tribunal (DRT), Allahabad, seeking recovery of Rs. 72,75,29,053.71 from LML Limited and its guarantors.
3. Sanjeev Shriya and Deepak Singhania, the petitioners, are directors and guarantors of LML Limited.
4. The National Company Law Tribunal (NCLT), Allahabad, initiated a Corporate Insolvency Resolution Process (CIRP) against LML Limited under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016, and imposed a moratorium under Section 14 on 30.5.2017.
5. The DRT stayed proceedings against LML Limited but continued proceedings against the

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## Issues and analysis

### Issue 1: Whether the Debt Recovery Tribunal (DRT) can continue proceedings against the guarantors of a …

**Ratio:** The principle is that once a moratorium is imposed under Section 14 of the IBC, the focus

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**Reasoning:** The court reasoned that the DRT proceedings against the guarantors should be stayed until

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**Interpretation:** The interpretation of Section 14 of the IBC is crucial. While it directly

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**Application:** In this specific case, the court applied the ratio by staying the DRT

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## Parties

- **Judges:** Mahesh Chandra…
- **Appellants:** Sanjeev S…
- **Respondents:** LML LIM…; State Bank of…

## Timeline

- **2007-05-08 — LML Declared Sick…**: LML Limited was declared a 'Sick Industrial Company' by the Board of Industrial and…
- **2017-03-27 — SBI Files Original…**: State Bank of India (SBI) filed Original Application No. 238 of 2017 before the Debt…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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