The Calcutta HC has ruled that the IBC moratorium does not prevent pre-existing civil suits from proceeding, setting aside the dismissal of a guarantor suit against Canara Bank.
Calcutta HC Rules on Civil Proceedings during IBC Moratorium
The Calcutta High Court has issued a significant ruling clarifying that the moratorium imposed under the IBC does not serve to bar pre-existing civil proceedings. The court set aside the dismissal of a suit filed against Canara Bank by a personal guarantor under Section 95 of the IBC.
This decision is pivotal in establishing that parties can pursue civil litigation despite the ongoing insolvency resolution processes, thus preserving their legal rights. The court highlighted the distinction between insolvency proceedings initiated under the IBC and other civil suits that may coexist concurrently.
Legal practitioners should take note of this decision as it has implications for the rights of litigants in insolvency scenarios. Attorneys must be diligent in ensuring that clients are aware of their rights to continue with certain civil actions even when an IBC moratorium is in effect, potentially affecting strategies in insolvency and recovery matters.
Citations
- Guarantor Suit (2026) Calcutta HC Order
