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Following the order of NCLT, the Company and the Guarantors preferred an application before the DRT to stay the proceedings against them in light of the moratorium imposed by NCLT.

The DRT allowed stay of its proceedings against the Company but ordered that the proceedings against the Guarantors shall continue as the moratorium is only applicable in relation to the Company.

The judgment, therefore, in this context has departed from this position and offered wider protection to the guarantors during the ongoing insolvency resolution process against the corporate debtor.

This being a high court judgment, it remains to be seen if the other High Courts agree or dissent from this view and how the Supreme Court finally settles this.

They further argued that the adjudicating authority for corporate persons (which include the Company and the Guarantors) is the NCLT in terms of section 60(1) of the Code and as such the proceeding against Guarantors before the DRT should be stayed.

On the other side, the counsel for SBI argued that the Code pertains to insolvency resolution whereas, the RDDBFI Act pertains to recovery of dues and as such there is no overlap between the two statutes.

General Wireless Operations, the Radio Shack successor created by a partnership between Sprint Corp.

and the defunct retailer's owners, is preparing to file for bankruptcy, according to people familiar with the matter.

The beleaguered company, which does business as Radio Shack, operates outlets that share space with Sprint's retail locations, as well as franchising the name to other stores.The Court, while adjudicating upon this question, opined that in view of the moratorium, since the liability of the corporate debtor and the guarantor are still in a ‘’ and not crystallised, two parallel proceedings, viz.under the Code against the corporate debtor and recovery proceedings against the Guarantors before the Debt Recovery Tribunal (DRT) should be avoided and therefore, the Court stayed the proceedings pending before DRT against the guarantor, and deferred it to the outcome of the corporate insolvency resolution process initiated under the Code.Subsequently, SBI had filed an application sometime in 2017 before the DRT, Allahabad against the Company and the Guarantors under section 19 (3) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (RDDBFI Act) for recovery of the amount due from the Company, under the loan agreement.The DRT accepted SBI’s application and had initiated proceedings against the Company and the Guarantors.

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