No Writ to Consolidate DRT Proceedings or Stay Personal Guarantor Insolvency under IBC: Commentary on Sanjeev Krishan Sharma v. Punjab National Bank & Anr.

No Writ to Consolidate DRT Proceedings or Stay Personal Guarantor Insolvency under IBC: Commentary on Sanjeev Krishan Sharma v. Punjab National Bank & Anr.

1. Introduction

The Delhi High Court’s decision in Sanjeev Krishan Sharma v. Punjab National Bank & Anr., 2025 DHC 10225-DB, is a strong reaffirmation of the “alternative remedy” doctrine and of judicial restraint in matters governed by specialised financial legislations, particularly the Recovery of Debts and Bankruptcy Act, 1993 (“RDB Act”), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”), and the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The judgment squarely addresses two increasingly common litigation strategies by defaulting borrowers and personal guarantors:

  • Using Article 226/227 of the Constitution to seek directions for consolidation and expeditious disposal of proceedings pending before the Debts Recovery Tribunals (“DRTs”); and
  • Seeking a writ to stay personal insolvency proceedings against guarantors under Section 95 of the IBC on the ground that related DRT proceedings are pending, allegedly causing multiplicity or risk of conflicting decisions.

The Court not only declines both forms of relief but also characterises the writ petition as an abuse of process and imposes exemplary costs, while denouncing an attempted act of forum shopping (an application to transfer the case away from the Division Bench specifically assigned such matters).

1.1 Parties and Context

  • Petitioner: Sanjeev Krishan Sharma, erstwhile (suspended) director of M/s KMG A to Z Systems Pvt. Ltd., and personal guarantor who also mortgaged his immovable property as collateral.
  • Respondent No. 1: Punjab National Bank (lead bank of the consortium, successor to Oriental Bank of Commerce).
  • Respondent No. 2: Canara Bank (a consortium participant and applicant under Section 95 IBC).

1.2 Core Issues

The petition raised, in substance, three principal issues:

  1. Whether the High Court, in writ jurisdiction, can direct:
    • expeditious disposal of, and
    • preferably consolidation of
    two interim applications (IAs) pending before two different DRTs, where the petitioner seeks discharge of his personal guarantee and release of mortgaged property.
  2. Whether the High Court can stay personal insolvency proceedings under Section 95 IBC pending before the NCLT (Court-VI, New Delhi) against the same guarantor, on the ground that DRT proceedings and IAs on the same debt are already pending.
  3. Whether the selective settlement and release of a co-guarantor by the lead bank automatically discharges or reduces the liability of the remaining guarantor so as to justify writ intervention on the basis of Sections 133, 134, 139 and 141 of the Indian Contract Act, 1872 (“Contract Act”).

The High Court answers all of these against the petitioner, relying heavily on recent Supreme Court authority and emphasising that High Courts must not be converted into supervisory “case management” fora for specialised tribunals when effective statutory remedies exist.

2. Factual Matrix and Procedural History

2.1 Underlying Transactions and Guarantees

  • M/s KMG A to Z Systems Pvt. Ltd., incorporated in 1999, availed credit facilities from a consortium of banks led by Oriental Bank of Commerce (now merged with PNB) with Canara Bank as a participant.
  • The petitioner, along with others (including one Mr. Rajiv Mittal), executed personal guarantees and mortgaged property (Business Suite No. 508, Peach Tree Complex, Gurugram) as collateral.

2.2 Recovery Proceedings before DRTs

Two separate yet related recovery actions were initiated:

  1. By Respondent No. 1 (PNB, ex-Oriental Bank of Commerce):
    • Original Application (O.A.) No. 136/2016 → after merger renumbered as Transfer Application (T.A.) No. 406/2022.
    • Title: Punjab National Bank v. M/s KMG A to Z Systems Pvt. Ltd. & Ors.
    • Pending before DRT-III, Delhi.
    • The petitioner is one of the respondents.
  2. By Respondent No. 2 (Canara Bank):
    • O.A. No. 29/2017 → renumbered as T.A. No. 2097/2023.
    • Title: Canara Bank v. M/s KMG A to Z Systems Pvt. Ltd. & Ors.
    • Pending before DRT-II, Delhi.
    • The petitioner is again a respondent.

Both TAs emanate from the same credit facilities and security structure, so the underlying debt and securities are common or closely intertwined.

2.3 Settlement with Co-guarantor and Petitioner’s IAs

  • PNB, as majority lender, entered into a settlement with co-guarantor Mr. Rajiv Mittal, receiving Rs. 7.40 crores and, in consequence:
    • releasing his personal guarantee, and
    • discharging his mortgaged property.
  • This settlement was recorded by DRT-III on 08.04.2024 in T.A. No. 406/2022.
  • The petitioner contends this was unilateral, without his knowledge/consent, and has the effect of discharging or reducing his own liability under Sections 133, 134, 139, 141 Contract Act.
  • On this basis, the petitioner filed:
    • I.A. No. 635/2024 in T.A. No. 406/2022 (DRT-III), and
    • I.A. No. 3340/2024 in T.A. No. 2097/2023 (DRT-II),
    seeking:
    • discharge from his personal guarantee, and
    • release of his mortgaged immovable property.

2.4 Personal Insolvency Proceedings under the IBC

  • While these IAs were pending, Canara Bank initiated personal insolvency proceedings against the petitioner as a personal guarantor under Section 95 IBC.
  • Case: (IB) No. 58/ND/2025, Canara Bank v. Sanjeev Krishan Sharma, before NCLT, Court-VI, New Delhi.
  • The petitioner asserts that he first learnt of these proceedings on 26.05.2025.
  • He argues that the IBC proceedings are based on the same debt and that allowing them to continue parallel to DRT proceedings would cause:
    • multiplicity of proceedings, and
    • risk of conflicting adjudications on the same debt and guarantee.

2.5 Writ Petition before the Delhi High Court

Invoking Articles 226 and 227, the petitioner sought:

  1. Directions to DRTs:
    • for expeditious adjudication of I.A. No. 635/2024 and I.A. No. 3340/2024; and
    • “preferably” after consolidation or joint consideration, given that both arise out of common transactions and disputes.
  2. Stay of NCLT proceedings:
    • for stay of personal insolvency Case (IB) No. 58/ND/2025 before NCLT until final disposal of the above IAs by the DRTs.

Additionally, after the matter was listed before this Division Bench, the petitioner moved CM Application No. 66877/2025 seeking transfer of the writ petition from the Division Bench to an “appropriate” Single Bench, relying on Articles 215 of the Constitution and Sections 7 and 10 of the Delhi High Court Act, 1966.

3. Summary of the Judgment

The Division Bench (Anil Kshetarpal, J. and Harish Vaidyanathan Shankar, J.) dismissed the writ petition with costs of Rs. 1,00,000 payable to the Poor Patients’ Fund at AIIMS, New Delhi, within two weeks. It held:

  1. Writ Petition Not Maintainable:
    • The petitioner has efficacious statutory remedies before:
      • DRT and DRAT under the RDB Act / SARFAESI, and
      • NCLT and NCLAT under the IBC.
    • High Court’s writ jurisdiction cannot be used to:
      • direct consolidation or accelerated hearing of IAs where such requests were not even made to the DRTs, or
      • stay proceedings under the IBC, which is a complete code with its own checks, balances, and appellate structure.
  2. No Grounds for Interference under Exceptional Categories:
    • The case does not fall within recognised exceptions where writ intervention is permissible despite alternative remedies – such as:
      • lack of jurisdiction,
      • defiance of fundamental judicial procedure,
      • use of repealed provisions, or
      • gross violation of natural justice.
  3. Petitioner’s Conduct Before DRTs:
    • The record (from DRT’s own website) showed:
      • no application for early hearing,
      • no persistent effort to press the IAs, and
      • on some dates, counsel sought adjournments or did not appear.
    • Having not demonstrated diligence before the DRTs, the petitioner cannot invoke the High Court’s supervisory powers to compel expedition.
  4. Selective Release of Co-guarantor Not a Ground for Writ:
    • Any grievance arising from the DRT-III order dated 08.04.2024 (releasing co-guarantor Rajiv Mittal) should have been challenged through a statutory appeal to the DRAT.
    • The plea that the petitioner’s guarantee stands discharged under Contract Act provisions is a justiciable defence to be raised and decided in DRT/NCLT proceedings, not via writ.
  5. Parallel DRT and IBC Proceedings Are Legally Permissible:
    • Proceedings under RDB/SARFAESI and under the IBC operate in distinct statutory spheres.
    • The statutory moratorium in IBC, when triggered after admission, resolves any potential conflict by staying other proceedings where required by law.
    • The apprehension of conflicting decisions is therefore “wholly unfounded.”
  6. No Stay of NCLT Proceedings:
    • Following Supreme Court authority (notably Bank of Baroda v. Farooq Ali Khan and Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan), High Courts should not interdict personal insolvency proceedings under Section 95 IBC at a pre-admission or pre-determination stage.
    • Questions as to:
      • existence of debt,
      • validity and subsistence of guarantee,
      • limitation, or
      • alleged waiver/discharge of liability,
      are to be addressed within the IBC mechanism (Resolution Professional’s report under Section 99 and adjudication under Section 100), with further recourse to NCLAT.
  7. Forum Shopping and Roster Manipulation:
    • The Bench noted that the roster effective from 12.08.2025 explicitly assigned:
      “Writ Petitions (AIIFR, BIFR, DRT, DRAT & Lokayukta)”
      to this Division Bench (DB–VIII).
    • The petitioner’s application seeking transfer of the matter to a Single Judge, without challenging the roster itself, was characterised as a calculated attempt at forum shopping driven by apprehension of an unfavourable outcome.
    • This conduct was “deprecated in the strongest terms.”

On this basis, the writ petition was dismissed with costs and the pending applications were also disposed of.

4. Detailed Analysis

4.1 Maintainability and the Scope of Writ Jurisdiction

The judgment’s central contribution lies in how rigorously it applies the “alternative remedy” rule to the specific context of DRT and personal guarantor IBC proceedings.

4.1.1 Articles 226 and 227: Discretion, Not Routine Appeal

The Court begins by recalling the Supreme Court’s exposition in M.S. Sanjay v. Indian Bank, 2025 SCC OnLine SC 368, which emphasises:

  • Article 226 is an extraordinary, discretionary remedy, founded on legal injury but tempered by public interest and equity.
  • Even where some illegality is made out, the High Court may decline relief if upseting the impugned action would not further substantive justice.
  • High Courts must avoid functioning as ordinary appellate courts over statutory tribunals.

This framing sets the tone: the High Court’s role is supervisory and gatekeeping, not to re-run or micro-manage tribunal processes where statutory mechanisms already exist.

4.1.2 Self-contained Codes and Efficacious Remedies

The Court then relies heavily on the line of decisions typified by:

These decisions repeatedly stress:

“The legislations enacted by Parliament … for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person.”

Accordingly, in matters involving:

  • bank and financial institution dues,
  • RDB Act and SARFAESI proceedings, and
  • IBC insolvency proceedings,

High Courts must insist that litigants exhaust the internal statutory remedial chain (application, appeal, revision, etc.) before invoking writ jurisdiction, save in narrow, exceptional circumstances.

4.1.3 Recognised Exceptions – And Why They Didn’t Apply

The Supreme Court, as recited in PHR Invent and picked up in this judgment, has identified limited situations justifying writ intervention despite an alternative remedy:

  1. Where the authority has not acted in accordance with the statute;
  2. Where it has acted in defiance of fundamental principles of judicial procedure;
  3. Where it relies on repealed provisions; or
  4. Where there is total violation of principles of natural justice.

The Delhi High Court expressly finds that:

  • No such jurisdictional or procedural defect is alleged or made out against the DRTs or NCLT; and
  • The petitioner’s grievances concern mere case management (speed, consolidation) and substantive merits (discharge of guarantee) that the statutory fora are fully competent to address.

Thus, on a pure maintainability analysis, the writ petition fails.

4.2 Reliefs Sought and Why the Court Refused Them

4.2.1 Directions for Expeditious Disposal and Consolidation before DRTs

Notably, the writ petition did not challenge any particular DRT order. Instead, it sought:

  • a positive direction to the DRTs for expedited hearing, and
  • a structural direction for possible consolidation/joint hearing of IAs across DRT-II and DRT-III.

The Court highlights several problems:

  1. No diligence shown before DRTs:
    • Order sheets revealed that:
      • the petitioner had not moved any formal application for early hearing;
      • there was no record of pressing the IAs for prompt disposal; and
      • on some dates, counsel either sought adjournments or failed to appear.
    • Having made no real effort before the DRTs, the petitioner cannot now seek High Court intervention under Articles 226/227 to secure expedition.
  2. Statutory Mechanisms Exist for Transfer and Consolidation:
    • The RDB Act and SARFAESI Act contain provisions enabling:
      • transfers between DRTs and DRAT, and
      • consolidation or joint hearing, where justified.
    • The proper course was to invoke these mechanisms before the tribunals, not to ask the High Court to usurp that administrative-judicial discretion.
  3. Availability of Appeal to DRAT:
    • Even if the petitioner was aggrieved by inaction, adverse orders, or refusal to expedite/consolidate, he could have approached the DRAT under Section 20 RDB Act.
    • By-passing this statutory appeal to seek writ relief was held to be impermissible.

4.2.2 Stay of Personal Insolvency Proceedings under Section 95 IBC

The petitioner argued that because his IAs on guarantee discharge were pending before DRTs, the NCLT proceedings under Section 95 IBC should be frozen to avoid parallel litigation and conflicting decisions.

The Court rejects this for multiple reasons:

  1. Lack of material particulars about NCLT proceedings:
    • The writ petition provided little detail about:
      • the precise stage of the NCLT matter,
      • what orders had been passed, or
      • whether any relief had been sought there (e.g., on jurisdiction or maintainability).
  2. IBC is a complete code with its own remedial chain:
    • Following Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan, 2025 SCC OnLine SC 23, the Court notes that:
      • IBC provides a full set of internal checks, balances, and appellate remedies;
      • High Court interference through writs disrupts the statutory scheme and “breaches the discipline of law.”
    • If the petitioner is aggrieved by the initiation or conduct of IBC proceedings, he must:
      • raise objections before NCLT, and
      • if necessary, appeal to NCLAT.
  3. Supreme Court in Bank of Baroda v. Farooq Ali Khan:
    • This recent decision specifically dealt with the High Court’s interference in personal guarantor insolvency under Section 95 IBC.
    • The Supreme Court held that:
      • At the stage of appointing a Resolution Professional under Section 97 and obtaining his report under Section 99, NCLT is not required to adjudicate on jurisdictional facts such as existence of the debt or validity of the guarantee.
      • These matters are first examined by the RP and only judicially determined at the Section 100 stage (admit/reject) – hence, High Courts must not short-circuit this process through writs.
    • The Delhi High Court applies this reasoning to decline any stay or interference in (IB) No. 58/ND/2025.
  4. Parallel Proceedings Not Inherently Objectionable:
    • Proceedings under:
      • RDB/SARFAESI (before DRTs), and
      • IBC (before NCLT),
      have distinct purposes and structures.
    • Once an IBC application is admitted, statutory moratorium provisions ensure that overlapping recovery actions are regulated or paused as Parliament has mandated.
    • Thus, mere pendency of both sets of proceedings is not ground for High Court interference.

4.2.3 Discharge of Co-guarantor and Contract Act Arguments

The petitioner relied on Sections 133, 134, 139, and 141 of the Contract Act to argue that:

  • PNB’s unilateral release of co-guarantor Rajiv Mittal and his security impaired the petitioner’s rights of contribution and subrogation; and
  • Consequently, his own liability either stands discharged or is necessarily reduced in law.

The Court’s position is subtle but important:

  • It does not decide the merits of these Contract Act contentions.
  • Instead, it holds that:
    • these are substantive defences raised in a fact-heavy context, properly triable by:
      • the DRTs (where the guarantee is directly in issue), and
      • the NCLT (insofar as the same guarantee forms the basis of an IBC claim).
    • If the petitioner was aggrieved by the order dated 08.04.2024 releasing the co-guarantor, the proper forum was:
      • DRAT, via an appeal, not the High Court under Article 226.

Thus, the judgment is not a ruling on the substantive law of discharge of surety. Instead, it is a jurisdictional ruling: these Contract Act issues must be pursued through statutory fora and their appellate chains, not by invoking writ jurisdiction in the first instance.

4.3 Precedents and Their Influence

4.3.1 M.S. Sanjay v. Indian Bank, 2025 SCC OnLine SC 368

The Court quotes extensively from M.S. Sanjay to underline:

  • Article 226 is flexible and equity-oriented, allowing the Court to mould relief in public interest rather than mechanically set aside every illegality.
  • Legal formulations must be applied in the context of factual reality; the High Court is not to function as an ordinary appellate forum.
  • Even upon finding illegality, the High Court may decline to overturn an order if overall justice so dictates.

In this case, Delhi High Court uses that reasoning inversely: where no extreme illegality or injustice is shown, and statutory mechanisms are fully functional, the High Court must step back.

4.3.2 PHR INVENT EDUCATIONAL SOCIETY v. UCO BANK, 2024 SCC OnLine SC 528

PHR Invent consolidates and reaffirms the alternative remedy rule in the context of RDB Act and SARFAESI, specifically stating that:

  • High Courts “strongly deprecated” the practice of entertaining writs in bank recovery matters despite available statutory remedies.
  • Specialised legislations for recovery of public dues are “code unto themselves.”
  • Only in narrow exceptions (as listed earlier) should writs be entertained.

Delhi High Court directly applies these principles to conclude that the petitioner’s complaints against DRT proceedings and timelines must be agitated within the DRT/DRAT framework, not via writ.

4.3.3 Celir LLP v. Bafna Motors (Mumbai) (P) Ltd., 2023 SCC OnLine SC 1209

Celir LLP revisits Satyawati Tondon and emphasises that:

  • More than a decade after Satyawati Tondon, High Courts continue to disregard statutory remedies under RDBFI and SARFAESI Acts.
  • The Supreme Court again admonishes this tendency, holding that writs are impermissible when appeals and applications are available under those Acts.

The Delhi High Court uses Celir LLP to reinforce that:

  • Even post-2010 jurisprudence, there is no dilution of this restraint doctrine; rather, it has been reiterated and strengthened.
  • The present writ is part of the same problematic pattern of trying to avoid the discipline of statutory remedies.

4.3.4 Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan, 2025 SCC OnLine SC 23

This case addressed improper High Court interference with corporate insolvency resolution process (CIRP) under the IBC. The Supreme Court observed:

  • IBC is a complete code with sufficient checks, balances, and appellate avenues.
  • High Court writ interference in IBC proceedings breaches legal discipline and disrupts the statutory scheme.
  • Adherence to procedural protocols preserves the balance between order and justice.

Delhi High Court draws on this reasoning to conclude that:

  • Personal insolvency of guarantors under Part III of IBC should similarly not be short-circuited through writs.
  • The petitioner’s recourse must lie within the IBC architecture (NCLT → NCLAT).

4.3.5 Bank of Baroda v. Farooq Ali Khan, 2025 SCC OnLine SC 374

This judgment is particularly apposite because it:

  • Concerns writ interference in Section 95 IBC proceedings against a personal guarantor.
  • Summarises Dilip B. Jiwrajka v. Union of India, 2023 SCC OnLine SC 1530, on the role of the Resolution Professional (RP) under Sections 95–100 IBC:
    • At Sections 95–99 stage: no judicial adjudication; RP gathers facts and gives a recommendatory report.
    • Adjudication occurs only at Section 100, when NCLT decides whether to admit or reject the application.
  • Holds that High Courts should not:
    • pre-empt the statutory process by deciding questions like existence of debt or validity of guarantee via writ, or
    • interdict proceedings even before the RP’s report is submitted.

The Delhi High Court essentially transposes this reasoning to the petitioner’s case: any arguments about discharge of guarantee, limitation, or quantum are to be evaluated within the IBC sequence, not externally via writ.

4.4 Legal Reasoning on Conduct and Forum Shopping

An important ancillary aspect of the judgment is its treatment of litigant conduct.

4.4.1 Lack of Diligence as a Bar to Equitable Relief

The Court notes that the petitioner:

  • did not file any early hearing application before the DRTs;
  • did not, on record, press for expedition; and
  • in some instances sought adjournments or was absent.

In a discretionary jurisdiction like Article 226, such conduct weighs heavily against grant of relief. A party who has not made bona fide efforts before the primary forum is ill-placed to seek a constitutional writ compelling expedition or consolidation.

4.4.2 Forum Shopping and Roster Integrity

After the Bench flagged maintainability concerns, the petitioner filed a CM Application seeking transfer of the writ petition to a Single Judge, arguing that the matter ought not to have been listed before a Division Bench.

However:

  • The roster effective from 12.08.2025 specifically allocated “Writ Petitions (… DRT, DRAT …)” to this Division Bench (DB–VIII).
  • The petitioner did not challenge the legality or correctness of the roster itself.

The Court therefore characterised the transfer application as an attempt at forum shopping – seeking a different Bench purely out of apprehension regarding the likely outcome. It strongly deprecated this practice, stressing that:

  • roster allocation is an internal administrative-judicial arrangement to be respected; and
  • manipulative attempts to change forum undermine the integrity of the judicial process.

The imposition of costs of Rs. 1 lakh, payable to AIIMS Poor Patients’ Fund, reflects the Court’s intent to deter such procedural misadventures.

5. Complex Concepts Simplified

5.1 Writ Jurisdiction under Articles 226 and 227

  • Article 226: Empowers High Courts to issue writs and directions for:
    • enforcement of fundamental rights, and
    • “for any other purpose” (including legal rights under statutes or contracts).
  • Article 227: Gives High Courts supervisory jurisdiction over all courts and tribunals within their territory.

These powers are broad but are exercised:

  • discretionarily (i.e., even if a legal error exists, relief may be declined), and
  • subject to self-imposed restraints, notably the rule that statutory remedies should generally be exhausted first.

5.2 “Alternative Remedy” Doctrine

This doctrine means:

  • If a statute provides a specific remedy (appeal, revision, review, etc.), the High Court will normally insist that the aggrieved party uses that route first.
  • Writs are reserved for:
    • clear jurisdictional errors (e.g., authority acting outside the law),
    • fundamental procedural violations, or
    • cases where the statutory remedy is illusory or not efficacious.

In the current case:

  • DRT orders and inaction are appealable to DRAT;
  • NCLT orders in IBC proceedings are appealable to NCLAT;
  • Therefore, the High Court refused to treat itself as a first-instance forum for grievances that clearly belong in those statutory channels.

5.3 DRT, DRAT, SARFAESI, and RDB Act

  • DRT: Debts Recovery Tribunal – specialised tribunal for adjudicating bank/financial institution claims above statutory thresholds.
  • DRAT: Debts Recovery Appellate Tribunal – appellate body for DRT decisions.
  • RDB Act: Governs procedure before DRT/DRAT, dealing with adjudication and recovery of debts due to banks/FIs.
  • SARFAESI: Enables secured creditors to enforce security interests without first going to court (e.g., possession, sale of secured assets), subject to limited challenges before DRT.

These statutes are “self-contained codes” because they prescribe:

  • who can file,
  • what can be claimed,
  • how proceedings run, and
  • what appeals are available.

5.4 NCLT, NCLAT, and Personal Guarantor Insolvency under IBC

  • NCLT: National Company Law Tribunal – the Adjudicating Authority for corporate insolvencies and for personal guarantors to corporate debtors under IBC.
  • NCLAT: Appellate tribunal over NCLT decisions.

For personal guarantors, Part III Chapter III of IBC (Sections 94–100) provides that:

  1. A creditor or debtor may file an application (e.g., under Section 95 for creditors).
  2. NCLT appoints a Resolution Professional under Section 97.
  3. The RP examines the application, collects information, and under Section 99 submits a recommendatory report on whether the application should be admitted or rejected.
  4. Only then, under Section 100, does NCLT judicially decide to admit/reject the application.

The Supreme Court has clarified that:

  • no judicial determination occurs at the stages of Sections 95–99; and
  • questions such as whether a debt exists or a guarantee is valid are to be first addressed within this statutory sequence.

Hence, High Courts should not enter this domain via writs at early stages.

5.5 Moratorium and Parallel Proceedings

A frequent concern is whether multiple fora (DRT and NCLT) deciding matters about the same debt/guarantee may issue conflicting outcomes. IBC addresses this via:

  • Interim moratorium under Section 96 for personal guarantors, triggered upon filing of application; and
  • Moratorium under Section 101, triggered upon admission.

These provisions:

  • temporarily freeze certain legal actions and enforcement steps against the debtor/guarantor;
  • ensure that insolvency proceedings can proceed in an orderly manner; and
  • regulate the extent to which other proceedings (like DRT recovery cases) can be continued during insolvency.

Thus, Parliament itself has provided the mechanism to handle overlap, undermining the petitioner’s claim that High Court intervention is needed to prevent “conflicting adjudications.”

5.6 Co-sureties and Discharge under the Contract Act

The petitioner invoked:

  • Section 133: Discharge of surety by variance in terms of contract between principal debtor and creditor, without surety’s consent.
  • Section 134: Discharge of surety by release or discharge of principal debtor by any contract or by any act or omission of the creditor.
  • Section 139: Creditor’s act or omission impairing surety’s eventual remedy (e.g., compromising securities) may discharge the surety.
  • Section 141: Surety entitled to the benefit of every security which the creditor has against the principal debtor at the time the contract of suretyship is entered into; loss of such security without surety’s consent discharges the surety to the extent of the value of the security.

On these provisions, the petitioner argued that:

  • the unilateral release of co-guarantor and associated security has impaired his ability to seek contribution or be subrogated, and
  • therefore, his liability is automatically reduced/discharged in law.

The High Court’s stance was that:

  • these are substantive legal questions requiring factual determination (quantum of security, terms of guarantee, nature of co-suretyship, etc.);
  • they lie within the ordinary jurisdiction of DRTs and NCLT; and
  • a writ Court will not usurp that role in the absence of jurisdictional or procedural illegality.

5.7 Forum Shopping and Roster Allocation

“Forum shopping” refers to the practice of a litigant attempting to choose or manipulate the adjudicatory forum (or Particular Bench) perceived as more favourable, rather than accepting:

  • the statutory forum (e.g., DRT vs High Court), or
  • the judicial assignment under the court’s roster (e.g., Division Bench vs Single Bench).

Rosters are administrative instruments specifying which types of cases each Judge/Bench will handle. Unless the roster’s legality is challenged, litigants are not entitled to demand a different coram merely because they suspect the result may be adverse.

In this case:

  • the writ was correctly listed before DB–VIII under the roster; and
  • the post-facto transfer application was seen as an impermissible attempt at forum selection.

6. Impact and Implications

6.1 For Personal Guarantors and Borrowers

  • They cannot:
    • use writ petitions to stall Section 95 IBC proceedings on the ground that DRT proceedings are pending; or
    • seek High Court directions to “manage” DRT calendars (expedite, consolidate) without first exhausting in-tribunal remedies.
  • Defences such as:
    • discharge due to release of co-guarantor,
    • impairment of securities, or
    • variance in contract terms,
    must be pleaded and prosecuted before DRT/NCLT and, if needed, before DRAT/NCLAT – not via Article 226 in the first instance.
  • Strategically, guarantors must be more proactive within the statutory fora – filing early hearing applications, resisting IBC admission applications timely, and using appeals – rather than hoping for High Court intervention later.

6.2 For Banks and Financial Institutions

  • The judgment fortifies the ability of banks:
    • to pursue parallel remedies (DRT actions and IBC proceedings) as allowed by law; and
    • to resist attempts by borrowers/guarantors to derail recovery or insolvency through writ petitions.
  • It also underscores that:
    • selective settlements or one-time settlements with specific guarantors, if properly recorded by DRTs, will not automatically and externally be used in writ to discharge remaining guarantors;
    • such issues remain triable defences in the statutory fora.

6.3 For High Court Practice and Judicial Administration

  • The decision is a strong signal that:
    • writ petitions against DRT/SARFAESI/IBC actions will be scrutinised at the threshold for maintainability; and
    • costs, including exemplary costs, may be imposed for frivolous or abusive petitions.
  • It reinforces respect for:
    • roster allocation, and
    • the limits of judicial review over tribunal case management.
  • It may reduce the load of such writs on the High Court and channel litigation more firmly through specialised tribunals.

6.4 Doctrinal Clarifications

The judgment, though largely applying Supreme Court law, clarifies at the High Court level that:

  • Claims of multiplicity or potential “conflicting decisions” between DRT and IBC fora, by themselves, are not sufficient to invoke writ jurisdiction; and
  • The statutory design of IBC (with moratoriums and structured stages) is considered adequate to manage conflicts, absent extraordinary circumstances.

7. Conclusion

Sanjeev Krishan Sharma v. Punjab National Bank & Anr. is best understood as a robust reaffirmation of three key principles:

  1. Alternative Remedy and Self-contained Codes:
    • Where specialised statutes like the RDB Act, SARFAESI, and IBC create a comprehensive remedial architecture, High Courts will be extremely reluctant to intervene via writs.
    • Only clear jurisdictional or foundational procedural violations justify bypassing statutory remedies.
  2. Separation of Tribunal Functions and Writ Oversight:
    • Substantive defences relating to guarantee discharge, validity of debt, limitation, and impact of co-guarantor settlements are the province of DRTs and NCLT (and their appellate bodies), not the High Court exercising original fact-finding under Article 226.
    • Parallel proceedings in DRT and NCLT based on the same debt do not per se justify writ relief; the IBC moratorium framework handles potential conflicts.
  3. Litigant Conduct and Forum Integrity:
    • A litigant who has not diligently pursued remedies before the statutory forum cannot expect equitable writ relief.
    • Attempts at forum shopping – such as seeking transfer from a roster-assigned Bench without legal basis – will not only fail but may attract financial penalties.

In practical terms, the decision closes off an increasingly used route by personal guarantors: approaching the High Court to manage, delay, or derail DRT and IBC processes under the guise of preventing multiplicity or conflicting decisions. The High Court’s clear message is that litigants must work within the specialised statutory systems Parliament has created, reserving writ jurisdiction for genuinely exceptional and jurisdictional failings, not as an ordinary alternative to appeals and applications under those codes.

Case Details

Year: 2025
Court: Delhi High Court

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