Litigant Hit with ₹1 Lakh Cost for Forum Shopping and Stalling Tactics: Delhi High Court
Introduction
The Delhi High Court has dismissed a writ petition filed by Sanjeev Krishan Sharma, imposing costs of ₹1,00,000 for attempting to misuse the Court’s writ jurisdiction to obstruct proceedings pending before the Debts Recovery Tribunals (DRTs) and the National Company Law Tribunal (NCLT). The Division Bench held that the petitioner failed to demonstrate any violation of fundamental rights or statutory procedure that could justify invoking the High Court’s extraordinary supervisory jurisdiction under Article 226.
Factual Background
KMG A to Z Systems Pvt. Ltd., where the petitioner served as a director, availed credit facilities from a consortium led by Punjab National Bank, with Canara Bank as participant lender. Sharma executed a personal guarantee and mortgaged a Business Suite in Gurugram as security. After the borrower defaulted, both banks initiated recovery actions before the DRTs. During the pendency of these proceedings, Canara Bank also initiated personal insolvency proceedings under Section 95 of the Insolvency and Bankruptcy Code (IBC) based on the same underlying debt.
Procedural Background
Sharma filed interim applications before the DRTs seeking discharge from his personal guarantee and release of the mortgaged property, contending that his guarantee stood extinguished in law. He simultaneously approached the Delhi High Court through a writ petition seeking consolidation or stay of the DRT and NCLT proceedings. He further filed an application attempting to move the matter from the Division Bench to a Single Judge despite the roster assigning DRT-related writ jurisdiction to the Division Bench.
Issues
1. Whether the writ petition was maintainable to halt statutory proceedings before DRTs and the NCLT.
2. Whether the petitioner’s personal guarantee was discharged due to the alleged settlement with a co-guarantor.
3. Whether simultaneous proceedings under SARFAESI/RDB Acts and IBC warranted consolidation.
4. Whether the petitioner had abused the process of court by forum shopping or unreasonably delaying statutory proceedings.
Contentions of the Parties
Petitioner: Argued that simultaneous adjudication before DRTs and NCLT risked conflicting findings. Contended that his guarantee was extinguished when Punjab National Bank settled with co-guarantor Rajiv Mittal for ₹7.40 crore. Claimed that unilateral release of a co-surety discharged the remaining surety under the Contract Act. Sought consolidation of the proceedings and a stay on all parallel actions. Alleged violation of natural justice due to multiplicity of proceedings.
Respondent Banks: Submitted that writ jurisdiction cannot be invoked to bypass or stall statutory procedures under RDB Act, SARFAESI Act, or IBC. Argued that the personal guarantee is an independent undertaking; settlement with another surety does not discharge others. Submitted that insolvency proceedings under the IBC are distinct and independent from DRT recovery actions. Contended that the petitioner was responsible for delays before the DRT and was trying to forum-shop.
Reasoning and Analysis
The Justices Anil Kshetarpal and Harish Vaidyanathan Shankar held that Sharma had failed to demonstrate violation of fundamental rights, statutory infirmity, or breach of natural justice—conditions necessary to invoke Article 226. It reiterated the principle that writ courts ordinarily do not interfere with matters pending before statutory tribunals such as DRT or NCLT unless exceptional grounds exist. The Bench stated that, The petitioner himself sought repeated adjournments before DRTs and failed to press for expeditious disposal, undermining his plea of prejudice. The insolvency proceedings under the IBC constituted an independent statutory mechanism and could run parallel to DRT actions without conflict.
A compromise between the bank and a co-guarantor did not extinguish liability of other guarantors, who issued separate, enforceable undertakings. Attempt by the petitioner to move the matter to a Single Judge constituted forum shopping and abuse of process. The Court therefore dismissed the writ petition and imposed costs of ₹1,00,000 payable to the Poor Patients’ Fund at AIIMS within two weeks.
Implications
Reaffirms strict limits on the maintainability of writ petitions that challenge or seek to stall statutory recovery mechanisms under the SARFAESI Act, RDB Act, and IBC. Clarifies that personal insolvency proceedings and DRT recovery actions can proceed simultaneously without legal inconsistency. Reinforces that release of a co-guarantor does not automatically discharge other guarantors. Signals a strong judicial stance against forum shopping and misuse of the writ jurisdiction.
In this case the petitioner was represented by Dr. Pankaj Garg, Mr. Yaksh Garg and Ms. Yashna Ahuja, Advocates. Meanwhile the respondent was represented by Mr. Saurabh Kushwaha and Mr. Rohit Arya, Advocates.