INDIAN OVERSEAS BANK versus M/S RCM INFRASTRUCTURE LTD. AND ANOTHER on 18 May 2022

[2022] 7 S.C.R. 1090

SUPREME COURT REPORTS

[2022] 7 S.C.R.

AINDIAN OVERSEAS BANK

v.

M/S RCM INFRASTRUCTURE LTD. AND ANOTHER

(Civil Appeal No. 4750 of 2021)

BMAY 18, 2022

[L. NAGESWARA RAO AND B. R. GAVAI, JJ.]

Insolvency and Bankruptcy Code, 2016: ss. 238, 10, 14 –Provisions of the Code to override other laws – On facts, corporatedebtor filed an insolvency petition u/s. 10 on 22.10.2018 – NCLTCadmitted the petition on 03.01.2019, moratorium was notified andInterim Resolution Professional was appointed – Meanwhile theappellant bank issued the second E-auction notice on 27.11.2018,to recover the public money availed by the corporate debtor –Thereafter, E-auction was held by the Bank, the properties wereDsold, sale certificate was issued and the sale was completed on8.03.2019 – Promoter of the corporate debtor filed an applicationbefore NCLT to set aside the security realization during the CIRPperiod carried out by the Bank or in alternative cancel the impugnedtransaction – NCLT set aside the sale of the property owned by thecorporate debtor – Appeal thereagainst rejected by the NCLAT –EOn appeal, held: After the commencement of the CIRP, there iscomplete prohibition for any action to foreclose, recover or enforceany security interest created by the Corporate debtor in respect ofits property including any action under the SARFESI Act in the viewof s.14(1)(c) rw s.238 which have overriding effect over any otherFlaw – On facts, the balance amount was accepted by the appellantBank on 8.03.2019 – Sale under the statutory scheme ascontemplated u/rr. 8 and 9 would stand completed only on 8.03.2019,which falls much after 03.01.2019, i.e., on which date CIRPcommenced and moratorium was ordered – As such, it cannot beaccepted that the sale was complete upon receipt of the part paymentG– Appellant Bank could not have continued the proceedings underSARFESI Act once the CIRP was initiated and the moratorium wasordered – Thus, the orders of NCLT and NCLAT does not call forinterference –Securitization and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002 – s. 13 – SecurityHInterest Enforcement Rules – rr. 8, 9.

Dismissing the appeal, the Court

HELD: 1.1 It is clear that after the CIRP is initiated, thereis moratorium for any action to foreclose, recover or enforce anysecurity interest created by the Corporate Debtor in respect ofits property including any action under the SARFAESI Act. It isclear that once the CIRP is commenced, there is completeprohibition for any action to foreclose, recover or enforce anysecurity interest created by the Corporate Debtor in respect ofits property. The words “including any action under the SARFAESIAct” are significant. The legislative intent is clear that after theCIRP is initiated, all actions including any action under theSARFAESI Act to foreclose, recover or enforce any securityinterest are prohibited. [Para 24][1100-E-G]

1.2 In view of the provisions of s. 238 IBC, the provisionsof the IBC shall have effect, notwithstanding anything inconsistenttherewith contained in any other law for the time being in forceor any instrument having effect by virtue of any such law.[Para 26][1101-A]

1.3 The instant case arises out of a statutory sale. The salewould be governed by Rules 8 and 9 of the said Rules. The salewould be complete only when the auction purchaser makes theentire payment and the authorised officer, exercising the powerof sale, shall issue a certificate of sale of the property in favour ofthe purchaser in the Form given in Appendix V to the said Rules.[Para 32][1102-F-G]

1.4 In the instant case, the balance amount has beenaccepted by the appellant Bank on 8[th] March 2019. The sale underthe statutory scheme as contemplated under Rules 8 and 9 of thesaid Rules would stand completed only on 8th March 2019.Admittedly, this date falls much after 3rd January 2019, i.e., onwhich date CIRP commenced and moratorium was ordered. Assuch, it cannot be accepted that the sale was complete uponreceipt of the part payment. [Para 34][1103-B-C]

1.5 In view of the provisions of Section 14(1)(c) of the IBC,which have overriding effect over any other law, any action toforeclose, recover or enforce any security interest created by A

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[2022] 7 S.C.R.

Athe Corporate Debtor in respect of its property including anyaction under the SARFAESI Act is prohibited. The appellant Bankcould not have continued the proceedings under the SARFAESIAct once the CIRP was initiated and the moratorium was ordered.[Para 35][1103-C-D]

B1.6 The submission of the appellant Bank that the petitionfiled by the Corporate Debtor was mala fide cannot be accepted.All the details with regard to action taken by the appellant Bankhave been specifically mentioned in the petition filed by theCorporate Debtor. Insofar as the submission with regard toliquidation order being passed is concerned, the same is alreadyCunder challenge before the NCLAT. Thus, no case is made outfor interfering with the concurrent orders passed by the NCLTand NCLAT. [Paras 36 and 37][1103-E-F]

Vidhyadhar v. Manikrao and Another (1999) 3 SCC573 : [1999] 1 SCR 1168; B. Arvind Kumar v. Govt. ofDIndia and Others (2007) 5 SCC 745; Kaliaperumal v.Rajagopal and Another (2009) 4 SCC 193 : [2009] 2SCR 814; Hindon Forge Private Limited and Anotherv. State of Uttar Pradesh through District Magistrate,Ghaziabad and Another (2019) 2 SCC 198 : [2018] 11ESCR 1019; S. Karthik and Others v. N. Subhash ChandJain and Others 2020 SCC OnLine SC 787; AnandRao Korada, Resolution Professional v. Varsha FabricsPrivate Limited and Others (2020) 14 SCC 198 : [2019]14 SCR 695; Innoventive Industries Limited v. ICICIBank and Another (2018) 1 SCC 407 : [2017] 8 SCRF33; Principal Commissioner of Income Tax v. MonnetIspat and Energy Limited (2018) 18 SCC 786;Ghanashyam Mishra and Sons Private Limited throughthe Authorised Signatory v. Edelweiss AssetReconstruction Company Limited through the DirectorGand Others (2021) 9 SCC 657; Shakeena and Anotherv. Bank of India and Others 2019 SCC OnLine SC1059 – referred to.

Case Law Reference

[1999] 1 SCR 1168referred toPara 12H

INDIAN OVERSEAS BANK v. M/S RCM INFRASTRUCTURELTD. AND ANOTHER

CIVIL APPELLATE JURISDICTION : Civil Appeal No.4750 of2021.

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From the final Order dated 26.03.2021 of the National CompanyLaw Appellate Tribunal, Principal Bench, New Delhi in Company Appeal(AT) (Insolvency) No.736 of 2020.

Tushar Mehta, SG, C. S. Vaidhyanathan, K. V. Viswanathan, Sr.Advs., Vikas Mehta, Adith Nair, R. Anand Padmanabhan, E. VenkataSiddhartha, Rahul Gupta, S. Santanam Swaminadhan, Kartik Malhotra,Abhilasha Shrawat, Himani Thakur, J. Manivannan, (RP), R.Venkataraman, Rahul Sangwan, Mrs. Aarthi Rajan, Aditya Verma, Ms.Priyamvada Mishra, Rigved Prasad Advs. for the appearing parties.

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The Judgment of the Court was delivered by

B. R. GAVAI, J.

1. This appeal challenges the judgment dated 26[th] March 2021passed by the National Company Law Appellate Tribunal, PrincipalBench, New Delhi (hereinafter referred to as “the NCLAT”) in CompanyAppeal (AT) (Insolvency) No. 736 of 2020, thereby dismissing the appealfiled by the present appellant-Indian Overseas Bank, which was in turnfiled challenging the order dated 15[th] July 2020 passed by the NationalCompany Law Tribunal, Hyderabad Bench-1, Hyderabad (hereinafterreferred to as “the NCLT”) in I.A. No.832 of 2019 in C.P. (IB) No. 601/10/HDB/2018, vide which the learned NCLT had allowed the applicationfiled by the respondent No.2 herein, former Managing Director of therespondent No.1 herein-M/s RCM Infrastructure Ltd. (hereinafterreferred to as the “Corporate Debtor”) and set aside the sale of theassets of the Corporate Debtor.

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A2. The facts in brief, giving rise to filing of the present appeal, areas under:

The appellant Bank had extended certain credit facilities to theCorporate Debtor. However, the Corporate Debtor failed to repay thedues and the loan account of the Corporate Debtor became irregular.BAs such, on 13[th] June 2016, the loan account of the Corporate Debtorcame to be classified as “Non-Performing Asset” (NPA).

3. The appellant Bank issued a Demand Notice under Section13(2) of the Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 (hereinafter referred to asCthe “SARFAESI Act”), calling upon the Corporate Debtor and itsguarantors to repay the outstanding amount due to the appellant Bank.Since the Corporate Debtor failed to comply with the Demand Noticeand repay the outstanding dues, the appellant Bank took symbolicpossession of two secured assets mortgaged exclusively with it. Thesame was done by the appellant Bank in exercise of powers conferredDon it under Section 13(4) of the SARFAESI Act read with Rule 8 of theSecurity Interest (Enforcement) Rules, 2002 (hereinafter referred to asthe “said Rules”). One of the said properties stood in the name ofCorporate Debtor and the other in the name of Corporate Guarantor. AnE-auction notice came to be issued on 27[th] September 2018 by theEappellant Bank to recover the public money availed by the CorporateDebtor.

4. In the meantime, on 22[nd] October 2018, the Corporate Debtorfiled a petition being CP(IB) No. 601/10/HDB/2018 under Section 10 ofthe Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as“the IBC”) before the learned NCLT. In the first E-auction held on 6[th]FNovember 2018, no bids were received. As such, the second E-auctionnotice came to be issued on 27[th] November 2018, which was scheduledto be held on 12[th] December 2018. In the second E-auction, three personsbecame successful bidders by offering jointly a price of Rs.32.92 crorefor both the secured assets. On 13[th] December 2018, the sale wasGconfirmed in favour of the successful bidders/auction purchasers in thepublic auction. The successful bidders deposited 25% of the bid amount,i.e., Rs.8.23 crore including the Earnest Money Deposit of the said amountand the appellant Bank issued a sale certificate to them. The auctionpurchasers were directed to pay the balance 75% of the bid amountwithin 15 days, i.e., prior to 28[th] December 2018.H

5. It appears that the auction purchasers, on 28[th] December 2018,addressed a letter to the appellant Bank seeking handing over of peacefuland vacant possession of the secured assets and also prayed for extensionof time to pay the balance 75% of the bid amount till 8[th] March 2019.The request made by the auction purchasers was accepted by theappellant Bank on 29[th] December 2018. It is the case of the appellantBank that in exercise of its powers under Rule 9(4)(a) of the said Rules,it extended the period till 8[th] March 2019 for payment of the balance75% of the bid amount.

6. The learned NCLT, vide order dated 3[rd] January 2019, admittedthe petition filed by the ex-promoter of the Corporate Debtor. As a resultof the said order passed under Section 10 of the IBC, the CorporateInsolvency Resolution Process (hereinafter referred to as “the CIRP”)of the Corporate Debtor commenced. A moratorium as provided underSection 14 of the IBC was notified and an Interim Resolution Professional(hereinafter referred to as “the IRP”) was also appointed.

7. The appellant Bank on 21[st] January 2019, filed its claim in ClaimForm-C with the IRP, upon it coming to know about the admission of theinsolvency petition filed by the Corporate Debtor. According to theappellant Bank, since the balance 75% of the bid amount was not yetreceived on the said date, it was not excluded from the claim filed beforethe IRP. During the pendency of the CIRP, the appellant Bank acceptedthe balance 75% of the bid amount, i.e., Rs.24.69 crore on 8[th] March2019. Upon receipt of the payment, the appellant Bank submitted itsrevised claim in Claim Form-C to the IRP on 11[th] March 2019. Theappellant Bank also intimated the IRP about the successful sale of thesaid secured assets. The promoter of the Corporate Debtor, i.e.,respondent No.2 herein, thereafter filed an application being I.A. No.832/2020 in the pending company petition being CP(IB) No. 601/10/HDB/2018, thereby praying the learned NCLT to set aside the securityrealization during the CIRP period carried out by the appellant Bank orin the alternative to cancel the impugned transaction. Vide order dated15[th] July 2020, the learned NCLT passed an order thereby allowing thesaid application filed by the respondent No.2 and setting aside the saleof the property owned by the Corporate Debtor. Being aggrieved thereby,the appellant Bank filed an appeal being Company Appeal (AT)(Insolvency) No. 736 of 2020 before the learned NCLAT and the samewas rejected by the impugned judgment dated 26[th] March 2021. Beingaggrieved thereby, the present appeal.

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A8. We have heard Shri Tushar Mehta, learned Solicitor Generalappearing on behalf of the appellant Bank, Shri C.S. Vidyanathan, learnedSenior Counsel appearing on behalf of the impleading applicants, i.e.,the auction purchasers, Shri K.V. Viswanathan, learned Senior Counselappearing on behalf of the respondent No.1 and Shri Aditya Verma,learned counsel appearing on behalf of the respondent No.2.B

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9. Shri Tushar Mehta submitted that the very initiation of thevoluntary insolvency proceedings under Section 10 of the IBC, by theex-promoter of the Corporate Debtor, was with mala fide intent and assuch, hit by Section 65 of the IBC. It is submitted that the loan accountof the Corporate Debtor was classified as “NPA” on 13[th] June 2016.CThereafter on 18[th] April 2018, the appellant Bank issued a Demand Noticeunder Section 13(2) of the SARFAESI Act. He submitted that since theCorporate Debtor failed to make the payment, a symbolic possessioncame to be undertaken by the appellant Bank under Section 10 of theSARFAESI Act and an E-auction notice was issued on 26[th] SeptemberD2018. He submitted that the said notice was challenged by the CorporateDebtor by filing an application being SA No. 340/2018 before the learnedDebt Recovery Tribunal-II, Hyderabad (hereinafter referred to as “theDRT”). However, no stay was granted by the DRT in the said application.It is submitted that on the contrary, an order came to be passed on 29[th]October 2018 by the learned DRT, whereby confirmation of sale wasEstayed, subject to deposit of Rs.12 crore by the Corporate Debtor. TheCorporate Debtor failed to do so. After that, with mala fide intent, insteadof making payment, a petition came to be filed under Section 10 of theIBC by the Corporate Debtor for the sole purpose of stalling the sale.He further submitted that the second E-auction notice was issued onF27[th] November 2018, which resulted in sale of the two properties.

10. Shri Mehta submitted that the order of the learned NCLT,admitting the petition under Section 10 of the IBC, came to be passedonly on 3[rd ]January 2019, i.e., prior to confirmation of sale. He submittedthat it is thus clear that the CIRP was initiated only to stall the SARFAESIproceedings. It is submitted that though the issue with regard to SectionG65 of the IBC was subsequently raised by the appellant Bank, neitherthe learned NCLT nor the learned NCLAT had considered the same. Itis submitted that the mala fide intention of the IRP is clear inasmuch assince the ex-promoters could not submit a credible plan, the learnedNCLT, vide order dated 7[th] February 2022, has ordered for liquidation. ItHis submitted that a perusal of the said order dated 7[th] February 2022

INDIAN OVERSEAS BANK v. M/S RCM INFRASTRUCTURELTD. AND ANOTHER [B. R. GAVAI, J.]

would reveal that the delay was caused at the instance of the IRP, whohas been seen to be helping the ex-promoters.

11. Shri Mehta further submitted that since the moratorium underSection 14 of the IBC has ceased to subsist after the order directingliquidation was passed under Section 52 of the IBC, the secured creditorswere allowed to realise their security interest. It is therefore submittedthat now, there is no bar on the appellant Bank to realise its money.

12. Shri Mehta submitted that in view of the provision of Section54 of the IBC, the sale was complete after the appellant Bank hadreceived 25% of the bid amount and the said was confirmed. He submittedthat merely because a part of the sale consideration was receivedsubsequently, it could not affect the sale. A reference in this respect isplaced on the judgments of this Court in the cases of Vidhyadhar v.Manikrao and Another[1], B. Arvind Kumar v. Govt. of India andOthers[2] and Kaliaperumal v. Rajagopal and Another[3].

13. It is lastly submitted by Shri Mehta that Section 14(1)(c) ofthe IBC interdicts any action to foreclose, recover or enforce any securityinterest including any action under SARFAESI. However, it does notundo actions which have already stood completed.

14. Shri Vaidyanathan, learned Senior Counsel also supported thesubmissions of the learned Solicitor General made on behalf of theappellant Bank. It is submitted that the promoters of the Corporate Debtorhave indulged into forum shopping with the malicious intent and as such,the learned NCLT ought not to have granted relief in their favour. It issubmitted that the applicants were bona fide purchasers and put intopossession and therefore should not be disturbed. It is submitted that theCorporate Debtor’s right in respect of the mortgaged property is theright of redemption under Section 60 of the Transfer of Property Act,1882 (hereinafter referred to as “the TP Act”). It is submitted that underSection 13(8) of the SARFAESI Act, as amended in 2016, the right ofredemption is lost on issuance of public notice of auction or tender.

15. Shri Vaidyanathan further submitted that the mala fide intentionof the Corporate Debtor and the IRP are glaring inasmuch as theapplicants were successful auction purchasers and they were not addedas party respondents in the proceedings before the learned NCLT. Relying 1 (1999) 3 SCC 573

2 (2007) 5 SCC 745

3 (2009) 4 SCC 193

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Aon paragraph (21) of the Insolvency Law Committee Report, 2018, ShriVaidyanathan submitted that the rights and priorities of creditorsestablished prior to insolvency under commercial laws should be upheldto preserve the legitimate expectations of creditors and encourage greaterpredictability in commercial relationship.

B16. Shri Viswanathan, learned Senior Counsel has supported theimpugned judgment passed by the learned NCLAT as well as the orderpassed by the learned NCLT. He submitted that the title of the securedassets cannot be conveyed to the auction purchasers merely uponconfirmation of sale even before receiving full sale consideration. Hesubmitted that the title would be passed over only after receipt of the fullCconsideration and issuance of sale certificate. The learned Senior Counselsubmitted that such contentions are totally contrary in view of variousprovisions of the SARFAESI Act, the said Rules as well as Sections14(1)(c), 31(1) and 238 of the IBC. He submitted that only after thetransfer takes place under Rules 8 and 9 of the said Rules, the titleDwould be passed over to the auction purchasers. He relies on the judgmentof this Court in the case of Hindon Forge Private Limited and Anotherv. State of Uttar Pradesh through District Magistrate, Ghaziabadand Another[4].

17. Shri Viswanathan further submitted that Section 13(8) of theESARFAESI Act itself provides a right of redemption of secured assetsto the owner/debtor. He relies on the judgment of this Court in the caseof S. Karthik and Others v. N. Subhash Chand Jain and Others[5 ]insupport of this proposition.

18. Shri Viswanathan submitted that upon approval of theFResolution Plan (hereinafter referred to as “the RP”), in view of Section31(1) of the IBC, all the debts stand legally resolved and the same isbinding on all parties including the Corporate Debtor, its employees,members, creditors, all Govt. dues and the successful resolution applicantwould be entitled to start on a clean slate. The learned Senior Counselsubmitted that the Jural relationship of Creditor-Debtor would get altered/Gsevered under a new contract upon approval of a new RP. It is submittedthat as a consequence, the security created under the old contract wouldstand released by operation of law and the relationship would be governedby the terms of the approved plan and the mortgage created under the 4 (2019) 2 SCC 198H5 2020 SCC OnLine SC 787

INDIAN OVERSEAS BANK v. M/S RCM INFRASTRUCTURELTD. AND ANOTHER [B. R. GAVAI, J.]

old contract would get extinguished/novated. It is submitted that in anycase, in view of Section 238 of the IBC, the provisions contained thereinwill override all other laws for the time being in force and the provisionsof the IBC would also prevail over any other instrument having effectby virtue of any other law. A reliance in this respect is placed on thejudgment of this Court in the case of Anand Rao Korada, ResolutionProfessional v. Varsha Fabrics Private Limited and Others[6].

19. Shri Viswanathan further submitted that the continuation ofany proceeding including the proceeding under the SARFAESI Act istotally illegal in view of Section 14(1)(c) of the IBC. It is, therefore,submitted that the continuation of any action under the SARFAESI Actby the appellant Bank and the receipt of the balance sale considerationwas violative of Section 14(1)(c) of the IBC. He submitted that theamount payable by the Corporate Debtor to the other Financial Creditorsis much more than the amount received by the appellant Bank during thependency of the CIRP. He submitted that under the provisions of theIBC, all the Financial Creditors would be entitled to a share in the amountreceived upon realization of the assets of the Corporate Debtor and theappellant Bank cannot keep it in entirety.

20. Shri Viswanathan submitted that the allegations with regardto mala fide are made only in order to prejudice the Court. It is submittedthat in the petition filed under Section 10 of the IBC, the CorporateDebtor has clearly mentioned about declaration of NPA by both theappellant Bank and Andhra Bank and also initiation of auction processby both the Banks. He submitted that in any case, initiation of theproceedings under the IBC for overall resolution of debts of the CorporateDebtor cannot be labelled as a mala fide attempt. He submitted thatSection 65 of the IBC expressly provides for the mechanism and theremedy for addressing frivolous or malicious proceedings initiated underthe SARFAESI Act. However, the appellant Bank has chosen not totake recourse to such proceedings. As such, the allegations of mala fidecannot be heard.

21. Shri Verma, learned counsel also supported the impugnedjudgment passed by the learned NCLAT as well as the order passed bythe learned NCLT and the submissions made by Shri Viswanathan. It issubmitted that the appellant Bank has never challenged the order dated AB

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A3[rd] January 2019, vide which the learned NCLT commenced the CIRP.He submitted that though the order of liquidation was passed by thelearned NCLT on 7[th] February 2022, the same has been stayed by thelearned NCLAT on 8[th] March 2022.

22. It is further submitted by Shri Verma that as a matter of fact,Bafter the CIRP was initiated, the appellant Bank itself has submitted itsclaim in Claim Form-C on 21[st] January 2019 for an amount of Rs.79.94crore, which included the full value of the assets. It is, therefore, submittedthat the appellant is estopped from contending that the amount of Rs.8.23crore cannot be included in the amount available for CIRP.

23. For appreciating the rival submissions, it will be apposite toCrefer to Section 14(1)(c) of the IBC:

“14. Moratorium.—(1) ……

(a) ……;

(b) …….;

D(c) any action to foreclose, recover or enforce any security interestcreated by the corporate debtor in respect of its property includingany action under the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002 (54 of2002);

……….”E

24. It is thus clear that after the CIRP is initiated, there is moratoriumfor any action to foreclose, recover or enforce any security interestcreated by the Corporate Debtor in respect of its property including anyaction under the SARFAESI Act. It is clear that once the CIRP iscommenced, there is complete prohibition for any action to foreclose,Frecover or enforce any security interest created by the Corporate Debtorin respect of its property. The words “including any action under theSARFAESI Act” are significant. The legislative intent is clear that afterthe CIRP is initiated, all actions including any action under the SARFAESIAct to foreclose, recover or enforce any security interest are prohibited.G25. It will also be relevant to refer to Section 238 of the IBC:

“238. Provisions of this Code to override other laws.—Theprovisions of this Code shall have effect, notwithstanding anythinginconsistent therewith contained in any other law for the timebeing in force or any instrument having effect by virtue of anysuch law.”H

26. It could thus be seen that the provisions of the IBC shall haveeffect, notwithstanding anything inconsistent therewith contained in anyother law for the time being in force or any instrument having effect byvirtue of any such law.

27. It has been consistently held by this Court that the IBC is acomplete Code in itself and in view of the provisions of Section 238 ofthe IBC, the provisions of the IBC would prevail notwithstanding anythinginconsistent therewith contained in any other law for the time being inforce. A reference in this respect could be placed on the judgments of thisCourt in the cases of Innoventive Industries Limited v. ICICI Bankand Another[7], Principal Commissioner of Income Tax v. Monnet Ispatand Energy Limited[8 ]and Ghanashyam Mishra and Sons PrivateLimited through the Authorised Signatory v. Edelweiss AssetReconstruction Company Limited through the Director and Others[9].

28. It is the contention of the appellant Bank that the sale in questionwas complete on its confirmation on 13[th] December 2018 and as such,the admission of the petition on 3[rd] January 2019 by the learned NCLTwould not affect the said sale. Relying on the provisions of Section 54 ofthe TP Act, the learned Solicitor General submitted that merely becausea part of the payment was received subsequently after initiation of CIRP,it will not deprive the appellant Bank from receiving the said money inpursuance to the sale which has already been completed. A reliance inthis respect is placed on various judgments of this Court.

29. Insofar as the judgment of this Court in the case of Vidhyadhar(supra) is concerned, no doubt that it has been held that even if the fullprice of the property has not been paid, the transaction of the sale willtake effect and the title would pass on that transaction. This Court hasfurther held that the real test is the intention of the parties. It has beenheld that the parties must intend to transfer ownership of the propertyand that they must also intend that the price would be paid either inpraesenti or in future. However, it is to be noted that in the said case, thedefendant No.2 had not only executed the sale deed in favour of theplaintiff but had presented it for registration, admitted its execution beforethe Sub-Registrar before whom the remaining part of the saleconsideration was paid and thereafter, the document was registered.

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A30. In the case of B. Arvind Kumar (supra), the property inquestion was a suit property and was sold in a public auction. The salewas confirmed by the District Judge, Civil and Military Station, Bangalore.What has been held by this Court is that when a property is sold bypublic auction in pursuance of the order of the court and the bid isaccepted and the sale is confirmed by the court in favour of the purchaser,Bthe sale becomes absolute and the title vests in the purchaser. It hasbeen held that a sale certificate is issued to the purchaser only when thesale becomes absolute. It was held that when the auction purchaserderives title on confirmation of sale in his favour and a sale certificate isissued evidencing such sale and title, no further deed of transfer fromCthe court is contemplated or required. Additionally, in the said case, theCourt found that the sale certificate itself was registered.

31. In the case of Kaliaperumal (supra) also, the sale deed wasregistered on partial payment of consideration. However, in spite ofregistration of the sale deed, in the facts of the said case, the Court heldDthat what was important is the intention of the parties. It was held thatnormally the ownership and the title of the property will pass to thepurchaser on registration of the sale deed with effect from the date ofexecution of the sale deed. However, that was not an invariable rule.What was paramount, was the intention of the parties. In the facts ofEthe said case, the Court held that the parties intended that the ownershipof the property would be transferred to the appellant only after the receiptof the entire sale consideration by the vendors as a condition precedent.Upon interpretation of the sale deed, the Court found that the title wasintended to be passed only on the payment of the balance consideration.

F32. It is further to be noted that the present case arises out of astatutory sale. The sale would be governed by Rules 8 and 9 of the saidRules. The sale would be complete only when the auction purchasermakes the entire payment and the authorised officer, exercising the powerof sale, shall issue a certificate of sale of the property in favour of thepurchaser in the Form given in Appendix V to the said Rules.G

33. In the case of Shakeena and Another v. Bank of India andOthers[10], which was a case arising out of SARFAESI Act, this Courthas held that the sale certificate issued in favour of the respondent No.3

did not require registration and that the sale process was complete onissuance of the sale certificate. The same has been followed by thisCourt in the case of S. Karthik (supra).

34. Undisputedly, in the present case, the balance amount hasbeen accepted by the appellant Bank on 8[th] March 2019. The sale underthe statutory scheme as contemplated under Rules 8 and 9 of the saidRules would stand completed only on 8[th] March 2019. Admittedly, thisdate falls much after 3[rd] January 2019, i.e., on which date CIRPcommenced and moratorium was ordered. As such, we are unable toaccept the argument on behalf of the appellant Bank that the sale wascomplete upon receipt of the part payment.

35. In view of the provisions of Section 14(1)(c) of the IBC, whichhave overriding effect over any other law, any action to foreclose, recoveror enforce any security interest created by the Corporate Debtor inrespect of its property including any action under the SARFAESI Act isprohibited. We are of the view that the appellant Bank could not havecontinued the proceedings under the SARFAESI Act once the CIRPwas initiated and the moratorium was ordered.

36. Insofar as the contention of the appellant Bank that the petitionfiled by the Corporate Debtor was mala fide is concerned, we do notfind any merit in the said contention. All the details with regard to actiontaken by the appellant Bank have been specifically mentioned in thepetition filed by the Corporate Debtor. Insofar as the contention withregard to liquidation order being passed is concerned, the same is alreadyunder challenge before the learned NCLAT. As such, we need not makeany observation with regard to the same.

37. We, therefore, find that no case is made out for interferingwith the concurrent orders passed by the learned NCLT dated 15[th] July2020 and learned NCLAT dated 26[th] March 2021.

38. In the result, the present appeal is dismissed. Pendingapplication(s), if any, shall stand disposed of in the above terms. Noorder as to costs.

Nidhi Jain

Appeal dismissed

(Assisted by : Shashwat Jain, LCRA)

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