2018 (12) TMI 1722 - Tri - Insolvency and Bankruptcy

Directions against the Respondent to return the physical possession of the B Wing premises of Lakshmi Towers to the applicant and restrain the Respondent from taking any action in relation to the A Wing premises - Section 13(4) of the SARFAESI Act - HELD THAT - The Respondent, who is also the Financial Creditor of the Corporate Debtor, was fully aware of the moratorium order but violated that and taken the possession of the alleged premises/property without due process of law - the respondent are directed to immediately return the physical possession of the B Wing premises to the applicant and we further restrain the Respondent from taking any further action in relation to A Wing premises pursuant to the notices issued by the Respondent under Section 13 (4) of the SARFAESI Act.

Summary

Issues:
Resolution professional seeking return of physical possession, alleged unlawful actions by respondent under SARFAESI Act and IBC, violation of moratorium order, respondent's role as financial creditor and CoC member, respondent's violation of moratorium order, guidelines for secured creditor under SARFAESI Act, absence of court order copy, overriding effect of Section 238 of the Code.

Analysis:
The judgment pertains to an application filed by the Resolution Professional under Section 60(5) of the IBC, 2016, seeking directions against the Respondent. The Resolution Professional alleged that the Respondent's representatives forcibly entered the 'B' Wing premises, threatened the applicant's team, and pasted a notice under Section 13(4) of the SARFAESI Act, unlawfully vacating the premises. The Respondent's actions were deemed to be in contravention of the SARFAESI Act and the IBC provisions.

The Resolution Professional further contended that the Respondent, being a financial creditor and CoC member, attended meetings and was aware of the Corporate Debtor's CIRP status. Despite this knowledge, the Respondent violated the moratorium order by taking possession of the property without due process of law. The Tribunal emphasized that the Respondent's actions were in violation of the moratorium order and directed the Respondent to explain within three days why action should not be taken against them under the provisions of the Code.

Referring to the guidelines provided by the Hon'ble Supreme Court in the case of Standard Chartered Bank v. V. Noble Kumar, the Tribunal highlighted the procedures to be followed by secured creditors under the SARFAESI Act in case of resistance from the borrower. The Tribunal noted that the Respondent, being a financial creditor, was fully aware of the moratorium order but still unlawfully took possession of the premises, contravening the established legal principles.

The Tribunal, after considering the circumstances, allowed the application and directed the Respondent to immediately return the physical possession of the 'B' Wing premises to the applicant. Additionally, the Respondent was restrained from taking any further action related to the 'A' Wing premises pursuant to the notices issued under Section 13(4) of the SARFAESI Act. The Tribunal reiterated the overriding effect of Section 238 of the Code and emphasized that proceedings under the SARFAESI Act could not have been initiated during the existence of the moratorium order.

Moreover, the Tribunal made it clear that the Respondent was not authorized to tamper with any records in the 'B' Wing premises and suggested providing police protection to the Resolution Professional if necessary for the security of the premises. The Respondent was directed to provide an explanation within three days regarding the potential actions under the provisions of the Code.