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2021 (8) TMI 699 - AT - Insolvency and BankruptcyCancellation of the sale effected by respondent i.e. State Bank of India in favour of auction purchaser - seeking appropriate directions to the respondent i.e. State Bank of India to give effect for reversing this sale transaction - HELD THAT - In view of the admitted facts of this case and further in view of the Judgement of the Hon ble Supreme Court reported in the case of B. ARVIND KUMAR VERSUS GOVERNMENT OF INDIA AND ORS. 2007 (5) TMI 657 - SUPREME COURT , wherein, the Hon ble Supreme Court has held when a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale become absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely an evidence of such title. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. Further, it does not required registration under Section 17(2) (xii) of the Registration Act - Initiation of the proceedings for public auction under SARFAESI Act was completed on 30.12.2019. In the instant case also proceedings for sale of property was initiated under SARFAESI Act and also on 21.09.2019 Sale notice was published in the newspaper Business Standard (English) and Business Standard (Hindi) under Rule 8(6) of SARFAESI Rules - On 24.10.2019 e-auction for sale of the subject property was conducted by STATE bank of India and M/s Alucom Panels Pvt. Ltd. (Respondent No. 3) and was declared highest bidder. Sale confirmation issued to Respondent No. 3 under Rule 9(2), SARFAESI. There is no illegality in the Impugned Order passed by the Learned Adjudicating Authority and Impugned Order is hereby affirmed - Appeal dismissed.
Issues Involved:
1. Cancellation of the sale effected by the State Bank of India (SBI) in favor of the auction purchaser. 2. Jurisdiction of the National Company Law Tribunal (NCLT) under Section 60(5)(c) of the Insolvency and Bankruptcy Code (IBC), 2016. 3. Validity of the sale conducted under the SARFAESI Act prior to the commencement of the Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Cancellation of the Sale Effected by SBI: The appellant, a suspended director of the corporate debtor, sought the cancellation of the sale of the corporate debtor's property conducted by SBI. The sale was completed through an e-auction on 24.10.2019, and the sale certificate was issued on 30.12.2019. The appellant argued that the sale was invalid due to non-registration of the sale certificate and sought its reversal. The tribunal referred to the Supreme Court judgment in 'B. Arvind Kumar vs. Govt. of India and Others', which held that when a property is sold by public auction and the sale is confirmed, the title vests in the purchaser, and the sale certificate is merely evidence of such title. Registration is not required under Section 17(2)(xii) of the Registration Act, 1908. The tribunal found that the sale was conducted in compliance with the SARFAESI Act and Rules, and the sale certificate was valid. Thus, the request for cancellation was dismissed. 2. Jurisdiction of NCLT under Section 60(5)(c) of IBC: The appellant contended that the NCLT had jurisdiction to entertain the application for cancellation of the sale under Section 60(5)(c) of the IBC. However, the respondents argued that the sale was conducted under the SARFAESI Act, a statutory sale by public auction, and was completed before the initiation of the CIRP. The tribunal held that the NCLT does not have jurisdiction to interfere with the sale conducted under the SARFAESI Act, as the sale was completed before the CIRP commencement date of 24.01.2020. The tribunal emphasized that the sale under the SARFAESI Act is a statutory sale, and the title of the property no longer remains with the corporate debtor once the sale is confirmed. 3. Validity of the Sale Conducted Under SARFAESI Act: The appellant challenged the validity of the sale, arguing that the sale certificate was not registered, and thus, the sale was not valid. The respondents countered that the sale was conducted in compliance with the SARFAESI Act and Rules, and the sale certificate was issued before the CIRP commencement date. The tribunal found that the sale process was initiated and completed in accordance with the SARFAESI Act. The possession of the property was taken by SBI on 27.08.2019, and the sale notice was published on 21.09.2019. The e-auction was conducted on 24.10.2019, and the sale certificate was issued on 30.12.2019. The tribunal concluded that the sale was valid and completed before the CIRP commencement date. Conclusion: The tribunal affirmed the impugned order of the adjudicating authority, holding that the sale conducted under the SARFAESI Act was valid and completed before the initiation of the CIRP. The NCLT did not have jurisdiction to interfere with the sale, and the appeal was dismissed without costs. The tribunal directed the registry to upload the judgment on its website and send a copy to the NCLT, New Delhi Bench.
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