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TMI Blog2022 (5) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... t the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. It has been consistently held by this Court that the IBC is a complete Code in itself and in view of the provisions of Section 238 of the IBC, the provisions of the IBC would prevail notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Undisputedly, in the present case, the balance amount has been accepted by the appellant Bank on 8th March 2019. The sale under the statutory scheme as contemplated under Rules 8 and 9 of the said Rules would stand completed only on 8th March 2019. Admittedly, this date falls much after 3rd January 2019, i.e., on which date CIRP commenced and moratorium was ordered. As such, we are unable to accept the argument on behalf of the appellant Bank that the sale was complete upon receipt of the part payment - In view of the provisions of Section 14(1)(c) of the IBC, which have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act ), calling upon the Corporate Debtor and its guarantors to repay the outstanding amount due to the appellant Bank. Since the Corporate Debtor failed to comply with the Demand Notice and repay the outstanding dues, the appellant Bank took symbolic possession of two secured assets mortgaged exclusively with it. The same was done by the appellant Bank in exercise of powers conferred on it under Section 13(4) of the SARFAESI Act read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the said Rules ). One of the said properties stood in the name of Corporate Debtor and the other in the name of Corporate Guarantor. An E-auction notice came to be issued on 27th September 2018 by the appellant Bank to recover the public money availed by the Corporate Debtor. 4. In the meantime, on 22nd October 2018, the Corporate Debtor filed a petition being CP(IB) No. 601/10/HDB/2018 under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC ) before the learned NCLT. In the first E-auction held on 6th November 2018, no bids were recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 2019. The appellant Bank also intimated the IRP about the successful sale of the said 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 security realization during the CIRP period carried out by the appellant Bank or in the alternative to cancel the impugned transaction. Vide order dated 15th July 2020, the learned NCLT passed an order thereby allowing the said application filed by the respondent No.2 and setting aside the sale of 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 same was rejected by the impugned judgment dated 26th March 2021. Being aggrieved thereby, the present appeal. 8. We have heard Shri Tushar Mehta, learned Solicitor General appearing on behalf of the appellant Bank, Shri C.S. Vidyanathan, learned Senior Counsel appearing on behalf of the impleading applicants, i.e., the auction purchasers, Shri K.V. Viswanathan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. It is submitted that a perusal of the said order dated 7th February 2022 would reveal that the delay was caused at the instance of the IRP, who has been seen to be helping the ex-promoters. 11. Shri Mehta further submitted that since the moratorium under Section 14 of the IBC has ceased to subsist after the order directing liquidation was passed under Section 52 of the IBC, the secured creditors were allowed to realise their security interest. It is therefore submitted that now, there is no bar on the appellant Bank to realise its money. 12. Shri Mehta submitted that in view of the provision of Section 54 of the IBC, the sale was complete after the appellant Bank had received 25% of the bid amount and the said was confirmed. He submitted that merely because a part of the sale consideration was received subsequently, it could not affect the sale. A reference in this respect is placed on the judgments of this Court in the cases of Vidhyadhar v. Manikrao and Another (1999) 3 SCC 573, B. Arvind Kumar v. Govt. of India and Others (2007) 5 SCC 745 and Kaliaperumal v. Rajagopal and Another (2009) 4 SCC 193. 13. It is lastly submitted by Shri Mehta that Section 14(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, the title would be passed over to the auction purchasers. He relies on the judgment of this Court in the case of Hindon Forge Private Limited and Another v. State of Uttar Pradesh through District Magistrate, Ghaziabad and Another (2019) 2 SCC 198. 17. Shri Viswanathan further submitted that Section 13(8) of the SARFAESI Act itself provides a right of redemption of secured assets to the owner/debtor. He relies on the judgment of this Court in the case of S. Karthik and Others v. N. Subhash Chand Jain and Others 2020 SCC OnLine SC 787 in support of this proposition. 18. Shri Viswanathan submitted that upon approval of the Resolution Plan (hereinafter referred to as the RP ), in view of Section 31(1) of the IBC, all the debts stand legally resolved and the same is binding on all parties including the Corporate Debtor, its employees, members, creditors, all Govt. dues and the successful resolution applicant would be entitled to start on a clean slate. The learned Senior Counsel submitted that the Jural relationship of Creditor-Debtor would get altered/severed under a new contract upon approval of a new RP. It is submitted that as a consequence, the security crea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so supported the impugned judgment passed by the learned NCLAT as well as the order passed by the learned NCLT and the submissions made by Shri Viswanathan. It is submitted that the appellant Bank has never challenged the order dated 3rd January 2019, vide which the learned NCLT commenced the CIRP. He submitted that though the order of liquidation was passed by the learned NCLT on 7th February 2022, the same has been stayed by the learned NCLAT on 8th March 2022. 22. It is further submitted by Shri Verma that as a matter of fact, after the CIRP was initiated, the appellant Bank itself has submitted its claim in Claim Form-C on 21st January 2019 for an amount of Rs.79.94 crore, which included the full value of the assets. It is, therefore, submitted that the appellant is estopped from contending that the amount of Rs.8.23 crore cannot be included in the amount available for CIRP. 23. For appreciating the rival submissions, it will be apposite to refer to Section 14(1)(c) of the IBC: 14. Moratorium.- (1) (a) ; (b) .; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned NCLT would not affect the said sale. Relying on the provisions of Section 54 of the TP Act, the learned Solicitor General submitted that merely because a part of the payment was received subsequently after initiation of CIRP, it will not deprive the appellant Bank from receiving the said money in pursuance to the sale which has already been completed. A reliance in this 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 full price of the property has not been paid, the transaction of the sale will take effect and the title would pass on that transaction. This Court has further held that the real test is the intention of the parties. It has been held that the parties must intend to transfer ownership of the property and that they must also intend that the price would be paid either in praesenti or in future. However, it is to be noted that in the said case, the defendant No.2 had not only executed the sale deed in favour of the plaintiff but had presented it for registration, admitted its execution before the Sub-Registrar before whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shakeena and Another v. Bank of India and Others 2019 SCC OnLine SC 1059, which was a case arising out of SARFAESI Act, this Court has held that the sale certificate issued in favour of the respondent No.3 did not require registration and that the sale process was complete on issuance of the sale certificate. The same has been followed by this Court in the case of S. Karthik (supra). 34. Undisputedly, in the present case, the balance amount has been accepted by the appellant Bank on 8th March 2019. The sale under the statutory scheme as contemplated under Rules 8 and 9 of the said Rules would stand completed only on 8th March 2019. Admittedly, this date falls much after 3rd January 2019, i.e., on which date CIRP commenced and moratorium was ordered. As such, we are unable to accept the argument on behalf of the appellant Bank that the sale was complete upon receipt of the part payment. 35. In view of the provisions of Section 14(1)(c) of the IBC, which have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is proh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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