Property auctioned under the SARFAESI Act cannot be included in the moratorium assets under Section 14 of the Insolvency and Bankruptcy Code, once the sale is confirmed.
The Supreme Court Bench of Justice Aniruddha Bose and Justice Vikram Nath was hearing an appeal and held that a property auctioned under the SARFAESI Act cannot be included in the moratorium assets under Section 14 of the Insolvency and Bankruptcy Code, 2016, once the sale is confirmed. The Court emphasized the importance of the factual context in deciding the case and directed the bank to refund the amount to the successful bidder.
The Supreme Court heard an appeal regarding the eligibility of a property, auctioned by a bank under the SARFAESI Act, to be included in the moratorium assets under Section 14 of the Insolvency and Bankruptcy Code, 2016 (2016 Code). The case involved Amrit Hatcheries Pvt. Ltd., a corporate entity in default.
Proceedings under the SARFAESI Act were initiated on 19.07.2017, and the property, located in Bankura, West Bengal, was auctioned on 17.08.2019. The sale was confirmed on 19.08.2019. However, on 20.08.2019, insolvency proceedings under the 2016 Code were initiated, and a moratorium was declared.
The appellant bank issued full payment to the auction purchaser on 03.09.2019, after the declaration of the moratorium. Following an order from the NCLT on 25.02.2020, upheld by the National Company Law Appellate Tribunal, the property was handed over to the liquidator.
The Supreme Court, considering the factual context, dismissed the appeal and directed the appellant bank to refund the amount to the successful bidder within six weeks. Pending applications were disposed of accordingly.
Subscribers can access the case, along with case analysis, case research, ratio decidendi, headnotes, briefs, caselaw cross-references, etc. etc.
Click on the Citation
Comments