Haldiram Incorporation Pvt Ltd vs Amrit Hatcheries Pvt Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL,

PRINCIPAL BENCH, NEW DELHI

Company Appeal (AT) (Ins) No. 449 of 2020

IN THE MATTER OF: Punjab National Bank 18A, Mezzanine Floor, Brabourne road, Kolkata -700001 ...Appellant

Vs.

1.Amrit Hatcheries Pvt. Ltd. Through its Liquidator Shri. Bijay Murmuria Sumedha Solutions Pvt. Ltd. 6A, Geetanjali Apartment, 8B, Middleton Street, Kolkata - 700 071 ...Respondent No.1

2.Harish Baghla, Director/Promoter, Amrit Hatcheries Pvt. Ltd. (Corporate Debtor) 6, Ashoka Road, Alipore, Jaisalmer Building, Kolkata - 700 027 ...Respondent No.2

3.Haldiram Incorporation Pvt. Ltd P2, CIT Road, Scheme VIIM, Kolkata - 700 054 ...Respondent No.3

4.Skylark Feeds Pvt. Ltd. Village Khera Khemawati Tahsil Safidon, District Jind, Haryana - 126 112 ...Respondent No.4

Present: For Appellant: Mr. Ankur Mittal, and Ms. Meera Murali, Advocates.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 1 of 150 For Respondents:Mr. Bijay Murmuria (Liquidator), Ms. Jinelle G, Mr. Anuj Singh and Mr. Anand Verma, Advocates for R1. Mr. Jayant Kumar Mehta, Sr. Advocate with Ms. Nirmalya Dasgupta, Mr. Shwetaank Nigam and Mr. Ashish Choudhury, Advocates for R-2. Mr. Krishnendu Datta, Sr. Advocate with Mr. Abhay Gupta, Advocate for R-3. Mr. Saurabh Kalia and Mr. Aaryan Sharma, Advocates for R-4. With

Company Appeal (AT) (Ins.) No. 504 of 2020

IN THE MATTER OF: Haldiram Incorporation Pvt. Ltd P2, CIT Road, Scheme VIIM, Kolkata - 700 054 ...Appellant Vs. 1.Amrit Hatcheries Pvt. Ltd. Through its Liquidator Shri. Bijay Murmuria Sumedha Solutions Pvt. Ltd. 6A, Geetanjali Apartment, 8B, Middleton Street, Kolkata - 700 071 ...Respondent No.1

2.Harish Baghla, Director/Promoter, Amrit Hatcheries Pvt. Ltd. (Corporate Debtor) 6, Ashoka Road, Alipore, Jaisalmer Building, Kolkata - 700 027 ...Respondent No.2

3.Punjab National Bank 18A, Mezzanine Floor, Brabourne road, Kolkata -700001 ...Respondent No.3

Present: For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Abhay Gupta and Ms. Mehak Khurrana, Advocates.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 2 of 150 For Respondents: Mr. Jayant Kumar Mehta, Sr. Advocate with Ms. Nirmalya Dasgupta, Mr. Shwetaank Nigam, Mr. Ashish Choudhury and Mr. Dhruv Surana, Advocates for R-2. Mr. Anuj Singh, Mr. Anand Verma, Mr. Bijay Murmuria(Liquidator), Advocates for R-1. Ms. Meera Murali, Ms. Chitranshi and Mr. Ankur Mittal, Advocates for R-3.

With

Company Appeal (AT) (Ins.) No. 746 of 2020

IN THE MATTER OF: Arun Kumar Gupta Resolution Professional P15 Bentinck Street, Kolkata - 700 001 ....Appellant

Vs.

Amrit Hatcheries Pvt. Ltd. Through its Liquidator Shri. Bijay Murmuria Sumedha Solutions Pvt. Ltd. 6A, Geetanjali Apartment, 8B, Middleton Street, Kolkata - 700 071 ...Respondent

Present: For Appellant: Mr. Arik Banerjee, Mr. Arun Kumar Gupta (RP in person) and Mr. Abhishek Parmar, Advocates For Respondents: Mr. Bijay Murmuria (Liquidator), Mr. Anuj Singh & Mr.Anand Verma, Advocates for R-1.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 3 of 150

DR. ASHOK KUMAR MISRHA, TECHNICAL MEMBER

In order to bring clarity of facts and law including its analysis and arriving at a logical

'Judgment', it is thought prudent to divide the drafting of judgment in the following heads: -

Contents:

SL Particulars Para No. Page No. No. A. Introduction 1-2 05 B. Facts of the case 3-7 5-22  CA(AT)(Ins) No. 449 of 2020  CA(AT)(Ins) No. 504 of 2020  CA(AT)(Ins) No. 746 of 2020

C. Observation of the Adjudicating 8 22-27 Authority D. Submissions by the parties  CA(AT)(Ins) No. 449 of 2020 9-11 27-36  CA(AT)(Ins) No. 504 of 2020 12-14 37-39  CA(AT)(Ins) No. 746 of 2020 15 40-41

E. Analysis of law laid down on the subject issue involved & facts of the 16-17 41-103 case leading to judgment

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 4 of 150 A. I n t r o d u c t i o n

1. All these appeals have been filed by the 'Appellants' under Section 61 of the 'Insolvency

and Bankruptcy Code, 2016' (in short 'Code') against the impugned order dated

25.02.2020 passed by the 'Adjudicating Authority' (National Company Law Tribunal,

Kolkata Bench, Kolkata in CA(IB) No. 1402/KB/2019 and CA(IB) No. 1635/KB/2019 in

CP(IB) No. 803/KB/2018.

2. Since 'CA(AT) (Ins) No. 449 of 2020' & 'CA(AT) (Ins) No.504 of 2020' have sought the

relief basically to quash and set aside the impugned order dated 25.02.2020 of the

Adjudicating Authority and 'CA(AT) (Ins) No. 746 of 2020' has sought the relief for stay

the operation of the said impugned order till disposal of present appeal and order be passed

for appointing the Appellant as 'Liquidator of Corporate Debtor' (CD) and expunge the

observations made in paragraph 37 of the impugned order etc. So, it was thought fit and

proper, all appeals are to be heard together and disposed off by a 'common judgment'.

Accordingly, we are proceedings in the matter.

B. Facts of the case:-

3. The brief facts of the case are that an 'Operational Creditor' (OC) viz. Mangturam

Noranglal filed the application under section 9 of the Code against the CD - Amrit

Hatcheries Pvt. Ltd. The 'Corporate Insolvency Resolution Process' (CIRP) was initiated

on 20.08.2019 and Mr. Khetan Mukhija was appointed as 'Interim Resolution

Professional' (IRP). However, the 'Committee of Creditors' (CoC) in its first CoC

meeting held on 17.09.2019 replaced IRP with 'Resolution Professional' (RP) Mr. Arun

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 5 of 150 Kumar Gupta. The Adjudicating Authority confirmed the appointed of the RP vide its

order dated 14.10.2019. As far as voting share is concerned 83% voting share rest with

'Punjab National Bank' (PNB) and 17% rest with HDFC bank based on their claim

(appearing at page no.66 of the Appeal paper Book in CA(AT) (Ins) No. 449 of 2020.

The PNB has advanced various credit facility to the CD and the CD has mortgaged two

sets of properties to the PNB, the properties so mortgaged are called 'Howrah Property'

& 'Bankura Property'.

4. The description of both the properties are given hereunder: -

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 6 of 150

5. Chronology of events in respect of both properties are given hereunder:

Property in Howrah sold to Haldiram Incorporation Pvt. Ltd

SL. Particulars Date

1. CIRP commencement date 20.08.2019

2. CoC replaced IRP with RP - Mr. 17.09.2019

Arun Kumar Gupta in the 1st CoC

meeting

3. E-Auction sale notice issued by PNB 15.06.2019

for sale of Howrah Property (reserve

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 7 of 150 price Rs.11.20 Crore) - Page 141-142

of the Appeal Paper Book

4. DRT passed interim order, that the 05.07.2019

fate of the sale will be determined

subject to the outcome of the SA (page

171 of the Appeal Paper Book)

5. E-Auction date - declaration of 06.07.2019

highest bidder for Howrah Property from 12:30PM

M/s. Haldiram Incorporation Pvt. to 01:30PM

Ltd., amount of bid Rs.5.09 Crore

against Reserve Price of Rs 11.20 cr

- page 173 of the Appeal Paper Book

6. Confirmation of sale issued by PNB 09.07.2019

page 174 of the Appeal Paper Book

7. Last Tranche of Payment made by 16.08.2019

M/s. Haldiram Incorporation Limited

- page 25 of the Appeal Paper book

Para XIV

8. Sale certificate under Rule 9(6) of the 19.08.2019

Security Interest Enforcement Act,

2002 was issued by the authorized of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 8 of 150 the PNB- page 175 of the Appeal

Paper Book

9. CIRP commencement date 20.08.2019

10. Date of 1st CoC meeting 17.09.2019

11. Date of handing over possession of 26.09.2019

Howrah Property by RP

12. Date of 2nd CoC meeting 16.10.2019

13. Date of filing CA No. 1402 of 2019 21.10.2019

14. Date of NCLT Order directing the RP 29.10.2019

to defend DRT proceedings

15. Date of dismissal of DRT Proceedings 26.11.2019

for non-prosecution as RP didn't

appear before the DRT in spite of

NCLT direction. With the observation

by the DRT Proceeding Officer that

SA No. 152 of 2019 is dismissed for

want of prosecution since no one is

present for the Applicant without

considering any merit or demerit of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 9 of 150 the case- page 277 of the Appeal

Paper Book

Property in Bankura Sold to Skylark Feed Pvt. Ltd.

SL. Particulars Date

1. E-Auction sale notice issued by PNB 20.07.2019

for sale of Bankura Property (Reserve

Price Rs.9.86 Crore)

2. IA No.894 of 2019 praying stay of 16.08.2019

operation of the sale notice filed. The

DRT heard the same. PNB candidly

submitted that the sale process is

subject to the outcome of the SA- page

172 of the Appeal Paper book

3. E-Auction date - declaration of 17.08.2019

highest bidder for Bankuru Property

of M/s. Skylark Feed Pvt., Ltd

4. Declaration of Skylark Feed Pvt. Ltd 17.08.2019

as highest Bidder Highest Bid amount

of Rs. 9.91 Crore

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 10 of 150

5. Confirmation of sale issued by PNB 19.08.2019

page 177 of the Appeal Paper Book

6. CIRP commencement date 20.08.2019

7. 3rd Tranche/Last of Payment received 03.09.2019

8. Sale certificate under Rule 9(6) of the 03.09.2019

Security Interest Enforcement Act,

2002 was issued by the authorized of

the PNB- page 26- para XVII of the

Appeal Paper Book

09. The RP didn't appear before the DRT 26.11.2019

and accordingly, DRT dismissed SA

for want of prosecution without

considering any merit or demerit of

the case.

6. It is the case of the PNB that 'sale certificate' in respect of 'Howrah Property' has already

been issued on 19.08.2019 prior to 'CIRP commencement' on 20.08.2019, the RP had no

jurisdiction to take back the possession of the 'Howrah Property' so sold. While in case

of 'Bankura Property', the confirmation of sale was made on 19.08.2019 prior to CIRP

commencement on 20.08.2019 so RP / Adjudicating Authority has no jurisdiction to deal

with the property although final payment yet to be received on CIRP commencement

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 11 of 150 date.. In the 2nd CoC meeting held on 16.10.2019 (appearing at Annexure -D page 92 of

the Appeal paper Book in CA(AT) (Ins) No. 746 of 2020) at PNB, Asset Management

Recovery Branch, Kolkata, the IRP informed that he has taken possession of the

manufacturing unit at Howrah on 03.09.2019. The PNB informed the IRP vide their email

dated 23.09.2019 that they have sold the property vide e- auction dated 15.06.2019 and

received sale consideration vide 16.08.2019 and provided to IRP the followings

documents (i) sale confirmation letter dated 09.07.2019 issued by PNB (ii) Statement of

Bank account for receiving sale proceedings and (iii) TDS Certificate. The IRP handed

over the possession on the said Howrah Property to PNB on 26.09.2019. However, IRP

didn't hand over physical possession of the 11 trunks, standing inside the said Howrah

Unit and the said trucks are still under the possession of the IRP/RP.

7. It is also revealed from the 2nd CoC meeting that IRP has not taken possession of Bankura

Property from PNB as PNB reported to it that it has sold the property and entire sale

proceedings have been received by the PNB prior to 20.08.2019. For brevity and clarity,

the 2nd meeting of CoC is depicted below:

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 12 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 13 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 14 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 15 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 16 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 17 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 18 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 19 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 20 of 150 Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 21 of 150 C. Observation of the Adjudicating Authority: -

8. The Adjudicating Authority vide its elaborate order with analysis has passed in an

unambiguous term that both 'Bankura Property' and 'Howrah Property' are the assets of

the CD and has directed the 'Liquidator' to take possession of both 'Howrah Property'

and 'Bankura Property' from so-called purchasers and include the same in the Liquidation

estate. For brevity and clarity, we are reproducing paras 36, 37, 39, 41, 43 & 44 of the

impugned order:

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 22 of 150 "36. In respect of Howrah Property, since the R1

was obliged not to conclude the sale as per the

undertaking dated 16.08.2019 before the DRT,

the issuance of sale certificate and alleged

handing over of possession of the Howrah

Property to R2 become illegal because as on the

date of declaration of the moratorium the said

undertaking was in force. Moreover, the said sale

certificate also was not engrossed on stamp

paper and no evidence was led in to prove that

the Howrah property was handed over to R2 as

attempted to prove on the side of R1. Taking into

account the overall factual scenario, and the fact

that the possession of the property has not been

granted in favour of R3 before the date of

declaration of moratorium and since no evidence

was led in other than sale certificate to prove that

possession was handed over to the R2 and that

issuance of sale certificate in favour of R2 being

found illegal and issuance of sale certificate in

favour of R3 was subsequent to the date of

declaration of moratorium, we are of the view

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 23 of 150 that Bankura Property as well as Howrah

Property are the assets of the CD and that R2 and

R3 has not obtained any legal ownership or title

as claimed by them. In short, R2 and R3 have no

right to retain the properties and the property

belongs to the CD.

37.Coming to the relief prayed for in CA(IB)

No.1635/KB/2019, it appears to us that RP was

not due diligent enough in implementing the

provisions of the Code and Regulations. Instead

of obeying the directions what the RP asked for

is to keep the order of this AA dated 29.10.2019

until the CA(IB) No. 1402/KB/2019 is disposed

of. RP filed this CA on 28.11.2019. CA(IB) No.

1402/KB/2019 was filed by the R4 on 14.10.2019

alleging collusion of RP with R1 aiding handing

over possession of the properties in dispute in

favour of the auction purchasers. It is in the said

CA the directions were issued on 29.10.2019 to

the RP explaining in detail what action was

expected from him. He was specifically asked to

take steps to safeguard the properties of CD by

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 24 of 150 approaching the DRT. The RP having stepped in

the shoes of CD, he would have prosecuted the

case before the DRT. But unfortunately, none of

the sides of the CD/Applicant in SA appears when

the said case was taken up on 26.11.2019 before

the DRT and Ld. DRT dismissed the SA for want

of prosecution. Similarly, as regards the Bankura

Property, it was in the possession of the R1 as on

the date of declaration of moratorium. That

property ought not to have been permitted to be

transferred to the purchaser. So RP himself who

was duty bound to safeguard the property did not

take as much care as was expected at least from

a prudent man. However, we are not going deep

into the circumstances behind the handing over

possession of the disputed property by R1, in the

case in hand. The Application is liable to be

allowed by directing the RP to recover

possession back from the auction purchasers and

to be listed as liquidation assets and to have

valuation of the properties in accordance with

provisions of Code, and Regulations.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 25 of 150

39. CA(IB) No.1617/KB/2019 is an application

filed by the RP under Section 19 and 70 of the

Code alleging non-cooperation from the

directors of the suspended board of CD. Since,

the CIRP period expired on 15.02.2020 has not

been extended and RP prays for passing an order

of Liquidation for want of resolution plan, we are

closing the CA without entering into merits of the

allegations leveled by the RP as against the

directors. This application also requires no

further consideration. Accordingly, it is liable to

be dismissed.

41. In view of the above said legal position of law

and circumstances and that no resolution plan

was obtained by the RP within the period of 180

days and the CoC has not decided for extension

of CIRP period, we have no other alternative

than to pass an order requiring the CD to be

liquidated in the manner as laid down in Chapter

- III of the Code.

43. The Application bearing CA(IB) No.

1635/KB/2019 is hereby allowed by directing the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 26 of 150 Liquidator to take possession of Howrah

Property from R2 and Bankura Property from R3

and include the same in the liquidation assets.

The Liquidator is at liberty to appoint valuers for

valuing the said properties in accordance with

the provisions of the Code and Regulations.

Consequently, CA(IB) No. 1402/KB/2019 is

disposed of.

44.R1(PNB) is hereby directed to refund the bid

amount to R2 and R3 within 15 days from the

receipt of this order."

D. Submissions by the parties

9. C.A(AT) (Ins) No. 449 of 2020

Submissions of the Appellant:-

i. The Appellant - PNB has submitted that the 'sale certificate' was issued by the

Bank to the 'Purchaser' under Rule 9(6) of the 'Securitization and Reconstruction

of Financial Assets and Enforcement of Security Interest Act, 2002' (SARFAESI)

on 19.08.2019 while CIRP has commenced on 20.08.2019. Hence, the sale is in

order. The bank has also stated that an auction purchase gets title on confirmation

of sale in his favour and a 'sale certificate' is issued evidencing such sale and title,

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 27 of 150 no further deed of transfer from the court is contemplated or required. It has also

stated that the right to redemption available to the CD under Section 13(8) of

SARFAESI Act (Amended) stood expired under Section 13(8) on publication of

sale notice on 15.06.2019 in case of Howrah Property. The CD has done nothing to

exercise its right of redemption in accordance with SARFAESI Act. The

Application filed before the Adjudicating Authority / DRT are a mere afterthought

with a mala fide intention to stall the process.

ii. It has also stated that non-registration / belated registration of 'sale certificate' has

no bearing on sale under the SARFAESI Act or the CIRP of CD. It has also stated

that the Borrower /CD has voluntarily not exercised its right of redemption has miss

ed the bus. The Appellant/ Bank has also submitted that the requirement of

registration under a sale under 'Transfer of Property Act' is nowhere required under

the provisions of SARFAESI Act and no further deed of transfer from the court is

contemplated. The requirement of payment of stamp duty is not relevant for

ascertaining when a sale is confirmed under SARFAESI Act and Rules. It has also

stated that the sale certificates are admissible even without engrossing stamp paper

and even plain paper is suffice. The bank has also submitted that the CoC has not

misguided the RP regarding sale of properties and even if sale certificate has been

transferred on 09.08.2019 while CIRP commenced on 20.08.2019. There is no

effect on the auction sale. It has also stated that no reliefs whatsoever have been

sought qua the Bankura Property by the Respondent No.2, as such the Adjudicating

Authority should not have gone into the sale issue of Bankura Property. The bank

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 28 of 150 has also mentioned in its 'written submissions' which is undated but received in

this Tribunal vide Diary No.50109 dated 14.12.2021/ Diary No.32211 dated

14.12.2021, 'para f' has depicted below:

"para f. As for the submission of behalf of R4, inter alia

seeking to withdraw from the transaction, it is most humbly

submitted that the sale in favour of R4 stands completed and

title stands transferred to the R4 as on date and the sale

cannot be set aside under Section 60(5) of the Code. Thus, no

opportunity can be provided to R4 to exit the transaction and

there is no question whatsoever, of any refund of the sale

consideration, interest or any other expenses, by the Bank."

10. Submission of the Respondent No.4

i. It is stated by the R4 - Skylark Feeds Pvt. Ltd., that it has purchased the Bankura

Property as a bona fide purchaser without notice of impending proceedings. They

have purchased the property through e-auction held by the Appellant bank. The e-

auction was conducted on 17.08.2019 and it was declared as the highest bidder on

the same day vide letter dated 17.08.2019 issued by the Appellant bank and it got

sale confirmation letter on 19.08.2019 and sale certificate issued by the Appellant

bank to Respondent No.4 for Bankura Property on 03.09.2019 from the bank. It is

also settled position of law that the rights of an auction purchaser in the property

purchased by it cannot be extinguished except in case where the said purchase can

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 29 of 150 be assailed on grounds of fraud or collusion and in the present case nothing has

been provided on record that any fraud or collusion has been committed. It is not

concerned with the affairs of the CD or the Appellant Bank and therefore, the fraud

or collusion does not arise. It has purchased the property based on its own

commercial and economic /financial viability. It has availed credit facility from

HDFC bank at a very high interest for paying sale consideration and the money is

lying with the Appellant bank and simultaneously the Liquidator is approaching it

for taking back the possession of the said property. It is incurring cost in the form

of interest being paid to the said bank for borrowed funds and its investments is

yielding no returns. It has incurred Rs.134.85 lakh till 31.07.2020. As a result of

all this, its own units may become 'Non -Preforming Assets' (NPA) as added to

cost, the outspread of Covid-19 pandemic. They are unable to furnish to property

to HDFC bank and as a result, they have stopped funding to its other units. If it

has to hand over the property to the Liquidator back, then in that case it is to be

refunded entire sale consideration alongwith interest and other incidental expenses

spent on the upkeep Bankura Property from the Appellant /PNB.

11. Submission of the Respondent No.2

i. The various submissions made by the Ex-Director/Promoter of the

Respondent No.2 are as under:

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 30 of 150 ii. He has stated that auction sale proceedings are not final under the

SARFAESI Act, unless the SA of the borrower is decided under Section 17

of the SARFAESI Act. The DRT passed an order dated 05.07.2019 that the

fate of sale will be subject to outcome of the SA (appearing at page 171 of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 31 of 150 the Appeal Paper book).

For brevity and clarity, the same is depicted below:

iii. The Adjudicating Authority has directed to RP to take appropriate steps in

SA No. 152/2019 (appearing at page 251 of the Appeal paper book):

"None other than the RP appears. Ld. RP submits that

as per his information possession of the disputed assets

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 32 of 150 of the Applicant in this application is with the buyer as

per a proceeding before the Debts Recovery Tribunal

filed by the PNB, one of the Financial Creditor in the

CoC. Copy has been served upon the erstwhile IRP.

However, no copy has been served to the present RP. RP

prays time to file reply. In the meanwhile, RP is to take

immediate steps so as to get back possession of the

property if it was not sold prior to the declaration of

moratorium in this case. He is directed to do the needful

to safeguard the property of the Cd and take appropriate

steps in SA No. 152 of 2019 before the DRT-1 Kolkata

and file its report whether the property was disposed of

by the PNB during moratorium or not."

iv. The RP didn't appear before the DRT and the SA was dismissed for non-

prosecution on 26.11.2019 (appearing at page no. 277 of the Appeal Paper

Book):

"Respondent has filed the supplementary affidavit and

bring on record status of proceedings pending before

NCLT. No one is present for the SARFAESI Applicant.

In view of the affidavit filed by the Respondent nothing

will survive so far SARFAESI action is concerned. In

view of the RP appointment . S.A no. 152 of 2019 is

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 33 of 150 dismissed for want of prosecution since no one is present

for the Applicant without considering any merit or

demerit of the case. File be consigned to record room."

v. On 20.08.2019, the date of CIRP of declaration of moratorium, the SA of

the CD/ borrower was pending and as such no sale could have been finalized

in view of order dated 05.07.2019 passed by the DRT and no right or title

vest with auction purchase / R3 in respect of the property.

vi. He has also raised that physical possession of the property on 26.09.2019

should not have been handed over to the Appellant/Bank during moratorium

period. The sale certificate dated 19.08.2019 is ante dated and illegal as no

sale certificate was served to the RP by the Appellant / PNB when

documents regarding the sale of property were provided. Reference may be

made to the Minutes of 2nd CoC, Item No4. & 5 has depicted below:

(appearing at page 47 & 48 agenda of the reply affidavit on behalf of R2).

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 34 of 150 vii. As far as Bankura Property is concerned, no sale of property was concluded

as on 20.08.2019 when CIRP commenced. Last trench of payment was

made on 03.09.2019 post CIRP. The DRT passed an order dated 16.08.2020

recording undertaking of the Appellant Bank that sale process is subject to

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 35 of 150 outcome of SA (appearing at 172 of the Appeal paper Book). For brevity

and clarity, DRT order dated 16.08.2019 has depicted below:

"I.A No. 894 of 2019 was moved by the Applicant, which

was affirmed by the authorised signatory of the Applicant,

Ravindra Narayan Singh, praying inter alia stay of the

operation of the sale notice dated 27.07.2019. Since, the

Ld. Counsel appeared on behalf of the respondent bank,

no formal notice need be issued by the Registry.

Ld. Counsel for the Respondents candidly submitted

that sale process is subject to outcome of the SA.

In view of the submission, parties are directed to complete

pleadings in the main S.A. as well as IAs by the next date

of hearing. It is expected that copy of the pleadings shall

be exchanged by the parties at least two days before the

next date of hearing.

List the matter on 11.09.2019 for further order."

viii. The RP was also directed to take appropriate steps in SA No. 152/2019 and

the said SA was dismissed for non-prosecution on 26.11.2019. Now the

stage has come, when the R4 - Skylark feed Pvt. Ltd., are seeking to exit

from the transactions and are claiming refund of the bid amount in respect

of the property.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 36 of 150

12. Submissions of the Appellant:-

C.A(AT) (Ins) No. 504 of 2020

i. The Appellant is the auction purchaser for property situated at Howrah. He has

stated that an auction sale was conducted on 06.07.2019 for Howrah Property and

it was declared highest bidder on 06.07.2019 and 09.07.2019 under SARFAESI

Rules, the PNB has issued sale confirmation notice in its favour. It has paid the

entire amount by 16.08.2019 to the PNB. However, sale certificate was issued to

the Appellant on August, 2019 under SARFAESI Rules while CIRP commenced

on 20.08.2019. It is a matter of record that the Promoter /Ex-Management of the

CD sought a declaration that the sale of Howrah Property under the provisions of

SARFAESI Act and Rules be made subject to outcome of SA No. 152/2019 filed

before the DRT Kolkata and sought injunction against issuance of sale certificate.

The Adjudicating Authority directed the RP to get back the possession of Howrah

property, if it was not sold prior to declaration of moratorium. However, RP had no

occasion to take back the property which has already sold prior to initiation of CIRP

(a day earlier).

ii. It has also stated that it has a bona fide auction purchaser and it has paid entire

consideration before commencement of CIRP and sale certificate issued prior to

commencement of CIRP. Hence, no title remained with CD. He has also stated that

on the day of commencement of CIRP, Howrah Property was not the assets of the

CD. Hence, the Adjudicating Authority has no jurisdiction to bypass the provisions

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 37 of 150 of statutory appeals, the deal with the effect of sale carried out under the provisions

of SARFAESI Act.

iii. Even if DRT dismissed the SA on 26.11.2019 for want of prosecution the sale

which was made subject to outcome of the SA remain unaffected in view of the

dismissal of SA.

iv. The Adjudicating Authority observing that the 'sale certificate' is not being

engrossed on stamp paper to draw an inference that the sale is not completed and is

erroneous. The stamp paid or not paid is the requirement of Stamp Act and not

under the SARFAESI Act. Even the subsequent delivery of possession from the

authorized officer to the auction purchaser is immaterial. The property was out of

possession of CD. Hence, the order of the Adjudicating Authority requires to be set

aside.

13. Submission of the Respondent No.3

i. The R3/PNB has also filed a separate appeal CA(AT) (Ins) No. 449/2020

challenging the same impugned order. The bank has reiterated that in a statutory

auction sale under SARFAESI Act/Rules title transfer to auction purchaser upon

confirmation of sale. It has also reiterated right of redemption available to CD

under Section 13(8) SARFAESI Act (Amended) stood expired under Section

13(8) on publication of sale notice. The sale subject to the outcome of SA at DRT

is of no basis as the same was dismissed even on the ground on non-prosecution.

The Adjudicating Authority has no jurisdiction to interfere with or set aside

statutory sale proceedings under the SARFAESI Act. It has again reiterated that

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 38 of 150 requirement of payment of stamp duty is not relevant or ascertaining whether a

sale is confirmed under the SARFAESI Act / Rules or not.

14. Submission of the Respondent No.2/ Ex-Director/Promoter

i. It has reiterated by the Respondent No.2 / Ex-Director/Promoter that auction sale

proceedings are not final under the SARFAESI Act unless the SA of the borrower

is decided under Section 17 of SARFAESI Act. The DRT passed an order dated

05.07.2019 that the fate of sale will be subject to outcome of the SA. The

Adjudicating Authority has directed the RP to take appropriate steps in SA No.

152 of 2019 but RP failed to appearing before the DRT and the SA was dismissed

for non-prosecution only on 26.11.2019. Hence, no right or title vest with the

Appellant in respect of the property. The sale certificate is liable for stamp duty

on the market value as per provision of Article 18-C R/w Article 23 of Schedule-

1 of the Stamp Act.

ii. The RP has illegally handed over actual physical possession of the property on

26.09.2019 to the Appellant during moratorium period. The CD remained the

owner of the property as on the date of the declaration of moratorium, no sale

could have been finalized during the pendency of SA and as such Howrah Property

was an asset of the CD.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 39 of 150

15. C.A(AT) (Ins) No. 746 of 2020

i. Here the Appellant is the RP of the CD and CD itself is the Respondent. The RP

is aggrieved of the observation made in the impugned order. He himself has stated

that on 20.08.2019 the commencement of CIRP Mr. Khetan Mukhija was

appointed as IRP and the IRP was replaced in the first CoC meeting held on

17.09.2019 and the Appellant was appointed RP. The Adjudicating Authority

confirmed the same vide its order 14.10.2019. He has stated that in the 2nd CoC

meeting held on 16.10.2019 that the said two factories at Howrah and Bankura

have been sold by PNB under SARFAESI Act. The DRT was ceased of the issue

during the course of hearing on 29.10.2019 based on information provided by

PNB, the Appellant has submitted before the Adjudicating Authority, that such

assets are in the possession of the 3rd party who were the present buyer of the said

property. The Adjudicating Authority directed to take immediate steps to take back

possession of property, if it was not sold prior to declaration of moratorium of CD

and to take appropriate action before the DRT.

ii. The Appellant has also submitted that both PNB and 'Suspended Board of

Directors' were requested to give details in respect of the said factory land and

date on which such sale was made. Nobody provided the input regarding the

current status before DRT Kolkata. Hence, the Appellant could not attend hearing

on 26.11.2019 before the DRT which dismissed because of non-prosecution and

the Appellant came to know about it through an email from PNB dated 29.11.2019.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 40 of 150 iii. The Appellant has filed CA No. 1635 of 2019 provided the status of sale of two

factories which has provided by PNB. The Appellant has acted as per the legal

advice given to him.

iv. The Appellant despite being eligible under the provisions of Liquidation Process

Regulations 2016 was not appointed as Liquidator and there is a violation of

principal of natural justice.

E. Analysis of law laid down on the subject issue involved & facts of the case

leading to judgment:

16. We have carefully gone through the pleadings of the submissions made during the course

of hearing by Ld. Sr. Counsels /Counsels for the parties and have carefully considered the

order passed by the Adjudicating Authority and have the following observations: -

i. The proposition of law as laid down on the subject issues involved and cited by

the parties are enumerated hereunder for ready reference:-

A. Dr. R. Thiagarajan Vs. Inspector General of Registration &

Ors. (full Bench of Hon'ble High Court of Madras (2019) SCC

Online Mad. 9085 @para 21-23

"21. In the unreported judgment of this Court dated

21.08.2017____________ http://www.judis.nic.in W.P.(MD)

No.3989 of 2017 made in W.A.(MD) No.3 of 2017 [cited

supra], the Division Bench of this Court held that the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 41 of 150 Authorised Officer appointed by the bank in the proceedings

initiated under SARFAESI Act, is not a Civil or Revenue

Court, Collector or Revenue Officer and he is an officer of

the bank, which lend money to the borrowers, acts as an

Authorized Officer, only for the purpose of bringing the

property for sale. In other words, such officers merely replace

the secured creditors. The Division Bench further observed

that at best the Authorized Officer cannot be termed as Civil

or Revenue Court, Collector or Revenue Officer. Observing

so, the Division Bench held that notice issued under Section

47-A of the Indian Stamp Act, claiming stamp duty on the

market value of the property is proper.

22. The Sale Certificate issued by the Authorised Officer of

the bank cannot be granted with the Sale Certificate issued by

a Civil or Revenue Court. The nomenclature given to the

document issued by the Authorized Officer would be

irrelevant for exemption from payment of stamp duty and the

same will not be covered under Article 18-C Schedule 1 of

the Stamp Act. Therefore, the Sale Certificate

____________ http://www.judis.nic.in W.P.(MD) No.3989 of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 42 of 150 2017 issued by one who is neither Civil or Revenue Officer

would not fall under Section 17(2)(xii) of the Registration Act

and the Sale Certificate issued by the Authorized Officer is

liable for stamp duty on the market value as per Article 18-

C read with Article 23 of Schedule 1 of the Stamp Act.

23. If proper stamp duty is not paid for the said Sale

Certificate and registered as required under law, then it is

only a still born child and does not confer any right to the

petitioner whatsoever. When the Sale Certificate is not

properly stamped and registered, it is a void document and

no right would vest upon the petitioner based on the same.

As per Section 47-A of the Stamp Act, if the Registering

Authority has reason to believe that the market value of the

property, which is the subject matter of conveyance, has not

been truly set-forth in the instrument, he may, after

registering such instrument, refer the same to the Collector

for determination of the market value of the said property and

the proper duty payable thereon.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 43 of 150 B. Ram Murthy Pyara Lal Vs. Central bank of India & Ors. 2010

(120) DRJ 437 (DB) decided by Hon'ble Delhi High Court @ para

10

"We have already reproduced the provisions of Section

13(8) and Section 17 sub sections (2) to (4) above. Section 13 sub

section (8) in plain language provides that no steps with regard to

the transfer or sale of secured assets can take place if dues of the

secured creditors together with cost charges and expenses

incurred are tendered to the secured creditor at any time before

the date fixed for sale/transfer. However, sub sections (2) to (4)

of Section 17 provide that the DRT in the proceedings

under Section 17 has the right to declare whether the action of the

secured creditor taken under Section 13(4) is or is not in

accordance with the provisions of the SARFAESI Act. In case, the

DRT comes to the conclusion that the action taken by the secured

creditor is not in accordance with the provisions of the SARFAESI

Act and the rules framed thereunder, then, by virtue of sub section

(3), DRT can declare the actions taken pursuant to Section

13(4) as invalid and pass necessary orders including of

cancellation of the auction sale proceedings and restoring the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 44 of 150 possession of the secured asset to the borrower. Thus, a conjoint

reading of the provisions of Section 13(8) on one hand and sub

sections (2) to (4) of Section 17 on the other hand, bring out the

position that although the right of redemption is to be ordinarily

exercised before the date fixed for sale of transfer, however, even

if the auction sale proceedings take place but in case the borrower

succeeds in the S.A. under Section 17, the auction sale

proceedings can be cancelled and since fresh auction sale may

have to be conducted the right of redemption can again be

exercised at that stage when a fresh date will be fixed for

sale/transfer.

There is a vital difference in this legal position and the legal

position which emerges under the provisions of Order 21 of the

CPC. Whereas under relevant rules and sub rules of Order 21 of

CPC, and as interpreted by the Supreme Court, even if a decree is

set aside a bonafide purchaser for value at an auction sale

proceedings gets a complete title in case he purchases the property

without any notice of any dispute or claims with respect to the

auctioned property, however under the SARFAESI Act, the DRT

has complete powers under the provisions of sub sections (2) to

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 45 of 150 (4) of Section 17 to set aside the auction sale and restore back the

possession of the secured asset to the borrower. Clearly, therefore,

the auction sale proceedings are not final under the SARFAESI

Act unless the S.A. of the borrower under Section 17 is decided. A

purchaser at an auction sale cannot claim title merely because the

auction sale proceedings for concluded in his favour and a

necessary sale certificate issued as the same as per sub- sections

(2) to (4) of Section 17 is subject to final decision on an S.A filed

under Section 17. However, auction sale and steps under Section

13(4) can continue unless the applicant in the S.A. under Section

17 takes appropriate interim orders.

C. P.M.Associates Vs. IFCI (2014 -2 L.W.323) para 30

"30. In the judgment reported in (2007) 5 Supreme Court

Cases 745 [B.Arvind Kumar Vs. Govt. of India and

others], it is clear that when a property is sold by public

auction in pursuance of an order of the Court and bid is

accepted and the sale is confirmed by the Court in favour

of the purchaser, the sale becomes absolute and the title

vests in the purchaser. The Sale Certificate is issued to the

purchaser only when the sale becomes absolute, further, it

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 46 of 150 is clear that the Sale Certificate is merely an evidence of

such title. It is also well settled that when an auction

purchaser derives title on confirmation of sale in his

favour, the Sale Certificate is issued evidencing such sale

and title, no further deed of transfer from the Court is

contemplated or required. So far as the registration of the

Sale Certificate is concerned, under Section 17(2)(xii) of

the Registration Act, the Sale Certificate issued by a Civil

or Revenue Officer does not fall under the category of non-

testamentary documents which requires registration under

sub-section 17(1)(b)and(c) of the said Act. In the case on

hand, the Sale Certificate was issued by the Authorised

Officer, the second respondent. That being the case, the

auction purchaser derives title on confirmation of sale in

their favour and the Sale Certificate was issued evidencing

such sale and title. In respect of the registration of the Sale

Certificate issued by the second respondent, since the

second respondent is not a Civil or Revenue Officer, the

registration of the Sale Certificate is not exempted

under Section 17(2)(xii) of the Registration Act.

Therefore, we are of the view that though the auction

purchaser derived title on confirmation of sale in their

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 47 of 150 favour and a Sale Certificate was issued by the

Authorised Officer, evidencing such sale and title, no

further deed of transfer is required. In view of the

judgment reported in (2007) 5 Supreme Court Cases 745

and the provisions of 17(2)(xii) of the Registration Act,

the Sale Certificate issued by the second

respondent/Authorised Officer requires registration.

41.Since the auction conducted by the second respondent

was confirmed in favour of the petitioner/auction

purchaser and Sale Certificate was also issued by the

Authorised Officer, the petitioner/auction purchaser is

entitled to get the Sale Certificate registered in their

favour."

D. Nitin Garg Vs. State Bank of India & Ors. (Company

Appeal (AT) (Ins) No. 930 of 2020- para 24-25

"24. 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 vs. Govt. of

India and Others' reported in 2007 Volume 5 Supreme

Court Cases 745 (Supra), wherein, the Hon'ble Supreme

Court has held when a property is sold by public auction

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 48 of 150 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 evidence of such title.

25. 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."

E. B.Arvind Kumar Vs. Govt. of India

(2007) 5 SCC 745 para 12

" The plaintiff has produced the original registered sale

certificate dated 29.8.1941 executed by the Official

Receiver, Civil Station, Bangalore. The said deed

certifies that Bhowrilal (father of plaintiff) was the

highest bidder at an auction sale held on 22.8.1941, in

respect of the right, title, interest of the insolvent Anraj

Sankla, namely the leasehold right in the property

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 49 of 150 described in the schedule to the certificate (suit

property), that his bid of Rs.8,350 was accepted and the

sale was confirmed by the District Judge, Civil and

Military Station, Bangalore on 25.8.1941. The sale

certificate declared Bhowrilal to be the owner of the

leasehold right in respect of the suit property. 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 becomes 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 the 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. In this case,

the sale certificate itself was registered, though such a

sale certificate issued by a court or an officer authorized

by the court, does not require registration. Section

17(2)(xii) of the Registration Act, 1908 specifically

provides that a certificate of sale granted to any

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 50 of 150 purchaser of any property sold by a public auction by a

civil or revenue officer does not fall under the category

of non testamentary documents which require

registration under sub-section (b) and (c) of section

17(1) of the said Act. We therefore hold that the High

Court committed a serious error in holding that the sale

certificate did not convey any right, title or interest to

plaintiff's father for want of a registered deed of

transfer."

F. P.M.Associates Vs. IFCI (2014 -2 L.W.323) para 30,

31 & 34

"30. In the judgment reported in (2007) 5 Supreme Court

Cases 745 [B.Arvind Kumar Vs. Govt. of India and others], it

is clear that when a property is sold by public auction in

pursuance of an order of the Court and bid is accepted and the

sale is confirmed by the Court in favour of the purchaser, the

sale becomes absolute and the title vests in the purchaser. The

Sale Certificate is issued to the purchaser only when the sale

becomes absolute, further, it is clear that the Sale Certificate

is merely an evidence of such title. It is also well settled that

when an auction purchaser derives title on confirmation of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 51 of 150 sale in his favour, the Sale Certificate is issued evidencing

such sale and title, no further deed of transfer from the Court

is contemplated or required. So far as the registration of the

Sale Certificate is concerned, under Section 17(2)(xii) of the

Registration Act, the Sale Certificate issued by a Civil or

Revenue Officer does not fall under the category of non-

testamentary documents which requires registration under

sub-section 17(1)(b)and(c) of the said Act. In the case on hand,

the Sale Certificate was issued by the Authorised Officer, the

second respondent. That being the case, the auction purchaser

derives title on confirmation of sale in their favour and the

Sale Certificate was issued evidencing such sale and title. In

respect of the registration of the Sale Certificate issued by the

second respondent, since the second respondent is not a Civil

or Revenue Officer, the registration of the Sale Certificate is

not exempted under Section 17(2)(xii) of the Registration Act.

Therefore, we are of the view that though the auction

purchaser derived title on confirmation of sale in their favour

and a Sale Certificate was issued by the Authorised Officer,

evidencing such sale and title, no further deed of transfer is

required. In view of the judgment reported in (2007) 5

Supreme Court Cases 745 and the provisions of 17(2)(xii) of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 52 of 150 the Registration Act, the Sale Certificate issued by the second

respondent/Authorised Officer requires registration.

31. In the judgment reported in AIR 2008 Madras 108

[K.Chidambara Manickam Vs.. Shakeena and others], the

Division Bench of this Court held that the right of redemption

provided to the borrower under Section 60 of the Transfer of

Property Act will be available to the borrower before it is

foreclosed or estate is sold and on the issuance of the Sale

Certificate to the auction purchaser, the sale becomes

complete, vesting the right in the property in favour of auction

purchaser. In the case on hand, there is no dispute that the

auction was confirmed in favour of the auction purchaser and

Sale Certificate was also issued in their favour. Thus, the sale

became complete and the right in the property vests in favour

of the auction purchaser. Since the third respondent/borrower

failed to exercise his right of redemption before sale of the

property and also in view of the provisions of Section 13(8) of

the SARFAESI Act, the borrower/third respondent cannot now

(i.e.) after the completion of the sale in favour of the petitioner

seek to redeem the property, that too, without the intervention

of a Competent Court or Tribunal.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 53 of 150

34.Therefore, it is clear that an auction purchaser derives title

on confirmation of sale in his favour and the issuance of Sale

Certificate is only an evidence to prove that the sale was

confirmed in his favour conveying the title. Therefore, in the

case on hand, by issuance of Sale Certificate on 16.09.2011, it

is clearly proved that sale was confirmed in favour of the

petitioner/auction purchaser. To prove that the sale was

confirmed in their favour, the Sale Certificate dated

16.09.2011 was issued. Therefore, after the confirmation of

the sale in favour of the petitioner/auction purchaser, the

second respondent Authorised Officer have no authority to

cancel the sale on his own. The power of cancelling the sale

vests only with the Competent Court/Forum and definitely not

with the Authorised Officer. If the Authorised Officer cancels

the Sale Certificate on his own, no case will reach finality at

any point of time. Therefore, from the above it is clear that the

second respondent Authorised Officer has no jurisdiction to

cancel the Sale Certificate. The order dated 08.02.2012 was

passed by the second respondent when he has no jurisdiction

to pass such an order. Therefore, such an act of the second

respondent should not be allowed to stand."

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 54 of 150 G. Raj Kumar Dey & Ors. Vs. Tarapada Dey & Ors. -

(1987) 4 SCC 398 para 8

" para 8- It was urged before us that an award affecting

the immovable properties which was not registered and

which was made outside the court could not form the

basis of an award and an unregistered award, in other

words could not form the basis of the award. We are

unable to accept that position. There is no dispute to the

proposition that an award affecting immovable

properties as in the instant case should be registered. It

is therefore, not necessary to discuss in detail the ratio

of A the decision of the Full Bench of the Andhra

Pradesh High Court in M. Venkataratnam v. M.

Chelamayya, A.I.R. 1967 Andhra Pradesh In the

aforesaid view of the matter the judgment and order of

the High Court cannot be sustained and are set aside.

The appeal is allowed and the order of the Sub-

Registrar, Arambagh dated 24th of June, 1985 is

restored. In the facts and circumstances of the case,

however, the parties are directed to pay and bear their

own costs."

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 55 of 150 H. Madhukar Nivrutti Vs. Pramilabai Chandulal (2019)

SCC Online SC 1026

Operation of the doctrine of lis pendens: Section 52 T.P. Act

14. The third question as regards the sale transactions in favour

of the present appellants (the subsequent purchasers) need not

detain us longer, except to correct an error on the part of High

Court where it is observed that such sale deeds are to be treated

as illegal.

14.1. The suit in question was filed on 26.08.1968. So far the sale

transaction in favour of the defendant Nos. 4 & 5 (the appellant

Nos. 1 & 2 herein), in relation to 25 acres of land out of the suit

property, is concerned, the same was effected by way a sale deed

registered only on 10.07.1978 i.e., nearly 10 years after filing of

the suit. So far, the sale transaction in favour of the defendant No.

6 (the appellant No. 3 herein), in relation to other 25 acres of land

out of the suit property, is concerned, though it is suggested that

there had been an agreement (dated 08.05.1968) in his favour

before filing of the suit but then, admittedly, the sale transaction

was affected by way of a sale deed registered only on 18.09.1968,

that had also been after filing of the suit. The suggestion about

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 56 of 150 wants of knowledge of the subsequent purchasers about the

transaction of the vendors with the plaintiffs and about the

pendency of the suit has been considered and rejected by the High

Court and even by the subordinate Court after due appreciation

of evidence on record; and we are unable to find any infirmity in

these findings. Both the sale transactions in favour of the present

appellants, purporting to transfer the suit property in part, having

been affected after filing of the suit, are directly hit by the doctrine

of lis pendens, as embodied in Section 52 of the Transfer of

Property Act, 1882 that reads as under: -

"52. Transfer of property pending suit relating thereto. ----

During the pendency in any Court having authority within the

limits of India excluding the State of Jammu and Kashmir or

established beyond such limits by the Central Government of any

suit or proceedings which is not collusive and in which any right

to immoveable property is directly and specifically in question, the

property cannot be transferred or otherwise dealt with by any

party to the suit or proceedings so as to affect the rights of any

other party thereto under any decree or order which may be made

therein, except under the authority of the Court and on such terms

as it may impose.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 57 of 150 Explanation.---- For the purposes of this section, the pendency of

a suit or proceeding shall be deemed to commence from the date

of the presentation of the plaint or the institution of the proceeding

in a Court of competent jurisdiction, and to continue until the suit

or proceedings has been disposed of by a final decree or order

and complete satisfaction or discharge of such decree or order

has been obtained, or has become unobtainable by reason of the

expiration of any period of limitation prescribed for the execution

thereof by any law for the time being in force." 14.2. In the case

of Guruswamy Nada (supra), this Court has held as under: -

"13. Normally, as a public policy once a suit has been filed

pertaining to any subject-matter of the property, in order to put an

end to such kind of litigation, the principle of lis pendens has been

evolved so that the litigation may finally terminate without

intervention of a third party. This is because of public policy

otherwise no litigation will come to an end. Therefore, in order to

discourage that same subject-matter of property being subjected

to subsequent sale to a third person, this kind of transaction is to

be checked. Otherwise, litigation will never come to an end." 14.3.

The aforesaid observations in no way lead to the proposition that

any transaction on being hit by Section 52 ibid., is illegal or void

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 58 of 150 ab initio, as assumed by the High Court. In Sarvinder Singh

(supra), as relied upon by the High Court, the subsequent

purchasers sought to come on record as defendants and in that

context, this Court referred to Section 52 of the T.P.

Act and pointed out that alienation in their favour would be hit by

the doctrine of lis pendens. The said decision is not an authority

on the point that every alienation during the pendency of the suit

is to be declared illegal or void. The effect of doctrine of lis

pendens is not to annul all the transfers effected by the parties to

a suit but only to render them subservient to the rights of the

parties under the decree or order which may be made in that suit.

In other words, its effect is only to make the decree passed in the

suit binding on the transferee, i.e., the subsequent purchaser.

Nevertheless, the transfer remains valid subject, of course, to the

result of the suit. In the case of A. Nawab John (supra), this Court

has explained the law in this regard, and we may usefully reiterate

the same with reference to the following:-

"18. It is settled legal position that the effect of Section 52 is not

to render transfers effected during the pendency of a suit by a

party to the suit void; but only to render such transfers subservient

to the rights of the parties to such suit, as may be, eventually,

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 59 of 150 determined in the suit. In other words, the transfer remains valid

subject, of course, to the result of the suit. The pendent lite

purchaser would be entitled to or suffer the same legal rights and

obligations of his vendor as may be eventually determined by the

court." 14.4. Hence, the effect of Section 52 ibid., for the purpose

of the present case would only be that the said sale transactions in

favour of the appellants shall have no adverse effect on the rights

of the plaintiffs and shall remain subject to the final outcome of

the suit in question. However, the High Court, while holding that

the said transactions were hit by lis pendens, has proceeded to

observe further that the sale deeds so made in favour of the present

appellants were illegal. These further observations by the High

Court cannot be approved for the reasons foregoing."

I. Transcore Vs. UOI (2008) 1 SCC 125 para 73-74

"The word possession is a relative concept. It is not an absolute

concept. The dichotomy between symbolic and physical possession

does not find place in the Act. As stated above, there is a conceptual

distinction between securities by which the creditor obtains

ownership of or interest in the property concerned (mortgages) and

securities where the creditor obtains neither an interest in nor

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 60 of 150 possession of the property but the property is appropriated to the

satisfaction of the debt (charges). Basically, the NPA Act deals with

the former type of securities under which the secured creditor,

namely, the bank/FI obtains interest in the property concerned. It is

for this reason that the NPA Act ousts the intervention of the courts/

tribunals.

Keeping the above conceptual aspect in mind, we find that Section

13(4) of the NPA Act proceeds on the basis that the borrower, who

is under a liability, has failed to discharge his liability within the

period prescribed under Section 13(2), which enables the secured

creditor to take recourse to one of the measures, namely, taking

possession of the secured assets including the right to transfer by

way of lease, assignment or sale for realizing the secured

assets. Section 13(4-A) refers to the word "possession" simpliciter.

There is no dichotomy in sub-section (4-A) as pleaded on behalf of

the borrowers. Under Rule 8 of the 2002 Rules, the authorised

officer is empowered to take possession by delivering the possession

notice prepared as nearly as possible in Appendix IV to the 2002

Rules. That notice is required to be affixed on the property. Rule 8

deals with sale of immovable secured assets. Appendix IV prescribes

the form of possession notice. It inter alia states that notice is given

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 61 of 150 to the borrower who has failed to repay the amount informing him

and the public that the bank/FI has taken possession of the property

under Section 13(4) read with Rule 9 of the 2002 Rules. Rule 9

relates to time of sale, issue of sale certificate and delivery of

possession. Rule 9(6) states that on confirmation of sale, if the terms

of payment are complied with, the authorised officer shall issue a

sale certificate in favour of the purchaser in the form given in

Appendix V to the 2002 Rules. Rule 9(9) states that the authorised

officer shall deliver the property to the buyer free from all

encumbrances known to the secured creditor or not known to the

secured creditor. (emphasis supplied). Section 14 of the NPA Act

states that where the possession of any secured asset is required to

be taken by the secured creditor or if any of the secured asset is

required to be sold or transferred, the secured creditor may, for the

purpose of taking possession, request in writing to the District

Magistrate to take possession thereof. Section 17(1) of NPA Act

refers to right of appeal. Section 17(3) states that if the DRT as an

appellate authority after examining the facts and circumstances of

the case comes to the conclusion that any of the measures

under Section 13(4) taken by the secured creditor are not in

accordance with the provisions of the Act, it may by order declare

that the recourse taken to any one or more measures is invalid, and

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 62 of 150 consequently, restore possession to the borrower and can also

restore management of the business of the borrower. Therefore, the

scheme of Section 13(4) read with Section 17(3) shows that if the

borrower is dispossessed, not in accordance with the provisions of

the Act, then the DRT is entitled to put the clock back by restoring

the status quo ante. Therefore, it cannot be said that if possession is

taken before confirmation of sale, the rights of the borrower to get

the dispute adjudicated upon is defeated by the authorised officer

taking possession. As stated above, the NPA Act provides for

recovery of possession by non-adjudicatory process, therefore, to

say that the rights of the borrower would be defeated without

adjudication would be erroneous. Rule 8, undoubtedly, refers to sale

of immovable secured asset. However, Rule 8(4) indicates that

where possession is taken by the authorised officer before issuance

of sale certificate under Rule 9, the authorised officer shall take

steps for preservation and protection of secured assets till they are

sold or otherwise disposed of. Under Section 13(8), if the dues of the

secured creditor together with all costs, charges and expenses

incurred by him are tendered to the creditor before the date fixed

for sale or transfer, the asset shall not be sold or transferred. The

costs, charges and expenses referred to in Section 13(8) will include

costs, charges and expenses which the authorised officer incurs for

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 63 of 150 preserving and protecting the secured assets till they are sold or

disposed of in terms of Rule 8(4). Thus, Rule 8 deals with the stage

anterior to the issuance of sale certificate and delivery of possession

under Rule 9. Till the time of issuance of sale certificate, the

authorised officer is like a court receiver under Order XL Rule 1

CPC. The court receiver can take symbolic possession and in

appropriate cases where the court receiver finds that a third party

interest is likely to be created overnight, he can take actual

possession even prior to the decree. The authorized officer under

Rule 8 has greater powers than even a court receiver as security

interest in the property is already created in favour of the banks/FIs.

That interest needs to be protected. Therefore, Rule 8 provides that

till issuance of the sale certificate under Rule 9, the authorized

officer shall take such steps as he deems fit to preserve the secured

asset. It is well settled that third party interests are created

overnight and in very many cases those third parties take up the

defence of being a bona fide purchaser for value without notice. It

is these types of disputes which are sought to be avoided by Rule 8

read with Rule 9 of the 2002 Rules. In the circumstances, the

drawing of dichotomy between symbolic and actual possession does

not find place in the scheme of the NPA Act read with the 2002

Rules."

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 64 of 150 J. Embassy Property Vs. State of Karnataka (2019) SCC

Online SC 1542 para 37

"From a combined reading of Subsection (4) and Subsection (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of MMDR Act, 1957 and the Rules issued thereunder. The only provision which can probably throw light on this question would be Subsection (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of Subsection (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution" appearing in Clause (c) of Subsection (5). Let us take for instance a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal, at the time of initiation of CIRP. If Section 60(5)(c) of IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260A of the Income Tax Act, 1961. Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. (It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate debtor, since, in such cases, the dues payable to the Government would come within the meaning of the expression "operational debt" under Section 5(21), making the Government an "operational creditor" in terms of Section 5(20). The moment the dues to the Government are crystalised and what remains is only payment, the claim of the Government will have to be adjudicated and paid only in a manner prescribed in the resolution plan as approved by the Adjudicating Authority, namely the NCLT. )"

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 65 of 150 K. Kumararaja Paper Mills Pvt. Ltd. Vs. Tamil Nadu,

Principal Revenue Control Officer Cum Inspector

General of Registration, 2012 (1) (CTC) 315 @ para 12

"On a reading of the above paragraphs, it could be

easily inferred that only if the sale certificate issued

by the Revenue officer in respect of the property

conveyed by them for the purpose of deriving

income from taxes, duties and other sources for the

payment of the nation's expenses, it needs no

compulsory registration. So far as the sale

certificate issued by the Authorised Officer of the

Government Corporation, such as SIPCOT is

concerned, the same cannot be equated with the

sale certificate issued by the revenue officers.

Moreover, the function of the SIPCOT is purely

entrepreneur in nature. For the purpose of

collecting the loan due, the property was sold in the

auction. Therefore, the sale certificate issued by the

Authorised Officer of the Government Corporation,

such as SIPCOT cannot be exempted from the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 66 of 150 registration. In fact, this Court, in the judgment

relied upon by the learned counsel for the

appellant in 2010(4) CTC 802 (supra), has held as

follows:

"14. ....But so far as the certificate issued by the

Authorised Officer is concerned, it cannot be

equated with the certificate issued by the Revenue

or Civil Court. As contended by the learned

counsel for the petitioner, the nomenclature given

to the document issued by the Authorised Officer

may not be relevant for giving exemption from

paying the stamp duty since the sale certificate

issued by the Authorised Officer will not be

covered by Article 18 of Schedule I of the Stamp

Act..."

Therefore, I do not find any infirmity in the order

passed by the respondents based on the value of

the plant and machinery sold in the sale note dated

07.06.2002."

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 67 of 150 L. Cenney Hotels Pvt. Ltd Through its Managing Director

vs. State of Tamil Nadu represented by Inspector

General of Registration 2010 (4) CTC 802 @para 14

"14. A reading of the above judgment would

reveal that the purchaser of a property by sale

through Civil or Revenue Court has no

disadvantage because of lack of registration in

view of the fact that under Section 17(2)(xii) of

the Registration Act, Certificate of Sale is not a

compulsory registrable document and

consequently, the transfer of title in his favour

will not be vitiated by non-registration. But so

far as the certificate issued by the Authorised

Officer is concerned, it cannot be equated with

the certificate issued by the Revenue or Civil

Court. As contended by the learned Counsel for

the Petitioner, the nomenclature given to the

document issued by the Authorised Officer may

not be relevant for giving exemption from

paying the stamp duty since the Sale Certificate

issued by the Authorised Officer will not be

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 68 of 150 covered by Article 18 of Schedule I of the Stamp

Act. In my considered opinion, the judgment

delivered by this Court in In Re, The Official

Liquidator, High Court, Madras, 2010 (2) CTC

113 by considering the earlier judgments, has

set forth the correct position of law. In view of

the above, I do not find any infirmity in the order

passed by the 1st Respondent."

M. The Official Liquidator, High Court of Madras, 2010 (2)

CTC 113 @para 56-59

"There is one more crucial issue. Section 17(2)(xii)

refers only to a Certificate of Sale granted to the

purchaser of a property in public auction by a Civil

or Revenue Officer. Section 89(4) uses the term

"Revenue Officer" alone. The question as to who is

a Civil or Revenue Officer, did not fall for

consideration either in the decision of the Division

Bench in K. Chidambara Manickam or in any other

decision. The only case where this question was

considered, was in Shanti Devi L. Singh. But in that

case, the Supreme Court was concerned with a sale

made by the Tax Recovery Officer of the Income

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 69 of 150 Tax Department. Since the Tax Recovery Officer

was collecting the revenue due to the Government,

by selling the property of the Assessee in public

auction, the Supreme Court extended the meaning

of the term "Civil or Revenue Officer" to a Tax

Recovery Officer in Shanti Devi L. Singh case. If a

person selling a property in public auction is not a

"Civil or Revenue Officer", the sale made by him

will not fall under Section 17(2)(xii). If he is not a

"Revenue Officer", it will not also fall under

Section 89(4).

57. The term "Revenue Officer" is defined in

"Advanced Law Lexicon by P.Ramanatha Iyer" as

"an Officer employed in or about the business of

any branch of the public revenue". This definition

was culled out from the Explanation to Section 125

of the Indian Evidence Act, 1872. In Sheopatsingh

vs. Harishchandra {AIR 1958 Rajasthan 324}, it

was held that the term "Revenue Officer" will

include such Officers of the Income Tax, Sales Tax

and Irrigation Department. Again in Gopi Parshad

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 70 of 150 vs. State of Punjab {AIR 1957 Pun. 45}, it was held

that the expression revenues means "the income of

the nation derived from its taxes, duties or other

sources, for the payment of the nations expenses".

It is a term generally used in referring to income of

a Government or governmental sub division and as

so used means all the public moneys which the

State collects and receives from whatever source

and in whatever manner. In Kishore Chandra Deo

Bhanj vs. Raghunath Misra {AIR 1959 SC 589 },

the Village Accountants were also held to be

Revenue Officers.

58. Similarly, the term "Civil Officer" is defined in

"Advanced Law Lexicon by P.Ramanatha Iyer" as

"any Officer holding appointment under the

Government except in the Military or Naval

Service, whether the duties are Executive or

Judicial or in the highest or the lowest

departments". The term "Civil Officer" has to be

understood only in the context of "civilians" as

opposed to persons in Military Service. It is

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 71 of 150 doubtful, if an Official Liquidator can be equated

to a Civil Officer or a Revenue Officer, so as to

make the certificate of sale issued by him come

within the purview of Section 17(2)(xii) of the

Registration Act, 1908. I do not think that an

Official Liquidator can be considered to be a

"Revenue Officer" within the meaning of Section

89(4) since he is not collecting revenue for the

Government. Even assuming for the sake of

argument that he can be equated, Article 18 under

Schedule-I of the Indian Stamp Act makes a

certificate of sale issued by a Revenue Officer also

liable to stamp duty. The term "Revenue Officer"

appearing both in Article 18 under Schedule-I of

the Indian Stamp Act and also in sections 17(2)(xii)

and 89(4) of the Registration Act, are to be given

the same meaning and to be construed to indicate

the same person.

59. Therefore, the only conclusion that one can

draw by a combined reading of the provisions of

the Transfer of Property Act, 1882, the Indian

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 72 of 150 Stamp Act, 1899 and the Registration Act, 1908 is

that by whatever name the instrument is called

(whether certificate of sale or Sale Deed), the

instrument is chargeable with stamp duty, under

Article 18 read with Article 23 of Schedule I to the

Stamp Act. While the Official Liquidator can leave

the choice to the auction purchaser to choose the

title to or the nomenclature of the document,

neither he nor the purchaser has any choice with

regard to the liability to pay stamp duty."

N. Mathew Varghese Vs. M Amritha Kumar & Ors. (2014)

5 SCC 610 @para 38-39

"38. On a reading of the above paragraphs, we are

able to discern the ratio to the effect that a mere

conferment of power to sell without intervention of the

court in the mortgage deed by itself will not deprive

the mortgagor of his right to redemption, that the

extinction of the right of redemption has to be

subsequent to the deed conferring such power, that

the right of redemption is not extinguished at the

expiry of the period, that the equity of redemption is

not extinguished by mere contract for sale and that

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 73 of 150 the mortgagor's right to redeem will survive until

there has been completion of sale by the mortgagee by

a registered deed. The ratio is also to the effect that

the power to sell should not be exercised unless and

until notice in writing requiring payment of the

principal money has been served on the mortgagor.

The above proposition of law of course was laid down

by this Court in Narandas Karsondas while

construing section 60 of the tp act. But as rightly

contended by Mr Shyam Divan, we fail to note any

distinction to be drawn while applying the abovesaid

principles, even in respect of the sale of secured assets

created by way of a secured interest in favour of the

secured creditor under the provisions of the Sarfaesi

Act, read along with the relevant Rules. We say so,

inasmuch as, we find that even while setting out the

principles in respect of the redemption of a mortgage

by applying section 60 of the tp act, this Court has

envisaged the situation where such mortgage deed

providing for resorting to the sale of the mortgage

property without the intervention of the Court.

Keeping the said situation in mind, it was held that the

right of redemption will not get extinguished merely

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 74 of 150 at the expiry of the period mentioned in the mortgage

deed. It was also stated that the equity of redemption

is not extinguished by mere contract for sale and the

most important and vital principle stated was that the

mortgagor's right to redeem will survive until there

has been completion of sale by the mortgagee by a

registered deed. The completion of sale, it is stated,

can be held to be so unless and until notice in writing

requiring payment of the principal money has been

served on the mortgagor. Therefore, it was held that

until the sale is complete by registration of sale, the

mortgagor does not lose the right of redemption. It

was also made clear that it was erroneous to suggest

that the mortgagee would be acting as the agent of the

mortgagor in selling the property.

39. When we apply the above principles stated with

reference to section 60 of the tp act in respect of a

secured interest in a secured asset in favour of the

secured creditor under the provisions of the Sarfaesi

Act and the relevant Rules applicable, under Section

13(1), a free hand is given to a secured creditor to

resort to a sale without the intervention of the court

or tribunal. However, under Section 13(8), it is

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 75 of 150 clearly stipulated that the mortgagor i.e the borrower,

who is otherwise called as a debtor, retains his full

right to redeem the property by tendering all the dues

to the secured creditor at any time before the date

fixed for sale or transfer. Under sub-section (8) of

Section 13, as noted earlier, the secured asset should

not be sold or transferred by the secured creditor

when such tender is made by the borrower at the last

moment before the sale or transfer. The said sub-

section also states that no further step should be taken

by the secured creditor for transfer or sale of that

secured asset. We find no reason to state that the

principles laid down with reference to section 60 of

the tp act, which is general in nature in respect of all

mortgages, can have no application in respect of a

secured interest in a secured asset created in favour

of a secured creditor, as all the above stated

principles apply on all fours in respect of a

transaction as between the debtor and secured

creditor under the provisions of the Sarfaesi Act."

O. Union of India & ors. Vs. Major General Madan Lal

Yadav (1996) SCC 127 @ para 28

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 76 of 150 "Even if narrow interpretation is plausible, on the

facts in this case, we have no hesitation to conclude

that the trial began on February 25, 1987 on which

date the Court-martial assembled, considered the

charge and the prosecution undertook to produce

the respondent who was found escaped from the

open detention, before the Court. It is an admitted

position that GCM assembled on February 25,

1987. On consideration of the charge, the

proceedings were adjourned from day to day till

the respondent appeared on March 2, 1987. It is

obvious that the respondent had avoided trial to

see that the trial would not get commenced. Under

the scheme of the Act and the Rules, presence of

the accused is a pre-condition for commencement

of trial. In his absence and until his presence was

secured, it became difficult, may impossible, to

proceed with the trial of the respondent- accused.

In this behalf, the maxim nullus commodum capere

potest de injuria sua propria- meaning no man can

take advantage of his own wrong - squarely stands

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 77 of 150 in the way of avoidance by the respondent and he

is estopped to plead bar of limitation contained

in Section 123 [2]. In Broom's Legal Maximum

[10th Edn.] at page 191 it is stated "it is a maxim

of law, recognized and established, that no man

shall take advantage of his own wrong; and this

maxim, which is based on elementary principles, is

fully recognized in Courts of law and of equity,

and, indeed, admits of illustration from every

branch of legal procedure. The reasonableness of

the rule being manifest, we proceed at once to

show its application by reference to decided cases.

It was noted therein that a man shall not take

advantage of his own wrong to gain the favourable

interpretation of the law. In support thereof, the

author has placed reliance on another maxim

frustra legis auxilium quoerit qui in legem

committit. He relies on Perry v. Fitzhowe [8 Q.B.

757]. At page 192, it is stated that if a man be

bound to appear on a certain day, and before that

day the obligee put him in prison, the bond is void.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 78 of 150 At page 193, it is stated that "it is moreover a

sound principle that he who prevents a thing from

being done shall not avail himself of the non-

performance he has occasioned". At page 195, it is

further stated that "a wrong doer ought not to be

permitted to make a profit out of his own wrong".

At page 199 it is observed that "the rule applies to

the extent of undoing the advantage gained where

that can be done and not to the extent of taking

away a right previously possessed".

P. Dr. Raghubir Saran Vs. State of Bihar and Anr. (1964) 2

SCR 336 @ para 6-7

"What is the scope of this inherent power ? Can it be

invoked in a case where the judgment has become final to

expunge the remarks made therein ? By expunging

remarks what does the appellate Court do ? Substantially

it strikes out a part of the judgment. Sometimes the part

struck out may be an in- tegral part of the judgment, that

is to say, the conclusion may not flow in the absence of the

part deleted. On some occasions remarks made by a Court

on the credibility of a witness, however exaggerated they

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 79 of 150 may be, may be the sole reason for not believing that

witness. There may also be other occasions when the

remarks may be so irrelevant that they may not have any

direct impact on the judgment, but such instances will be

very rare. Whatever may be the decree of impact, the result

of expunging remarks from a judgment is that it derogates

from its finality. There is no provision in the Code of

Criminal Procedure which enables an appellate Court in

a case where the order of a lower Court has become final

between the State and the accused to modify the said order

by deleting or striking out some of the observations found

therein. Does s. 561 A of the said Code confer such a

power ? The conflicting views on this question are

reflected in some of the judgments cited at the Bar. Sulaiman j. in Panchanan Banerji v. Upendra Nath

Bhattwharji (3), holds that s. 561A of the Code of Criminal

Procedure, which was added in 1923, confers such a

power and (1) A. 1. R. 1945 P. C. 18, 22.

(2) (1945) 47 Bom. L. R. 634. (P.C.) (3) (1926) 1. L. R. 49

All, 254, 256.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 80 of 150 he does not see any reason why such an inherent power

should not comprise a power to order a deletion of

passages which are either irrelevant or inadmissible and

which adversely affect the character of persons before the

Court. Tek Chand J. In the matter of Daly (1), also

concedes such a power to an appellate Court. Beaumont

C. J. in Rogers, P. J. v. Shrinivas Gopal (2), remarks

tersely that no Court can claim inherent power to alter the

judgment of another Court. Dhavle J. in Bhutnath Khawas

v. Dasrathi Das (3), agrees with Beaumont C.J. in holding

that no Court can claim inherent power to alter the

judgment of another Court. The Madras High Court in In

re Public Prosecutor (4), holds that an appellate Court has

power to expunge remarks in a judgment in a suitable case.

The Full Bench of the Bombay High Court in State v.

Nilkanth Shripad (5), posed the question thus : "The

important question that arises is whether a superior Court

has inherent power to alter the record, as it were, by

changing or altering a judgment which has already been

delivered and has become final as far as that particular

Court is concerned", and expressed its view as follows :

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 81 of 150 "A judgment of a lower Court may be wrong; it may even

be perverse The proper way of attack that judgment is by

bringing it under the scrutiny of the superior Court and

getting the judgment of the lower Court judicially

corrected...........................................

....

In our opinion, the inherent power that the High Court

possesses is, in proper cases, even though no appeal or

revision may be preferred to this Court to judicially

correct the observations of the lower Court by pointing out

that the observations made by the Magistrate were not

justified or were without any foundation or were wholly

wrong or improper."

With respect, I agree with the conclusion arrived (1)

(1927) 1. L. R. 9 Lah, 269, 275.

(2) I. L.R. 1940 Bom. 415, 418, (3) A. 1. R, 1941 Pat. 544.

(4) A.I.R. 1944 Mad, 614.

(5) I.L.R. 1954 Bom 148,157, 160.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 82 of 150 at by the Bombay High Court. This judgment, if I may say

so with respect, reconciles the doctrine of finality of a

judgment and the necessity to give relief in an appropriate

case to a person who is not a party to a proceeding, if

uncharitable, unmerited and irrelevant remarks are made

against him without any foundation whatsoever. The other

decisions taking the contrary view infringe the

fundamental principle of jurisprudence that a judgment

made by a Court, however inferior it may be in the

hierarchy, is final and it can only be modified in the

manner prescribed by the law governing such procedure.

All the learned judges construing the scope of s. 561 A of

the Code of Criminal Procedure have agreed on one

question namely, to preserve the independence of judicial

officers so that they may express their views without fear

or favour. The observations made by some of the Judges

are apposite in this context. Tek Chand J. observed in In

the matter of Daly (1) :

"It is of the utmost importance to the admini- stration of

Justice that Courts should be allowed to perform their

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 83 of 150 functions freely and fearlessly and without undue

interference by this Court."

Chagla C. J. in State v. Nilkanth Shripad observed :

"It is very necessary, in order to maintain the

independence of the judiciary, that every Magistrate,

however junior, should feel that he can fearlessly give

expression to his own opinion in the judgment which he

delivers. If our Magistrates feel that they ,cannot frankly

and fearlessly deal with matters that come before them and

that the High Court is likely to interfere with their

opinions, the independence of the judiciary might be

seriously undermined."

I entirely agree with the remarks. I reiterate that every

judicial officer must be free to express his mind (1927) 1

T.R. 9 Lab, 269, 275.

(2) I.L.R. 1954 Bom. 148, 157, 160, in the matter of the

appreciation of evidence before him. The phraseology

used by a particular judge depends upon his inherent

reaction to falsehood, his comparative command of the

English language and his felicity of expression. There is

nothing more deleterious to the discharge of judicial

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 84 of 150 functions than to create in the mind of a judge that he

should conform to a particular pattern which may, or may

not be, to the liking of the appellate Court. Sometimes he

may overstep the mark. When public interests conflict, the

lesser should yield to the larger one. An unmerited and

undeserved insult to a witness may have to be tolerated in

the general interests of preserving the independence of the

judiciary. Even so, a duty is cast upon the judicial officer

not to deflect himself from the even course of justice by

making disparaging and undeserving remarks on persons

that appear before him as witnesses or otherwise.

Moderation in expression lends dignity to his office and

imparts greater respect for judiciary. But occasions do

arise when a particular judge, without any justification,

may cast aspersions on a witness or any other person not

before him affecting the character of such witness or

person. Such remarks may affect the reputation or even the

career of such person. In my experience I find such cases

are very rare. But if it happens, I agree with the Full Bench

of the Bombay High Court that the appellate Court in a

suitable case may judicially correct the observations of the

lower Court by pointing out that the observations made by

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 85 of 150 that Court were not justified or were without any

foundation were wholly wrong or improper. This can be

done under its inherent power preserved under s. 561-A of

the Code of Criminal Procedure. But that power must be

exercised only in exceptional cases where the interest of

the Party concerned would irrevocably suffer.

From the aforesaid discussion the following principles

emerge : (1) A judgment of a criminal Court is final ; it

can be set aside or modified only in the manner prescribed

by law. (2) Every judge, whatever may be his rank in the

hierarchy, must have an unrestricted right to express his

views in any matter before him without fear or favour. (3)

There is a correlative and self-imposed duty in a judge not

to make irrelevant remarks or observations without any

foundation, especially in the case of witnesses or parties

not before him, affecting their character or reputation. (4)

An appellate Court has jurisdiction to judicially correct

such remarks, but it will do so only in exceptional cases

where such remarks would cause irrevocable harm to a

witness or a party not before it."

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 86 of 150 ii. The entire case is having around the issue whether 'Howrah Property' and

'Bankura Property' were the properties of the CD on the date of commencement

of CIRP proceedings. As also whether there is transfer of secured assets.

iii. It is a settled law that the Code is a complete Code and provides all remedy within

the boundary of the Code. Section 238 of the Code provides as under:

"Section 238: Provisions of this Code to override other laws.

The provisions of this Code 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."

This reflects these provisions of this Code override other laws.

iv. In order to bring brevity and clarity on the subject, we are reproducing the

provisions of certain Acts for the requirement of Transfer of Property during

sale/auction sale. Section 17 of SARFAESI Act has depicted below:

"[Section 17: Application against measures to recover secured debts.]

17. (1) Any person (including borrower), aggrieved by any of the

measures referred to in sub-section (4) of section 13 taken by the

secured creditor or his authorised officer under this Chapter, 2 [may

make an application along with such 8 fee, as may be prescribed,] to

the Debts Recovery Tribunal having jurisdiction in the matter within

forty-five days from the date on which such measure had been taken: 3

[Provided that different fees may be prescribed for making the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 87 of 150 application by the borrower and the person other than the borrower.]

[Explanation.--For the removal of doubts, it is hereby declared that

the communication of the reasons to the borrower by the secured

creditor for not having accepted his representation or objection or the

likely action of the secured creditor at the stage of communication of

reasons to the borrower shall not entitle the person (including

borrower) to make an application to the Debts Recovery Tribunal

under this sub-section (1) of section 17.] 5 [(1A) An application under

sub-section (1) shall be filed before the Debts Recovery Tribunal within

the local limits of whose jurisdiction-- (a) the cause of action, wholly

or in part, arises; (b) where the secured asset is located; or (c) the

branch or any other office of a bank or financial institution is

maintaining an account in which debt claimed is outstanding for the

time being.] 6 [(2) The Debts Recovery Tribunal shall consider whether

any of the measures referred to in sub-section (4) of section 13 taken

by the secured creditor for enforcement of security are in accordance

with the provisions of this Act and the rules made thereunder.

[(3) If, the Debts Recovery Tribunal, after examining the facts and

circumstances of the case and evidence produced by the parties, comes

to the conclusion that any of the measures referred to in subsection (4)

of section 13, taken by the secured creditor are not in accordance with

the provisions of this Act and the rules made thereunder, and require

restoration of the management or restoration of possession, of the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 88 of 150 secured assets to the borrower or other aggrieved person, it may, by

order,-- (a) declare the recourse to any one or more measures referred

to in sub-section (4) of section 13 taken by the secured creditor as

invalid; and

(b) restore the possession of secured assets or management of secured

assets to the borrower or such other aggrieved person, who has made

an application under sub-section (1), as the case may be; and (c) pass

such other direction as it may consider appropriate and necessary in

relation to any of the recourse taken by the secured creditor under sub-

section (4) of section 13.]

(4) If, the Debts Recovery Tribunal declares the recourse taken by a

secured creditor under sub-section (4) of section 13, is in accordance

with the provisions of this Act and the rules made thereunder, then,

notwithstanding anything contained in any other law for the time being

in force, the secured creditor shall be entitled to take recourse to one

or more of the measures specified under sub-section (4) of section 13

to recover his secured debt.

[(4A) Where-- (i) any person, in an application under sub-section (1),

claims any tenancy or leasehold rights upon the secured asset, the Debt

Recovery Tribunal, after examining the facts of the case and evidence

produced by the parties in relation to such claims shall, for the

purposes of enforcement of security interest, have the jurisdiction to

examine whether lease or tenancy,--

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 89 of 150

(a) has expired or stood determined; or

(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4

of 1882); or (c) is contrary to terms of mortgage; or (d) is created after

the issuance of notice of default and demand by the Bank under

subsection (2) of section 13 of the Act; and (ii) the Debt Recovery

Tribunal is satisfied that tenancy right or leasehold rights claimed in

secured asset falls under the sub-clause (a) or sub-clause (b) or sub-

clause (c) or sub-clause (d) of clause (i), then notwithstanding anything

to the contrary contained in any other law for the time being in force,

the Debt Recovery Tribunal may pass such order as it deems fit in

accordance with the provisions of this Act.]

(5) Any application made under sub-section (1) shall be dealt with by

the Debts Recovery Tribunal as expeditiously as possible and disposed

of within sixty days from the date of such application: Provided that the

Debts Recovery Tribunal may, from time to time, extend the said period

for reasons to be recorded in writing, so, however, that the total period

of pendency of the application with the Debts Recovery Tribunal, shall

not exceed four months from the date of making of such application

made under sub-section (1).

(6) If the application is not disposed of by the Debts Recovery Tribunal

within the period of four months as specified in sub-section (5), any

part to the application may make an application, in such form as may

be prescribed, to the Appellate Tribunal for directing the Debts

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 90 of 150 Recovery Tribunal for expeditious disposal of the application pending

before the Debts Recovery Tribunal and the Appellate Tribunal may,

on such application, make an order for expeditious disposal of the

pending application by the Debts Recovery Tribunal.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal

shall, as far as may be, dispose of the application in accordance with

the provisions of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 (51 of 1993) and the rules made there under.]"

Section 47 A of the Stamp Act, 1899 has depicted below:

"Section 47 in The Indian Stamp Act, 1899

47. Power of payer to stamp bills and promissory notes received by

him unstamped.--When any bill of exchange [or promissory note]

chargeable [with a duty not exceeding ten naye paise] is presented

for payment unstamped, the person to whom it is so presented, may

affix thereto the necessary adhesive stamp, and, upon cancelling the

same in manner hereinbefore provided, may pay the sum payable

upon such bill [or note], and may charge the duty against the person

who ought to have paid the same, or deduct it from the sum payable

as aforesaid, and such bill [or note] shall, so far as respects the duty,

be deemed good and valid: Provided that nothing herein contained

shall relieve any person from any penalty or proceeding to which he

may be liable in relation to such bill [or note].

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 91 of 150 Section 17(2) of the Registration Act 1908 has depicted below:

Section 17(2) - Nothing in clauses (b) and (c) of sub-section (1) applies to--

(i) any composition deed; or

(ii) any instrument relating to shares in a joint stock Company,

notwithstanding that the assets of such Company consist in whole or

in part of immovable property; or

(iii) any debenture issued by any such Company and not creating,

declaring, assigning, limiting or extinguishing any right, title or

interest, to or in immovable property except in so far as it entitles

the holder to the security afforded by a registered instrument

whereby the Company has mortgaged, conveyed or otherwise

transferred the whole or part of its immovable property or any

interest therein to trustees upon trust for the benefit of the holders

of such debentures; or

(iv) any endorsement upon or transfer of any debenture issued by

any such Company; or

(v) [any document other than the documents specified in sub-section

(1A)] not itself creating, declaring, assigning, limiting or

extinguishing any right, title or interest of the value of one hundred

rupees and upwards to or in immovable property, but merely

creating a right to obtain another document which will, when

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 92 of 150 executed, create, declare, assign, limit or extinguish any such right,

title or interest; or

(vi) any decree or order of a Court [except a decree or order

expressed to be made on a compromise and comprising immovable

property other than that which is the subject-matter of the suit or

proceeding]; or

(vii) any grant of immovable property by [Government]; or

(viii) any instrument of partition made by a Revenue-Officer; or (ix)

any order granting a loan or instrument of collateral security

granted under the Land Improvement Act, 1871 (26 of 1871), or the

Land Improvement Loans Act, 1883 (19 of 1883); or trument for

securing the repayment of a loan made under that Act; or 1 [(xa)

any order made under the Charitable Endowments Act, 1890 (6 of

1890), vesting any property in a Treasurer of Charitable

Endowments or divesting any such Treasurer of any property; or]

(xi) any endorsement on a mortgage-deed acknowledging the

payment of the whole or any part of the mortgage-money, and any

other receipt for payment of money due under a mortgage when the

receipt does not purport to extinguish the mortgage; or (xii) any

certificate of sale granted to the purchaser of any property sold by

public auction by a Civil or Revenue-Officer. [Explanation.--A

document purporting or operating to effect a contract for the sale of

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 93 of 150 immovable property shall not be deemed to require or ever to have

required registration by reason only of the fact that such document

contains a recital of the payment of any earnest money or of the

whole or any part of the purchase money.]"

Article 18 and 23 of Schedule 1 to the Stamp Act, 1899 has enumerated below:

"18. Instruments other than bills and notes executed out of

India.--(1) Every instrument chargeable with duty executed

only out of 2 [India], and not being a bill of exchange or

promissory note, may be stamped within three months after it

has been first received in 2 [India].

(2) Where any such instrument cannot, with reference to the

description of stamp prescribed therefore, be duly stamped by

a private person, it may be taken within the said period of three

months to the Collector, who shall stamp the same, in such

manner as the 1 [State Government] may by rule prescribe,

with a stamp of such value as the person so taking such

instrument may require and pay for

23. Instruments reserving interest. --Where interest is

expressly made payable by the terms of an instrument, such

instrument shall not be chargeable with duty higher than that

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 94 of 150 with which it would have been chargeable had not mention of

interest been made therein."

Section 60 of the Transfer and Property Act,1882 has enumerated below:

"Section 60 in The Transfer of Property Act, 1882

60. Right of mortgagor to redeem.--At any time after the principal

money has become 1[due], the mortgagor has a right, on payment

or tender, at a proper time and place, of the mortgage-money, to

require the mortgagee

(a) to deliver [to the mortgagor the mortgage-deed and all

documents relating to the mortgaged property which are in the

possession or power of the mortgagee], (b) where the mortgagee is

in possession of the mortgaged property, to deliver possession

thereof to the mortgagor, and (c) at the cost of the mortgagor either

to re-transfer the mortgaged property to him or to such third person

as he may direct, or to execute and (where the mortgage has been

effected by a registered instrument) to have registered an

acknowledgement in writing that any right in derogation of his

interest transferred to the mortgagee has been extinguished:

Provided that the right conferred by this section has not been

extinguished by act of the parties or by [decree] of a Court. The

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 95 of 150 right conferred by this section is called a right to redeem and a suit

to enforce it is called a suit for redemption. Nothing in this section

shall be deemed to render invalid any provision to the effect that, if

the time fixed for payment of the principal money has been allowed

to pass or no such time has been fixed, the mortgagee shall be

entitled to reasonable notice before payment or tender of such

money. Redemption of portion of mortgaged property.--Nothing in

this section shall entitle a person interested in a share only of the

mortgaged property to redeem his own share only, on payment of a

proportionate part of the amount remaining due on the mortgage,

except [only] where a mortgagee, or, if there are more mortgagees

than one, all such mortgagees, has or have acquired, in whole or in

part, the share of a mortgagor."

Section 14 of the Code has depicted below:

"Section 14- Moratorium

14. (1) Subject to provisions of sub-sections (2) and (3), on the

insolvency commencement date, the Adjudicating Authority shall by

order declare moratorium for prohibiting all of the following,

namely:--

(a) the institution of suits or continuation of pending suits or

proceedings against the corporate debtor including execution of any

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panel or other authority;

(b) transferring, encumbering, alienating or disposing of by the

corporate debtor any of its assets or any legal right or beneficial

interest therein;

(c) 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 Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where such

property is occupied by or in the possession of the corporate debtor.

[Explanation.--For the purposes of this sub-section, it is hereby

clarified that notwithstanding anything contained in any other law

for the time being in force, a license, permit, registration, quota,

concession, clearances or a similar grant or right given by the

Central Government, State Government, local authority, sectoral

regulator or any other authority constituted under any other law for

the time being in force, shall not be suspended or terminated on the

grounds of insolvency, subject to the condition that there is no

default in payment of current dues arising for the use or

continuation of the license, permit, registration, quota, concession,

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 97 of 150 clearances or a similar grant or right during the moratorium

period;]

(2) The supply of essential goods or services to the corporate debtor

as may be specified shall not be terminated or suspended or

interrupted during moratorium period.

[(2A) Where the interim resolution professional or resolution

professional, as the case may be, considers the supply of goods or

services critical to protect and preserve the value of the corporate

debtor and manage the operations of such corporate debtor as a

going concern, then the supply of such goods or services shall not

be terminated, suspended or interrupted during the period of

moratorium, except where such corporate debtor has not paid dues

arising from such supply during the moratorium period or in such

circumstances as may be specified.]

[(3) The provisions of sub-section (1) shall not apply to -- 3 [(a)

such transactions, agreements or other arrangements as may be

notified by the Central Government in consultation with any

financial sector regulator or any other authority;] (b) a surety in a

contract of guarantee to a corporate debtor.]

(4) The order of moratorium shall have effect from the date of such

order till the completion of the corporate insolvency resolution

process: Provided that where at any time during the corporate

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approves the resolution plan under sub-section (1) of section 31 or

passes an order for liquidation of corporate debtor under section

33, the moratorium shall cease to have effect from the date of such

approval or liquidation order, as the case may be."

From the perusal of the above provisions, it is abundantly clear that certain

compliances are necessary to affect the 'sale'. Be it registration/ payment of stamp

duty/compliances of the provisions of the specific law etc. Furthermore, on a

concurrent reading the provisions of Section 14 R/w section 238 of the Code, it is very

much clear that the provisions of the Code shall have affect notwithstanding anything

in consistent therewith. Section 14 provides Moratorium of certain Act which includes

transferring, encumbering alienating or disposing off any of the assets of the Corporate

Debtor.

v. What we observe in the present case that DRT has dismissed the petition not on

merit but due to non-prosecution on 26.11.2019 and the other thing is that the fate

of the sale was subject to the outcome of the SA as adjudicated by the DRT -III

Kolkata orders dated 05.07.2019 & 16.08.2019, so the sale certificate is without

any registration and payment of stamp duty and in violation of commitment at

DRT. Generally all the above citations reveal one thing clearly that payment of

stamp duty and registration is must which has also not been done in respect of both

'Howrah Property' and 'Bankura Property'. So, even on legal consideration the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 99 of 150 order passed by the Adjudicating Authority on 25.02.2020 as depicted below in

para 43 & 44 of the impugned order seems withstand the scrutiny of law :

43. The Application bearing CA(IB) No.

1635/KB/2019 is hereby allowed by directing

the Liquidator to take possession of Howrah

Property from R2 and Bankura Property from

R3 and include the same in the liquidation

assets. The Liquidator is at liberty to appoint

valuers for valuing the said properties in

accordance with the provisions of the Code

and Regulations. Consequently, CA(IB) No.

1402/KB/2019 is disposed of.

44.R1(PNB) is hereby directed to refund the

bid amount to R2 and R3 within 15 days from

the receipt of this order."

vi. The CIRP commenced on 20.08.2019 and moratorium declared.

vii. The RP has conducted its 8th meeting of CoC held on 14.02.2020 and informed the

CoC that only one 'Prospective Resolution Applicant' came forward but he didn't

submit any Resolution Plan and asked the CoC for approving the extension of

CIRP but the representative of the Financial Creditors informed the RP that they

have to obtain necessary approval from their appropriate authority for voting on

the item and meeting be convened next week. The RP reconvened the adjourned

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 100 of 150 meeting but the representatives of the Financial Creditors stated that they didn't

have any mandate or approval as yet from their appropriate authority on how to

vote on Resolution Plan and finally no voting could take place on any item for

voting during the meeting including extension of CIRP and so he didn't seek any

extension from the Adjudicating Authority under Section 12 of the Code.

viii. The Adjudicating Authority has also observed (at para 42- page 89 of the Appeal

paper book) that RP showed his unwillingness to continue as a 'Liquidator'. As

per the impugned order at page 65, the RP himself was present on the date of

hearing. The Adjudicating Authority has also observed at para 41 that no

Resolution Plan was obtained by the RP within the period of 180 days and the CoC

has not decided for extension of CIRP period, we have no other alternative but to

pass an order requiring the CD to be Liquidated in the manner as laid down

Chapter - III of the Code and has passed accordingly the Liquidation order

(appearing para 42 of the impugned order).

ix. In case of Sale certificate in respect of Howrah Property was issued on 19.08.2019

and CIRP commenced on 20.08.2019. Auction sale proceedings under the

SARFAESI Act are not final unless the SA of the borrower/CD is decided under

Section 17 of SARFAESI Act. The DRT order dated 05.07.2019 already made the

sale subject to the outcome of relevant SA and the SA was dismissed by the DRT

not on merit but on non-prosecution.

x. The 2nd CoC (appearing at page 92-101 of the Appeal Paper Book in case of

CA(AT) (Ins) No. 746 of 2020) reflects that in para of 10 of the 2nd CoC at page 93

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 101 of 150 that the IRP informed the CoC that RP has taken physical possession of

manufacturing unit at Howrah on 03.09.2019 whereas PNB vide their email dated

23.09.2019 informed the IRP that the said unit of the CD had been sold by them.

So PNB informed the IRP /RP after the commencement of the CIRP. Apart from

this the PNB has submitted that the IRP in the 2nd CoC meeting held on

16.10.2019, the following documents only (i) Sale Confirmation Letter by PNB to

Haldiram Corporation Pvt Limited (ii) the statement of Bank account (iii) the TDS

Challan dated 16.08.2019. However, the alleged sale certificate dated

19.08.2019 was not shared in the 2nd CoC meeting which happened approx.

two months after the issue of sale certificate this is a grey area.

xi. Whereas in case of Bankura Property, the Appellant/PNB in CA(AT) (Ins) No.

449 of 2020 has given an undertaking that sale process is subject to outcome of

SA as reflects from DRT Order sheet dated 16.08.2019 (appearing at page 172 of

the Appeal Paper Book of CA(AT) (Ins) No. 449 of 2020) and the sale certificate

was issued on 03.09.2019 i.e after commencement on CIRP (appearing at page

No. 178 of CA(AT) (Ins) No. 449 of 2020).

17. In view of the aforesaid facts and circumstances of the case including the

law laid down, this Tribunal does not find any infirmity in the impugned order and

resultantly uphold the impugned order dated 25.02.2020 of the 'Adjudicating

Authority'. Consequently, all the three Appeals fail and they are dismissed.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 102 of 150 Interim order, if any, passed by this Tribunal stands vacated.

Pending Application, if any, stands disposed of. No order as costs.

[Justice M.Venugopal] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical)

For the reasons recorded separately, I disagree with the Judgment authored by

Hon'ble Dr. A.K. Mishra, Member (Technical), and assented by Hon'ble Mr.

Justice M. Venugopal, Member (Judicial).

(V.P. Singh) Member (Technical)

14th February, 2022

New Delhi

Raushan.K

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 103 of 150 [Per; V. P. Singh, Member (T)]

1. I have had the opportunity to go through the judgement authored by

brother Hon'ble Member Technical, Dr A K Mishra. Still, I fail to persuade myself

with the findings of brother Member Dr Mishra. Therefore, I wish to record my

dissent with utmost humility and honour to my brother Dr Mishra. Since Dr

Mishra had narrated facts in detail, there is no need to repeat the same.

Analysis with the chronology of events

2. Before the commencement of insolvency commencement date, i.e. August

20 2019, the Appellant Bank had conducted the sale of two properties belonging

to the corporate debtor under the provisions of the SARFAESI Act (for the sake

of brevity, the two sets of properties are now referred to as "Howrah Property"

and the "Bunkura Property").

3. The sale of Howrah Property was conducted on July 6, 2019, and the

highest bidder was declared on the same day. Under Rule 9 (2) of the SARFAESI

Rules, vide Letter dated July 9, 2019, confirmation of sale notice was issued to

the auction purchaser. Entire payments by the auction purchaser were duly

made by August 16, 2019. The Authorised Officer issued the sale certificate

under Rule 9 (6) under the SARFAESI Rules on August 19, 2019, i.e. before the

commencement of the Corporate Insolvency Resolution Process.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 104 of 150

4. The sale of Bankura Property was conducted on August 17, 2019, under

Rule 9 (2) of the SARFAESI Rules, i.e. before the commencement of the Corporate

Insolvency Resolution Process, vide Letter dated August 19 2019, confirmation

of sale was issued to the auction purchaser.

5. The Appellant Bank took Possession of Bankura Property under Sections

13 (4) & 14 of the SARFAESI Act, read with Rule 8 (3) of the SARFAESI Rules on

July 25 2019.

6. CA (IB) No. 1402 of 2019 was filed by the promoter and ex-management

of the corporate debtor before the Adjudicating Authority seeking a declaration

that the sale of Howrah Property under the SARFAESI Act and SARFAESI

Rules be made subject to the outcome of SA No. 152/2019 filed before DRT

Kolkata and further, seeking an injunction against the issuance of sale

certificate, and for seeking setting aside of the confirmation of sale and sale

certificate. Further for seeking direction against the RP to take back the

Possession of the Howrah property from respondent auction purchaser.

7. The Adjudicating Authority vide the interim Order dated October 29, 2019,

directed the RP to get back the Possession of Howrah property if it was not sold

before the declaration of the Moratorium.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 105 of 150

8. Since the sale of Howrah property was already confirmed on July 9 2019,

and the sale certificate evidencing the title had already been issued on August

19 2019, i.e. before the imposition of Moratorium under section 14 of the IB Code

on August 20 2019. Thus the Resolution Professional had no authority to take

back the Possession of the property already sold.

9. Even the NCLT had no authority to direct RP, under Section 60 (5) of the

IBC, to deal with an immovable property sold under the provisions of the

SARFAESI Act before the commencement of CIRP. As such, the application ought

to have been dismissed outrightly as not maintainable and without jurisdiction.

CA (IB) No. 1635 of 2019

10. The Resolution Professional filed this application before the Adjudicating

Authority seeking direction to keep in abeyance of the interim Order dated

October 29, 2019, in CA 1402 of 2019, until the disposal of the CA.

11. Vide impugned Order dated February 25, 2020, the Adjudicating Authority

while inter alia disposing of CA (IB) No. 1402 of 2019 and CA (IB) No. 1635 of

2019 held that "the auction purchaser's had not acquired legal ownership title to

the Howrah property or the Bunkura property on the date of imposition of the

Moratorium and further held that the issuance of sale certificate is illegal."

12. The Appellant challenges the impugned Order on the ground that;

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 106 of 150

a) Section 60 (5) of IBC confers no power or jurisdiction to NCLT to deal

with the sale certificate that has taken place under the provisions of

the SARFAESI Act before the commencement of the Insolvency

Resolution Process.

b) The remedy for any party agreed by the conduct of sale, sale

confirmation, issuance of sale certificate before commencement of

CIRP lies with the DRT under Section 17 of the SARFAESI Act.

c) The sole reason the NCLT concludes that the sale was not completed

was based on a reference to order dated July 5 2019, and August

16, 2019, passed by the DRT in SA No. 152 of 2019. However, the

said Order merely record that 'the sale shall be subject to the

outcome of the said securitisation application'. In any case, the

said SA No. 152 of 2019 was dismissed on November 26, 2019, for

want of prosecution. Therefore, nothing turns around on the basis

of the aforesaid Order and the reference made by the NCLT to the

said Order to conclude that the sale was not complete or concluded.

d) The Appellant contends that the learned NCLT wrongly referred to

non-availability of date of delivery of Possession to the auction

purchaser. Although the scheme of the SARFAESI Act, including

Sections 13 (4), 14, read with Rule 8 (1) and Rule 8 (3) of the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 107 of 150 SARFAESI Rules, the authorised officer takes Possession of the

subject property before putting it up for auction itself, i.e. the

properties out of Possession of the corporate debtor. The authorised

officer has either the symbolic Possession or the actual Possession,

as the case may be, at the time of putting the property on auction.

Therefore, the subsequent delivery of Possession from the

authorised officer to the auction purchaser is immaterial for the

purposes of ascertaining whether the auction sale concluded or not.

e) However, the imposition of the Moratorium under Section 14 of the

code does not, by any stretch of the imagination, obliterate the

proceedings/actions that have already taken place before the

commencement of insolvency proceedings. For example, the instant

case sale of Howrah and Bankura property under the statutory

provisions of the SARFAESI Act and SARFAESI Rules had already

taken place before the insolvency commencement date.

13. Chronology of events about Howrah property is given below in the form of

a chart for ready reference;

List of Dates Chronology of events about Howrah property

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 108 of 150 January 10 2015 Possession of property was taken under Rule 8 (1) under SARFAESI Act, read with SARFAESI Rules.

February 11 2019 Sale notice under Rule 8 (6) of SARFAESI Rules issued by the Bank.

June 15 2019 Sale notice dated June 15 2019, under Rule 8 (6) of SARFAESI Rules again issued by the Appellant Bank to CD for Howrah property.

Publication of an auction sale notice under Rule 9 (1). However, no attempt has been made to exercise the right of redemption under Section 13 (8) of the SARFAESI Act.

July 5 2019 DRT issued a direction in SA 152 of 2019 that the "fate of sale would be subject to the outcome of SA."

July 6 2019 Auction sale conducted by the Bank.

Respondent No. 3 decades the highest bidder.

July 9 2019 Since 25% amount was deposited by auction purchaser as per Rule 9 (3), a letter dated July 9 2019, was issued to Respondent No. 3 confirming sale in its favour under Rule 9 (2).

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 109 of 150 August 16 2019 One hundred per cent payment was made by Respondent No. 3 under Rule 9 (4) of SARFAESI Rules.

August 19 2019 Sale certificate issued by a bank to Respondent No. 3 under Rule 9 (6) SARFAESI Rules.

August 20 2019 Insolvency commencement date-

moratorium imposed.

14. Based on the chronology of events about Howrah property, it is clear

that sale proceedings of Howrah property were concluded on August 19

2019, i.e. before the commencement of CIRP. The title is transferred before

the commencement of the Moratorium on August 20 2020. Thus, there could be

no question of such a sale being set aside by the Adjudicating Authority/NCLT

under Section 60 (5) of the Code.

15. The learned Counsel for the Appellant adverted to the observations of the

Hon'ble Supreme Court in paragraph 12 in case of B. Arvind Kumar v. Govt. of

India, reported in (2007) 5 SCC 745 ) wherein it is observed that;

"12. The plaintiff has produced the original registered sale certificate dated 29-8-1941 executed by the Official Receiver, Civil Station, Bangalore. The said deed certifies that Bhowrilal (father of the plaintiff) was the highest bidder at an auction sale held

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 110 of 150 on 22-8-1941, in respect of the right, title, interest of the insolvent Anraj Sankla, namely, the leasehold right in the property described in the schedule to the certificate (suit property), that his bid of Rs 8350 was accepted and the sale was confirmed by the District Judge, Civil and Military Station, Bangalore on 25-8-1941. The sale certificate declared Bhowrilal to be the owner of the leasehold right in respect of the suit property. 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 becomes 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 the 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. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorised by the court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under sub-sections (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 111 of 150 convey any right, title or interest to plaintiff's father for want of a registered deed of transfer."

(emphasis in bold supplied)

16. The Appellants counsel further placed reliance on the judgement of

Hon'ble Supreme Court in the case of Shakeena v. Bank of India, reported in

2019 SCC OnLine SC 1059 wherein it is observed that;

"35. A fortiorari, it must follow that the appellants have failed to exercise their right of redemption in the manner known to law, muchless until the registration of the sale certificate on September 18, 2007. In that view of the matter no relief can be granted to the appellants, assuming that the appellants are right in contending that as per the applicable provision at the relevant time (unamended Section 13(8) of the 2002 Act), they could have exercised their right of redemption until the registration of the sale certificate - which, indisputably, has already happened on September 18, 2007. Therefore, it is not possible to countenance the plea of the appellants to reopen the entire auction process. This is moreso because, the narrative of the appellants that they had made a valid tender towards the subject loan accounts before registration of the sale certificate, has been found to be tenuous. Thus understood, their right of redemption in any case stood obliterated on September 18, 2007. Further, the amended Section 13(8) of the 2002 Act which has come into force w.e.f. September 1, 2016, will now stare at the face of the appellants. As per the amended provision, stringent

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 112 of 150 condition has been stipulated that the tender of dues to the secured creditor together with all costs, charges and expenses incurred by him shall be at any time before the "date of publication of notice" for public auction or inviting quotations or tender from public or private deed for transfer by way of lease assessment or sale of the secured assets. That event happened before the institution of the subject writ petitions by the appellants.

36. Having said thus, in the peculiar facts of the present case, we do not deem it necessary to dilate further on the argument that registration of the sale certificate in relation to the auction conducted under the 2002 Act is essential. Similarly, it is not necessary to examine other grounds urged by the appellants, in light of our conclusion that the appellants have failed to make a valid and legal tender to the respondent bank before the issue of sale certificate on January 6, 2006, much less registration thereof on September 18, 2007."

(emphasis in bold supplied)

17. The learned Counsel for the respondent placed reliance on the judgement

of Hon'ble Supreme Court in the case of Mathew Varghese v. M. Amritha Kumar

reported in (2014) 5 SCC 610.

"53. We, therefore, hold that unless and until a clear 30 days' notice is given to the borrower, no sale or transfer can be resorted to by a secured creditor. In the event of any such sale properly notified after giving 30 days' clear notice to the borrower did not take place as scheduled for reasons which cannot be solely

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 113 of 150 attributable to the borrower, the secured creditor cannot effect the sale or transfer of the secured asset on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that respect, the only other provision to be noted is sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as sub-rule (8) is concerned, the parties referred to can only relate to the secured creditor and the borrower. It is, therefore, imperative that for the sale to be effected under Section 13(8), . The procedure prescribed under Rule 8 read along with Rule 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Sections 13(1) and (8) of the said Act."

18. It is pertinent to mention that the judgement Mathew Varghese case is

distinguishable as it does not apply to the facts of the present case. As the same

deals with Section 13 (8) of the SARFAESI Act before Amendment in 2016. By

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 114 of 150 the Amendment to Section 13(8), the legislature has made the provision much

stricter and limited the rights to redemption only until the publication of sale

notice.

19. The fundamental basis and crux of the Mathew Varghese judgment are

that the borrower's right of redemption, a statutorily protected right, must not

be lost. However, the same does not apply to the present case as the borrower

has voluntarily not exercised its right of redemption despite having multiple

opportunities since 2018. It is also important to point out that Mathew

Varghese's judgment relies upon the Narandas Karsondas vs S A Kamtam

reported in (1977) 3 SCC 247, which relates to Transfer of Property Act and not

SARFAESI Act.

20. Admittedly, as held by the Hon'ble Supreme Court in a catena of

judgements, the SARFAESI Act is a complete code in itself. Section 35 has an

overriding effect on anything inconsistent in addition to that contained in any

other law for the time being in force. Thus, the registration requirement as

may be required under the sale on the transfer of property act is nowhere

required under the provisions of the SARFAESI Act.

21. Further, this Appellate Tribunal, while deciding Company Appeal (AT)

(insolvency) No. 930 2020 Nitin Garg vs State Bank of India, date of decision

August 12, 2021, has already decided that;

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 115 of 150 "25. It is well settled that when an auction purchaser derives title and confirmation of sale in its favour and a sale certificate is issued evidencing such sale and title, no further date of transfer from the court is contemplated are required. Further, it does not required registration under section 17 (2) (xii) of the registration act."

22. It is pertinent to mention that the Adjudicating Authority/NCLT has itself

held that the sale proceedings for Howrah Property were concluded on August

19, 2019, i.e. before the commencement of CIRP (paragraph 31 of the Impugned

Order). Therefore, once the NCLT has concluded that the sale is completed, it

cannot set aside a sale.

23. Therefore, admittedly, the title of Howrah Property stood transferred before

the commencement of Moratorium, i.e. on August 20, 2020, and there could be

no question of such a sale being set aside by the NCLT under Section 60 (5) the

Code.

24. It is also important to point out that the Adjudicating Authority/NCLT

has failed to consider the amended provision of the SARFAESI Act Section

13 (8). The amended Act provided that the right of redemption expires on

publication of sale notice, i.e.in, the instant case on June 15, 2019.

Therefore, the right of redemption available to the borrower has not been

exercised by the Corporate Debtor/Respondent No. 2 borrower.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 116 of 150

25. Under the amended provision, such right of redemption only arises if

the borrower tenders all dues, costs, charges and expenses to the creditor

at any time before the date of publication of the notice for the public

auction. Thus, the Amendment has imposed a more stringent condition

compared to the older provision, which the Hon'ble Supreme Court has duly

recognised in the case of Shakeena (supra).

26. Admittedly, in the present case, Possession of the property was taken far

back in February 2018, and an auction sale notice was issued in February 2019

and after that on June 15, 2019, which fructified into the sale of the Howrah

property. Pertinently, no attempt was made by Respondent No. 2 to exercise its

right of redemption under the SARFAESI Act. The applications were filed before

the NCLT/DRT are a mere afterthought with the mala fide intent to stall the

process, and Respondent No. 2 has no locus whatsoever.

27. The learned senior Counsel for the respondent raised the issue about the

non-registration of the sale certificate.

28. Respondent No.2 has placed reliance on Ram Murthy Pyara Lal & Ors vs

Central Bank of India Ors., reported in 2010 (120) DRJ 437 (DB) to state those

auction sale proceedings are not final under the SARFAESI Act unless SA of the

borrower before DRT is decided. It is argued that the reliance placed is misplaced

and misconceived, and a part of the judgment is being read in isolation to

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 117 of 150 mislead this Tribunal. However, at the very outset, the decision in Rama Murthy

does not apply to the facts of this case as it does not deal with the Amended

Section 13(8) of the SARFAESI Act. (Section 13(8) before its Amendment in 2016).

Moreover, the judgment deals with the right of redemption available to the

borrower and in no manner questions or halts the continuation and conclusion

of a sale under the SARFAESI Act.

29. Further, the judgment under para 11, 12 categorically states that there

shall be no automatic stay on proceedings under Section 13 merely upon the

filing of an SA under Section 17 of the SARFAESI Act. Moreover, the judgment

in Mathew Varghese (supra) concludes simply that right of redemption will

depend upon the outcome of Section 17 proceedings. If the borrowers

succeed, the court may set aside the auction sale so conducted. Setting aside a

sale by the DRT implies that the sale was concluded and thereafter required to

be set aside. However, the judgment nowhere states that a sale under SARFAESI

cannot be conducted and concluded even during the pendency of an SA.

However, above stated case of Mathew Varghese (supra) does not apply to

the facts of the case because it does not deal with the amended provision of the

Act. The Statutory provisions with Amendment is given below for ready reference.

30. Statutory Provisions

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 118 of 150 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 20021

13. Enforcement of security interest.--(1) Notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or Tribunal, by such creditor in accordance with the provisions of this Act.

(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4):

[Provided that--

(i) the requirement of classification of secured debt as non-

performing asset under this sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and

(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 119 of 150 provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee;]

(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non- payment of secured debts by the borrower.

[(3-A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower:

Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17-A.]

(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:--

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 120 of 150

(a) take Possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

[(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:

Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;]

(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the Possession of which has been taken over by the secured creditor;

(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 121 of 150 (5) Any payment made by any person referred to in clause (d) of sub-section (4) to the secured creditor shall give such person a valid discharge as if he has made payment to the borrower.

[(5-A) Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale.

(5-B) Where the secured creditor, referred to in sub-section (5-A), is declared to be the purchaser of the immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards the amount of the claim of the secured creditor for which the auction of enforcement of security interest is taken by the secured creditor, under sub-section (4) of Section 13.

(5-C) The provisions of Section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, apply to the immovable property acquired by secured creditor under sub-section (5-A).]

(6) Any transfer of secured asset after taking Possession thereof or take over of management under sub-section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 122 of 150 (7) Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.

[(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,--

(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and

(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.]

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 123 of 150 (9) [Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of] financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub-section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than [sixty per cent] in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:

Provided that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of Section 529-A of the Companies Act, 1956 (1 of 1956):

Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of Section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmen's dues with the liquidator in accordance with the provisions of Section 529-A of that Act:

Provided also that liquidator referred to in the second proviso shall intimate the secured creditor the workmen's dues in accordance with the provisions of Section 529-A of the Companies Act, 1956 (1 of 1956) and in case such workmen's dues cannot be ascertained, the liquidator shall intimate the estimated amount or

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 124 of 150 workmen's dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator:

Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator:

Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen's dues, if any.

Explanation.--For the purposes of this sub-section,--

(a) "record date" means the date agreed upon by the secured creditors representing not less than [sixty per cent] in value of the amount outstanding on such date;

(b) "amount outstanding" shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor.

(10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 125 of 150 competent court, as the case may be, for recovery of the balance amount from the borrower.

(11) Without prejudice to the rights conferred on the secured creditor under or by this section, the secured creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first taking any of the measures specified in clauses (a) to (d) of sub-section (4) in relating to the secured assets under this Act.

(12) The rights of a secured creditor under this Act may be exercised by one or more of his officers authorised in this behalf in such manner as may be prescribed.

(13) No borrower shall, after receipt of notice referred to in sub-

section (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor.

Security Interest (Enforcement) Rules, 2002.

7. Issue of certificate of sale.--(1) Where movable secured assets is sold, sale price of each lot shall be paid as per the terms of the public notice or on the terms as may be settled between the parties, as the case may be, and in the event of default of payment, the movable secured assets shall be liable to be offered for sale again.

(2) On payment of sale price, the authorised officer shall issue a certificate of sale in the prescribed form as given in Appendix-III

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 126 of 150 to these rules specifying the movable secured assets sold, price paid and the name of the purchaser and thereafter the sale shall become absolute. The certificate of sale so issued shall be prima facie evidence of title of the purchaser.

(3) Where the movable secured assets are those referred in sub- clauses (iii) to (v) of clause (1) of sub-section (1) of Section 2 of the [Act], the provisions contained in these rules and Rule 7 dealing with the sale of movable secured assets shall, mutatis mutandis, apply to such assets.

8. Sale of immovable secured assets.--(1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken Possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.

(2) [The possession notice as referred to in sub-rule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking Possession, in two leading newspapers], one in vernacular language having sufficient circulation in that locality, by the authorised officer.

[(2-A) All notices under these rules may also be served upon the borrower through electronic mode of service, in addition to the modes prescribed under sub-rule (1) and sub-rule (2) of Rule 8.]

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 127 of 150 (3) In the event of Possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property.

(4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of.

(5) Before effecting sale of the immovable property referred to in sub-rule (1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:--

(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or

(b) by inviting tenders from the public;

[(c) by holding public auction including through e-auction mode;

or]

(d) by private treaty.

[Provided that in case of sale of immovable property in the State of Jammu and Kashmir, the provisions of Jammu and Kashmir

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 128 of 150 Transfer of Property Act, 1977 shall apply to the person who acquires such property in the State.]

(6) the authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub- rule (5):

[Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.]

[(7) every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the website of the secured creditor, which shall include;

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

(b) the secured debt for recovery of which the property is to be sold;

(c) reserve price of the immovable secured assets below which the property may not be sold;

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 129 of 150

(d) time and place of public auction or the time after which sale by any other mode shall be completed;

(e) deposit of earnest money as may be stipulated by the secured creditor;

(f) any other terms and conditions, which the authorised officer considers it necessary for a purchaser to know the nature and value of the property.]

(8) Sale by any methods other than public auction or public tender, shall be on such terms as may be settled [between the secured creditor and the proposed purchaser in writing].

9. Time of sale, Issue of Sale Certificate and delivery of Possession, etc.--

[(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of Rule 8 or notice of sale has been served to the borrower:

Provided further that if sale of immovable property by any one of the methods specified by sub-rule (5) of Rule 8 fails and sale is required to be conducted again, the authorised officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.]

(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 130 of 150 or offer to the authorised officer and shall be subject to confirmation by the secured creditor:

Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of [Rule 8]:

Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price.

[(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again.]

(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months].

(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited [to the secured creditor] and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 131 of 150 or to any part of the sum for which it may be subsequently sold.

(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules.

(7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him:

[Provided that if after meeting the cost of removing encumbrances and contingencies there is any surplus available out of the money deposited by the purchaser such surplus shall be paid to the purchaser within fifteen days from the date of finalisation of the sale.]

(8) On such deposit of money for discharge of the encumbrances, the authorised officer [shall] issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 132 of 150 (9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not.

31. The Enforcement of Security Interest and Recovery of Debts Laws and

Miscellaneous Provisions (Amendment) Act, 2016

Objects; 3. The amendments proposed in the Recovery of Debts due to Banks and Financial Institutions Act, 1993 inter alia, include (i) expeditious adjudication of recovery applications; (ii) electronic filing of recovery applications, documents and written statements; (iii) priority to secured creditors in repayment of debts; (iv) debenture trustees as financial institutions; (v) empowering the Central Government to provide for uniform procedural rules for conduct of proceedings in the Debts Recovery Tribunals and Appellate Tribunals.

4. The Bill also seeks to amend the Indian Stamp Act, 1899, so as to exempt assignment of loans in favour of asset reconstruction companies from stamp duty and the Depositories Act, 1996 for facilitating transfer of shares held in pledge or on conversion of debt into shares in favour of banks and financial institutions.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 133 of 150

5. The Bill aims to improve ease of doing business and facilitate investment leading to higher economic growth and development.

6. The Bill seeks to achieve the above objectives by him.".

11. Amendment of Section 13.-- In the principal Act, in Section 13,--

(i) in sub-section (2), the following proviso shall be inserted, namely--

"Provided that--

(i) the requirement of classification of secured debt as non-

performing asset under this sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and

(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee;";

(iii) for sub-section (8), the following sub-section shall be substituted, namely--

"(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 134 of 150 treaty for transfer by way of lease, assignment or sale of the secured assets,--

(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and

(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets."

32. The learned senior Counsel for the Appellant argued that symbolic

Possession of the properties was taken by Appellant Bank much prior to the

imposition of Moratorium. In any case, the date of delivery of Possession to the

auction purchaser has no bearing on the statutory sale confirmed prior to the

imposition of Moratorium. In para 32 of the Impugned Common Order, the

learned Adjudicating Authority/NCLT has incorrectly held that sale of the

property is affected when sale certificate is issued in favour of the

purchaser and that vesting of all rights of the owner of the secured assets

only comes into effect when there is the transfer of the asset after taking

Possession of the property.

33. The AA/NCLT has stated that the above observation is indicated from

reading the SARFAESI Act. The Learned AA/NCLT has further, in para 33,

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 135 of 150 observed that "the sale certificate itself amounts to transfer of title,

provided Possession is given in favour of the purchaser.

34. However, SARFAESI Act provides no such requirement. The AA/ NCLT

failed to consider that the Possession of the properties in question was taken

under the provisions of Rule 8 of the SARFAESI Rules much prior to the

imposition of Moratorium in January 2018. Rule 8 of SARFFAESI Rules makes

no distinction or differentiation on the basis of symbolic Possession or physical

Possession of the property to be auctioned; as such, the event of symbolic

Possession is of equal and similar significance as the event of physical Possession

under the provisions of SARFAESI Act and the Rules.

35. The learned senior Counsel for the Appellant adverted to the observation

of the Hon'ble Supreme Court in paragraphs 73, and 74 in the case of Transcore

v. UOI (2008) 1 SCC 125 wherein Hon'ble Supreme Court has observed that;

"73. The word Possession is a relative concept. It is not an absolute concept. The dichotomy between symbolic and physical Possession does not find place in the Act. As stated above, there is a conceptual distinction between securities by which the creditor obtains ownership of or interest in the property concerned (mortgages) and securities where the creditor obtains neither an interest in nor Possession of the property but the property is appropriated to the satisfaction of the debt (charges). Basically, the NPA Act deals with the former type of securities under which the secured creditor,

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 136 of 150 namely, the bank/FI obtains interest in the property concerned. It is for this reason that the NPA Act ousts the intervention of the courts/tribunals.

74. Keeping the above conceptual aspect in mind, we find that Section 13(4) of the NPA Act proceeds on the basis that the borrower, who is under a liability, has failed to discharge his liability within the period prescribed under Section 13(2), which enables the secured creditor to take recourse to one of the measures, namely, taking Possession of the secured assets including the right to transfer by way of lease, assignment or sale for realising the secured assets. Section 13(4-A) refers to the word "possession" simpliciter. There is no dichotomy in sub-section (4-A) as pleaded on behalf of the borrowers. Under Rule 8 of the 2002 Rules, the authorised officer is empowered to take Possession by delivering the possession notice prepared as nearly as possible in Appendix IV to the 2002 Rules. That notice is required to be affixed on the property. Rule 8 deals with sale of immovable secured assets. Appendix IV prescribes the form of possession notice. It inter alia states that notice is given to the borrower who has failed to repay the amount informing him and the public that the bank/FI has taken Possession of the property under Section 13(4) read with Rule 9 of the 2002 Rules. Rule 9 relates to time of sale, issue of sale certificate and delivery of Possession. Rule 9(6) states that on confirmation of sale, if the terms of payment are complied with, the authorised officer shall issue a sale certificate in favour of the purchaser in the form given in

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 137 of 150 Appendix V to the 2002 Rules. Rule 9(9) states that the authorised officer shall deliver the property to the buyer free from all encumbrances known to the secured creditor or not known to the secured creditor. (emphasis supplied) Section 14 of the NPA Act states that where the Possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred, the secured creditor may, for the purpose of taking Possession, request in writing to the District Magistrate to take Possession thereof. Section 17(1) of the NPA Act refers to the right of Appeal. Section 17(3) states that if DRT as an appellate authority after examining the facts and circumstances of the case comes to the conclusion that any of the measures under Section 13(4) taken by the secured creditor are not in accordance with the provisions of the Act, it may by Order declare that the recourse taken to any one or more measures is invalid, and consequently, restore Possession to the borrower and can also restore management of the business of the borrower. Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not in accordance with the provisions of the Act, then DRT is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if Possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorised officer taking Possession. As stated above, the NPA Act provides for recovery of Possession by non-adjudicatory process; therefore, to

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 138 of 150 say that the rights of the borrower would be defeated without adjudication would be erroneous. Rule 8, undoubtedly, refers to sale of immovable secured asset. However, Rule 8(4) indicates that where Possession is taken by the authorised officer before issuance of sale certificate under Rule 9, the authorised officer shall take steps for preservation and protection of secured assets till they are sold or otherwise disposed of. Under Section 13(8), if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the creditor before the date fixed for sale or transfer, the asset shall not be sold or transferred. The costs, charges and expenses referred to in Section 13(8) will include costs, charges and expenses which the authorised officer incurs for preserving and protecting the secured assets till they are sold or disposed of in terms of Rule 8(4). Thus, Rule 8 deals with the stage anterior to the issuance of sale certificate and delivery of Possession under Rule 9. Till the time of issuance of sale certificate, the authorised officer is like a Court Receiver under Order 40 Rule 1 CPC. The Court Receiver can take symbolic Possession and in appropriate cases where the Court Receiver finds that a third-party interest is likely to be created overnight, he can take actual Possession even prior to the decree. The authorised officer under Rule 8 has greater powers than even a Court Receiver as security interest in the property is already created in favour of the banks/FIs. That interest needs to be protected. Therefore, Rule 8 provides that till issuance of the sale certificate under Rule 9, the authorised

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 139 of 150 officer shall take such steps as he deems fit to preserve the secured asset. It is well settled that third-party interests are created overnight and in very many cases those third parties take up the defence of being a bona fide purchaser for value without notice. It is these types of disputes which are sought to be avoided by Rule 8 read with Rule 9 of the 2002 Rules. In the circumstances, the drawing of dichotomy between symbolic and actual Possession does not find a place in the scheme of the NPA Act read with the 2002 Rules."

36. It is pertinent to mention that the AA/ NCLT had no jurisdiction under

Section 60(5) to interfere or deal with the proceedings, including the sale

confirmation and issuance of sale certificate already carried out before initiation

of CIRP and the imposition of Moratorium. Section 60(5) of the IB Code does not

confer any power or jurisdiction upon the AA/ NCLT to deal with a statutory sale

that has taken place under the provisions of the SARFAESI Act before the

commencement of the Insolvency Resolution Process.

37. The learned Counsel for the Appellant further adverted to observations of

the Hon'ble Supreme Court in paragraph 30, 33, and 37 in the case of Embassy

Property v. the State of Karnataka reported in (2020) 13 SCC 308, wherein it is

held that;

"30. The NCLT is not even a civil court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of which their cognisance is either

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 140 of 150 expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which it is called upon to administer. Hence, let us now see the jurisdiction and powers conferred upon NCLT.

33. Sub-section (4) of Section 60 of the IBC, 2016 states that the NCLT will have all the powers of the DRT as contemplated under Part III of the Code for the purposes of sub-section (2). Sub-section (2) deals with a situation where the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor of a corporate debtor is taken up, when CIRP or liquidation proceeding of such a corporate debtor is already pending before NCLT. The object of sub-section (2) is to group together (A) the CIRP or liquidation proceeding of a corporate debtor, and (B) the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor of the very same corporate debtor, so that a single forum may deal with both. This is to ensure that the CIRP of a corporate debtor and the insolvency resolution of the individual guarantors of the very same corporate debtor do not proceed on different tracks, before different fora, leading to conflict of interests, situations or decisions.

37. From a combined reading of sub-section (4) and sub-section (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the Government under the provisions of the MMDR Act, 1957 and the Rules issued thereunder. The only

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 141 of 150 provision which can probably throw light on this question would be sub-section (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact arising out of or in relation to insolvency resolution.

But a decision taken by the Government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of the imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution"

appearing in clause (c) of sub-section (5). Let us take for instance a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal, at the time of initiation of CIRP. If Section 60(5)(c) of the IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the Order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260-A of the Income Tax Act, 1961. Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. [It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate debtor, since, in such cases, the dues payable to the Government would come within the meaning of the expression "operational debt" under Section 5(21), making the Government an "operational creditor" in terms of Section 5(20). The moment the dues to the Government are crystallised and what remains is only payment, the claim of the Government will have to

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 142 of 150 be adjudicated and paid only in a manner prescribed in the resolution plan as approved by the adjudicating authority, namely, the NCLT.]."

38. The Appellant counsel argues that the observations made by the learned

AA/NCLT in para-42 of the impugned Order against the Appellant Bank are

uncalled for and liable to be set aside. NCLT has wrongly observed that the CoC

has misguided the IRP regarding the sale of properties. The sale of the properties

in question and confirmation of sale in favour of the auction purchasers before

CIRP was under the SARFAESI Act & Rules.

39. It is also important to note that Securitization Application No.152/2019

stood dismissed on 26.11.2019. Therefore, the ground of sale is subject to its

outcome was not available on the date of Impugned Common Order.

40. Therefore, it is clear that the AA/NCLT wrongly concluded that the sale

was not completed before the initiation of CIRP. Based on the orders dated

05.07.2019 and 16.08.2019 passed by the Ld. DRT Kolkata in IA 636/2019 &

IA 894/2019 in SA No. 152/2019 the NCLT, in para 36, wherein it is observed

that 'in respect of Howrah Property, the Appellant Bank was obliged to not

conclude the sale as per undertaking dated 16.08.2019 before the DRT. The said

Order merely records that the fate of the sale shall be subject to the outcome of

SA No.152/2019 and does not operate as a stay on sale proceedings. It is

reiterated that no stay whatsoever was ever granted on the sale of the property.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 143 of 150 Further, the Order dated 16.08.2019 was passed in IA 894/2019,

specifically pertaining only to Bankura property. Thus the observation of the

NCLT in para 36 of the impugned Order (@pg 86 of Appeal) is incorrect.

41. Based on the above discussion, it is clear that the finding of the

Adjudicating Authority about Howrah property is erroneous. Therefore, the

Adjudicating Authority has erred in exercising its jurisdiction. It is also crystal

clear that the sale of Howrah property was complete before the initiation of CIRP

under the SARFAESI Act. A sale certificate was also issued before the initiation

of CIRP. Further, no application was filed under Section 13 (8) of the SARFAESI

Act for redemption. Therefore the Adjudicating Authority was not authorised to

direct the Resolution Professional to take back the Possession of IIIrd Party

Assets in the exercise of powers under Section 60 (5) (c) of the Insolvency and

Bankruptcy Code, 2016. However, the aggrieved party had the right to approach

the Appropriate Forum/Authority under the applicable laws to challenge the

Order passed under SARFAESI Act. Thus, the Adjudicating Authority/NCLT

direction to RP to recover Possession back from the auction purchaser and the

property to be added in the liquidation assets of the Corporate Debtor is

unsustainable.

42. Chronology of events about "BANKURA PROPERTY"

DATE PARTICULARS

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 144 of 150 09.01.2018 Possession under R. 8(1) of SARFAESI Rules. Consolidated Possession letter issued by the Bank on 11.01.2018.

25.07.2019 Physical Possession taken by Appellant of Bankura Property on 25.07.2019 and publication in this regard made on 28.07.2019.

27.07.2019 Sale Notice dated 27.07.2019 under R. 8(6) issued by Bank to CD for Bankura property. Publication of e-auction sale notice under Rule 9(1)

17.08.2019 Auction Sale conducted by Bank. Respondent no. 4 was declared as Highest Bidder.

19.08.2019 SALE CONFIRMATION AND TITLE TRANSFER- Since the auction purchaser deposited 25% amount as per Rule 9(3), Letter dated 19.08.2019 was issued to Respondent No.4 confirming the sale in its favour under Rule 9(2).

20.08.2019 CIR Process commenced, and Moratorium imposed

03.09.2019 Sale Certificate issued by Appellant to Respondent No.4 under Rule 9(6), after balance payment received.

43. The chronology of events relating to Howrah and Bankura property events

is compared, then come to our notice that proceeding up to the sale confirmation

and title transfer of the properties were made by August 19 2019, the only

difference for Howrah property is about payment of auction sale amount. It

appears that for the Howrah property, 25% amount was deposited by the auction

purchaser as per Rule 9 (3), and a sale confirmation letter was issued in its

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 145 of 150 favour under Rule 9 (2) of the SARFAESI Rules. After that, the auction purchaser

made that 100% hundred per cent payment under Rule 9 (4) of the SARFAESI

Rules on August 16 2019. The Bank finally issued a sale certificate to

Respondent No. 3 under Rule 9 (6) on August 19 2019.

44. But for the Bankura property, 25% was deposited by the auction

purchaser under Rule 9 (3) of SARFAESI Rules on August 19 2019. After that, a

letter confirming the sale in its favour was issued under Rule 9 (2). After that, on

September 3, 2019, a sale certificate was issued by the Appellant to Respondent

No. 4 under Rule 9 (6) of the SARFAESI Rules after receiving the balance

payment.

45. Thus, it is clear that both the properties' Sale confirmation Notices were

issued on August 19 2019. However, the auction purchaser of Howrah property

deposited 100 % hundred per cent payment on August 19, 2019, and a sale

certificate was issued in its favour on that day, i.e. before initiation of the

Corporate Insolvency Process.

46. It is pertinent to mention that Rule 9 (3) of the SARFAESI Rules permits

depositing 25% payment on sale confirmation. Further, Rule 9 (4) provides a

maximum period for depositing 100 % hundred per cent amount within 15 days

from the date of confirmation of sale. Still, this time is the extendable maximum

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 146 of 150 of up to 3 months. However, the appellant bank does not contend that auction

money was not deposited in the prescribed time limit under the Rules'.

47. The highest bidder for Bankura Property was declared on 17.08.2019, and

sale confirmation was issued on 19.08.2019, i.e. prior to commencement of

insolvency (sale confirmation @pg 177 of the Appeal). [Impugned Order

incorrectly notes the date of sale confirmation as 16.08.2019). Thus, in

accordance with the settled position of law, as detailed hereinabove, the sale

stood confirmed, and the title stood transferred prior to commencement of CIRP.

48. It is pertinent to note that no relief whatsoever has been sought qua

the Bankura Property by Respondent No.2 before the NCLT. A perusal of CA

(IB) No.1402 KB/2019 filed by Respondent No.2 before the NCLT

categorically reveals that the relief sought qua the 'Howrah Property' only.

(see pg. 232 Vol II of the Appeal).

49. This is more evident because the Auction Purchaser of Bankura Property,

i.e. Respondent No.4, was not made a party to the proceedings before the

AA/NCLT. (see pg 197-198- Memo of Parties). Further, even the Order dated

29.10.2019 passed by the AA/NCLT directing the RP to take back

Possession, if not already sold, was pertaining to 'Howrah Property' only.

50. Further, even CA (IB) No. 1635/KB/ 2019 filed by the RP was qua Howrah

Property only, and no relief was sought about Bankura property. As such, the

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 147 of 150 NCLT ought not to have gone into a statutory sale ,duly conducted under

SARFAESI Act and set aside the same.

51. In any case, the SA was dismissed vide Order dated 26.11.2019. The

condition of the sale was subject to the outcome of SA, either in Order dated

05.07.2019 or 16.08.2019, no longer existed. Thus in view of the fact that the

sale stood confirmed before the imposition of the Moratorium, and title stood

transferred in favour of Respondent No.4, there was no question of the sale being

hit by Moratorium. Furthermore, even if the sale certificate was issued post

commencement of CIRP, it is well established, as detailed above, that the title of

the property stands transferred on sale confirmation, and the sale certificate is

only evidence of title.

52. Effect of Moratorium under Section 14 of the IB Code would not scuttle

statutory sale proceedings that have already taken place before initiation of the

corporate insolvency resolution process. However, the imposition of Moratorium

does not obliterate the proceedings/actions that had already taken place before

the commencement of insolvency proceedings, such as the sale of the properties

herein, which was confirmed before the imposition of Moratorium.

53. Further, unlike S.14 of IB Code which prohibits institution and the

continuance of the proceedings during the Moratorium, under Section 33 of I&B

Code, the only restriction is regarding the institution of the suit or proceedings

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 148 of 150 by or against the Corporate Debtor, as such, there is no bar in continuing with

SARFAESI action and take it to its logical conclusion.

54. Without prejudice, in any case, in view of the fact that liquidation has been

ordered, the Moratorium under Section 14 ceases to operate. As a result, the

Appellant Bank can always continue with the SARFAESI proceedings while

invoking its right under Section 52 of IB Code. However, considering the present

circumstances in all likelihood, there may be a substantial reduction of the bid

amount compared to the amount for which the property has already been sold.

Therefore, if the sale is set aside, it would defeat the objective of the IB Code, i.e.

maximisation of the Corporate Debtor's assets.

55. Thus, no opportunity can be provided to Respondent No.4 to exit the

transaction. There is no question whatsoever of any refund of the sale

consideration, interest, or other expenses by the Bank.

Conclusion

56. Based on the above discussion, I'm of the view that (AT) (Ins) 449 of 2020

and connected CA( AT)(Ins) 504 of 2020 filed by auction purchaser for setting

aside the same common Impugned Order dated 25.02.2020 deserves to be

allowed and the common impugned Order dated February 25, 2020, passed in

CA (IB)No. 1402/KB/2019 and CA (IB) No. 1635/KB/2019 in CP (IB) No.

Company Appeal (AT) (Ins) No.449 of 2020 with Company Appeal (AT) (Ins) No.504 of 2020 with Company Appeal (AT) (Ins) No.746 of 2020 Page 149 of 150 803/KB/2018 deserves to be set aside. Accordingly, further remarks against the

RP, made in paragraph 42 of the impugned judgment, is expunged.

57. Further, Connected Appeal CP (IB) No 746 of 2020 seeking expunction of

remarks against RP in Paragraph 37 of the impugned Order has become

infructuous as the Impugned Order has been set aside. Hence, liable to be

dismissed.

[Mr. V. P. Singh] Member (Technical)

ORDER

Based on the majority view judgment authored by Hon'ble Dr. A.K. Mishra,

Member (Technical) shall prevail. Consequently, all the three Appeals are

dismissed, interim order, if any passed by this Tribunal stands vacated pending

application, if any, stands disposed of, no order as to cost.

[Justice M.Venugopal] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical) NEW DELHI February 14 2022

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