Moratorium prevails over incomplete SARFAESI transfer, and liquidation follows when CIRP expires without a resolution plan

A SARFAESI sale and transfer of possession do not keep secured assets outside insolvency control unless completion is conclusively established before the moratorium. On the facts, the Howrah and Bankura properties were not shown to have been validly transferred before the moratorium, and the insolvency code prevailed over inconsistent enforcement steps. The assets were therefore brought back into the liquidation estate. With the CIRP period expired, no resolution plan received, and no approved extension in place, liquidation followed as the statutory consequence, and an independent liquidator was appointed for further administration.

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Issues: (i) Whether the secured creditors' sale and transfer of possession of the Howrah and Bankura properties were completed before the insolvency moratorium so as to keep those assets outside the liquidation estate. (ii) Whether, in the absence of a resolution plan and any approved extension of the CIRP period, liquidation of the corporate debtor had to be ordered.

Issue (i): Whether the secured creditors' sale and transfer of possession of the Howrah and Bankura properties were completed before the insolvency moratorium so as to keep those assets outside the liquidation estate.

Analysis: The properties were subject to SARFAESI action, but the effect of the moratorium under the insolvency law had to be examined against the stage reached in the sale process. The Howrah property was treated as having concluded sale steps before the moratorium, but the sale certificate and alleged handing over of possession were not supported by convincing proof of completion in the manner required to exclude the asset from insolvency control. As to the Bankura property, the sale process and transfer of possession continued beyond the moratorium date, and the required completion of transfer was not established before the moratorium commenced. In the circumstances, the protections of the insolvency moratorium and the overriding effect of the insolvency code prevailed over the inconsistent continuation of SARFAESI enforcement.

Conclusion: The Howrah and Bankura properties were held to belong to the corporate debtor for insolvency purposes and were directed to be taken back into the liquidation assets.

Issue (ii): Whether, in the absence of a resolution plan and any approved extension of the CIRP period, liquidation of the corporate debtor had to be ordered.

Analysis: The CIRP period had expired, no resolution plan had been received, and the Committee of Creditors had not approved any extension. In that situation, the statutory consequence under the insolvency framework was liquidation. Ancillary applications that had become infructuous or were not pressed did not alter that result. The Tribunal also appointed an independent liquidator and issued directions for liquidation administration in accordance with the liquidation regulations.

Conclusion: Liquidation of the corporate debtor was ordered, and the company petition was disposed of accordingly.

Final Conclusion: The disputed properties were brought within the liquidation estate, the corporate debtor was directed into liquidation, and the liquidation process was ordered to proceed under the insolvency framework.

Ratio Decidendi: Once the moratorium commences, any SARFAESI sale or transfer of possession that is not conclusively completed before that date cannot defeat the insolvency code, and where no resolution plan or approved extension exists, liquidation follows as the statutory consequence.

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