Moratorium bars completion of auction sale of corporate debtor assets and overrides inconsistent SARFAESI enforcement.

Once moratorium under the Insolvency and Bankruptcy Code, 2016 commenced, the auction sale of the corporate debtor's secured assets could not be completed by accepting the balance consideration, because the sale had not been concluded before the insolvency commencement date and the assets continued to stand in the corporate debtor's name. The moratorium barred further transfer or enforcement steps against those assets, and the setting aside of the sale was upheld. In that framework, the Code prevailed over any inconsistent SARFAESI action, so the creditor could not rely on SARFAESI remedies to complete realisation during moratorium.

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Issues: (i) Whether the auction sale of the corporate debtor's secured assets could be completed and the balance sale consideration accepted after commencement of moratorium under the Insolvency and Bankruptcy Code, 2016. (ii) Whether the Insolvency and Bankruptcy Code, 2016 overrides the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of such transaction.

Issue (i): Whether the auction sale of the corporate debtor's secured assets could be completed and the balance sale consideration accepted after commencement of moratorium under the Insolvency and Bankruptcy Code, 2016.

Analysis: The corporate insolvency resolution process had commenced and moratorium had been declared. The sale process had begun before the insolvency commencement date, but only part of the bid amount was received before moratorium. The balance consideration was received thereafter. The assets continued to stand in the name of the corporate debtor in the revenue records, showing that the sale was not concluded before moratorium. Completion of the sale after moratorium was inconsistent with the statutory prohibition against transfer, alienation, or enforcement actions against the corporate debtor's assets during the resolution process.

Conclusion: The sale could not be completed after moratorium, and the setting aside of the sale was upheld.

Issue (ii): Whether the Insolvency and Bankruptcy Code, 2016 overrides the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of such transaction.

Analysis: The moratorium under the insolvency law barred continuation of enforcement steps, including action under the SARFAESI regime, against the corporate debtor's assets. The insolvency law was treated as a complete code and its overriding provision was applied to resolve any inconsistency with other laws. In that framework, the creditor could not proceed with or complete realisation of security during moratorium by relying on SARFAESI remedies.

Conclusion: The Insolvency and Bankruptcy Code, 2016 prevailed over the inconsistent SARFAESI action in the facts of the case.

Final Conclusion: The appeal failed because the post-moratorium completion of the auction transaction was impermissible and the impugned order setting aside the sale was affirmed.

Ratio Decidendi: Once moratorium under the Insolvency and Bankruptcy Code, 2016 commences, no enforcement or completion of a security realisation involving the corporate debtor's assets can continue, and the Code prevails over any inconsistent remedy under SARFAESI.

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