Insolvency moratorium and asset custody can override prior SARFAESI possession when title remains with the corporate debtor.

A corporate debtor's mortgaged property, if still reflected as an asset in its books, may be brought under the Resolution Professional's control even when a secured creditor has already taken possession under SARFAESI. The commentary explains that possession alone does not transfer title, so the Resolution Professional's duty to take custody of assets recorded as belonging to the corporate debtor continues after insolvency commencement. It also states that the moratorium covers enforcement-related steps, including foreclosure, recovery, and other actions under SARFAESI, preventing the secured creditor from resisting handover of the asset to the insolvency process.

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Issues: (i) Whether the Resolution Professional was entitled to seek custody of the mortgaged property after commencement of insolvency proceedings. (ii) Whether the moratorium under the Insolvency and Bankruptcy Code prevented the secured creditor from retaining possession of the property taken under the SARFAESI Act before commencement of the corporate insolvency resolution process.

Issue (i): Whether the Resolution Professional was entitled to seek custody of the mortgaged property after commencement of insolvency proceedings.

Analysis: The property continued to be shown as an asset of the corporate debtor in its books, and possession taken by the bank did not amount to sale or transfer of title. On that basis, the Resolution Professional was required under the Insolvency and Bankruptcy Code to take control and custody of assets over which the corporate debtor had ownership rights as recorded in the balance sheet. The prior possession of the secured asset by the bank did not displace this duty.

Conclusion: The Resolution Professional was entitled to seek custody of the property.

Issue (ii): Whether the moratorium under the Insolvency and Bankruptcy Code prevented the secured creditor from retaining possession of the property taken under the SARFAESI Act before commencement of the corporate insolvency resolution process.

Analysis: The prohibition in the moratorium provision was read as covering actions to foreclose, recover, or enforce a security interest, including actions under the SARFAESI Act, and the prior enforcement steps were treated as falling within that framework. The definition of security interest and the past enforcement of rights under SARFAESI supported the view that the asset remained subject to the insolvency process despite earlier possession having been taken.

Conclusion: The moratorium applied, and the secured creditor could not resist handover of possession on that ground.

Final Conclusion: The interlocutory application failed, and the secured creditor was required to yield custody of the asset to the insolvency process for treatment along with the corporate debtor's other assets.

Ratio Decidendi: Property reflected as an asset of the corporate debtor may be brought under the Resolution Professional's control notwithstanding prior possession by a secured creditor under SARFAESI, and the moratorium extends to enforcement-related actions affecting such security interest.

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