Moratorium breach under insolvency law renders a private-treaty sale certificate unenforceable despite good faith or alternate remedy arguments.

Transfer or registration of secured assets during an operative moratorium under the Insolvency and Bankruptcy Code, 2016 is unenforceable. A sale certificate issued under a private treaty remained subject to compulsory registration and stamp duty requirements, and registration completed after the moratorium breach could not confer any right, title, or interest on the purchaser. A plea of good faith did not cure a transfer made in violation of the insolvency restraint. The existence of a remedy under the SARFAESI Act did not bar insolvency jurisdiction where the grievance was breach of moratorium, and Section 60(5) continued to govern the dispute.

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Issues: (i) whether the sale certificate issued pursuant to a private treaty and registered after commencement of the moratorium was void and unenforceable; (ii) whether the plea of good faith protected the purchaser from the consequences of the moratorium breach; (iii) whether the availability of a remedy under the SARFAESI Act barred the insolvency application.

Issue (i): whether the sale certificate issued pursuant to a private treaty and registered after commencement of the moratorium was void and unenforceable.

Analysis: The admitted CIRP had commenced on 18.01.2021 and the moratorium under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 operated from that date. The sale certificate, though issued on 20.01.2021, was registered only on 04.03.2021. The transaction was not by a civil court or revenue officer sale, but by an authorised officer in a private treaty, and the sale certificate required compulsory registration as well as stamp duty under Article 18-C of Schedule I of the Indian Stamp Act, 1899 read with Article 23. Registration of the instrument during the moratorium amounted to a clear infraction of the restraint imposed by the insolvency order.

Conclusion: The sale certificate was held to be void and unenforceable, and no right, title, or interest could accrue to the purchaser.

Issue (ii): whether the plea of good faith protected the purchaser from the consequences of the moratorium breach.

Analysis: The protection for acquisition in good faith under Section 44 of the Insolvency and Bankruptcy Code, 2016 was not accepted because the underlying registration itself was effected in breach of the subsisting moratorium. Once the transfer was made in violation of the insolvency order, the plea that the purchaser acted bona fide could not validate the transaction or preserve title derived from it. The breach went to the root of the transaction and rendered the asserted acquisition ineffective in law.

Conclusion: The plea of good faith was rejected and did not save the purchaser's claim.

Issue (iii): whether the availability of a remedy under the SARFAESI Act barred the insolvency application.

Analysis: Although Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 provides a remedy before the Debts Recovery Tribunal, the grievance here arose from violation of the moratorium under the Insolvency and Bankruptcy Code, 2016. In such a situation, the insolvency framework governed the dispute, and the alternative SARFAESI remedy could not defeat the Tribunal's jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The objection based on alternate remedy was rejected.

Final Conclusion: The impugned order was upheld, the sale certificate and its registration were treated as ineffective in law, and the challenge to the insolvency forum's jurisdiction failed.

Ratio Decidendi: Any transfer or registration of secured assets effected during an operative moratorium under the Insolvency and Bankruptcy Code, 2016 is unenforceable, and a private-treaty sale by an authorised officer must comply with the insolvency restraint, compulsory registration, and applicable stamp law; an alternate remedy under SARFAESI does not displace insolvency jurisdiction where the complaint is breach of moratorium.

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