TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 926
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....y Law Tribunal, Hyderabad Bench-1, Hyderabad (hereinafter referred to as "the NCLT") in I.A. No.832 of 2019 in C.P. (IB) No. 601/10/HDB/2018, vide which the learned NCLT had allowed the application filed by the respondent No.2 herein, former Managing Director of the respondent No.1 herein M/s RCM Infrastructure Ltd. (hereinafter referred to as the "Corporate Debtor") and set aside the sale of the assets of the Corporate Debtor. 2. The facts in brief, giving rise to filing of the present appeal, are as under: The appellant Bank had extended certain credit facilities to the Corporate Debtor. However, the Corporate Debtor failed to repay the dues and the loan account of the Corporate Debtor became irregular. As such, on 13th June 2016, the loan account of the Corporate Debtor came to be classified as "Non-Performing Asset" (NPA). 3. The appellant Bank issued a Demand Notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act"), calling upon the Corporate Debtor and its guarantors to repay the outstanding amount due to the appellant Bank. Since the Corporate Debt....
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....or. As a result of the said order passed under Section 10 of the IBC, the Corporate Insolvency Resolution Process (hereinafter referred to as "the CIRP") of the Corporate Debtor commenced. A moratorium as provided under Section 14 of the IBC was notified and an Interim Resolution Professional (hereinafter referred to as "the IRP") was also appointed. 7. The appellant Bank on 21st January 2019, filed its claim in Claim Form-C with the IRP, upon it coming to know about the admission of the insolvency petition filed by the Corporate Debtor. According to the appellant Bank, since the balance 75% of the bid amount was not yet received on the said date, it was not excluded from the claim filed before the IRP. During the pendency of the CIRP, the appellant Bank accepted the balance 75% of the bid amount, i.e., Rs.24.69 crore on 8th March 2019. Upon receipt of the payment, the appellant Bank submitted its revised claim in Claim Form-C to the IRP on 11th March 2019. The appellant Bank also intimated the IRP about the successful sale of the said secured assets. The promoter of the Corporate Debtor, i.e., respondent No.2 herein, thereafter filed an application being I.A. No.832/2020 in the p....
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....ition came to be filed under Section 10 of the IBC by the Corporate Debtor for the sole purpose of stalling the sale. He further submitted that the second E-auction notice was issued on 27th November 2018, which resulted in sale of the two properties. 10. Shri Mehta submitted that the order of the learned NCLT, admitting the petition under Section 10 of the IBC, came to be passed only on 3rd January 2019, i.e., prior to confirmation of sale. He submitted that it is thus clear that the CIRP was initiated only to stall the SARFAESI proceedings. It is submitted that though the issue with regard to Section 65 of the IBC was subsequently raised by the appellant Bank, neither the learned NCLT nor the learned NCLAT had considered the same. It is submitted that the mala fide intention of the IRP is clear inasmuch as since the ex-promoters could not submit a credible plan, the learned NCLT, vide order dated 7th February 2022, has ordered for liquidation. It is submitted that a perusal of the said order dated 7th February 2022 would reveal that the delay was caused at the instance of the IRP, who has been seen to be helping the ex-promoters. 11. Shri Mehta further submitted that since the ....
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....rs established prior to insolvency under commercial laws should be upheld to preserve the legitimate expectations of creditors and encourage greater predictability in commercial relationship. 16. Shri Viswanathan, learned Senior Counsel has supported the impugned judgment passed by the learned NCLAT as well as the order passed by the learned NCLT. He submitted that the title of the secured assets cannot be conveyed to the auction purchasers merely upon confirmation of sale even before receiving full sale consideration. He submitted that the title would be passed over only after receipt of the full consideration and issuance of sale certificate. The learned Senior Counsel submitted that such contentions are totally contrary in view of various provisions of the SARFAESI Act, the said Rules as well as Sections 14(1)(c), 31(1) and 238 of the IBC. He submitted that only after the transfer takes place under Rules 8 and 9 of the said Rules, the title would be passed over to the auction purchasers. He relies on the judgment of this Court in the case of Hindon Forge Private Limited and Another v. State of Uttar Pradesh through District Magistrate, Ghaziabad and Another (2019) 2 SCC 198. 1....
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....ank cannot keep it in entirety. 20. Shri Viswanathan submitted that the allegations with regard to mala fide are made only in order to prejudice the Court. It is submitted that in the petition filed under Section 10 of the IBC, the Corporate Debtor has clearly mentioned about declaration of NPA by both the appellant Bank and Andhra Bank and also initiation of auction process by both the Banks. He submitted that in any case, initiation of the proceedings under the IBC for overall resolution of debts of the Corporate Debtor cannot be labelled as a mala fide attempt. He submitted that Section 65 of the IBC expressly provides for the mechanism and the remedy for addressing frivolous or malicious proceedings initiated under the SARFAESI Act. However, the appellant Bank has chosen not to take recourse to such proceedings. As such, the allegations of mala fide cannot be heard. 21. Shri Verma, learned counsel also supported the impugned judgment passed by the learned NCLAT as well as the order passed by the learned NCLT and the submissions made by Shri Viswanathan. It is submitted that the appellant Bank has never challenged the order dated 3rd January 2019, vide which the learned NCLT c....
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....held by this Court that the IBC is a complete Code in itself and in view of the provisions of Section 238 of the IBC, the provisions of the IBC would prevail notwithstanding anything inconsistent therewith contained in any other law for the time being in force. A reference in this respect could be placed on the judgments of this Court in the cases of Innoventive Industries Limited v. ICICI Bank and Another (2018) 1 SCC 407, Principal Commissioner of Income Tax v. Monnet Ispat and Energy Limited (2018) 18 SCC 786 and Ghanashyam Mishra and Sons Private Limited through the Authorised Signatory v. Edelweiss Asset Reconstruction Company Limited through the Director and Others (2021) 9 SCC 657. 28. It is the contention of the appellant Bank that the sale in question was complete on its confirmation on 13th December 2018 and as such, the admission of the petition on 3rd January 2019 by the learned NCLT would not affect the said sale. Relying on the provisions of Section 54 of the TP Act, the learned Solicitor General submitted that merely because a part of the payment was received subsequently after initiation of CIRP, it will not deprive the appellant Bank from receiving the said money ....
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....ariable rule. What was paramount, was the intention of the parties. In the facts of the said case, the Court held that the parties intended that the ownership of the property would be transferred to the appellant only after the receipt of the entire sale consideration by the vendors as a condition precedent. Upon interpretation of the sale deed, the Court found that the title was intended to be passed only on the payment of the balance consideration. 32. It is further to be noted that the present case arises out of a statutory sale. The sale would be governed by Rules 8 and 9 of the said Rules. The sale would be complete only when the auction purchaser makes the entire payment and the authorised officer, exercising the power of sale, shall issue a certificate of sale of the property in favour of the purchaser in the Form given in Appendix V to the said Rules. 33. In the case of Shakeena and Another v. Bank of India and Others 2019 SCC OnLine SC 1059, which was a case arising out of SARFAESI Act, this Court has held that the sale certificate issued in favour of the respondent No.3 did not require registration and that the sale process was complete on issuance of the sale certifica....