TaxTMI 
TaxTMI 
2026 (3) TMI 664
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....2024 has been allowed. Aggrieved by which order these Appeal(s) have been filed. The order dated 24.04.2024 was corrected by corrigendum order dated 26.04.2024. 2. Company Appeal (AT) (Ins.) No. 848 of 2024 has been filed by IDFC First Bank Ltd., who was Respondent No.1 in IA(IB)No. 592/(KB)/2024. Company Appeal (AT) (Ins.) No.1009 of 2024 has been filed by Quest Queen Vista LLP, who was Respondent No.2 in IA(IB)No.592/(KB)/2024. In the Appeal on 01.05.2024, an interim order was passed directing status quo, with regard to possession of the assets. 3. Brief facts of the case, necessary to be noticed for deciding the Appeal are: (i) IDFC First Bank Ltd. (hereinafter referred to as the "Financial Creditor") has sanctioned Term Loan of Rs. 25 crores to Monotona Tyres Ltd. (the "Borrower"). The Corporate Debtor ("CD") - M/s Jai Gokul Towers Pvt. Ltd. was one of the Guarantors of the Term Loan Facility. Under the Facility Agreement in October 2017, immovable property described in Schedule-5 bearing Municipal Holding No.43/72; Mondalghanti (presently known as 1, Kaxi Nazrul Islam Avenue), under Municipal Ward No.13 formerly 26 was included. A Mortgage Deed was also ex....
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...., which came to be heard by the NCLT Kolkata Bench. On 01.01.2024, the Adjudicating Authority while admitting Section 7 application declared moratorium under Section 14 and appointed Seikh Abdul Salam as the IRP. (vii) On 06.03.2024, the Recovery Officer passed an order with respect to sale of mortgaged property conducted on 11.10.2023 and affirmed on 20.11.2023 in favour of Auction Purchaser. The RP wrote to the DRT informing the DRT about the CD and the moratorium. The Calcutta High Court subsequently by an order dated 12.03.2024 recalled the order dated 01.11.2023. On 14.03.2024, the Recovery Officer issued ITCP-20 in favour of Auction Purchaser and directed the Financial Creditor to handover original chain of documents. The DRT also directed to handover possession. Auction Purchaser took possession on 16.03.2024. (viii) IA(IB)No.592/(KB)/2024 was filed by the RP before the Adjudicating Authority pleading that confirmation of sale in favour of Auction Purchaser is null and void and direction be issued to restore possession of the premises to the RP. On 21.03.2024 Certificate of Sale dated 14.03.2024 was also executed. On the application filed by the RP, notices....
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....very Office of the DRT and in the auction sale held on 11.10.2023, Auction Purchaser emerged as Successful Auction Purchaser on reserve price of Rs. 32.03 crores. The Auction Purchaser having paid the entire amount as per Schedule-II of the Income Tax Act, 1961, the Recovery Officer confirmed the sale on 20.11.2023 and the sale become absolute. The direction to keep in abeyance the issuance of sale certificate does not in any manner take away the right and title of the Auction Purchaser. The Corporate Insolvency Resolution Process ("CIRP") against the CD was admitted on 01.01.2024, i.e. subsequent to sale confirmation. Hence, Section 14 of the IBC shall have no effect on the sale proceedings, which was conducted by Recovery Officer of the DRT. The Recovery Officer on 20.11.2023 has kept the issuance of sale certificate in abeyance on the basis of interim order passed by the Calcutta High Court on 01.11.2023, which was subsequently recalled and sale certificate was issued on 14.03.2024. The Adjudicating Authority had no jurisdiction to hold the sale as null and void, whereas the sale took place much before the initiation of CIRP and also stood confirmed in accordance with the provis....
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....2024. After initiation of CIRP against the CD on 01.01.2024, the RP proceeded to take possession. The Recovery Officer in its order dated 06.03.2024, itself has noted that moratorium has been declared on 01.01.2024. Despite having been aware of the order of NCLT dated 01.01.2024, the Recovery Officer passed an order on 06.03.2024 directing issuance of sale certificate, which was in clear breach of moratorium under Section 14 of the IBC. The CD has its undivided 1/6th interest in the property and the CD has the right in law to occupy every square inch of the said property. The order dated 06.03.2024 of the DRT, directing issuance of ITCP-18 and ITCP-20 in respect of the said property is in the teeth of moratorium under Section 14. As per Section 54 of the Transfer of Property Act, 1882, conclusion of auction, payment of consideration and confirmation of sale does not amount to conclusion of the sale or transfer of title from the CD to Respondent No.2. Learned Counsel for the Respondent also placed reliance on certain judgments of the Hon'ble Supreme Court, which we shall refer to hereinafter. 8. We have considered the submissions of learned Counsel for the parties and have peruse....
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....nfirmed in favour of the Auction Purchaser Quest Queen LLP Pvt. Ltd. Registry is directed to issue ITCP 18 & ITCP 20 in favour of Auction Purchaser and also directed to deposit the poundage fees of Rs. 32,03,100/-in Government account." 10. After passing of the aforesaid order, it was noticed by the Recovery Officer that an order passed by Calcutta High Court dated 01.11.2023 was placed before him, where the Calcutta High Court restrained the issuance of Sale certificate in respect of ground and top floors of the building. Noticing the interim order, Recovery Officer has kept in abeyance issuance of ITCP-18 and ITCP-20. The Auction Purchaser has deposited the entire auction amount, which is recorded in the order dated 20.11.2023 and after Recovery Officer further held that there being no application pending for setting aside the sale under Rule 60, 61 & 62 of Second Schedule of Income Tax Act and Auction Purchaser has already deposited the entire amount, sale is confirmed. Sale proclamation and entire proceedings of the auction took place in the present case under the statutory provisions of the Recovery of Debts and Bankruptcy Act, 1993. Section 29 of the Rec....
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....e persons affected thereby." 13. Rule 65 deals with 'Sale certificate'. The scheme as contained in Rule 63 clearly indicates that Tax Recovery Officer shall make an order confirming the sale, and, thereupon, the sale shall become absolute. Although, Rule 65 provides for sale certificate, but Rule 65 sub-rule (2) clearly indicates that certificate shall state the date on which the sale became absolute. Thus, the day on which sale became absolute is the date of confirmation of sale. Rule 65 is as follows: "65. Sale certificate.-(1) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who at the time of sale is declared to be the purchaser. (2) Such certificate shall state the date on which the sale became absolute." 14. We have noticed above that although in the order dated 20.11.2023, the Recovery Officer also directed for issuance of ITCP-18 and ITCP-20, but noticing the interim order of the Calcutta High Court of 01.11.2023, it directed to keep in abeyance the issuance of ITCP-18 and ITCP-20. The order dated 01.11.2023, was subsequently recalled by the Calc....
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.... 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 in pursuance of the sale which has already been completed. A reliance in this respect is placed on various judgments of this Court." 15. The Hon'ble Supreme Court has noted in the said judgment that the Bank has accepted the balance amount on 08.03.2019, i.e. after initiation of CIRP and under the scheme of Rules 8 and 9, the sale stand completed on 08.03.2019. In Paragraphs-32, 34 and 35, following was held: "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. 34. Undisputedly, in the present case, the balance amount has been accepted by the appellant Bank on 8-3-2019. The sale under the statutory scheme as contemplated un....
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....rower and the secured creditor effect the sale at such price. (3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again;] [Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002). (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months] [Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).]. (5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited [to the secured creditor] [Inserted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] a....
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....tory provisions of Income Tax Act Second Schedule. 18. Learned Counsel for the Appellant has relied on judgment of the Hon'ble Supreme Court in B. Arvind Kumar vs. Govt. of India and Ors. - (2007) 5 SCC 745, where the Hon'ble Supreme Court has held that sale certificate is issued only when sale has become absolute and the sale certificate is merely the evidence of the title acquired by the purchaser. In Paragraph-12 of the judgment, following was held: "12. The plaintiff has produced the original registered sale certificate dated 29-8-1941 executed by the Official Receiver, Civil Station, Bangalore. The said deed certifies that Bhowrilal (father of the plaintiff) was the highest bidder at an auction-sale held on 22- 8-1941, in respect of the right, title, interest of the insolvent Anraj Sankla, namely, the leasehold right in the property described in the schedule to the certificate (suit property), that his bid of Rs 8350 was accepted and the sale was confirmed by the District Judge, Civil and Military Station, Bangalore on 25-8-1941. The sale certificate declared Bhowrilal to be the owner of the leasehold right in respect of the suit property. When a property is sold by publ....
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....e sale on certain enumerated grounds. However, once such objections are disposed of without disturbing the sale, the sale stands confirmed under Order XXI Rule 92 of the CPC. Thereafter, the sale certificate is issued under Order XXI Rule 94. The Court observed that this chronology of events made it clear that the transfer becomes final when an Order under Rule 92 of Order XXI is made and the issuance of a sale certificate under Rule 94 is only a formal declaration of the effect of such confirmation. Such issuance of certificate does not create or extinguish any title and thus would not attract any stamp duty which is applicable qua an instrument of sale of immovable property. 16. In B. Arvind Kumar v. Govt. of India, (2007) 5 SCC 745, this Court observed that when a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction-pur....
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....n the court though, to issue the certificate. That may, for any reason, get delayed. Whether there be failure to issue the certificate or delay of action on behalf of the court or the inaction of the purchaser in completing the legal requirements and formalities, are factors which have no bearing on the limitation prescribed for the application under Article 134. The purchaser cannot seek to extend the limitation on the ground that the certificate has not been issued. It is true though that order for delivery of possession cannot be passed unless sale certificate stands issued. It is manifest therefore that the issue of a sale certificate is not "sine qua non" of the application, since both these matters are with the same court. The starting point of limitation for the application being the date when the sale becomes absolute i.e. the date on which title passed, the evidence of title, in the form of sale certificate, due from the court, could always be supplied later to the court to satisfy the requirements of Order 21 Rule 95. See in this regard Babulal Nathoolal v. Annapurnabai [AIR 1953 Nag 215 : ILR 1953 Nag 557], which is a pointer. It therefore becomes clear that the title of....
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.... the purchaser thereof as also the date when the sale becomes absolute. The use of past tense in the rule stating that the sale "became" absolute, is consistent with this interpretation. The certificate, therefore, cannot be termed to be an instrument of sale so as to attract Section 147 of the Delhi Municipal Corporation Act. The appeal is accordingly dismissed with costs." 23. The above judgment of the Hon'ble Supreme Court, when applied in the facts of the present case and the statutory scheme under which the sale was conducted, it is clear that on confirmation of sale on 20.11.2023, title passed on Auction Purchaser and issuance of sale certificate, which was kept in abeyance on account of the interim order passed by the Calcutta High Court, cannot postpone the passing of the title on the date of confirmation of the sale, i.e. 20.11.2023. The submission of learned Counsel for the Respondent that since sale certificate was issued by DRT on 14.03.2024, that should be treated as date on which sale was completed, cannot be accepted. Issuance of sale certificate in the facts of the present case has no effect on sale becoming absolute on 20.11.2023 itself. 24. The Adjudicating ....