TaxTMI 
TaxTMI 
2026 (5) TMI 651
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.... Insolvency and Bankruptcy Code, 2016, (for short the 'IBC' or the 'Code') being C.P. (IB) No.148/(CHD)/2024. Adjudicating authority by the impugned order has rejected both the applications, aggrieved by which order, these appeals have been filed. 2. Brief facts of the case to be noticed for deciding these two appeals are: i. The State Bank of India (SBI) granted various credit facilities to Kirtiman Cements & Packaging Industries Limited (the corporate debtor) which facilities included the Cash Credit Limit, SLC, Term Loan - I and Term Loan - II sanctioned on 28.01.2019 amounting to Rs. 29,23,00,000/-. ii. Appellant executed a personal guarantee dated 28.01.2019 to secure the above financial facilities. Immovable property owned by the appellant were also mortgaged towards security of loan. iii. On 27.07.2019, loan account of the corporate debtor was classified as Non-Performing Asset (NPA) by SBI. iv. On 31.12.2019, notice under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act') was issued by the SBI to the corporate debtor as well as the personal guarantors i....
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....to set aside the sale certificate of property of the applicant/personal guarantor to corporate debtor i.e. Plot No.M-31. Industrial Area, Yamunanagar inspite of the fact that the present petition had been filed on 27.04.2024 and certificate of sale has been issued on 31.05.2024 which is after filing of the petition." xii. Both the applications came for consideration before the adjudicating authority. Applications were opposed by the Bank. It was stated by the Bank that appellant has earlier approached the DRT in Securitization Application No.340/2024 seeking similar relief of stay on dispossession which was rejected on 09.08.2024. Adjudicating authority after hearing the parties by the impugned order dated 25.03.2026 rejected the I.A.1743/2024. Adjudicating authority held that the application filed by the appellant does not merit any acceptance. It was held that rights of the applicants came to an end on 12.04.2024 when the sale was confirmed in favour of the auction purchaser and subsequent filing of Section 94 of the IBC cannot have effect of unsettling a confirmed sale. Adjudicating authority has noted the conduct of the applicant. It is observed that applicant had suff....
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....e have heard learned Sr. counsel Mr. Krishnendu Dutta along with Mr. Kunal Godhwani appearing for the appellants as well as learned counsel Mr. Harshit Khare appearing for the SBI and learned Sr. counsel Mr. Anand Chibbar appearing for the auction purchaser. 4. Learned Sr. counsel Mr. Krishnendu Dutta appearing for the appellant submits that adjudicating authority committed error in rejecting I.A. No.1473/2024. Application under Section 94 was filed by the appellant on 27.04.2024, whereas although auction was held on 11.04.2024 but Sale Certificate was not issued by that time. Sale Certificate was issued on 31.05.2024 which could not have been issued. Learned counsel for the appellant submits that judgment of the Hon'ble Supreme Court in 'Indian Overseas Bank' Vs. 'RCM Infrastructure Ltd. & Anr.' reported in [(2022) 8 SCC 516] fully covers the issue. It is submitted that the transfer in favour of auction purchaser is complete only when Sale Certificate is issued and on 27.04.2024 when Section 94 application was filed, no Sale Certificate was issued, thus due to moratorium under Section 96, no Sale Certificate could have been issued which ought to be set aside by the adjudicating....
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.... & Ors.' Vs. 'Union of India & Ors.' in [Writ Petition (L) 5156/2026], where Bombay High Court has noticed the disturbing trend when manner in which chronic defaulters are taking resort to the provisions of the Insolvency and Bankruptcy Code, 2016. In paragraphs 1 & 2 of the judgment, Bombay High Court made following observations: "1. A disturbing trend is noticed by this writ Court as to the manner in which chronic defaulters are taking resort to the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the IBC' for short) to frustrate secured creditors and auction purchasers from proceeding, in accordance with law, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Securitisation Act' for short). 2. In a number of such matters, it is found that the borrowers/ guarantors act as fence sitters and do not take any steps when the secured creditors proceed under Section 13(2) of the Securitisation Act and take further consequential steps, till the culmination of the process and auction purchasers coming into the picture. At the s....
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....the record it is clear that appellant has filed the Section 94 application in the NCLT on 24.12.2024 on which date receipt was issued. The assets which are covered by the directions issued by the adjudicating authority were auctioned on 13.12.2024 in favour of the Auction Purchaser which was confirmed on 18.12.2024. Even if we accept the submission of the appellant that sale certificate was signed on 26.12.2024 and 24.12.2024 was only unsigned sale certificate, that shall have no effect on the competition of the auction which took place on 13.12.2024 and confirmed on 18.12.2024 by the Bank. The rights of the personal guarantor came to an end after auction held on 13.12.2024 was confirmed." 9. Personal guarantor filed a civil appeal against the said judgment of this Tribunal dated 30.10.2025 in the Hon'ble Supreme Court, which civil appeal was also dismissed on 26.02.2026. 10. The Writ Petition before the Bombay High Court was filed by the auction purchaser, aggrieved by proceedings initiated by the guarantor before the DRT. Bombay High Court noticed the entire proceedings and the sequence of events and in paragraphs 24 & 25 of the judgment in 'Rozina Firoz Hajiani & Ors.' (su....
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....(1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application." 12. This Tribunal had occasion to consider the object and purpose of Section 94 in large number of cases. In cases, where it is apparent that personal guarantor has filed Section 94 application only for the purposes of obtaining a moratorium to thwart the proceedings as well as when proceedings are at verge of completion, filing of Section 94 application showed lack of good faith. In [Comp. App. (AT) (Ins.) No.455/2025], in the matter of 'Syed Sirajis Salikin Khadri' Vs. 'Edelweiss Asset Reconstruction Company Limited & Anr.' this Tribunal has affirmed the order of the adjudicating authority where Section 94 application was rejected which was filed only to obtain benefit of moratorium to scuttle the proceedings under SARFAESI Act. In paragraphs 13, 14 & 16, following was laid down: "13. When we look at the impugned order, we find that the Adjudicating Authority at para 5 thereof has exhaustively listed out the details of the multiple legal proceedings initiated....
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....ke payment by selling the said property to clear the outstanding debt. The present Section 94 proceedings have been filed 13 years after symbolic possession had been taken by the Bank of India on 10.12.2012. We notice that when the SARFAESI proceedings were on the verge of completion and all manoeuvres adopted by the Appellant to stall and delay the recovery proceedings having come to a naught, the Appellant now sought to wriggle out of this situation by resorting to filing of the Section 94 application. In view of the persistent lack of good faith displayed by the Appellant, the Adjudicating Authority cannot be said to be wrong in concluding that the Appellant on having received the possession notice once again from the Respondent No.1 has again tried to dodge the said notice by filing a Section 94 application. Hence, the reliance placed by the Appellant on the judgment in Getz Cables judgment supra is misplaced. The facts of the present case and that of Getz Cables supra are distinguishable. In the matter of Getz Cables supra, the insolvency proceedings under Section 94 of IBC was instituted immediately after initiation of SARFAESI proceedings. In comparison to the close proximit....
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....he date fixed by the Court Receiver to take over possession of the mortgage property. This timing cannot be treated as a simple case of accidental coincidence but signifies the ulterior motive of the Appellant taking refuge of moratorium under Section 96 of the IBC and to hinder and delay the recovery proceedings as and when initiated by the Respondent Bank. 14. When we look at the above order it is clear that the Appellant did not appear either on the first or the second revised call and hence the matter was dismissed for non-prosecution. It clearly shows that the Appellant was not serious of defending her case but was dragging the matter. When the Section 94 petition had already been dismissed once earlier, any vigilant litigant would not be as lackadaisical the second time. The same conduct of the Appellant of non- appearance on the dates of hearing had continued even after filing of the second section 94 petition. We are not persuaded to believe that technical malfunction as stated by the Appellant prevented the appearance especially when the matter was again taken up on revised call and the Appellant went unrepresented. We also do not find that the Adjudicating Author....
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....n appellant could not get any relief from the DRT who refuse to grant relief by order dated 09.08.2024, applications have been filed under Section 94 giving rise to this appeal. In the facts of the case as noticed above, we are of the view that initiation of proceeding under Section 94 by the personal guarantor was not with object of resolution of insolvency of the personal guarantor rather it was only with the intent to somehow create hurdles in the conclusion of the proceedings initiated by the Bank for recovery of its debts when auction was already held on 11.04.2024 which was confirmed on 12.04.2024, filing of the application on 27.04.2024 clearly was not bona fide application and the application was an abuse of process of Court and we are not inclined to interfere with the impugned order passed by the adjudicating authority rejecting the application filed by the appellant in facts of the present case. 15. Learned counsel for the appellant as well as learned counsel for the respondent have made submissions relying on various judgments of the Hon'ble Supreme Court and this Tribunal, according to the appellant unless the Sale Certificate is issued, the rights of the personal g....