The main legal point established is that involuntary transfers under the SARFAESI Act cannot be the subject matter of insolvency proceedings, and the jurisdiction of the Civil Court is expressly barred under Section 34 of the SARFAESI Act.

1. Legality, validity and propriety of the order dated 14.10.2014 passed by Principal District Judge, Akola in Miscellaneous Civil Appeal No. 15/2014 arising out of the order 21.12.2013 passed below Exh.86 in Insolvency Petition No. 1/2008 passed by the Civil Judge, Senior Division, Akola, is challenged in the Revision.

2. Brief facts of the revision are to the effect that:

Respondent nos. 1 to 4 herein had filed Insolvency Petition before trial Court under Section 7 of the Provincial Insolvency Act, 1920 against respondent Nos. 5 to 17. During pendency of the said petition, respondent no.1 filed an application at Exh.86 under Order-I Rule-10 of the Code of Civil Procedure for addition of party and under Order-VI Rule-17 read with Section 151 of the Code of Civil Procedure for amendment of Insolvency Petition. It was contended by respondent no.1 that the present applicant, in collusion with Akola Urban Co-operative Bank Limited, Akola and the debtors, purchased the property mentioned in para13-A of the application, as per sale certificate dated 20.5.2011. It was further alleged that the Akola Urban Co-operative Bank could not have given go bye to the insolvency proceedings and the bank ought to have claimed its dues in in solvency petition itself. It was further submitted that the said property was already attached by Sales Tax Department for recovery of amount of Sales Tax dues. Thus, respondent nos. 5 to 7 in collusion with the Akola urban Co-operative Bank by making a show of taking action under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002, sold the property to the applicant and hence, it was necessary to join both the applicant and the Akola bank as party respondents in the insolvency petition.

3. This application came to be resisted strongly by the present applicant contending that applicant is a bona fide purchaser for value and, therefore, the transaction entered into by him cannot be challenged in insolvency petition. It was submitted that the property purchased by him in the auction was the secured asset of the Akola bank and as the debtor M/s Baheti Automobiles failed to repay the amount of loan, interest etc. to the bank and as the account became N.P.A., the bank issued notice under Section 13(2) of the SARFAESI Act and Rule-9 of the Security Interest (Enforcement) Rules, there by demanding the amount. As the amount was not paid in pursuance of the notice, the bank has taken the possession of the property in exercise of powers conferred on the bank under the provisions of Section 13(2) of the Securitisation Act. Thereafter, bank published a notice under Section 8(1) of the Security Interest Rules. That notice was widely published in the newspaper, as required by law and thereafter following due procedure, the bank has sold the property to the applicant for valuable consideration of Rs. 3.25 crores. An amount of Rs.16,25,000/- was paid by the applicant towards stamp duty and Rs.30,000/- towards registration fees. Thus, it was submitted that the bank has acted within its power to dispose of the mortgaged property for realization of its dues and the applicant being the bona fide purchaser of the said property, in the insolvency petition his transaction of purchase of property cannot be challenged.

4. Further it was submitted that, as the property was sold by bank by auction under the provisions of SARFAESI Act, the jurisdiction of the Civil Court is expressly barred as per Section 34 of the said Act.

5. On this application, the learned trial Court heard both the parties and by its order dated 21.12.2013 allowed the application holding that, whether the transaction of the purchase of the property by applicant was bona fide and in good faith can be decided only after trial. It was also required to be examined while deciding the insolvency petition, whether the transfer of immovable property was made by the debtor with intent to d