Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.I. CHAGLA, FARHAN P. DUBASH, JJ.
Arrow Business Development Consultants Pvt. Ltd. – Appellant
Versus
Union Bank of India – Respondent
Writ Petition No. 11132 of 2025
Decided On : 10-12-2025
| Table of Content |
|---|
| 1. interplay of sarfaesi act and ibc. (Para 1 , 2 , 3 , 4) |
| 2. petitioner's claim of ownership post-auction. (Para 5 , 6 , 7 , 8) |
| 3. bank's defense against borrowers' claims. (Para 9 , 10 , 11 , 12) |
| 4. arguments of amicus curiae. (Para 13 , 14 , 15 , 16) |
| 5. analysis of sarfaesi act provisions. (Para 17 , 18 , 19 , 20) |
| 6. ownership transfer upon sale certificate issuance. (Para 21 , 22 , 23 , 24 , 25 , 26) |
| 7. impact of interim-moratorium on sales. (Para 27 , 28 , 29 , 30) |
| 8. final findings on ownership and petitions. (Para 31 , 32 , 33) |
| 9. judgment dismissal with no costs order. (Para 34 , 35) |
JUDGMENT :
FARHAN P. DUBASH, J.
| TABLE OF CONTENTS: | |
| A] | Factual overview |
| B] | Submissions of the Petitioner |
| C] | Submissions of Respondent No. 1/Bank |
| D] | Submissions of Respondent No. 2 |
| E] | Submissions of Respondent No. 3 |
| F] | Submissions of the Amicus Curiae |
| G] | Analysis of SARFAESI Act & SARFAESI Rules |
| H] | Transfer of ownership of secured asset – when complete? |
| I] | Decision in Indian Overseas Bank (supra) |
| J] | Effect of interim-moratorium |
| K] | Decision in Celir LLP (supra) |
| L] | Findings |
| M] | Operative Order |
1. The issue before this Court relates to an interplay between the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and Insolvency and Bankruptcy Code, 2016 (IBC). On the one hand, the bank and successful auction purchaser seek possession of the secured asset in furtherance of the sale certificate issued under the SARFAESI Rules, whilst, on the other, the Borrower contends that due to the prior imposition of interim moratorium under Section 96 of the IBC, possession cannot be handed over to them. In this background, the interesting question that needs to be determined in the present Writ Petition is whether, post amendment to Section 13(8) of the SARFAESI Act, the Borrowers’ ownership right in the secured asset, also stands extinguished, upon issuance of the sale notice under Rule 8(6) of the SARFAESI Rules?
2. The present Writ Petition has been filed by a successful auction purchaser, seeking a writ from this Court directing the Bank to hand over physical possession of a residential flat bearing no. 201 and situated on the 2nd floor of the El Castillo building located at Plot No. 23/B & 23/C in Sector- 6 on Palm Beach Road, Nerul West, Thane, Navi Mumbai - 400 706 (secured asset) to it notwithstanding the lodging of an application for personal insolvency under Section 94 of the IBC by its erstwhile owners, alleging that their rights stood extinguished on the date of publication of the auction notice by the Bank.
3. The successful auction purchaser (Petitioner) and the Bank (Respondent) were the original parties to the present Writ Petition. The interests of both parties were aligned inasmuch as, they sought implementation of the measures taken under the SARFAESI Act, to the exclusion of the provisions of the IBC. In these circumstances, this Court requested Mr. Naushad Engineer, Senior Advocate for assistance and appointed him as Amicus Curae in the matter. Subsequently, upon hearing him, we directed the Petitioner to implead the Resolution Professional (RP) representing Ms. Vandana Choudhari, and also Mr. Ravindra Choudhari as party Respondents to the present Writ Petition, in their capacity as the Guarantors and Co-Owners of the secured asset, which has since been done and they have been added as party Respondent Nos. 2 and 3 herein.
A] FACTUAL OVERVIEW
4. In order to properly appreciate and adjudicate the disputes raised in the present Writ Petition, it is necessary to consider the below-mentioned events and the corresponding dates on which they took place:
(a) Certain financial facilities were provided by Respondent No.1/Bank to Vandana Chaudhari and Ravindra Chaudhari (Borrowers). The Borrowers are the owners of the secured asset which was mortgaged by them, as security for the said facility availed from Respondent No. 1/Bank.
(b) On 16th April 2023, on account of defaults stated to have been committed by the B
The ownership of a secured asset is retained until a sale certificate is issued, and the interim moratorium under the IBC prevents transfer of possession.
Point of Law - Rule 15 of Schedule II Part I of the Income Tax Act, 1961, in the first place it will have to be stated that a reading of the said Rule does not in any way conflict with either Section....
Interim moratorium under IBC Section 96 does not bar SARFAESI sale certificate or possession if auction notice published, auction held, and sale confirmed before Section 94 filing, as guarantor's rig....
A secured creditor retains rights over a property until actual possession is transferred, despite a sale certificate being issued to an auction buyer, as affirmed by the court.
Auction sale of secured asset – Once CIRP is commenced, there is complete prohibition for any action to foreclose, recover or enforce any security interest created by Corporate Debtor in respect of i....
The court ruled that once insolvency proceedings are initiated, actions under the SARFAESI Act to enforce security interests are barred, reinforcing the IBC's primacy in insolvency resolution.
The auction sale of secured assets was invalid due to violations of statutory procedures, including failure to obtain separate valuations and selling below the reserve price.
The bank retains the right to recover debts through mortgaged properties even if the borrower sells the property to a third party, as established under the SARFAESI Act, 2002.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
