The interim moratorium under Section 96 of the IBC applies to all debts, including those secured by personal guarantees, preventing further proceedings under the SARFAESI Act post-moratorium.

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

This appeal is against an impugned order dated 25.02.2021 passed by the Ld.National Company Law Tribunal, New Delhi, Court-IV, in IA No. 1009 of 2021 in CP (IB) No. 25/ND/2021 whereby the possession of subject property belonging to the Respondent and which has been taken over by the appellant was directed to be restored with the IRP forthwith.

2. It is the submission of the Ld. Counsel for the Appellant prior to the proceedings under Section 95 of the Code, the Appellant had filed proceedings under Section 13 (4) of the SARFAESI Act, 2002 and on 20.06.2019 had taken symbolic possession of the subject mortgaged property.

3. Thereafter, on 16.03.2020 the Ld. District Magistrate, Gautam Budh Nagar, Uttar Pradesh had allowed an application filed by the appellant and had passed an order of possession of the said property. On 27.01.2021 the actual physical possession of the mortgaged property was taken over by Tehsildar, Dadri, Gautam Budh Nagar, Uttar Pradesh in lieu of the order dated 16.03.2020 passed by the District Magistrate. However, subsequent to 16.03.2020, i.e. on 07.01.2021, an application under Section 95 of the Code was filed to initiate insolvency proceedings against the Personal Guarantor. On 03.02.2021, the Ld. NCLT had initiated personal insolvency against the Respondent and held the moratorium had commenced in relation to all debts of the appellant upon filing of the Company Petition w.e.f. 07.01.2021.

4. The issue raised before this court is if the proceedings under the SARFAESI Act, 2002 were complete on 20.06.2019 when symbolic possession of the property of the Corporate Debtor was taken over by the Appellant and whether the moratorium under Section 96 of the Code would not affect the rights of the appellant. It is alleged by the appellant it had got a vested right in the subject property upon taking its symbolic possession and thus had become a de-facto owner of such property and thus had a vested right to dispose of such mortgaged property to its intending purchaser.

5. The crux of submissions of the learned counsel for the appellant is principles laid down in Section 14 of IBC shall be applicable to proceedings under Section 95 of the Code and as the subject property is a mortgaged property, whose symbolic possession has already been taken over by the appellant herein, such property would not fall within the ambit of Section 95 of the Code. 6. Heard.

7. This issue has already been answered in a recent judgement dated 2nd July, 2024 by Delhi High Court in Sanjay Dhingra Vs IDBI Bank Ltd & Ors WP(C) No.8131/2020 and CM Appl 26390/2020 as under:-

6. Pursuant to the aforesaid, the Court Receiver issued Possession Notices dated 19th March, 2020 and 03rd October, 2020, pursuant to which, physical possession of the property in question/secured asset, was taken over by the respondent no.1- bank.

9.5 The moratorium would not apply in the instant case. When bank takes possession under Section 13(6) of the SARFAESI Act, the asset will vest in the bank, free from all encumbrances.

9.6 In the present case, the bank had invoked its right under Section 13(2) of the SARFAESI Act on 27th September, 2018, thereby putting the petitioner to notice that the bank reserves its right to proceed against the properties in question. The Notice of Possession under Section 13(4) of SARFAESI Act, was issued on 02nd July, 2019. Therefore, on 02nd July, 2019, in terms of the judgment of Supreme Court in the case of Transcore Versus Union of India , (2008) 1 SCC 125 , all rights vested in the bank.

9.7 The actual physical possession of the property has already been taken by the bank on 17th October, 2020. The proceedings under the IBC, 2016, against the petitioner, commenced only in June, 2021. Therefore, all the actions qua the property in question, have been taken, prior to the initiation of proceedings under the IBC, 2016. Thus, no debt is being enforced against the petitioner, since the rights