Auction sale confirmed pre-CIRP becomes absolute under Income-tax Act Second Schedule Rule 63; title passes on confirmation, not sale certificate issuance; moratorium under IBC Section 14 does not affect such pre-CIRP absolute sales.

J U D G M E N T

ASHOK BHUSHAN, J.

These two Appeal(s) have been filed against the same order dated 24.04.2024 passed in IA(IB)No.592/(KB)/2024 in CP (IB) No. 218/(KB) /2023. By the impugned order the application filed by the Resolution Professional (“RP”) being IA(IB) No.592/(KB)/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 executed on 01.02.2018. The CD also had 1/6^th share in mortgaged property.

(ii) Financial Creditor had filed a Commercial Suit (L) No.310 of 2018 against Monotona Tyres Ltd. and others for recovery of dues in which a consent term as submitted on 04.04.2018 and the same was taken on record and a Decree dated 04.04.2018 was passed, under which Defendant Nos.1 to 10 were ordered to jointly and severally pay to the Plaintiff a sum of Rs.30,06,68,557/- being the principal amount with Rs.1,52,87,671/- as interest till 29.02.2018 with certain other amounts. Consent Decree was passed High Court of Judicature at Bombay. Commercial Execution Application (L) No.1765 of 2018 was filed in pursuance of Decree of the High Court dated 04.04.2018 for execution of the Consent Decree, which was allowed by the High Court. The Financial Creditor filed an application before the High Court for transfer of all proceedings from High Court of Bombay to DRT Mumbai. On 04.04.2019, the execution proceedings were transferred to the DRT Mumbai, which issued a Recovery Certificate on 19.02.2021 in favour of Financial Creditor.

(iii) Recovery Officer of DRT issued proclamation of sale notice on 08.09.2023 for sale of subject land. On 10.10.2023, Title Suit No.1179 of 2023 was filed by Jai Badrinath Niketan and Jai Raghuvir Enclave (P) Ltd. before the Court of Civil Judge (Sr. Divn.),2nd Court Barasat against certain debtors of the Appellant. An interim stay was sought, which was refused by the Learned Lower Court on 10.10.2023.

(iv) Bids were invited by the Recovery Officer till 06.10.2023. On 12.10.2023, the Recovery Officer declared Quest Queen Vista LLP as Successful Auction Purchaser, who was directed to deposit 25% of the sale consideration. On 20.11.2023, sale in favour of Auction Purchaser was confirmed and Registry was directed to issue ITCP-18 and ITCP-20 in favour of the Auction Purchaser.

(v) On 20.11.2023, the orde