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 rights extinguish earlier.

ORDER

1. The present Application has been filed by the Applicant, Mr. Ashwani Kumar Oberoi (Personal Guarantor), under Section 60(5) read with Section 96 of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, inter alia seeking directions to restrain the Respondents from proceeding to take physical possession of the property bearing Plot No. N-31, Industrial Area, Yamunanagar, on the ground that the same is in violation of the interim moratorium under Section 96 of the Code in view of the pendency of CP (IB) No. 148/CHD/CHD/2024 filed under Section 94 of the Code.

FACTS AND SUBMISSIONS OF THE APPLICANT:

2. The brief facts of the case, as stated in the application and relevant for adjudication of the present application, are summarised as follows:

(i) The Applicant, Mr. Ashwani Kumar Oberoi, is stated to be the Personal Guarantor to M/s Kirtiman Cements and Packaging Industries Limited. It is submitted that the Applicant has filed CP (IB) No. 148/CHD/CHD/2024 under Section 94 of the Insolvency and Bankruptcy Code, 2016 seeking resolution of his debts, which was e-filed on 27.04.2024 and thereafter hard copy was filed on 30.05.2024.

(ii) It is submitted that the said petition came up for hearing on 10.06.2024 and the Respondent Bank had appeared pursuant to Caveat No. 13 of 2024. It is further submitted that as per the caveat filed by the Respondent Bank, an auction of the secured asset had been conducted on 11.04.2024, however, at that stage, no sale certificate had been issued in respect of the said auction.

(iii) It is submitted that on the date of filing of the Section 94 petition, i.e. on 29.04.2024, no sale certificate had been issued by the Respondent Bank and therefore the rights in the property had not been crystallised in favour of any third party. However, subsequently, the Respondent Bank issued a Sale Certificate dated 31.05.2024 in respect of the property bearing Plot No. M-31 (also referred as Plot No. N-31), Industrial Area, Yamunanagar, which according to the Applicant has been done in breach of the interim moratorium under Section 96 of the Code.

(iv) It is further submitted that despite being aware of the pendency of the proceedings under Section 94 of the Code, the Respondent Bank proceeded with further recovery actions. In particular, it is submitted that on 24.07.2024, Respondent No.1, acting on the instructions of Respondent No.2, issued a notice for taking physical possession of the said property under the provisions of the SARFAESI Act, which is stated to be in violation of Section 96 of the Code.

(v) The Applicant has submitted that once an application under Section 94 of the Code is filed, an interim moratorium commences from the date of filing of such application, during which no action or proceeding in respect of any debt can be initiated or continued, including any action for sale or taking possession of secured assets. It is submitted that since the sale certificate dated 31.05.2024 and the possession notice dated 24.07.2024 have been issued after filing of the Section 94 application, the same are non- est and liable to be set aside.

(vi) It is further submitted that the Applicant has also challenged the sale certificate dated 31.05.2024 before the Debts Recovery Tribunal, Chandigarh by f