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Bombay HC – SARFAESI Auction Cannot Be Finalized During IBC Interim Moratorium

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The petitioner – auction purchaser filed the writ petition to direct the respondent no.1 Bank to hand over possession of flat in Thane (secured asset) notwithstanding the personal insolvency under Section 94 IBC initiated by its erstwhile owners.

Considering the analysis of the judicial precedents cited hereinabove to the facts at hand in the present Writ Petition, the position that emerges is summarised hereunder:

33(a)         The transfer of ownership of the secured asset in case of a statutory sale under SARFAESI takes place upon the issuance of the sale certificate. The amendment to Section 13(8) does not alter this position. It merely advances the date of extinguishment of the right of redemption available to a borrower.

33(b) The loss of the right of redemption does not tantamount to the loss of ownership rights. In other words, the extinguishment of the right of redemption will not affect ownership rights in the secured asset.

33(c) The sale conducted under the provisions of the SARFAESI Act in the present case does not stand completed since, during the intervening period viz. from the date of confirmation of sale on 30th May 2025 till the issuance of sale certificate on 20th June 2025, the interim-moratorium imposed under Section 96 of the IBC on 9th June 2025, stayed all proceedings in respect of any debt of the borrowers.

33(d) In view of the imposition of the interim-moratorium under Section 96 of the IBC, payments of the balance six tranches from sr. nos. (iii) to (viii) as set out in paragraph 4(h) above could not have been accepted by Respondent No. 1/Bank from the Petitioner.

33(e) Resultantly, the Petitioner is not the owner of the secured asset and therefore, not entitled to possession of the same.

Judgment dated 10.12.2025 of the Division Bench of the High Court of Bombay in Writ Petition No.11132 of 2025 of Arrow Business Development Consultants Pvt Ltd   Vs.   Union Bank of India and others

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