Published on: 12 October 2022 at 21:07 IST
Court – Supreme Court of India
Citation – Indian Overseas Bank v. RCM Infrastructure Ltd. 2022 SCC OnLine SC 634
Hon’ble Supreme Court of India has held that the Insolvency and Bankruptcy Code 2016 is a superior law to the SARFAESI Act 2002. It is held that provisions of Insolvency and Bankruptcy Code 2016 have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited.
Para – 24
It is thus clear that after the CIRP is initiated, there is moratorium for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act.
It is clear that once the CIRP is commenced, there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property.”
The words “including any action under the SARFAESI Act” are significant. The legislative intent is clear that after the CIRP is initiated, all actions including any action under the SARFAESI Act to foreclose, recover or enforce any security interest are prohibited.
Para – 35
In view of the provisions of Section 14(1)(c) of the IBC, which have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited.
We are of the view that the appellant bank could not have continued the proceedings under the SARFAESI Act once the CIRP was initiated and the moratorium was ordered.
Drafted by – Abhijit Mishra
Key Words – Corporate Debtor, Insolvency.