Raghavendra Joshi Vs Indian Bank (NCLT Mumbai)
NCLT Mumbai held that sale of property of personal guarantors by financial creditor under SARFAESI Act during protection of moratorium under section 96 of the IBC is invalid sale as protection of moratorium under section 96 is far greater than of section 14.
Facts- State Bank of India (‘the Financial Creditor’) had extended credit facilities on 17.05.2014 to M/s Deogiri Infrastructure Private Limited (‘the Corporate Debtor’). The repayment of the said facilities was secured by personal guarantee given by the Applicant and his wife Smt. Meena Raghavendra Joshi by signing Guarantee Agreement dated 13.03.2015.
Upon the credit facilities becoming irregular, the loan account of the corporate debtor, was classified as a Non-Performing Asset on 30.10.2018. Thereafter, State Bank of India issued notice u/s. 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (‘SARFAESI Act’) on 10.04.2019 and initiated proceedings before Hon’ble Debts Recovery Tribunal (‘DRT’) at Aurangabad. Thereafter, on 30.01.2020 State Bank of India took symbolic possession of the properties at Aurangabad and Latur u/s. 13(4) of the SARFAESI Act.
The State Bank of India also filed Company Petition u/s. 7 of the Code against the corporate debtor which is pending before National Company Law Tribunal at Mumbai. Thereafter, a Company Petition u/s. 95 of the Code was filed by the Financial Creditor against the applicant. A Resolution Professional was appointed vide order dated 27.06.2022. An interlocutory application was filed by the resolution professional on 19.07.2022, recommending initiation of personal insolvency proceedings against the applicant/personal guarantor.
