In I.A. No. 1743/2024 in CP (IB) No. 148/Chd/Chd/2024, Ashwini Kumar Oberoi v. District Magistrate, Jagadhri & State Bank of India (order dated 25.03.2026), the NCLT Chandigarh Bench dismissed an application by a personal guarantor seeking to restrain SARFAESI recovery proceedings on the ground of interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016. The Tribunal held that where the e-auction had been conducted and the sale confirmed before the filing of the application under Section 94 of the Code, the interim moratorium could not have the effect of reversing or stalling a concluded sale.
The Timeline
The Respondent Bank (SBI) had initiated SARFAESI proceedings and issued a sale notice on 19.03.2024. The e-auction was conducted on 11.04.2024 and the sale was confirmed in favour of the successful bidders on 12.04.2024. The Applicant (personal guarantor) thereafter filed an application under Section 94 of the Code on 29.04.2024, with hard copy filed on 30.05.2024. The Sale Certificate was issued on 31.05.2024. Physical possession proceedings followed.
The Applicant contended that the Sale Certificate and subsequent possession steps were in violation of the interim moratorium under Section 96, which commences from the date of filing of the Section 94 application. The Respondent Bank contended that the auction had been conducted and sale confirmed before any valid insolvency application was filed, and the subsequent steps were merely consequential.
The Tribunal’s Analysis
The Tribunal followed the NCLAT’s decision in Pratibha Industries Ltd. v. Yes Bank Ltd. (Company Appeal (AT) (Insolvency) No. 1049 of 2024, decided on 04.04.2025), which, relying on the Supreme Court’s ruling in Celir LLP v. Bafna Motors (Mumbai) (P) Ltd. ((2024) 2 SCC 1), held that the right of redemption of a borrower/guarantor stands extinguished upon publication of the auction notice under the amended Section 13(8) of the SARFAESI Act. Consequently, the jural relationship between the parties comes to an end, and the secured asset ceases to remain the property of the borrower/guarantor for the purpose of attracting the moratorium.
The Tribunal also relied on the NCLAT’s decision in Maria Kuresh Rajkotwala v. Rozina Firoz Hajiani (Company Appeal (AT) (Insolvency) No. 1644 of 2025, decided on 30.10.2025), which held that the rights of a personal guarantor come to an end after the auction is confirmed, and the subsequent issuance of a sale certificate does not alter that position.
The Bombay High Court’s Contrary View
The Applicant placed reliance on the Bombay High Court’s decision in Arrow Business Development Consultants Pvt. Ltd. v. Union Bank of India ((2025) ibclaw.in 4130 HC, decided on 10.12.2025), which held that where the interim moratorium kicks in after confirmation of sale but before payment of balance consideration or issuance of sale certificate, the sale cannot be completed and no ownership rights accrue in favour of the auction purchaser.
The Tribunal declined to follow this judgment on three grounds. First, the judgment of a High Court has only persuasive value on the NCLT situated outside its territorial jurisdiction. Second, the Arrow judgment did not consider the NCLAT’s binding ruling in Pratibha Industries. Third, when the Arrow judgment was subsequently brought to the NCLAT’s attention in the restoration application in Maria Kuresh Rajkotwala ((2026) ibclaw.in 89 NCLAT, decided on 04.02.2026), the NCLAT did not find any reason to interfere with its earlier view.
The Tribunal further noted the Bombay High Court’s own observations in Rozina Firoz Hajiani v. Union of India ((2026) ibclaw.in 1653 HC, decided on 18.03.2026), where the Court flagged a disturbing trend of chronic defaulters filing collusive proceedings under Sections 94/95 of the Code to frustrate confirmed SARFAESI auctions by invoking the Section 96 moratorium at a belated stage.
Result
The Tribunal dismissed the application, holding that the Applicant’s rights stood extinguished on 12.04.2024 when the sale was confirmed. The subsequent filing of the Section 94 application on 29.04.2024 could not unsettle a confirmed sale, as the interim moratorium under Section 96 operates prospectively from the date of filing.
Ms. Munisha Gandhi, Senior Advocate, appeared for the Petitioner, i.e., Mr. Ashwini Kumar Oberoi.