The NCLT has accepted an insolvency application for ₹1.96 crore, stating that SARFAESI actions by secured creditors do not hinder CIRP where operational debts are present.
NCLT Rules SARFAESI Action Does Not Bar IBC Proceedings
The National Company Law Tribunal (NCLT) has admitted an insolvency application amounting to ₹1.96 crore, reiterating that proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) cannot impede the Corporate Insolvency Resolution Process (CIRP) under the IBC.
The tribunal found ample evidence of operational debt and default, concluding that the existence of SARFAESI actions does not preclude the initiation of CIRP. This reinforces the legislative intent of the IBC, which aims to resolve insolvencies in a cohesive manner.
The NCLT stated, “Parallel SARFAESI proceedings cannot impede CIRP where operational debt and default are established.”
This decision is crucial for practitioners, as it clarifies that simultaneous enforcement actions cannot obstruct insolvency proceedings, thus providing a clearer operational framework for creditors pursuing recovery under different regimes.
Citations
- Insolvency Application No. 456 of 2026
