IN THE NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD (COURT - II)

Authority: National Company Law Tribunal, Ahmedabad Bench comprising Mrs. Chitra Hankare (Member Judicial) and Dr. Velamur G Venkata Chalapathy (Member Technical)

Order Date: 13 July 2026

Case Overview

This application was filed by Gulabchand Jain, former promoter and director of Vijay Timber Industries Private Limited (under liquidation), under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of NCLT Rules. The applicant sought to restrain the District Magistrate and Mamlatdar & Executive Magistrate of Kutchchh, Gujarat (Respondents 2 and 3) from initiating any measures under the SARFAESI Act against three specific properties of the corporate debtor: Plot Nos. 17, 18, 19 in GIDC Industrial Area Estate, Gandhidham; constructed E-Type Shed on Plot Nos. 1, 2, 3, Revenue Survey No. 259/1 Paiki, MithiRohar; and Revenue Survey No. 515/1, Mithirohar, Taluka Gandhidham.

The applicant contended that the corporate debtor was under liquidation, and therefore its assets were under the control of the liquidator and within the jurisdiction of NCLT. He argued that Respondent No. 3's notice dated 08 April 2022 seeking physical possession under SARFAESI was illegal since Section 18 of IBC overrides SARFAESI provisions under Section 238 of IBC. The applicant cited NCLAT's judgment in Encore Asset Reconstruction Company Pvt. Ltd vs. Ms. Charu Sandeep Desai & Ors. and the Supreme Court's Transcore judgment to support his position.

Respondent No. 1 (the liquidator) opposed the application, arguing it was misconceived and filed with the intention of obstructing liquidation proceedings. The liquidator revealed that Punjab National Bank had declared the corporate debtor as NPA on 30 June 2009, recovery proceedings had culminated in a Recovery Certificate from DRT, and the properties had been mortgaged to PNB. The liquidator had already conducted e-auction of the assets and issued sale certificates to successful bidders on 19 March 2022 and 28 April 2022 after receiving full payment. PNB had relinquished its security interest in favor of the liquidator.

The respondent also highlighted that the applicant had suppressed material facts, including that the corporate debtor had previously challenged SARFAESI proceedings before the High Court and appellate courts, which were dismissed. The DRT had already examined and rejected the validity of lease deeds claimed by occupants in an order dated 15 April 2019, finding them not legally valid due to lack of registration, proper stamp duty, evidence of rent payment, and physical possession.

Final Outcome

The NCLT rejected and disposed of IA No. 387 of 2022. The tribunal held that the application was not maintainable as challenges to SARFAESI proceedings must be pursued before the Debt Recovery Tribunal, not NCLT under Section 60(5) of IBC. The court found that the applicant had suppressed material facts about previous adjudications of SARFAESI proceedings and the current status of the liquidation process where assets had already been auctioned and sale certificates issued. The tribunal noted that mere pendency of appeals before NCLAT and Supreme Court (Diary No. 11740 of 2022) without any stay orders did not justify interfering with the liquidation process. The application was deemed an attempt to delay and obstruct the completion of liquidation proceedings.

Topics: NCLT Jurisdiction, SARFAESI vs IBC, Liquidation Process