Here's a breakdown of a recent court case where an auction sale got tangled up with insolvency rules. It all went down in the Bombay High Court, and the judgment was delivered on December 10, 2025. Let's dive into the details.
The case was about a clash between two sets of rules: one for selling off assets to recover loans and another for dealing with bankruptcy. Arrow Business Development Consultants Pvt. Ltd., the company that brought the case, wanted to take over a property they won in an auction. But the previous owners, Vandana and Ravindra Chaudhari, filed for personal bankruptcy, causing a temporary hold that blocked the handover.
Arrow's lawyer, Mr. G.S. Hegde, argued that once the auction was confirmed, the Chaudharis lost their ownership rights. He claimed that the temporary hold shouldn't prevent Arrow from taking possession since the sale was already in progress.
The bank and the Chaudharis’ representatives argued that the temporary hold stopped any transfer of the property. They highlighted that the hold came into effect before the sale was finalized, making the bank's actions invalid.
The court, led by Justices R.I. Chagla and Farhan P. Dubash, emphasized that ownership transfer only completes with the issuance of a sale certificate after full payment. Since the temporary hold began before the sale was finalized, the transfer couldn't proceed.
Quote from the Judgment: "The sale is only completed upon issuance of the sale certificate, in accordance with Rule 9(6) of the SARFAESI Rules."
The court dismissed the request from Arrow, ruling that Arrow was not entitled to the property due to the temporary hold. The judges appreciated the efforts of the advisor, Mr. Naushad Engineer, for his assistance in the case.
This case shows how tricky things can get when bankruptcy proceedings intersect with property auctions. The timing of legal actions can significantly impact the outcome, as seen here.
