M/s Sukh Sagar Agro Industries vs Punjab National Bank & Ors. - "We are of the view that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration of Act."

  HC Indore (2026.09.09) in M/s Sukh Sagar Agro Industries vs Punjab National Bank & Ors.   [2026:MPHC-IND:25173, Writ Petition No. 16502 of 2026] held that; 

• "We are of the view that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration of Act."

• The position of law discussed above makes it clear that sale certificate issued by the authorised officer is not compulsorily registrable. Mere filing under Section 89(4) of the Registration Act itself is sufficient when a copy of the sale certificate is forwarded by the authorised officer to the registering authority.

• However, a perusal of Articles 18 and 23 respectively of the first schedule to the Stamp Act respectively makes it clear that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles. As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.

Excerpts of the order;

The present petition under Article 226 of the Constitution of India has been filed praying for the following reliefs:

• "7. RELIEF PRAYED FOR: It is therefore, prayed that this Hon'ble Court may kindly be pleased to issue:

• 7.1 Issuance of a Writ of Certiorari or any other appropriate writ order or direction thereby calling for the records relating to auction of property being House No. 10 and 11, Khasra No. 1416/2 (part), Triveni avenue, Indore, builtup area 930 sq mt dated 06.08.2025 conducted by Ld. Recovery Officer-I, Debts Recovery Tribunal-Jabalpur in respect of loan of Arihant Coal under Recovery of Debts and Bankruptcy Act, 1993 examine the same and declare that the action of Respondent Nos. 1 refusing to file/ register/ record the sale certificate dated 08.02025 in respect of House No.- 10 and 11, Khasra No. - 1416/2 DOREit Triveni Avenue, Indore forwarded by Ld. Recovery Officer-1. FOR Debts Recovery Tribunal Jabalpur vide order dated 07.01.2026 illegal and without jurisdiction.

• 7.2 Issuance of a writ of Mandamus or any other appropriate writ order or direction thereby directing the Respondent Nos. 1 to 3 to file/ register/ record the sale certificate dated 08.09.2025 in respect of property being House No. 10 and 11, Khasra No. 1416/2 (part), Triveni Avenue, Indore, built-up area 930 sq mt, Delhi in Book No. I as per Section 89(4) of the Registration Act, 1908 forwarded by Ld. Recovery Officer-I, Debts Recovery Tribunal-Jabalpur vide order dated 07.01.2026.

• 7.3 Pass such other and further order(s) and grant such other reliefs in favour of the Petitioner that this Hon'ble Court deems just and proper in the facts and circumstances of the case and in the interest of justice and equity: 

• 7.4 Any other relief this Hon'ble Court deems fit may be granted in favour of the petitioner."

# 2. On the last date of hearing i.e. 25.08.2026, this Court had granted time to the counsel for respondent/State by passing the order which reads as under:

• "Learned counsel for the respondent no.1 shall take instructions pursuant to the prayer in the present petition, more particularly, the grievance that the sale certificate issued by the DRT in favour of the petitioner is not registered by the Registrar by making entry in the Book No.1. Let definite instructions be call and if required, appropriate affidavit disclosing the same be filed or definite statement regarding the same be made on the next date of hearing. List the matter on 09.09.2026."

# 3. Today, the counsel for respondent/State has submitted that there is a different view taken by the Court in the case of Smt. Shanti Devi L. Singh And Anr. Vs. Tax Recovery Officer and Ors reported in (1990) 3 SCC 605 as it is under the Income Tax Act.

# 4 . Learned counsel for the petitioner has relied upon the judgment passed in the case of Esjaypee Impex Private Limited Vs. Assistant General manager and Authorized Officer, Canara Bank reported in 2021(11) SCC 537, para 16 and also the order passed by Apex Court in the case of The Inspector General of Registration Vs. G. Madhuambal & Anr.[ SLP(C) No. 16949/2022 dated 11.11.2022] ,and also in the case of State of Punjab and Another Vs. Ferrous Alloy Forgoings P. Ltd. and Others reported in 2024 SCC Online 3372 . in support of her contention that sale certificate was though issued by the DRT in favour of the petitioner, but the same is not registered by the Registrar by making entry in the Book No.1

# 5. I have heard, learned counsel for the rival parties and perused the record.

# 6. In the case of Esjaypee Impex Private Limited, more particularly, para 16, it has been held as under:

• "We are of the view that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration of Act."

# 7. In the case of The Inspector General of Registration Vs. G. Madhuambal & Anr.(supra), it has been held as under:

• " Learned counsel for the petitioner(s) has made a valia endeavor to persuade us to interfere with the impugned judgment(s) but not successfully. It is logically so as this issue has been repeatedly settled and if one may say, a consistent view followed We may refer to the judgments by the for the last 150 years. Madras High Court in the Board of Revenue No.2 of 1875 (In Re: Case Referred) dated 19.10.1875 opining that a certificate of sale cannot be regarded as a conveyance subject to stamp duty, by the Allahabad High Court in Adit Ram v. Masarat-un-Nissa¹ opining that a sale certificate is not an instrument of the kind mentioned in clause (b) of Section 17 of Act III of 1877 and is not compulsorily registrable and this Court's view in Esjaypee Impex Pvt. Ltd. v. Asst. General Manager and Authorised Officer, Canara Bank² opining that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the Authorised officer of the Bank under the SARFAESI Act to hand over the duly validated Sale Certificate to the Auction Purchase with a copy forwarded to the Registering Authorities to be filed in Book I as per Section 89 of the Registration Act and order of this Court in Μ.Α. No.19262/2021 in SLP(C) No.29752/2019 dated 29.10.2021opining that once a direction is issued for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act, it has the same effect as registration and obviates the requirement of any further action. It is time that the authorities stop filing unnecessary special leave petitions only with the objective of attaining some kind of a final dismissal from this Court every time. Costs this time has been spared but will not be spared the next time. The needful be done in terms of the impugned judgment(s) within 15 days from today. The special leave petitions are dismissed. Pending applications stand disposed of"

# 8. In the case of State of Punjab and Another Vs. Ferrous Alloy Forgoings P. Ltd. and Others, it has been held as under:

• "20. The position of law discussed above makes it clear that sale certificate issued by the authorised officer is not compulsorily registrable. Mere filing under Section 89(4) of the Registration Act itself is sufficient when a copy of the sale certificate is forwarded by the authorised officer to the registering authority. However, a perusal of Articles 18 and 23 respectively of the first schedule to the Stamp Act respectively makes it clear that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles. As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.

• 21. We also do not find any force in the contention of the appellant that the High Court should not have exercised its writ jurisdiction under Article 226 as Respondent no. 1 had an alternate efficacious remedy of filing an appeal against the order of the Company Judge in pursuance of which directions came to be passed by the Registrar. This Court in Radha Krishan Industries v. State of H.P., (2021) 6 SCC 771 observed that an alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. It was held that when a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. However, this Court clarified that this rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion and if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with."

# 9. Considering the fact that after the judgment passed in the case of Smt. Shanti Devi L. Singh(Supra), in 2021, the Hon'ble Apex Court has considered the aspect regarding the SARFAESI Act in the case of Esjaypee Impex Private Limited and also in the case of The Inspector General of Registration Vs. G. Madhuambal & Anr.(supra). Though the judgment which is sought to be relied is particularly on the SARFAESI Act, but in the present proceedings, the Debt Recovery Tribunal has issued certificate and thereafter hold successful auction of the secured property by the Recovery Officer and issued certificate.

# 10. Considering the ratio of the above mentioned judgments and the fact that petitioner is a successful purchaser in whose favour the sale certificate was issued, petition is required to be allowed by exercising power under Article 226 by granting reliefs in terms of Clause 7.1 and 7.2 of the relief clause.

# 11. With the aforesaid observation, petition stands disposed off. 

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Samunnati Finance Pvt. Ltd. vs Renukadevi Anguraj - We fully endorse with the view taken by the Principal Bench, NCLT, New Delhi in the case of Alchemist Asset Reconstruction supra, in the order dated 25.01.2022 that Personal Guarantor is an individual who has stood as Guarantee to the Corporate Debtor. Section 95 petition is for initiating insolvency resolution process against the Personal Guarantor and it is not the case for recovery of any amount because that will go contrary to the scheme of IBC, 2016. In such a situation, on the demise of the Personal Guarantor the proceedings under Section 95 of IBC against an individual who has given his guarantee in favour of Corporate Debtor after her death, would abate and the petition under Section 95 has to be closed.

  NCLT Chennai (2026.10.07) in Samunnati Finance Pvt. Ltd. vs Renukadevi Anguraj   [(2026) ibclaw.in 3860 NCLT, CP(IB)/251(CHE)/2025 along with IA(IBC)/1587(CHE)/2025 in CP(IB)/251(CHE)/2025] held that; 

• We fully endorse with the view taken by the Principal Bench, NCLT, New Delhi in the case of Alchemist Asset Reconstruction supra, in the order dated 25.01.2022 that Personal Guarantor is an individual who has stood as Guarantee to the Corporate Debtor. Section 95 petition is for initiating insolvency resolution process against the Personal Guarantor and it is not the case for recovery of any amount because that will go contrary to the scheme of IBC, 2016. In such a situation, on the demise of the Personal Guarantor the proceedings under Section 95 of IBC against an individual who has given his guarantee in favour of Corporate Debtor after her death, would abate and the petition under Section 95 has to be closed.

• It was rightly observed in the case of Bank of Baroda supra that the assets of the Personal Guarantor are hit by moratorium and if the legal heirs of the deceased guarantor are put into the shoes of the Personal Guarantor, their personal assets will also get automatically hit by the moratorium which will cause grave prejudice to the rights of the third party. Further, there is no provision in the Code envisaging the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor.

Excerpts of the order;

# 1. This Petition has been filed u/s. 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016″) r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by Samunnati Finance Private Limited (“Financial Creditor”) for initiating insolvency resolution process against Ms. Renukadevi Anguraj (“Personal Guarantor”) in respect of default amount of Rs. 5,35,96,045 /- together with interest and penalties. The Date of Default, as specified in Part-III of the Petition, is 25.03.2024. The Petitioner has placed Deed of Guarantee dated 27.02.2019 and 05.01.2023 and Demand Notice under Form B dated 29.04.2025. This Petition has been filed on 02.08.2025.

# 2. Part -1 of the petition provides the details of the Financial Creditor i.e. Samunnati Finance Private Limited. Part – II of the petition provides the details of the Personal Guarantor i.e. Renukadevi Anguraj. She was the resident of 3/5 Nagar, Dindigul Main Road, Dindigul, Tamilnadu – 624619. She was Director in the Corporate Debtor Srinithi Enterprises Private Limited which has its registered office at Sarada Nagar, Virugambakkam, Chennai within the jurisdiction of this Tribunal. Part – III of the petition sets out the particulars of the debt being Rs. 5,35,96,045/- as on 29.04.2025 and the date of default as 25.03.2024.

# 3. As per the averments made in the petition, the Corporate Debtor engaged in the trading of dairy products had availed short term loan of Rs. 3.0 Crore from the Financial Creditor Samunnati Financial Intermediation and Services Private Limited, NBFC registered with RBI which was transferred with Samunnati Finance Private Limited by the order of NCLT Chennai Bench vide dated 23.12.2022. The short term loan was renewed / modified / enhanced from time to time and the last renewal was made vide sanction letter dated 30.12.2022 enhancing the credit facility limit to Rs. 4.0 Crore. The Corporate Debtor executed various documents favouring the Financial Creditor. The Respondent / Director of the Corporate Debtor along with three others executed a deed of personal guarantee dated 05.01.2023 where they including the Respondent irrevocably, absolutely and unconditionally agreed to guarantee the repayment of loan obligations in the event of default by the Corporate Debtor. It is stated that despite multiple demand notices and reminder letters, the Corporate Debtor failed to make any payments towards the outstanding dues on the due dates. Accordingly, the Financial Creditor issued a recall notice dated 14.05.2024 to the Corporate Debtor and the Guarantors demanding repayment of a sum of Rs. 4,23,11,085/- overdue from the Corporate Debtor along with interest and penalty. However, they did not comply with the said demand and failed to discharge their liability arising out of the loan agreement and the deed of personal guarantee. The Financial Creditor then on 29.04.2025 issued a demand notice under Form B of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 to the Personal Guarantors including the Respondent which was delivered on 02.05.2025, but the Respondent / Personal Guarantor neither responded to the notice nor filed any reply which made the Petitioner file the petition.

# 4. The Petitioner has placed the documents as detailed in the annexures to the petition at page 20 to 153.

# 5. On this petition, report from the IRP was called. He filed the report in IA(IBC)/1587(CHE)/2025 under Section 99 of IBC whereby she recommended for initiation of insolvency proceedings against the Respondent / Personal Guarantor Ms. Renukadevi Anguraj. The report is taken on record and the application IA(IBC)/1587(CHE)/2025 is disposed of.

# 6. Notice of the petition and the report was sent to the Respondent / Personal Guarantor. Shri. Prannit Stefano, Counsel appeared for the Personal Guarantor and submitted that the Personal Guarantor Ms. Renukadevi Anguraj has died in an accident. He filed the death certificate. On perusal, we find that she died on 19.04.2026 in an accident. This fact is also confirmed by the Counsel appeared on behalf of the Petitioner.

# 7. It is submitted on behalf of the Respondent that the proceedings against the Personal Guarantor have to be closed as the proceedings will abate consequent to the death of the Personal Guarantor. Reference has been made to the definition of Personal Guarantor given in Section 5(22) of IBC which means an individual who is the surety in a contract of guarantee to a Corporate Debtor. It is submitted that the Personal Guarantor is an individual who stood as a Guarantee to the Corporate Debtor and therefore on her demise, the proceedings against the Personal Guarantor would abate. It is submitted that the proceedings under IBC are not in the nature of recovery.

# 8. The case of Alchemist Asset Reconstruction Company vs. Deepak Puri in IB/438(PB)(2021) is referred where the Principal Bench of NCLT, New Delhi in its order dated 25.01.2022, held that in the case of proceedings under Section 95 of IBC which is not a case for recovery of any amount, after the demise of the Personal Guarantor as an individual who has given a guarantee in favour of the Corporate Debtor, there is no question of continuing the proceedings against such a dead person and the proceedings have to be closed. The case of Bank of Baroda, SAMB vs. Divya Jalan, CP(IB) No.363/2021 is also referred where NCLT, Kolkata Bench took a similar view in its order dated 11.02.2022. Following provisions / regulations were cited which are reproduced as under:

# 9. In the order, it was held that in a petition under Section 95 of IBC, the assets of the Personal Guarantor are hit by moratorium and if legal heirs of the deceased Personal Guarantor are put into the shoes of the Personal Guarantor, then their personal assets will also get automatically hit by moratorium which will cause grave prejudice to the rights of the third party. There is no provision in the Code which envisages the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor. It was held that the petition cannot be maintained against the legal heirs of the deceased Personal Guarantor. However, liberty was given to the creditor to pursue other recovery measures available under the law.

# 10. Ld. Counsel for the Petitioner per contra argued that as per section 169 of IBC, 2016 proceedings can be continued against the legal heirs of the bankrupt and also the said provision is in pari-materia to section 17 of the Provincial Insolvency Act, 1920 and section 93 of the Presidency Town Insolvency Act, 1909.

# 11. Ld. Counsel referred the case of State Bank of India SAMB v. Vijay Pal Garg IB 112(ND)/2022 where the case of IB/438/PB of 2021 titled Alchemist Asset Reconstruction Company supra, was discussed where it was observed that in the instant case, no death certificate has been produced regarding the death of the Personal Guarantor. In the absence of any document, it cannot be presumed that the person has expired. Order 22 Rule 4 and Rule 4A CPC, 1908 were referred which provide that if the sole defendant dies, right to sue survives against the legal representatives of the deceased defendant. It was observed that the Ld. Principal Bench did not consider Order 22 Rule 4 and Rue 4A while passing the order. The Tribunal thereafter directed the person appearing on behalf of the Personal Guarantor to file an affidavit whether personal guarantor is still alive or not. Ld. Counsel also referred the case of Reliance Capital AF Trustee Company Pvt. Ltd. v. S. Sailesh & Anr. CP(IB) No.132 of 2020 decided on 08.06.2022. Ld., Counsel submits that this issue is pending consideration before the Hon’ble NCLAT.

# 12. Ld. Counsel has also referred the case of Invent Assests Securitization and reconstruction Private Limited vs. Popatlal K Jain (Legal heir of late Smt Sakuben K Jain Personal Guarantor of Shree Daksh Jyot Silk Mills Private Limited) CP(IB)-203(MB)/2023 to contend that legal heirs can be substituted in place of the deceased personal guarantor.

# 13. Ld. Counsel argued that under the old insolvency laws, like the Presidency Towns Insolvency Act, 1909, proceedings could continue against the estate of a deceased debtor by substituting legal heirs, and therefore a similar approach should be taken under the IBC.

# 14. We have given our thoughtful consideration to contentions of both the parties.

# 15. Ld. Counsel for the Petitioner contends that, in the Presidency Towns Insolvency Act, 1909, proceedings could continue against the estate of a deceased debtor by substituting legal heirs, and therefore a similar approach should be taken under the IBC. This Tribunal is of the view that, this contention of the Petitioner does not hold any merit as those enactments have been repealed by Section 243 of the Code and creditors are free to proceed against the estate of the deceased guarantor under other laws, such as the Indian Contract Act and the CPC, but not under the IBC framework.

# 16. It is not in dispute that the Respondent/Personal Guarantor expired on 19.04.2026. Death Certificate in this respect has been placed on record.

# 17. We fully endorse with the view taken by the Principal Bench, NCLT, New Delhi in the case of Alchemist Asset Reconstruction supra, in the order dated 25.01.2022 that Personal Guarantor is an individual who has stood as Guarantee to the Corporate Debtor. Section 95 petition is for initiating insolvency resolution process against the Personal Guarantor and it is not the case for recovery of any amount because that will go contrary to the scheme of IBC, 2016. In such a situation, on the demise of the Personal Guarantor the proceedings under Section 95 of IBC against an individual who has given his guarantee in favour of Corporate Debtor after her death, would abate and the petition under Section 95 has to be closed. The similar view was taken by the other NCLTs in the cases referred supra.

# 18. The case of State Bank of India SAMB v. Vijay Pal Garg IB 112(ND)/2022 is distinguishable on facts. The Order 22, Rule 4 & Rule 4A of Civil Procedure Code, 1908 are applicable for substituting the legal heirs of the deceased defendant representing the estate of the deceased. The IBC proceeding is not a recovery proceeding or the proceedings where the legal heirs have inherited the estate of the deceased. It only relates to insolvency of the Personal Guarantor. It was rightly observed in the case of Bank of Baroda supra that the assets of the Personal Guarantor are hit by moratorium and if the legal heirs of the deceased guarantor are put into the shoes of the Personal Guarantor, their personal assets will also get automatically hit by the moratorium which will cause grave prejudice to the rights of the third party. Further, there is no provision in the Code envisaging the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor.

# 19. In the light of what has been stated above, we decide the issue in favour of the Respondent holding that the proceedings against the Personal Guarantor will abate after the death of the Personal Guarantor. The insolvency proceedings against the Personal Guarantor are accordingly closed.

# 20 The Petition CP(IB)/251(CHE)/2025 is dismissed with no orders as to costs.

# 21. File be consigned to records.

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Tata Capital Limited vs Mr. Sanjay Mahajan - We further observe that per combined reading of Section 52(2) of the Insolvency and Bankruptcy Code and also Regulations 21A, 31A(2) and 39BA of Liquidation Process Regulations, the Appellant cannot be permitted to simultaneously participate in the liquidation process and preserve an option to withdraw the secured assets at a later stage depending upon the result of the Scheme.

  NCLAT (2026.10.06) in Tata Capital Limited vs Mr. Sanjay Mahajan   [Company Appeal (AT) (Insolvency) No. 1067 of 2026] held that; 

• We are unable to accept the submission that the pendency of the Scheme under Section 230 of the Companies Act, 2013 kept the statutory requirements of the liquidation process in abeyance. The consideration of a Scheme for revival and value maximization does not dispense with the statutory requirement applicable to a secured creditor seeking to realize its security outside the liquidation estate. The Appellant could not retain an uncommunicated option and seek to exercise it after the Scheme had failed.

• The requirement of making the election within the prescribed period is part of the statutory scheme. Its applicability does not depend upon the existence of a competing security interest. Once the Appellant failed to exercise the option in the prescribed manner and within the prescribed period, it cannot seek to revive that option at a later stage on the ground that no third-party equity had intervened.

• We further observe that per combined reading of Section 52(2) of the Insolvency and Bankruptcy Code and also Regulations 21A, 31A(2) and 39BA of Liquidation Process Regulations, the Appellant cannot be permitted to simultaneously participate in the liquidation process and preserve an option to withdraw the secured assets at a later stage depending upon the result of the Scheme.

• The Liquidator was justified in treating the assets as part of the liquidation estate in view of the Appellant's failure to make a timely and valid election.

• The distinction between the existence of a security interest and the exercise of the statutory option is material. The loan documents may establish the existence of the security, but they do not by themselves establish compliance with the separate requirement of communicating the election contemplated by Regulation 21A. The Adjudicating Authority has correctly applied this distinction.

Excerpts of the order;

Analysis and Findings

# 46. Appellant/Tata Capital Ltd. claims that it is a secured financial creditor having a valid hypothecation over the assets of the Corporate Debtor. It submits that it had filed its claim in Form D and had stated that it had not relinquished its security interest. According to the Appellant, its participation in the stakeholders' Consultation Committee (SCC) meetings and in the consideration of the Scheme under Section 230 of the Companies Act, 2013 was without prejudice to its right under Section 52 of the Code. It submits that the email dated 19.02.2025 was a valid intimation of its decision to realize the secured assets outside the liquidation estate after the Scheme was rejected. The Appellant further contends that the existence of the security interest is established by the loan and hypothecation documents and that any deficiency in Form D cannot defeat its substantive right under Section 52. It also relies upon Action Ispat and Power Private Limited (supra), Y. Shivram Prasad (supra) and Swiss Ribbons Pvt. Ltd. (supra) to submit that the Code is intended to promote revival and value maximization and that participation in the revival process cannot amount to waiver or relinquishment of its security interest.

# 47. The Respondent/Liquidator claims that the Appellant did not validly and timely exercise the option contemplated by Section 52 of the Code read with Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016. The liquidation commenced on 13.08.2024, whereas the Appellant submitted Form D on 01.10.2024 and did not communicate within the prescribed period its decision to realize the security outside the liquidation estate. In Form D, Serial No. 8 was stated as 'NIL', while Serial No. 8A stated 'No' to relinquishment, which, according to the Respondent, did not constitute a clear election to stand outside the liquidation estate. The Appellant thereafter participated in the SCC meetings and exercised its voting rights, including in relation to the Scheme of Compromise under Section 230 of the Companies Act, 2013. The Respondent submits that the first clear written request for exclusion and delivery of the assets was made only by email dated 19.02.2025, after the Scheme had failed on 04.02.2025 and more than six months after commencement of liquidation. The Respondent therefore contends that the belated email could not cure the statutory non-compliance. It is further submitted that the existence of a security interest is distinct from the timely exercise of the statutory option and that Section 52(3) cannot be invoked without a valid election under Regulation 21A. The Respondent submits that the Impugned Order is reasoned and calls for no interference.

# 48. We have considered the submissions of the learned Counsel for the Appellant and the learned Liquidator and have perused the record placed before us. The principal question which arises for consideration is whether the Appellant, as a secured creditor, validly and within the prescribed period exercised its option under Section 52 of the Code to stand outside the liquidation estate and realize the secured assets.

# 49. There is no dispute that the Appellant is a secured financial creditor and that the hypothecation documents relied upon by it record a security interest over the concerned assets. However, the existence of a security interest and the exercise of the statutory option to realize that security outside the liquidation estate are two distinct matters. The present Appeal is required to be examined with reference to the latter issue.

# 50. Before proceeding further let us extract the provisions of Section 52(2) of the Insolvency and Bankruptcy Code and also Regulation 21A, 31A(2) and 39BA of Liquidation Process Regulations, which provides for the presumption of security interest and which are helpful in deciding the case in hand. 

"52. Secured creditor in the liquidation proceedings 

(1) A secured creditor in the liquidation proceedings may--

(a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section 53; or

(b) realise its security interest in the manner specified in this section.

(2) Where the secured creditor realizes security interest under clause

(b) of sub-section (1), he shall inform the liquidator of such security interest and identify the asset subject to such security interest to be realized."

[Prior to amendment of 2026] 

Regulation 21A. Presumption of security interest.

(1) A secured creditor shall inform the liquidator of its decision to relinquish its security interest to the liquidation estate or realise its security interest, as the case may be, in Form C or Form D of Schedule II.

Provided that, where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be deemed to be relinquished to the liquidation estate."

[Prior to latest amendments of 2026] 

Regulation 31A: Stakeholders' consultation committee. 

(1) XXX (2) The voting share of a member of the consultation committee shall be in proportion to his admitted claim in the total admitted claim:

Provided a secured creditor who has not relinquished his security interest under section 52 shall not be part of the consultation committee; Provided that the promoters, directors, partners or their representatives may attend the meeting of the consultation committee, but shall not have any right to vote.

Provided further that a financial creditor or his representative, if he is a related party of the corporate debtor, shall not have right to vote. (3)...."

"Regulation 39BA: Assessment of Compromise or Arrangement. 

(1) While deciding to liquidate the corporate debtor under section 33, the committee shall examine whether to explore compromise or arrangement as referred to under sub -regulation (1) of regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 and the resolution professional shall submit the committee's recommendation to the Adjudicating Authority while filing application under section 33.

(2) Where a recommendation has been made under sub-regulation (1), the resolution professional and the committee shall keep exploring the possibility of compromise or arrangement during the period the application to liquidate the corporate debtor is pending before the Adjudicating Authority."

# 51. The liquidation commenced on 13.08.2024. The record shows that the Appellant submitted Form D on 01.10.2024. In the said Form, Serial No. 8 contained an entry of 'NIL' in relation to the details of security held, whereas Serial No. 8A contained the answer 'No' to the question whether the security interest had been relinquished. The Adjudicating Authority considered these entries together and held that the Appellant had not clearly communicated the option to realize its security interest outside the liquidation estate. We find no error in this approach.

# 52. The statutory scheme requires a secured creditor who seeks to stand outside the liquidation estate to exercise and communicate its option within the prescribed period. The Appellant admittedly did not make a clear written request for exclusion of the hypothecated assets and their delivery for realization within that period. The first clear written communication relied upon by the Appellant is the email dated 19.02.2025. This communication was issued after the Scheme of Compromise under Section 230 of the Companies Act, 2013 had been rejected on 04.02.2025. Thus, the Appellant did not opt to stand outside the liquidation estate within the prescribed thirty days and waited until the Scheme had failed.

# 53. The explanation of the Appellant that it had orally communicated its intention or that the entries in Form D were sufficient cannot be accepted in the facts of the present case. There is no contemporaneous record placed before us showing a clear and valid election within the prescribed period. The subsequent email dated 19.02.2025 cannot retrospectively cure the failure to exercise the statutory option within time.

# 54. The participation of the Appellant in the SCC meetings is also a relevant circumstance. The Appellant remained a member of the SCC, attended its meetings and exercised its voting rights - to further confirm that it has relinquished its security interest else would not have been part of SCC per Regulation 31A. The Appellant was aware of the taking of custody of the assets and the valuation process. It did not, during the relevant period, take the position in a manner and within the time prescribed by Regulation 21A that the assets were to be excluded from the liquidation estate for independent realization. The conduct of the Appellant, therefore, has to be considered along with the entries made in Form D and the belated email dated 19.02.2025.

# 55. We are unable to accept the submission that the pendency of the Scheme under Section 230 of the Companies Act, 2013 kept the statutory requirements of the liquidation process in abeyance. The consideration of a Scheme for revival and value maximization does not dispense with the statutory requirement applicable to a secured creditor seeking to realize its security outside the liquidation estate. The Appellant could not retain an uncommunicated option and seek to exercise it after the Scheme had failed.

# 56. The judgments relied upon by the Appellant, including Action Ispat and Power Private Limited (supra), Y. Shivram Prasad (supra) and Swiss Ribbons Pvt. Ltd. (supra), emphasize the object of revival, continuation and value maximization under the Code. Those principles cannot be read as dispensing with the specific statutory requirements governing the exercise of an option under Section 52 read with Regulation 21A. The object of the Code has to operate within the statutory framework governing liquidation.

# 57. The submission that no prejudice was caused because there were no competing claims over the assets also does not advance the Appellant's case. The requirement of making the election within the prescribed period is part of the statutory scheme. Its applicability does not depend upon the existence of a competing security interest. Once the Appellant failed to exercise the option in the prescribed manner and within the prescribed period, it cannot seek to revive that option at a later stage on the ground that no third-party equity had intervened.

# 58. We also do not find merit in the contention that the Liquidator made the Appellant's right subject to approval of the SCC. The record, as noticed in the submissions of the Liquidator, shows that the issue was considered in the context of its effect upon the liquidation estate and the interests of the stakeholders. The Appellant's application was rejected by the Adjudicating Authority primarily because the statutory option had not been validly and timely exercised. The requirement of SCC approval was not treated as a statutory precondition for exercise of the right under Section 52.

# 59. We further observe that per combined reading of Section 52(2) of the Insolvency and Bankruptcy Code and also Regulations 21A, 31A(2) and 39BA of Liquidation Process Regulations, the Appellant cannot be permitted to simultaneously participate in the liquidation process and preserve an option to withdraw the secured assets at a later stage depending upon the result of the Scheme. Here we observe that the appellant had not relinquished its security interest and continued to participate in the stakeholder consultation committee meeting and also participated in the scheme of compromise and arrangement scheme. Thereafter only, it elected to stand outside, which is totally impermissible as per the existing Code and regulations. The regulation governing the scheme of compromise and arrangement (39BA) doesn't grant extension of time for Appellant with the security interest to stand out of the liquidation estate at a later point in time. Such a course would unsettle the liquidation estate after custody and valuation of the assets and after other steps in the liquidation process had been undertaken. The Liquidator was justified in treating the assets as part of the liquidation estate in view of the Appellant's failure to make a timely and valid election.

# 60. The distinction between the existence of a security interest and the exercise of the statutory option is material. The loan documents may establish the existence of the security, but they do not by themselves establish compliance with the separate requirement of communicating the election contemplated by Regulation 21A. The Adjudicating Authority has correctly applied this distinction.

# 61. On an overall consideration of the record, we are satisfied that the Appellant did not validly exercise its option to stand outside the liquidation estate within the prescribed thirty days. The Appellant waited until after the Scheme of Compromise had failed and thereafter sought to assert its right by email dated 19.02.2025. Such a belated assertion cannot be accepted to the prejudice of the liquidation process and other stakeholders.

# 62. We, therefore, find no infirmity in the Impugned Order dated 13.04.2026 passed by the Adjudicating Authority in IA/2828/2025 in CP(IB) No. 3138 (MB)/2019. The submissions of the Appellant seeking exclusion of the hypothecated assets and permission to realize the security interest outside the liquidation estate are unsustainable. The submissions of the Liquidator that the Appellant failed to comply with the statutory requirement and that the belated exercise of the option cannot be permitted are supported by the statutory scheme and the facts borne out from the record.

# 63. In view of the foregoing discussion, we are of the considered view that the Appeal does not merit interference by this Appellate Tribunal. The Impugned Order calls for no interference.

Conclusion

# 64. For the reasons stated above, the Appeal is dismissed. The Impugned Order dated 13.04.2026 passed by the Adjudicating Authority in IA/2828/2025 in CP(IB) No. 3138 (MB)/2019 is affirmed. The Appellant is not entitled to exclusion of the hypothecated assets from the liquidation estate or to realize the said assets outside the liquidation process on the basis of its belated communication dated 19.02.2025.

Order

# 65. The Appeal is dismissed. The Impugned Order dated 13.04.2026 passed by the National Company Law Tribunal in IA/2828/2025 in CP(IB) No. 3138 (MB)/2019 is affirmed. All related IAs are also accordingly disposed of. No order as to costs.

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