Section 10 Shouldn't Be Exploited And Abused By Corporate Debtor, Application After SARFAESI Proceedings Invalid: NCLAT Principle Bench

The NCLAT Delhi ruled that SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) proceedings cannot continue once a corporate debtor initiates a resolution process under Section 10 of the Insolvency and Bankruptcy Code (IBC). This decision clarifies that if a corporate debtor files for insolvency under IBC, any ongoing SARFAESI proceedings against it become invalid. The tribunal emphasized that the IBC process supersedes other recovery mechanisms, aligning with the principle of providing a uniform insolvency resolution framework. This ruling supports the priority of IBC procedures over SARFAESI, ensuring that once insolvency proceedings commence, all other debt recovery actions must cease.