Auction confirmation prior to moratorium renders sale absolute; subsequent issuance of sale certificate is a ministerial act.

IDFC First Bank (Appellant) sanctioned a loan of Rs. 25 crores to a borrower, for which Jai Gokul Towers Pvt. Ltd. (Corporate Debtor/CD) was a guarantor, mortgaging its 1/6th share in a property.

Following a consent decree and recovery certificate from DRT Mumbai, a recovery officer conducted an auction sale on 11.10.2023.

Quest Queen Vista LLP (Auction Purchaser) was declared successful, and the sale was confirmed by the Recovery Officer on 20.11.2023.

However, the issuance of the sale certificate (Forms ITCP-18 and ITCP-20) was kept in abeyance due to an interim stay by the Calcutta High Court.

On 01.01.2024, the NCLT admitted a Section 7 IBC application against the CD and declared a moratorium.

After the High Court stay was vacated, the Recovery Officer issued the sale certificate and handed over possession in March 2024.

The Resolution Professional (RP) moved the NCLT, arguing the sale was void due to the moratorium.

The NCLT allowed the RP’s application, holding that since the sale certificate was issued post-CIRP, the sale was bad in law.

The court applied Section 29 of the Recovery of Debts and Bankruptcy Act, 1993, which incorporates the Second Schedule of the Income Tax Act, 1961.

Rule 63 of the Second Schedule stipulates that a sale becomes "absolute" upon the Tax Recovery Officer making an order confirming the sale after the full purchase money is paid.

The court relied on the principle from *B. Arvind Kumar v. Govt. of India*, stating that a sale certificate is merely evidence of title and not the document that creates it.

It further applied *The State of Punjab v. M/s Ferrous Alloy Forgings P. Ltd.*, which holds that title transfers upon confirmation of sale once objections are disposed of, rather than upon the ministerial act of issuing or registering a sale certificate.

The Appellate Tribunal found that the NCLT erred in fact and law by concluding that the sale confirmation occurred post-CIRP.

The record clearly showed that the Recovery Officer confirmed the sale on 20.11.2023, following the payment of the full auction amount, which was well before the CIRP initiation on 01.01.2024.

The Tribunal reasoned that under Rule 63 of the Second Schedule of the Income Tax Act, the sale became "absolute" on the date of confirmation.

The subsequent issuance of the sale certificate in March 2024 was merely a ministerial act delayed by a third-party stay order, not a judicial act that transferred title.

The Tribunal distinguished the Supreme Court ruling in *Indian Overseas Bank v. RCM Infrastructure Ltd.*, noting that the RCM case involved the SARFAESI Rules where balance payments were accepted *after* the moratorium.

Conversely, in the present case, the statutory scheme of the Income Tax Act applied, and all conditions for an "absolute sale" were fulfilled prior to the moratorium.

Consequently, Section 14 of the IBC had no effect on the completed sale.

The Appeals were allowed, the NCLT’s order dated 24.04.2024 was set aside, and the RP’s application to recover the property was dismissed.