Auction sale confirmed before CIRP commencement remains absolute regardless of post-moratorium sale certificate issuance.

IDFC First Bank (Financial Creditor) obtained a consent decree against a borrower and the Corporate Debtor (CD), who was a guarantor.

Following a Recovery Certificate from DRT Mumbai, the Recovery Officer conducted an auction of the CD's mortgaged property on 11.10.2023.

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

The issuance of the Sale Certificate (Forms ITCP-18 and 20) was kept in abeyance due to an interim stay by the Calcutta High Court.

On 01.01.2024, the NCLT Kolkata admitted a Section 7 IBC petition against the CD and imposed a moratorium.

After the High Court vacated its stay, the Recovery Officer issued the Sale Certificate on 14.03.2024.

The Resolution Professional (RP) moved the NCLT, arguing the sale was void as the certificate was issued during the moratorium.

The NCLT allowed the RP's application, declaring the sale null and void.

The Bank and Auction Purchaser appealed this order.

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.

Specifically, Rule 63 of the Second Schedule stipulates that once the purchase money is paid and an order confirming the sale is made, the sale becomes "absolute".

The Court relied on the principle established in *B. Arvind Kumar v. Govt. of India*, holding that a sale certificate is merely evidence of title and not a transfer deed itself.

It distinguished the Supreme Court ruling in *Indian Overseas Bank v. M/s. RCM Infrastructure Ltd.*, noting that the latter dealt with the SARFAESI Rules where sale completion is contingent upon the payment of the balance amount during the moratorium, unlike the present case where the sale became absolute under the Income Tax Act rules prior to CIRP.

The Appellate Tribunal reasoned that the NCLT erred in concluding that the sale was post-initiation of CIRP.

The record clearly showed that the sale was confirmed by the Recovery Officer on 20.11.2023, well before the 01.01.2024 insolvency commencement date.

Under Rule 63 of the Second Schedule of the Income Tax Act, the sale became "absolute" upon that confirmation.

The Tribunal emphasized that the issuance of the Sale Certificate is a "ministerial act" and a "formal acknowledgement of a fact already accomplished," rather than a judicial act that transfers title.

Since the Auction Purchaser had paid the full amount and the sale was confirmed before the moratorium, the CD lost its right and title to the property in November 2023.

Consequently, the property was no longer an asset of the CD at the time of the Section 14 declaration, and the moratorium could not retrospectively invalidate a concluded sale.

It held that the title passed to the Auction Purchaser on 20.11.2023 upon confirmation of the sale, and the subsequent moratorium under Section 14 of the IBC had no effect on the absolute nature of that sale.

The application filed by the RP (IA No. 592/2024) was dismissed, effectively restoring the property rights to the Auction Purchaser.