The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held in Indian Overseas Bank v. RCM Infrastructure Ltd. and Ors. that the provisions of the Insolvency and Bankruptcy Code will override those of the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. On the question of the validity of a transaction partly initiated prior to the commencement of CIRP, the tribunal held that receiving a portion of the sale proceeds prior to the imposition of the moratorium under IBC does not necessarily indicate the completion of a sale.
The tribunal also held that the Financial Creditor in this case acted in violation of the moratorium by filing a revised claim form. The receipt of the remaining portion of the bid amount from the sale of assets, after the moratorium had been put in place, was declared illegal. In summary, it was held that the sale of the assets of the Corporate Debtor during the moratorium was held against the spirit of section 14 of the IBC.