Dismissing urgent writ petition challenging secured creditor’s sale notice, the Bombay High Court has held that IBC moratorium cannot be invoked by a mortgagor to obstruct SARFAESI proceedings. The Court further held that where a petitioner is admittedly a mortgagor and not a creditor under the IBC, the moratorium provisions of the Code cannot be used as a shield to obstruct a secured creditor’s enforcement action under the SARFAESI Act.
The High Court emphasised that the availability of an efficacious statutory remedy before the DRT, coupled with the petitioner’s own admission of having already approached the DRT against an earlier sale notice, rendered the writ petition non-maintainable. The Court further held that suppression of the NCLT order declining extension of moratorium violated the clean hands doctrine, and that writ jurisdiction could not be invoked against a private bank in any event.
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The Division Bench comprising Justice Manish Pitale and Justice Shreeram V. Shirsat observed that the Petitioner was admittedly the mortgagor of the subject property and was attempting to create a false impression that it was a creditor under the IBC whose cause the Bank, another creditor, was breaking ranks from. The Court characterised the Petition as yet another attempt by a mortgagor to wriggle out of the situation without availing the statutory remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The Court referred to the Supreme Court decisions in United Bank of India vs. Satyawati Tondon [(2010) 8 SCC 110] and Celir LLP vs. Bafna Motors (Mumbai) Pvt Ltd. [(2024) 2 SCC 1], observing that despite repeated pronouncements by the Supreme Court, High Courts continued to exercise writ jurisdiction under Article 226 of the Constitution ignoring statutory remedies under the RDBFI Act and the SARFAESI Act, and that no indulgence ought to be shown when such efficacious statutory remedies exist.
The Court also noted that the question of law sought to be raised on the basis of IBC provisions was nothing but a desperate attempt to avoid steps being taken by the Bank, which was admittedly a secured creditor under the SARFAESI Act. The Court reiterated that moratorium under the IBC would not apply to the subject property, which exclusively belonged to the Petitioner as mortgagor. The Court further observed that the Writ Petition was not maintainable against a private bank in view of settled law, particularly since the Respondent private Bank was the only Respondent in the Petition.
On the issue of non-disclosure of the NCLT order, the Court referred to the Supreme Court’s decision in Udyami Evam Khadi Gramodyog Welfare Sanstha vs. State of Uttar Pradesh [(2008) 1 SCC 560], reiterating that a writ remedy is an equitable one and that a person approaching a superior court must come with clean hands, must not suppress any material fact, and that repeated filing of writ petitions to avoid secured creditor’s recovery action amounts to abuse of the process of law.
Briefly, the Petitioner, M/s. Ravijyot Finance and Leasing Pvt Ltd., approached the Bombay High Court challenging a sale notice dated 22nd July 2026 issued by the Respondent, Unity Small Finance Bank Limited, fixing the sale of a mortgaged property for 17th August 2026. The Petition was filed and circulated urgently on the very date of the proposed auction, on the ground that the Bank had initiated proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC), which had progressed to Section 100, and that the Petitioner was a creditor in the said proceedings.
The Petitioner’s case was that since the moratorium period of 180 days under the IBC was over and no extension had been granted, the Bank could not proceed with the sale until the NCLT applied its mind and passed an order under Sections 121 and 122 of the IBC. The Petitioner had admittedly earlier filed a Securitisation Application before the Debt Recovery Tribunal (DRT) challenging the first sale notice, and that proceeding was still pending. The Petitioner had also filed Commercial Suit challenging the very mortgage as forged and fabricated, and an Interim Application seeking urgent interim relief to stall the auction was rejected by a Single Judge of the Bombay High Court on 24th March 2026.
When questioned by the Court about the details of other creditors whose ranks the Bank was supposedly breaking, the Petitioner could not provide any answer and merely submitted that details could be placed before the Court if time was granted. It also emerged during the hearing that the Petitioner had not disclosed in its pleadings the fact that the moratorium under the IBC had not been extended by the NCLT, and this fact only came to light when the Bank produced a copy of the NCLT order dated 1st July 2026.
