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2017 (8) TMI 491 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- On examination of the balance sheet (provisional) it transpires that there is a contrast between the assets disclosed and the corresponding liabilities shown. The provision for realization of debt appears to be significantly insufficient comparing the assets (whether tangible or intangible) of the Company. The Insolvency Professional can iron out all these creases. It is of the view that by the assistance of an expert such discrepancy can be resolved. For this reason as well the "Admission" is hereby approved. Nevertheless, the decision on "Admission" as pronounced hereinabove is subject to a qualification. Referring to verbatim the provisions of Section 14 of the Code is that on the commencement of the Insolvency process the 'Moratorium' shall be declared for prohibiting any action to recover or enforce any security interest created by the Corporate Debtor in respect of "its" property. Relevant section which needs in-depth examination is section 14(1)(c) of The Code. The outcome of this discussion is that the Moratorium shall prohibit the action against the properties reflected in the Balance Sheet of the Corporate Debtor. The Moratorium has no application on the properties beyond the ownership of the Corporate Debtor. For the sake of completeness it is worth to refer that the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (the SARFAESI Act) may be having different criteria for enforcement of recovery of outstanding debt, which is not the subject matter of this Bench. Before I part with it is necessary to clarify my humble view that The SARFAESI Act may come within the ambits of Moratorium if an action is to foreclose or to recover or to create any interest in respect of the property belonged to or owned by a Corporate Debtor, otherwise not. To conclude the Application under Section 10 of The Code is hereby "Admitted" subject to the exception as carved out supra. The consequential directions shall be that the provisions of Section 14 of The Code i.e. "Moratorium" shall come into operation.
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