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2017 (11) TMI 780 - Tri - Companies LawInsolvency procedure - whether the word “may” employed in Section 7(5)(a) of Insolvency & Bankruptcy Code, 2016 can be stretched to invalidate the purpose and object of the Section 7 of the Code or not? - SARFAESI proceeding - Held that:- Generally, the word “may” or the word “shall” cannot be used to go against the mandate of the Section - mandate is if debt and default is ascertained, if other conditions are fulfilled, then the petition has to be admitted. If that is so, the Adjudicating Authority is limited to see and to all conditions requisite for admitting the petition have been set out or not. That being so, can it be said that the petition need not be admitted for some other reason that is not envisaged either under the respective section or the code? To my knowledge, it can’t be so. Thus whether SARFAESI proceeding or a provision of SARFAESI Act can be worked into Section 7 of the Code to say that admission of Section 7 petition will amount to public mischief. I fear, not. Normally the word “shall” and “may” are construed imperatively Lord Brougham in Queen v. Allooparao [1847] 3MLA 488 P 492, it has been held “if the words are it “shall and may” be so and so done, by such and such officer and body then the word “may” is held in all soundness of construction to confer, a power but the word “shall” is held to make that power, or the exercise of that power compulsory.” Insolvency & Bankruptcy Code operates in the following manner: 1. Notwithstanding clause under Section 238 of the Code will have effect on any other law inconsistent with the provisions of the Code, SARFAESI Act also being an Act dealing with creditor and debtor relation and operation of law in both the enactments being on the same field, Insolvency & Bankruptcy Code will prevail over SARFAESI Act. 2. Section 14 having categorically mentioned that declaration of moratorium will prohibit enforcement of security interest created by the Corporate Debtor in respect of its property including any action under SARFAESI Act, 2002, it can’t be said that sale in progress will not remain under suspension during the moratorium period. As already said sale is not concluded because full payment is not made till date and confirmation has not been given as prescribed under sub Rule 6 of Rule 9 of Enforcement Rules, which are notified taking power from Section 13 of SARFAESI Act which is meant for enforcement of security interest.
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