CIRP - Recovery of outstanding dues - Legitimacy and ...

Companies Law

April 8, 2024

CIRP - Recovery of outstanding dues - Legitimacy and consequences of a Sale Deed executed by the company in liquidation. - Priority of charges - The High court recognized the secured creditor's (Andhra Bank) rights under the SARFAESI Act to enforce their security interest without judicial intervention. It affirmed that the Sale Deed, although executed during the winding-up proceedings, was a valid exercise of the bank’s rights to recover its dues and was not aimed at defrauding other stakeholders. - The court dismissed allegations of the property being undervalued or sold in bad faith. - The court clarified the Official Liquidator's powers, emphasizing that while the Liquidator plays a crucial role in protecting the company's assets, the SARFAESI Act empowers secured creditors to realize their security interests independently.

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