Banking · SARFAESI vs IBC Overlap
'Zenith Textiles Ltd' defaulted on a loan. The bank issued a notice under Section 13(2) of the SARFAESI Act. The company filed objections under Section 13(3A), which the bank ignored before taking possession. Meanwhile, the NCLT admitted an IBC application filed by an operational creditor and appointed an Interim Resolution Professional (IRP). Analyze the legal scenario.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Option B and Option C are correct✓
- 2The auction must be stayed due to the Moratorium under Section 14 of the IBC, which overrides SARFAESI
- 3The bank's possession is invalid because it did not respond to the borrower's objections under Section 13(3A)
- 4The bank can proceed with the auction because SARFAESI was initiated before the IBC admission
Correct answer
Both Option B and Option C are correct
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