BALANCING SARFAESI AND IBC: JUDICIAL RESPONSE TO MORATORIUM ABUSE – A DOCTRINAL ANALYSIS

AUTHOR – SUPRATIM RAY, STUDENT AT NATIONAL LAW UNIVERSITY, TRIPURA

BEST CITATION – SUPRATIM RAY, BALANCING SARFAESI AND IBC: JUDICIAL RESPONSE TO MORATORIUM ABUSE – A DOCTRINAL ANALYSIS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (5) OF 2026, PG. 786-789, APIS – 3920 – 0001 & ISSN – 2583-2344.

INTRODUCTION

The SARFAESI Act, 2002, and the IBC Act, 2016, create two pillars of the Indian debt recovery and resolution framework. Let us look at a SARFAESI v/s IBC analysis of these two Acts. The provisions of SARFAESI allow the secured creditor mostly banks and financial Institutions to enforce a security interest in the property of the Borrower without the intervention of a court and the focus is mainly asset recovery by taking possession and sale/ auction of the asset as per section 13. The provisions of IBC focus on the resolution of stress assets in a collective manner as per CIRP (Corporate Insolvency Resolution Process) or to go for liquidation and the section 14 moratorium is mainly for protecting the estate of the corporate debtor for the benefit of all across and not to take any action against people until the resolution plan is approved.They have always been in a delicate balance. SARFAESI ensures quick measures for secured creditors whereas IBC provides equitable distribution and revival. Nonetheless, this duality has created differences, especially on the moratorium that may defuse SARFAESI actions. By the year 2025, the jurisprudence has evolved sharply. In recent times, the Supreme Court, NCLAT, NCLT, and High Courts have perceived the IBC moratorium as not merely a “shield” for honest resolution seekers but also a possible “sword” for chronic defaulters. The landmark decision of the Bombay High Court (March 2026) in Rozina Firoz Hajiani & Ors. v. The Union of India v. Ors. have made very clear lines against misuse.