IBC Section 251: Amendments of Act 54 of 2002

Section 251 of Insolvency and Bankruptcy Code, 2016: Amendments of Act 54 of 2002

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 shall be amended in the manner specified in the Seventh Schedule.

Legal Commentary & Landmark Judgments: Section 251

Section 251 amends the SARFAESI Act, 2002 to harmonize securitisation and enforcement of security interests with the provisions of the Code.

Harmonization with SARFAESI Act: Amends Act 54 of 2002 in the manner specified in the Seventh Schedule to the Code.
Suspension During Moratorium: Clarifies that secured creditor actions under Section 13(2) and 13(4) of the SARFAESI Act stand suspended during the subsistence of a moratorium under Section 14 or Section 128.
Preservation of Securitisation Rights Post-Moratorium: Permits secured creditors to realize security interests under SARFAESI in liquidation, subject to the conditions of Section 52.

Key Landmark Precedents:

Pegasus Assets Reconstruction v. Haryana Concast Ltd. (2016) 4 SCC 47: The Supreme Court examined the interplay between securitisation laws and insolvency, affirming that SARFAESI remedies yield to specialized statutory moratoriums.
Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat (2023) 10 SCC 60: Highlighted that SARFAESI enforcement must harmonize with the collective liquidation priorities of the Code.

Courtroom Practice & Strategic Litigation Guidance:

Secured creditors with active SARFAESI possession cannot conduct property auctions once a Section 7/9/10 admission order is passed; taking physical possession during moratorium violates Section 14 and invites contempt sanctions.