Thursday, 10 September 2026

Maya Banerjee vs. Union of India and Ors - Doctrines of precedents and stare decisis are the core values of our legal system. They form the tools which further the goal of certainty, stability and continuity in our legal system. Arguably, Judges owe a duty to the concept of certainty of law, therefore they often justify their holdings by relying upon the established tenets of law.”

 SCI (2026.08.20) in Maya Banerjee vs. Union of India and Ors. [2026 INSC 959, Civil Appeal Nos.      of 2026 (@ DIARY NO. 43299/2024)] held that; 

  • Doctrines of precedents and stare decisis are the core values of our legal system. They form the tools which further the goal of certainty, stability and continuity in our legal system. Arguably, Judges owe a duty to the concept of certainty of law, therefore they often justify their holdings by relying upon the established tenets of law.”

  • It cannot be overemphasised that the discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty.

  • A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench; or if the decision of a High Court is not in consonance with the views of this Court.

  • We have to specifically deal with a submission on behalf of the appellant that the judgment in Rajkumar supra [State of Haryana vs. Raj Kumar, (2010) 4 SCC 216] does not have value as precedent. When ‘does’ or ‘does not’ in a decision become per incuriam, is a question that has been discussed in various judgments. Certain facets emerge from these discussions as follows:

14.1 It is an exception to the rule of stare decisis and must be ap-plied sparingly;

  • 14.2 A judgment is per incuriam:

(a) when its ratio is not reconcilable with an earlier decision rendered by a Bench of equal or higher strength; or

(b) when a particular provision or a statute or a rule or a regulation has not been brought to the attention of the Court;

14.3 It applies only to the ratio decidendi of a judgment and not to obiter dicta;

14.4 Judicial discipline requires that if a bench disagrees with an- other bench of co-equal strength the matter should be referred to a bench of three judges to decide the issue;

14.5 The decision rendered by the Bench of largest strength binds any subsequent Bench of co-equal or lesser strength. A Bench of lesser strength cannot dissent from the view already taken by a Bench of larger strength;

  • 14.6 A judgment cannot be said to be per incuriam:

(a) if it makes reference to an earlier decision and then concludes correctly or incorrectly; or 

(b) if the ordinary reading of the judgment does not on the face of it show it to be in conflict with earlier decisions, the court should refrain adopting such an interpretation.

14.7 It is not the numerical strength of judges taking a particular view that is relevant but it is instead the strength of the Bench, which is the determinative factor of the binding nature of a particular view.”


Excerpts of the Order

# 1. Delay condoned.

# 2. Leave granted.

# 3. A short question of importance is raised in these Appeals as to the appellant's entitlement to arrears of family pension consequent upon the death of her husband on 12.11.2000. However, the High Court has allowed family pension to the appellant from the year 2014, the time when she first approached the Central Administrative Tribunal 1, instead of allowing the same when it fell due upon the death of her husband.


# 4. As the facts of the matter are not in dispute, we shall refer to them very briefly. The appellant is the widow of Late K.M. Banerjee, an employee of Railways, who died on 12.11.2000 while in service as a Leverman. It is the appellant’s case that she was living separately from her husband on account of some dispute and she, being an illiterate lady, used to earn livelihood while offering maid services in the neighbourhood. The appellant 1 For short, ‘CAT’ was unknown about her husband’s service and his place of posting when he died on 12.11.2000 as per the death certificate (Annexure-P/3).


# 5. As per Railway Board’s Letter bearing No.E(D&A) 99 RG6-26 dated 19.06.2000 (RBE No. 115/2000), in the event of death of the charged employee during the pendency of the proceedings, the same should be closed immediately on the death of the charged railway servant. Despite this rule position, the appellant’s late husband was dismissed from service on 10.10.2001. On being aware of the said order of dismissal, the appellant preferred an appeal before the competent authority which was rejected on 24.07.2012 on the ground that the appeal was belatedly filed and that there were two varying dates of death available on record. Thereafter, the appellant served a legal notice on the respondent(s) seeking settlement of dues in her favour. However, when no action was taken thereon, the appellant preferred an original application which came to be dismissed by CAT on the ground of limitation.


# 6. In the meanwhile, the appellant also preferred a suit being Civil Suit No.269(A)/2014 seeking declaration about the date of death of her late husband which was decreed on 13.2.2015 declaring the date of death of her late husband as 12.11.2000. The said judgment and decree has attained finality.


# 7. The appellant thereafter moved the High Court by way of a writ petition in which the impugned order has been passed allowing the appellant’s claim to family pension. Yet the same has been restricted from the year 2014 onwards, the time when the appellant first approached the CAT.


# 8. It is argued that the appellant is entitled for family pension which fell due immediately after the death of her husband. Therefore, restricting the family pension from 2014 onwards is not in accordance with law.


# 9. Per contra, learned ASG appearing for the respondents would refer to the law laid down by this Court in Union of India and Others vs. Tarsem Singh [(2008) 8 SCC 648] to argue that the High Court has rightly restricted the consequential relief of recovery of arrears from 2014 onwards.


# 10. We have heard the learned counsel for the parties and perused the material available on record.


# 11. In the matter of State of Kerala and Others vs. M. Padmanabhan Nair [(1985) 1 SCC 429], this Court had held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement, but have become, under the decisions of this Court, valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with penalty of payment of interest.


# 12. The issue as to when the past arrears of pension can be restricted to a particular period instead of allowing the same from the date it fell due was considered by this Court in the matter of S.K. Mastan Bee vs. General Manager, South Central Railway and Another  [(2003) 1 SCC 184]. In this case also, the claim for pension was moved by the widow of the deceased servant of the Railways, who died in harness on 21.11.1969. However, due to ignorance  and lack of legal assistance, she could not stake her claim for family pension till 12.3.1991. Her claim was rejected by the Railways against which she preferred a writ petition which was allowed by the learned Single Judge. However, in an intra-court appeal preferred by the Railways, the Division Bench applied the principle of law of limitation applicable to suits and confined the retrospective benefit given by the learned Single Judge to a period subsequent to the date on which a legal notice was given by the widow of the deceased servant of Railways.


In the above factual background of the case in S.K. Mastan Bee (supra), this Court observed thus in paragraph 6:

  • “6. We notice that the appellant's husband was working as a Gangman who died while in service. It is on record that the appellant is an illiterate who at that time did not know of her legal right and had no access to any information as to her right to family pension and to enforce her such right. On the death of the husband of the appellant, it was obligatory for her husband's employer viz. the Railways, in this case to have computed the family pension payable to the appellant and offered the same to her without her having to make a claim or without driving her to a litigation. The very denial of her right to family pension as held by the learned Single Judge as well as the Division Bench is an erroneous decision on the part of the Railways and in fact amounting to a violation of the guarantee assured to the appellant under Article 21 of the Constitution. The factum of the appellant's lack of resources to approach the legal forum timely is not disputed by the Railways. The question then arises on facts and circumstances of this case, was the Appellate Bench justified in restricting the past arrears of pension to a period much subsequent to the death of the appellant's husband on which date she had legally become entitled to the grant of pension? In this case as noticed by us hereinabove, the learned Single Judge had rejected the contention of delay put forth by the Railways and taking note of the appellant's right to pension and the denial of the same by the Railways illegally considered it appropriate to grant the pension with retrospective effect from the date on which it became due to her. The Division Bench also while agreeing with the learned Single Judge observed that the delay in approaching the Railways by the appellant for the grant of family pension was not fatal, in spite of the same it restricted the payment of family pension from a date on which the appellant issued a legal notice to the Railways i.e. on 1-4-1992. We think on the facts of this case inasmuch as it was an obligation of the Railways to have computed the family pension and offered the same to the widow of its employee as soon as it  became due to her and also in view of the fact that her husband was only a Gangman in the Railways who might not have left behind sufficient resources for the appellant to agitate her rights and also in view of the fact that the appellant is an illiterate, the learned Single Judge, in our opinion, was justified in granting the relief to the appellant from the date from which it became due to her, that is the date of the death of her husband. Consequently, we are of the considered opinion that the Division Bench fell in error in restricting that period to a date subsequent to 1-4-1992.” (emphasis supplied)


# 13. Although in Tarsem Singh (supra), this Court has held that if the issue relates to pension or refixation of pay or pension, a relief may be granted in spite of delay. But if the claim involved issues relating to seniority or promotion, etc., affecting others, delay would render the claim stale and doctrine of laches/limitation will be applied. Insofar as the consequential relief of recovery of arrears for a past period is concerned, the principles relating to recurring/successive wrongs will apply. As a consequence, the High Courts will restrict the consequential relief relating to arrears normally to a period of three years prior to the date of filing of the writ petition.


# 14. The principle laid down in S.K. Mastan Bee (supra) is also by a two-Judge Bench like that in the matter of Tarsem Singh (supra). However, S.K. Mastan Bee (supra) is directly related to the case of family pension claim by a widow like in the present case. This Court, while taking a view in Tarsem Singh (supra) that the consequential relief of recovery of arrears should be restricted by the High Courts normally to a period of three years prior to the date of the filing of the writ petition, has not taken into consideration the earlier view of this Court in S.K. Mastan Bee (supra). In a situation like this, this Court is required to ponder as to what course is open when there is conflict in the views taken in two judgments of this Court rendered by the Benches of equal strength.


# 15. A seminal issue fell for consideration before this Court in Union of India and Others vs. S.K. Kapoor 5 wherein it was held thus in paragraph 9:

  • “9. It may be noted that the decision in S.N. Narula case [(2011) 4 SCC 591] was prior to the decision in T.V. Patel case [(2007) 4 SCC 785 : (2007) 2 SCC (L&S) 98]. It is well settled that if a subsequent coordinate Bench of equal strength wants to take a different view, it can only refer the matter to a larger Bench, otherwise the prior decision of a coordinate Bench is binding on the subsequent Bench of equal strength. Since, the decision in S.N. Narula case [(2011) 4 SCC 591] was not noticed in T.V. Patel case [(2007) 4 SCC 785 : (2007) 2 SCC (L&S) 98], the latter decision is a judgment per incuriam. The decision in S.N. Narula case [(2011) 4 SCC 591] was binding on the subsequent Bench of equal strength and hence, it could not take a contrary view, as is settled by a series of judgments of this Court.” (emphasis supplied)


# 16. Yet again in Dr. Shah Faesal and Others vs. Union of India and Another6, this Court had occasion to consider the doctrine of precedent and stare decisis and observed thus in paragraph 18:

  • “18. Doctrines of precedents and stare decisis are the core values of our legal system. They form the tools which further the goal of certainty, stability and continuity in our legal system. Arguably, Judges owe a duty to the concept of certainty of law, therefore they often justify their holdings by relying upon the established tenets of law.


# 17. Coming specific to the issue as to whether a ruling of a Coordinate Bench binds the subsequent Coordinate Benches, this Court in Dr. Shah Faesal (supra) held thus in paragraphs 23 to 26:

  • “23. This brings us to the question, as to whether a ruling of a coordinate Bench binds subsequent coordinate Benches. It is now a settled principle of law that the decision rendered by a coordinate Bench is binding on the subsequent Benches of equal or lesser strength. The aforesaid view is reinforced in the National 5 (2011) 4 SCC 589 6 (2020) 4 SCC 1  Insurance Co. Ltd. v. Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 :(2018) 2 SCC (Cri) 205] wherein this Court held that : (SCC pp. 713-14, para 59) 

  • “59.1. The two-Judge Bench in Santosh Devi [Santosh Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421 : (2012) 3 SCC (Civ) 726 : (2012) 3 SCC (Cri) 160 : (2012) 2 SCC (L&S) 167] should have been well advised to refer the matter to a larger Bench as it was taking a different view than what has been stated in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] , a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench.” (emphasis supplied)

  • 24. The impact of non-consideration of an earlier precedent by a coordinate Bench is succinctly delineated by Salmond [Salmond on Jurisprudence [P.J. Fitzgerald (Ed.), 12th Edn., 1966], p. 147.] in his book in the following manner:

  • “… A refusal to follow a precedent, on the other hand, is an act of coordinate, not of superior, jurisdiction. Two courts of equal authority have no power to overrule each other's decisions. Where a precedent is merely not followed, the result is not that the later authority is substituted for the earlier, but that the two stand side by side conflicting with each other. The legal antinomy thus produced must be solved by the act of a higher authority, which will in due time decide between the competing precedents, formally overruling one of them, and sanctioning the other as good law. In the meantime the matter remains at large, and the law uncertain.” (emphasis supplied)

  • 25. In this line, further enquiry requires us to examine, to what extent does a ruling of coordinate Bench bind the subsequent Bench. A judgment of this Court can be distinguished into two parts : ratio decidendi and the obiter dictum. The ratio is the basic essence of the judgment, and the same must be understood in the context of the relevant facts of the case. The principal difference between the ratio of a case, and the obiter, has been elucidated by a three-Judge Bench decision of this Court in Union of India v. Dhanwanti Devi [Union of India v. Dhanwanti Devi, (1996) 6 SCC 44] wherein this Court held that : (SCC pp. 51-52, para 9) 

  • `“9. … It is not everything said by a Judge while giving judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. … A decision is only an authority for what it actually decides. … The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject-matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding. It is only the principle laid down in the judgment that is binding law under Article 141 of the Constitution.”  (emphasis supplied)

  • 26. The aforesaid principle has been concisely stated by Lord Halsbury in Quinn v. Leathem [Quinn v. Leathem, 1901 AC 495 (HL)] in the following terms : (AC p. 506) “… that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides.” (emphasis supplied)” (emphasis supplied)


# 18. The rule of per incuriam has been explained in Dr. Shah Faesal (supra) in subsequent paragraphs 28 to 32 in the following words:

  • “28. The rule of per incuriam has been developed as an exception to the doctrine of judicial precedent. Literally, it means a judgment passed in ignorance of a relevant statute or any other binding authority [see Young v. Bristol Aeroplane Co. Ltd. [Young v. Bristol Aeroplane Co. Ltd., 1944 KB 718 (CA)] ]. The aforesaid rule is well elucidated in Halsbury's Laws of England in the following manner [3rd Edn., Vol. 22, Para 1687, pp. 799-800.] :

  • “1687. … the court is not bound to follow a decision of its own if given per incuriam. A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of a coordinate jurisdiction which covered the case before it, or when it has acted in ignorance of a decision of the House of Lords. In the former case it must decide which decision to follow, and in the latter it is bound by the decision of the House of Lords.” (emphasis supplied)

  • 29. In this context of the precedential value of a judgment rendered per incuriam, the opinion of Venkatachaliah, J., in the seven-Judge Bench decision of A.R. Antulay v. R.S. Nayak [A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602 : 1988 SCC (Cri) 372] assumes great relevance : (SCC p. 716, para 183) 

  • “183. But the point is that the circumstance that a decision is reached per incuriam, merely serves to denude the decision of its precedent value. Such a decision would not be binding as a judicial precedent. A coordinate Bench can disagree with it and decline to follow it. A larger Bench can overrule such decision. When a previous decision is so overruled it does not happen — nor has the overruling Bench any jurisdiction so to do — that the finality of the operative order, inter partes, in the previous decision is overturned. In this context the word “decision” means only the reason for the previous order and not the operative order in the previous decision, binding inter partes. … Can such a decision  be characterised as one reached per incuriam? Indeed, Ranganath Misra, J. says this on the point : (para 105) ‘Overruling when made by a larger Bench of an earlier decision of a smaller one is intended to take away the precedent value of the decision without effecting the binding effect of the decision in the particular case. Antulay, therefore, is not entitled to take advantage of the matter being before a larger Bench.’” (emphasis supplied)

  • 30. The counsel arguing against the reference have asserted that the rule of per incuriam is limited in its application and is contextual in nature. They further contend that there needs to be specific contrary observations which were laid down without considering the relevant decisions on the point, in which case alone the principle of per incuriam applies.

  • 31. Therefore, the pertinent question before us is regarding the application of the rule of per incuriam. This Court while deciding Pranay Sethi case [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 : (2018) 2 SCC (Cri) 205] , referred to an earlier decision rendered by a two-Judge Bench in Sundeep Kumar Bafna v. State of Maharashtra [Sundeep Kumar Bafna v. State of Maharashtra, (2014) 16 SCC 623 : (2015) 3 SCC (Cri) 558] , wherein this Court emphasised upon the relevance and the applicability of the aforesaid rule : (Sundeep Kumar Bafna case [Sundeep Kumar Bafna v. State of Maharashtra, (2014) 16 SCC 623 : (2015) 3 SCC (Cri) 558] , SCC p. 642, para 19) 

  • “19. It cannot be overemphasised that the discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty. A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench; or if the decision of a High Court is not in consonance with the views of this Court. It must immediately be clarified that the per incuriam rule is strictly and correctly applicable to the ratio decidendi and not to obiter dicta.” (emphasis supplied)

  • 32. The view that the subsequent decision shall be declared per incuriam only if there exists a conflict in the ratio decidendi of the pertinent judgments was also taken by a five-Judge Bench decision of this Court in Punjab Land Development & Reclamation Corpn. Ltd. v. Labour Court [Punjab Land Development & Reclamation Corpn. Ltd. v. Labour Court, (1990) 3 SCC 682 : 1991 SCC (L&S) 71] : (SCC pp. 706-07, para 43) “43. As regards the judgments of the Supreme Court allegedly rendered in ignorance of a relevant constitutional provision or other statutory provisions on the subjects covered by them, it is true that the Supreme Court may not be said to “declare the law”  on those subjects if the relevant provisions were not really present to its mind. But in this case Sections 25-G and 25-H were not directly attracted and even if they could be said to have been attracted in laying down the major premise, they were to be interpreted consistently with the subject or context. The problem of judgment per incuriam when actually arises, should present no difficulty as this Court can lay down the law afresh, if two or more of its earlier judgments cannot stand together.” (emphasis supplied)” (emphasis supplied)


# 19. In an extremely recent judgment in the matter of Parveen Kumar @ Parveen Chauhan vs. State of Haryana and Others [2026 INSC 667], this Court culled out the principles of per incuriam to hold thus in paragraph 14:

  • “14. We have to specifically deal with a submission on behalf of the appellant that the judgment in Rajkumar supra [State of Haryana vs. Raj Kumar, (2010) 4 SCC 216] does not have value as precedent. When ‘does’ or ‘does not’ in a decision become per incuriam, is a question that has been discussed in various judgments. Certain facets emerge from these discussions as follows:

  • 14.1 It is an exception to the rule of stare decisis and must be ap-plied sparingly;

  • 14.2 A judgment is per incuriam:

  • (a) when its ratio is not reconcilable with an earlier decision rendered by a Bench of equal or higher strength; or

  • (b) when a particular provision or a statute or a rule or a regulation has not been brought to the attention of the Court;

  • 14.3 It applies only to the ratio decidendi of a judgment and not to obiter dicta;

  • 14.4 Judicial discipline requires that if a bench disagrees with an- other bench of co-equal strength the matter should be referred to a bench of three judges to decide the issue;

  • 14.5 The decision rendered by the Bench of largest strength binds any subsequent Bench of co-equal or lesser strength. A Bench of lesser strength cannot dissent from the view already taken by a Bench of larger strength;

  • 14.6 A judgment cannot be said to be per incuriam:

  • (a) if it makes reference to an earlier decision and then concludes correctly or incorrectly; or 

  • (b) if the ordinary reading of the judgment does not on the face of it show it to be in conflict with earlier decisions, the court should refrain adopting such an interpretation.

  • 14.7 It is not the numerical strength of judges taking a particular view that is relevant but it is instead the strength of the Bench, which is the determinative factor of the binding nature of a particular view.”


# 20. When the principles concerning the binding value of two conflicting decisions rendered by the Benches of equal strength are settled, as quoted in the above referred judgments, we have to apply the principles in the case in hand to decide whether the appellant would be entitled to family pension from the date it fell due or she is entitled to it from the year 2014 as has been directed by the High Court.


# 21. In our considered view, considering the right of an individual to receive family pension which is held akin to a valuable right and property in her hand and is no longer treated as a bounty, restricting the same from 2014 onwards would not only be arbitrary, but it will amount to inflicting injustice upon a poor widow who was earning livelihood by working as a house maid in the neighbourhood when her husband died in harness. Not only that her husband was dismissed after his death which was impermissible as per the Railway Board’s own circular, the appellant’s subsequent representation claiming family pension was rejected on the ground of incongruity as to the date of death of her late husband. The appellant had to file a civil suit to obtain a declaration as to the exact date of death of her husband, for which otherwise, a death certificate, a statutory document, had already been issued in her favour. Thus, the appellant was not at fault in laying the delayed challenge to the Railways’ refusal to grant family pension to her. In our view, the ratio in S.K. Mastan Bee (supra) has dealt with the specific issue of restricting the past arrears of pension in more appropriate manner and the same having not been considered by the latter Bench of equal strength in Tarsem Singh (supra), the only choice open to us is to rely on S.K. Mastan Bee (supra) to allow the present Appeals.


# 22. In view of the settled legal position as to the binding value of the earlier judgments, we are persuaded to follow the principles laid down by this Court in S.K. Mastan Bee (supra) and, as a consequence, we allow the present Appeals and modify the order passed by the High Court to direct that the appellant shall be entitled to family pension from the date of death of her husband i.e., from 12.11.2000. The entire arrears shall be paid to the appellant with interest at the rate of 6% per annum within a period of three months from today.

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Thursday, 27 August 2026

Gondwana Engineers Ltd. vs Bijay Murmuria (Liquidator) and Ors.- An order is not per incuriam merely because it does not advert, in terms, to a statutory provision that, on a correct application of law as discussed above, would not in any event have altered the outcome.

  NCLAT (2026.08.21) in  Gondwana Engineers Ltd.  vs  Bijay Murmuria (Liquidator) and Ors. [(2026) ibclaw.in 998 NCLAT: Comp. App. (AT) (Ins) No. 1276 of 2026] held that;

  • Section 60(5)(c) of the Code confers upon the Adjudicating Authority jurisdiction to entertain “any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor.

  • The deliberate use of the word “priorities” forecloses the very contention now advanced: a dispute as to the inter se priority of charges over an asset of the Corporate Debtor, arising in the course of its liquidation, is a paradigm instance of the jurisdiction the provision was designed to confer, not a matter excluded from it.

  • When a prior encumbrance is discharged, a subsisting subsequent encumbrance moves up in priority, there being no fresh, intervening right of a stranger created in between.

  • Section 48 of the Transfer of Property Act, 1882 applies in its ordinary terms: successive rights created over the same immovable property rank in the order of their creation, and each later-created right is, absent special contract, subject to rights previously created.

  • The principle that an assignee steps into the shoes of, and can claim no greater right then, the assignor is precisely what the Adjudicating Authority applied at paragraphs holding that Areion Finserve and, in turn, Raj Radhe Finance, could acquire no more than the subordinate charge that BOM itself held.

  • It is not, however, the mode of creation of the charge; the charge here was created by the underlying contract, the equitable mortgage effected through the NOC dated 10.09.2012 and the Memorandum dated 16.01.2013 and continues to bind the immediate parties to that transaction and those claiming through them with notice of it, regardless of registration.

  • An order is not per incuriam merely because it does not advert, in terms, to a statutory provision that, on a correct application of law as discussed above, would not in any event have altered the outcome.

  • It is well settled that mere pendency of a review, revision or appeal does not, without an order of stay, suspend the operation or binding effect of the order under challenge; the order continues to bind the parties until set aside or stayed.


Excerpts of the Order

Findings

# 49. At the outset, we note that the core controversy concerns the inter se priority of competing charges over an immovable property i.e. the Sigma-9 Property , owned by the Corporate Debtor, as between (a) a second pari-passu equitable mortgage created in 2012–13 in favour of IDBI Bank Limited (“Respondent No. 3”) and Dena Bank, now Bank of Baroda (“Respondent No. 4”/“BOB”), and (b) a Simple Mortgage Deed dated 20.03.2015 executed by the Corporate Debtor as guarantor-mortgagor in favour of Bank of Maharashtra (“Respondent No. 5”/“BOM”) to secure independent credit facilities extended by BOM to the Appellant a security interest subsequently assigned by BOM, first to Areion Finserve Private Limited (“Respondent No. 2”) and thereafter to Raj Radhe Finance Limited (“Respondent No. 8”). The Adjudicating Authority has held that the Sigma-9 Property forms part of the liquidation estate of the Corporate Debtor, and that the mortgage traceable to BOM ranks subordinate to the charge of IDBI Bank and BOB. Aggrieved thereby, the Appellant has preferred the present appeal.


# 50. The facts, as borne out from the paper-book and the impugned order (including the chronology recorded by the Adjudicating Authority at paragraph 31.4 thereof), may be briefly noticed as under:

Date

Event

30.12.2009

Doshion Private Limited (“the Corporate Debtor”) purchased House No. 9, Sigma Corporate, behind Rajpath Club, Bodakdev, Ahmedabad (“the Sigma-9 Property”).

07.01.2010

Bank of Maharashtra (“BOM”) sanctioned a Loan Against Property facility of Rs. 3.20 crore to the Corporate Debtor and obtained an equitable mortgage over the Sigma-9 Property, thereby becoming its first charge-holder.

10.09.2012

BOM issued a No Objection Certificate permitting creation of a second pari-passu charge over the Sigma-9 Property in favour of IDBI Bank Limited and Dena Bank (now Bank of Baroda, “BOB”), who had separately sanctioned facilities aggregating approximately Rs. 140 crore to the Corporate Debtor.

16.01.2013

A Memorandum recording extension of equitable mortgage was executed, whereby IDBI Bank and Dena Bank acquired a second pari-passu charge over the Sigma-9 Property, subordinate to the first charge of BOM.

20.08.2014 &12.09.2014

IDBI Bank and Dena Bank respectively restructured their credit facilities (to Rs. 93.48 crore and Rs. 87.77 crore), continuing to record the Sigma-9 Property as collateral security.

11.03.2015

A Joint Lenders’ Meeting was held between BOM and the IDBI-Dena Bank consortium concerning extension of the second charge.

20.03.2015

BOM issued a No Due Certificate closing the Corporate Debtor’s 2010 Loan Against Property account; on the very same day, Gondwana Engineers Limited (“the Appellant”) executed a fresh, independent Simple Mortgage Deed in favour of BOM over the Sigma-9 Property, securing the Appellant’s own separate credit facilities, with the Corporate Debtor furnishing the property as guarantor-mortgagor.

06.04.2015

BOM, Pune Branch informed BOM, Ahmedabad Branch that no second charge on the Sigma-9 Property was to be ceded without approval of the competent authority.

08.05.2017

Bank of Baroda instituted O.A. No. 282 of 2017 before the Debts Recovery Tribunal, Ahmedabad (“DRT”).

17.10.2018

The DRT, in S.A. No. 154/2017, upheld Bank of Baroda’s symbolic possession under Section 13(4) of the SARFAESI Act, 2002, recording that a second charge in its favour over the Sigma-9 Property was not in dispute.

08.11.2019

The DRT, Ahmedabad, in O.A. No. 282 of 2017, held that IDBI Bank and Dena Bank (BOB) became first charge-holders over the Sigma-9 Property upon discharge of BOM’s facility, and that any subsequent loan by BOM would rank subordinate thereto.

2020

The Appellant filed Review Application No. 1 of 2020 against the DRT order dated 08.11.2019; no order staying that order has been placed on record at any stage.

31.08.2021

The Corporate Debtor was admitted into CIRP in C.P.(IB) No. 59 of 2019.

03.10.2023

The Corporate Debtor was ordered to be liquidated; Mr. Bijay Murmuria, Authorised Insolvency Professional of Sumedha Management Solutions Private Limited, was appointed Liquidator (“the Liquidator”/“Respondent No. 1”). Public announcement under Regulation 12 followed on 11.10.2023, fixing 08.11.2023 as the last date for submission of claims and 08.12.2023 for verification.

27.10.2023( regd. 30.11.2023)

BOM executed an Assignment Agreement in favour of Areion Finserve Private Limited (“Respondent No. 2”), assigning its debt and security interest, including over the Sigma-9 Property. No claim was lodged by BOM in the liquidation, and no intimation under Section 52 read with Regulation 21A(1) was given by BOM or Areion Finserve within thirty days of the liquidation commencement date.

21.06.2024

The Adjudicating Authority, in I.A. Nos. 63 of 2022 and 94 of 2022, directed handing over of possession of the Corporate Debtor’s properties to the Liquidator.

06.07.2024

Areion Finserve filed Form-D before the Liquidator asserting rights over the Sigma-9 Property — nearly nine months after the liquidation commencement date and well beyond the prescribed timeline.

15.07.2024 –07.09.2024

The Liquidator rejected Areion Finserve’s claim for delay and non-compliance with Regulation 21A; reconsideration was sought and reiteratively declined.

24.01.2025 –08.07.2025

Areion Finserve’s I.A. Nos. 231 and 341 of 2025 (condonation of delay; challenge to rejection) were, after being filed, ultimately dismissed for non-prosecution on 08.07.2025; no order setting aside or staying that dismissal is on record.

12.03.2025

The Liquidator filed (amended) I.A. No. 440(AHM)2025 under Section 60(5) of the Code seeking declarations concerning the Sigma-9 Property and the assignment deeds.

02.05.2025

Areion Finserve assigned its rights to Raj Radhe Finance Limited (“Respondent No. 8”).

22.09.2025

Raj Radhe Finance Limited filed I.A. No. 1137(AHM)2025 under Section 42 read with Section 60(5)(c) of the Code, challenging rejection of the claim originally filed by Areion Finserve.

01.04.2026

The Liquidator filed I.A. No. 525(AHM)2026 seeking amendment of I.A. No. 440 of 2025 for a consequential direction for handover of the original title deeds of the Sigma-9 Property.

30.06.2026

The Adjudicating Authority passed the impugned Common Order disposing of I.A. Nos. 440(AHM)2025, 1137(AHM)2025 and 525(AHM)2026.

17.06.2026

The Liquidator issued a notice (with corrigendum) for auction of the Corporate Debtor’s properties, including the Sigma-9 Property, fixed for 20.07.2026.

16.07.2026

The present appeal, together with applications for ad-interim stay of the impugned order and of the proposed auction, came to be filed.


# 51. The Adjudicating Authority framed four issues for determination, namely: 

  • (i) whether IDBI Bank and BOB acquired first charge over the Sigma-9 Property upon discharge of BOM’s earlier dues, and the nature and effect of the mortgage subsequently created by the Appellant in favour of BOM; 

  • (ii) whether the assignment of debt by BOM to Areion Finserve, and thereafter to Raj Radhe Finance, conferred any rights on the assignees and required adjudication of the validity of those assignments; 

  • (iii) whether BOM and its assignees failed to exercise the option to realise their security interest within the period prescribed under Section 52 of the Code read with Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016, and whether rejection of Areion Finserve’s claim warranted interference under Section 42 of the Code; and 

  • (iv) whether the Sigma-9 Property forms part of the liquidation estate and the Liquidator is entitled to its custody and control, including the original title deeds. 


On Issue (i), the Adjudicating Authority held that upon BOM’s No Due Certificate dated 20.03.2015 discharging its 2010 facility, the second pari-passu charge already vested in IDBI Bank and BOB with effect from 16.01.2013 automatically assumed the position of first charge, and that the Simple Mortgage Deed dated 20.03.2015 in favour of BOM, though validly created, ranked subordinate thereto. 


On Issue (ii), it declined to adjudicate upon or invalidate the assignment deeds, holding that the assignees merely stepped into the shoes of BOM and could acquire no greater right. 


On Issue (iii), it held that BOM and its assignees failed to intimate their election to realise security outside liquidation within thirty days as required by Regulation 21A(1), that the claim filed by Areion Finserve on 06.07.2024 was hopelessly delayed, and that rejection of that claim called for no interference under Section 42. 


On Issue (iv), it held that the Sigma-9 Property forms part of the liquidation estate under Section 36 of the Code and that the Liquidator is entitled to custody and control thereof, including the original title deeds, under Section 35.


# 52. In consequence, the Adjudicating Authority 

  • (a) partly allowed I.A. No. 440(AHM)2025, declaring the Sigma-9 Property to be part of the liquidation estate and holding that the security interest of Respondent Nos. 2 and 8 (Areion Finserve and Raj Radhe Finance), being subordinate and having lapsed into the liquidation estate under Regulation 21A(3), would not obstruct the Liquidator, while declining to quash the assignment deeds themselves; 

  • (b) dismissed I.A. No. 1137(AHM)2025 filed by Raj Radhe Finance Limited; and 

  • (c) allowed I.A. No. 525(AHM)2026, directing BOM, Areion Finserve, Raj Radhe Finance, or any person in possession of the original title deeds of the Sigma-9 Property to hand them over to the Liquidator within two weeks, failing which coercive steps under Sections 35(1)(n) and 70 of the Code were left open.


# 53. Having heard the matter and perused the paper-book, including the impugned order in its entirety, the said grounds resolve themselves into the following six Issues, which alone require determination and are dealt with issue-wise below:

  • ISSUE NO. (1) Whether I.A. No. 440(AHM)2025 involved adjudication of matters beyond the jurisdiction of the Adjudicating Authority under Section 60(5) of the Code.

  • ISSUE NO. (2) Whether the Adjudicating Authority erred in holding that the second pari-passu charge of IDBI Bank and BOB ranks in priority over the Simple Mortgage Deed dated 20.03.2015 in favour of BOM

  • ISSUE NO. (3) Whether the absence of registration of the IDBI Bank/BOB charge with the Registrar of Companies (“ROC”)/CERSAI, and the alleged non-consideration of Sections 77 and 79 of the Companies Act, 2013, renders the impugned order perverse or per incuriam.

  • ISSUE NO. (4) Whether the pendency of Review Application No. 1 of 2020 against the DRT order dated 08.11.2019 detracts from the impugned order.

  • ISSUE NO. (5) Whether the impugned order suffers from internal inconsistency in simultaneously including the Sigma-9 Property in the liquidation estate and declining to set aside the assignment deeds dated 27.10.2023 and dated 02.05.2025.

  • ISSUE NO. (6) Whether the dismissal of I.A. No. 1137(AHM)2025 and the directions in I.A. No. 525(AHM)2026 call for interference by this Appellate Tribunal.


Issue wise discussion

ISSUE NO.(1) Whether I.A. No. 440(AHM)2025 involved adjudication of matters beyond the jurisdiction of the Adjudicating Authority under Section 60(5) of the Code.

# 54. The Appellant urged that I.A. No. 440(AHM)2025 was, in essence, an attempt to obtain declarations regarding proprietary rights, mortgage priority and inter se rights of secured creditors — matters said to be governed by the Transfer of Property Act, 1882 and general mortgage law, and therefore not amenable to the summary jurisdiction conferred by Section 60(5) of the Code.


# 55. This contention does not survive a plain reading of the statute. Section 60(5)(c) of the Code confers upon the Adjudicating Authority jurisdiction to entertain “any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor.” The deliberate use of the word “priorities” forecloses the very contention now advanced: a dispute as to the inter se priority of charges over an asset of the Corporate Debtor, arising in the course of its liquidation, is a paradigm instance of the jurisdiction the provision was designed to confer, not a matter excluded from it.


# 56. Nor can the determination be characterised as collateral to liquidation. Unless the Adjudicating Authority determines whether, and subject to what encumbrance, the Sigma-9 Property forms part of the liquidation estate, the Liquidator cannot discharge the statutory duties cast upon him under Sections 35 and 36 of the Code to take custody, verify and realise the assets of the estate. The question “does this asset belong to the estate, and free of what claims” is not incidental to liquidation; it is foundational to it.


# 57. We also take into consideration that the Appellant’s own reply dated 18.07.2025 before the Adjudicating Authority (recorded at paragraphs 8.1 to 8.13 of the impugned order) did not question the Adjudicating Authority’s jurisdiction to decide priority at all; on the contrary, it squarely invited a decision on merits that the charge of IDBI Bank and BOB was never perfected for want of registration and could not prevail over the mortgage traceable to BOM. Having invited an adjudication on the very question of priority and having failed on merits, it is not open to the Appellant to contend for the first time before this Appellate Tribunal that the forum it invoked lacked jurisdiction to decide what it was asked to decide.


# 58. On the issue that the Adjudicating Authority travelled beyond the pleadings, we note that the reliefs sought in I.A. No. 440(AHM)2025 (extracted at paragraph 2 of the impugned order) expressly sought declarations as to the character of the Sigma-9 Property and the legality of the charges created by the assignment deeds qua that property. Determination of the underlying priority of mortgages was a necessary and inseverable incident of granting or refusing those very declarations; it cannot be said that relief was granted beyond the prayers. Issue No. 1 is accordingly answered against the Appellant.


Issue No. (2) Whether the Adjudicating Authority erred in holding that the second pari-passu charge of IDBI Bank and BOB ranks in priority over the Simple Mortgage Deed dated 20.03.2015 in favour of BOM?

# 59. The undisputed sequence is this: BOM acquired a first equitable mortgage on 07.01.2010; IDBI Bank and Dena Bank (BOB) acquired a second pari-passu charge with effect from 16.01.2013, pursuant to BOM’s own No Objection Certificate dated 10.09.2012; and on 20.03.2015, BOM discharged the very facility that constituted its first charge (by issuing a No Due Certificate) while, on the same day, the Appellant executed an entirely fresh and independent Simple Mortgage Deed over the same property in favour of BOM, securing the Appellant’s own, unrelated credit facilities, with the Corporate Debtor furnishing the property merely as guarantor-mortgagor.


# 60. On this sequence, the finding that the second pari-passu charge of IDBI Bank and BOB automatically assumed the position of first charge upon discharge of BOM’s 2010 facility is unexceptionable and follows from elementary mortgage law: when a prior encumbrance is discharged, a subsisting subsequent encumbrance moves up in priority, there being no fresh, intervening right of a stranger created in between. The 2015 Simple Mortgage Deed, on the correct finding of the Adjudicating Authority, was not a renewal or continuation of the discharged 2010 mortgage but a new and independent transaction securing a different borrower (the Appellant) and different facilities; neither the sanction letter nor the mortgage deed reserved to BOM a continuation of its erstwhile firs-tranking priority notwithstanding the intervening, already-vested rights of IDBI Bank and BOB.


# 61. In the absence of such a stipulation, Section 48 of the Transfer of Property Act, 1882 applies in its ordinary terms: successive rights created over the same immovable property rank in the order of their creation, and each later-created right is, absent special contract, subject to rights previously created. We are of considered view that this priority of a first-created charge under Section 48 of the Transfer of Property Act, 1882 is not displaced by provisions of company law governing distribution among secured creditors, and continues to bind unless the earlier charge-holder has itself relinquished its security.


# 62. The “composite transaction” argument of the Appellant is that discharge of the 2010 facility and creation of the 2015 mortgage formed one indivisible restructuring, such that BOM’s priority ought to be treated as unbroken, does not withstand scrutiny of the parties and facilities involved. The 2010 facility was a Loan Against Property extended to the Corporate Debtor; the 2015 facility was an altogether different credit exposure extended to the Appellant, with the Corporate Debtor merely a guarantor. A restructuring that is “composite” only in the loose commercial sense of involving affiliated customers of the same bank does not, without more, operate in law to preserve a priority that depends on continuity of the very right, not continuity of the banking relationship. Indeed, BOM’s own letter dated 19.03.2015 required that the 2010 facility “be closed before implementation” of the fresh sanction — contemplating sequential closure and fresh creation, not seamless continuation. The composite-transaction argument does not, therefore, assist the Appellant.


# 63. The Appellant’s reliance on BOM Pune’s internal communication dated 06.04.2015 to BOM Ahmedabad, asserting that no second charge was to be ceded without approval of competent authority was correctly held immaterial, since that communication post-dates, and could not retrospectively unwind, rights that had already vested in IDBI Bank and BOB with effect from 16.01.2013. A bank’s unilateral, internal and subsequent communication to its own branch cannot extinguish or subordinate rights that third parties had already validly and irrevocably acquired.


# 64. Another Ground of the Appellant insofar as it relies on an alleged “modification of charge for the subject property by BOM, Ahmedabad on 12.07.2011,” stands on a different footing altogether: this assertion appears for the first time in the Appeal. It finds no mention in the Appellant’s own reply dated 18.07.2025 before the Adjudicating Authority, no place in the chronology recorded at paragraph 31.4 of the impugned order, and no corresponding Annexure is traceable in the present paper-book. A plea of fact neither pleaded nor proved below, unsupported by any document on the record of this appeal, cannot be permitted to be raised for the first time in appeal, more so where, if true, it concerns a document that would have been squarely within the possession of the Appellant or BOM and readily producible before the Adjudicating Authority. This limb of Ground is rejected.


# 65. On the issue that an assignee acquires every proprietary and contractual right of the assignor, and that assignment cannot diminish the rights attached to the assigned security does not, on examination, assist the Appellant; if anything, it confirms the correctness of the impugned order. The principle that an assignee steps into the shoes of, and can claim no greater right then, the assignor is precisely what the Adjudicating Authority applied at paragraphs holding that Areion Finserve and, in turn, Raj Radhe Finance, could acquire no more than the subordinate charge that BOM itself held.

Thus, Issue No 2 goes against the Appellant.


Issue No. 3: Whether the absence of registration of the IDBI Bank/BOB charge with the Registrar of Companies (“ROC”)/CERSAI, and the alleged non-consideration of Sections 77 and 79 of the Companies Act, 2013, renders the impugned order perverse or per incuriam?

# 66. The Appellant argued that in the absence of registration of the IDBI Bank/BOB charge with the ROC or CERSAI, that charge could never be perfected and cannot prevail over the mortgage traceable to BOM (which was itself registered with CERSAI on 17.10.2023 and with the ROC by Form CHG-1 dated 06.12.2023, culminating in a certificate of registration of modification of charge dated 15.02.2024), and that the impugned order, by not adverting to Sections 77 and 79 of the Companies Act, 2013, is perverse.


# 67. We find that this conflates two distinct legal consequences. Registration of a charge under Section 77 of the Companies Act, 2013 operates as constructive notice to persons dealing with the company and, under sub-section (3) thereof, renders an unregistered charge liable to be disregarded by the liquidator and by other creditors of the company. It is not, however, the mode of creation of the charge; the charge here was created by the underlying contract, the equitable mortgage effected through the NOC dated 10.09.2012 and the Memorandum dated 16.01.2013 and continues to bind the immediate parties to that transaction and those claiming through them with notice of it, regardless of registration. Sections 77 and 79 of the Companies Act, 2013 exist to protect the liquidator and other creditors dealing with the company without notice of an unregistered charge; they were not enacted to confer, upon a subsequent chargee who otherwise had notice (actual or constructive) of an earlier charge, a priority it could not otherwise claim.


# 68. We observe that it is the Liquidator, the very party for whose protection Section 77(3) exists , who does not invoke non-registration to defeat the priority of IDBI Bank and BOB; to the contrary, the Liquidator treated their charge as the first charge, consistent with which IDBI Bank and BOB duly lodged their claims and relinquished their security to the liquidation estate under Section 52 of the Code . It is only the Appellant, a stranger to the IDBI Bank/BOB charge, aligned with the subsequent mortgagee, who seeks to invoke Section 77(3) for a purpose the provision was not designed to serve, namely to elevate its own subsequently created and, on facts, subordinate mortgage. Independently, as urged by Respondent No. 8 before the Adjudicating Authority, if the true grievance was the correctness or completeness of the entries on the register of charges maintained by the ROC, the remedy lay in an application for rectification of the register of charges under Section 87 of the Companies Act, 2013, and not in resisting, in summary liquidation proceedings under Section 60(5) of the Code, a declaration necessary for administration of the liquidation estate. This finding on this issue is affirmed.


# 69. The allied contention that the impugned order is rendered per incuriam for not expressly citing Sections 77 and 79 of the Companies Act, 2013 is equally misconceived. An order is not per incuriam merely because it does not advert, in terms, to a statutory provision that, on a correct application of law as discussed above, would not in any event have altered the outcome.

In totality the No. 3 is accordingly answered against the Appellant.


Issue No. 4: Whether the pendency of Review Application No. 1 of 2020 against the DRT order dated 08.11.2019 detracts from the impugned order.

# 70. The Appellant argued that the Adjudicating Authority erred in treating the DRT’s order dated 08.11.2019 as conclusive, without regard to the pendency of Review Application No. 1 of 2020 filed by the Appellant against that order.


# 71. It is not disputed and nothing in the Appeal suggests otherwise that no order staying the operation of the DRT order dated 08.11.2019 has been obtained in the Review Application at any point since 2020. It is well settled that mere pendency of a review, revision or appeal does not, without an order of stay, suspend the operation or binding effect of the order under challenge; the order continues to bind the parties until set aside or stayed. The Adjudicating Authority was, therefore, correct to proceed on the footing that the findings in the order dated 08.11.2019 continued to hold the field.


# 72. In any event, the finding on priority does not rest solely, or even principally, on the DRT’s order; it independently follows from the documentary chronology the NOC dated 10.09.2012, the Memorandum dated 16.01.2013, the No Due Certificate dated 20.03.2015 and the contemporaneous Simple Mortgage Deed read with Section 48 of the Transfer of Property Act, 1882, as discussed under Issue No. 2 above. The DRT order was relied upon only as independent corroboration and not as the foundation of the finding. The pendency of the review therefore furnishes no ground to disturb the impugned order.

Issue No. 4 is accordingly answered against the Appellant.


Issue No. 5: Whether the impugned order suffers from internal inconsistency in simultaneously including the Sigma-9 Property in the liquidation estate and declining to set aside the assignment deeds dated 27.10.2023 and dated 02.05.2025?

# 73. It is the case of the Appellant that the impugned order is self-contradictory in simultaneously (a) declaring the Sigma-9 Property part of the liquidation estate and permitting the Liquidator to take custody under Section 35 of the Code, and (b) declining to set aside the Assignment Agreements dated 27.10.2023 and 02.05.2025, which are said to remain subsisting and valid; and that unless the impugned order is set aside, the charges created by those assignment deeds would be rendered infructuous.


# 74. On examination, no such inconsistency exists. The impugned order does two analytically distinct things: first, it declines to invalidate the Assignment Agreements dated 27.10.2023 and 02.05.2025 as transactions inter se between BOM, Areion Finserve and Raj Radhe Finance and second, it separately holds that the security interest which those assignments purported to carry , being, on Issue No 2 above, a mortgage subordinate to the first charge of IDBI Bank and BOB, and, on the findings on Issue (iii) of the impugned order, never realised or even intimated for realisation within the thirty-day window prescribed by Regulation 21A(1) of the IBBI (Liquidation Process) Regulations, 2016 — stood deemed, by operation of the proviso to Regulation 21A(1) read with Regulation 21A(3), to have lapsed into the liquidation estate .


# 75. We observe that these findings can co-exist without any conflict. An assignment may be a perfectly valid transaction as between assignor and assignee, transferring whatever the assignor held, while what was transferred (here, a subordinate charge that its holders never elected, in time, to realise outside liquidation) is, independently and by force of Regulation 21A, treated as part of the estate. The assignees are not left without a valid transaction for that reason; what they are left without is a security interest enforceable outside liquidation. That is a statutory consequence of Regulation 21A, not an inconsistency internal to the impugned order.


# 76. The security assigned under the two deeds was always subordinate and always liable to lapse for want of timely election under Section 52 of the Code. The impugned order does no more than record the legal consequence that necessarily follows from those antecedent findings.

Issue No. 5 is accordingly answered against the Appellant.


Issue No. 6: Whether the dismissal of I.A. No. 1137(AHM)2025 and the directions in I.A. No. 525(AHM)2026 call for interference by this Appellate Tribunal?

# 77. It remains to consider whether the dismissal of I.A. No. 1137(AHM)2025 and the directions in I.A. No. 525(AHM)2026 call for interference, on the Ground that rejection of a claim does not extinguish a mortgage and that no prejudice was caused to the liquidation process by the delay in question.


# 78. We need to appreciate that IA No. 1137(AHM)2025 was preferred by Raj Radhe Finance Limited, as assignee of Areion Finserve, challenging the Liquidator’s rejection of Areion Finserve’s claim under Section 42 of the Code. Raj Radhe Finance, as assignee, could acquire no better title to press that claim than Areion Finserve itself possessed. The delay and non-compliance with Regulation 21A that justified rejection of Areion Finserve’s claim equally infects the claim as pressed by its assignee. The dismissal of I.A. No. 1137(AHM)2025 calls for no interference, and, in any event, it is Respondent No. 8 who is directly bound by that dismissal; the Appellant does not, beyond what is already covered under Issue No 1 to 5 above, make out any independent ground of challenge to this part of the impugned order.


# 79. on the issue that rejection of a claim does not extinguish a mortgage, and that no prejudice was caused to the liquidation process by the delay, misconceives the basis of the finding. While rejection of a proof of claim does not, of itself and for all purposes, extinguish an underlying mortgage as a matter of general property law, the operative consequence here is not extinguishment of the mortgage in the abstract but the statutorily deemed consequence, under Regulation 21A(3) of the IBBI (Liquidation Process) Regulations, 2016, of failure to exercise the Section 52 option within the time prescribed. That consequence — the secured asset being brought into, and treated as part of, the liquidation estate follows by operation of the Regulation itself, and does not depend on demonstrated prejudice to the liquidation process, in the same manner that limitation bars a remedy irrespective of individualised prejudice.


# 80. The direction in I.A. No. 525(AHM)2026 for handing over of the original title deeds of the Sigma-9 Property to the Liquidator is the necessary corollary of the finding, affirmed above, that the property forms part of the liquidation estate and that the Liquidator is obliged, under Section 35(1)(b), (d) and (n) of the Code, to take custody and control of the assets and records of the Corporate Debtor. Custody of an immovable asset without custody of its title documents would render that statutory duty illusory. This direction, too, calls for no interference. The Issue No. 6 is accordingly answered against the Appellant.


Conclusion

# 81. For the reasons recorded above, none of the grounds urged on behalf of the Appellant whether going to the jurisdiction of the Adjudicating Authority, to the priority of mortgages, to the effect of non-registration of charges under the Companies Act, 2013, to the pendency of the DRT review, or to the internal consistency of the impugned order is found to have merit. In the result, the impugned Order doesn’t warrant any interference from this Appellate Tribunal.


# 82. The appeal fails and accordingly, dismissed. No order as to cost. Pending IA, if any stand closed.

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