IBC Moratorium Bars Sale Of Repossessed Vehicles | NCLT

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  • Last Updated on 27 January, 2026

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IBC Moratorium On Sale Of Repossessed Vehicles

Case Details: STCI Finance Ltd. vs. Keshav Khaneja - [2025] 180 taxmann.com 138 (NCLT - Ahd.)

Judiciary and Counsel Details

  • Shammi Khan, Judicial Member
  •  Sanjeev Sharma, Technical Member
  • Manish Bhatt, Sr. Adv. & Anip Gandhi, Adv. for the Appellant.
  • Rishi Singhal, Adv. for the Respondent.

Facts of the Case

In the instant case, the applicant-NBFC had extended a financial facility to the corporate debtor pursuant to a duly executed facility agreement. In consideration thereof, a hypothecation deed was executed, whereby 129 electric passenger vehicles were hypothecated and exclusively charged in favour of the applicant.

The corporate debtor committed repeated and wilful defaults in repayment of the loan facility, thereby triggering events of default under the facility agreement. Thereafter, the applicant declared the corporate debtor’s account NPA.

The applicant instituted a civil suit before the High Court seeking recovery of the outstanding amount. The High Court was pleased to grant interim relief, thereby appointing the Court receivers to assist the applicant in repossessing the hypothecated vehicles.

During the pendency of said suit, CIRP was initiated against the corporate debtor. The applicant filed an instant application seeking permission to sell hypothecated electric vehicles repossessed before the initiation of CIRP, and declaring that such vehicles were not assets of the corporate debtor and were outside the purview of the ongoing CIRP.

It was noted that the hypothecated electric vehicles repossessed by the applicant were assets of the corporate debtor under the IBC. Further, the moratorium under section 14 of the IBC applies to repossessed vehicles and prohibits the applicant from selling them.

NCLT Held

The NCLT held that the IBC overrides the provisions of the Motor Vehicles Act, 1988, with respect to the ownership of hypothecated vehicles in the possession of a financier. Further, reliefs sought by the applicant, including permission for sale, appropriation of proceeds, and reimbursement, were to be declined.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied