Dismissed

Sanjay Agarwal v. M/s The B S Co. and Ors.

DRAT20 Sept 2022REGULAR APPEAL/70/2018

Case brief

AI extract

What is this about?

The Appellate Tribunal upheld the Deputy Registrar's order allowing the petitioner-borrower to file a SARFAESI application despite a statutory delay. The bench applied Section 14 of the Limitation Act, excluding the time consumed during the pendency of multiple withdrawn writ petitions filed in the High Court, ruling that specific liberty to file the SARFAESI application was not required.

What did the court decide?

The appeal was dismissed; the order of the DRT condoning delay and directing registration of the SARFAESI application was confirmed.

Sanjay Agarwal versus M/s The B S Co. and Ors. — Execution and Attachment | DRAT (2022)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No.70 of 2018

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(Arising out of S.A. No. 22 of 2018 – DRT- Cuttack)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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20.09.2022

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Sanjay Agarwal, Son of Kulwant Rai Agarwal having office at Power House Road, Rourkela – 769001, P.O. Rourkela, P.S. Plant Site Road, Dist. Sundargarh. … Appellant Vs. 1. M/s. The B.C. Company, a partnership firm at Panposh Road, Rourkela – 769004, Dist. Sundargarh, represented through its Managing Partner Sri Baljit Singh, at JJ-5, Civil Township, P.O. Rourkela, Dist. Sundargarh. 2. State Bank of India, represented through its Dy. General Manager, SAMB, at A/34, Pandit Jawaharlal Nehru Marg, OSCARD Bank Building, 4^th floor, Bhubaneswar, Dist. Khurda, PIN751001. 3. Authorised Officer, State Bank of India, SAMB, Bhubaneswar at A/34, Pandit Jawaharlal Nehru Marg, OSCARD Bank Building, 4^th floor, Bhubaneswar, Dist. Khurda, PIN-751001. ….. Respondents

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For Appellant : Mr. A. K. Dhandhania, Learned Senior Counsel Mr. Proshit Deb, Learned Counsel Mr. Soumo Mukherjee, Learned Counsel. Mr. Partha Bose, learned counsel.

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For Respondent : Mr. Prasanta Kr. Satpathy, Learned Counsel for Res.No.1 Mr. Subrata Kr. Sinha, Ld. Counsel for Res.No. 2 and 3.

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JUDGEMENT

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Instant appeal has arisen against the order dated 16.03.2018 passed by the learned DRT, Cuttack in M.A. No. 1234 of 2017 arising out of Diary

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No. 760 of 2017 thereby learned DRT has allowed the M.A. and condoned the delay in moving the SARFAESI application.

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As per pleadings of the parties respondent no.1, M/s. B.S. Company, a partnership firm, (hereinafter referred to as ‘SARFAESI applicant’) filed an application u/s 17 of the SARFAESI Act before the learned DRT being Diary No. 760 of 2017 [SA No. 22 of 2018] stating that the SARFAESI applicant had availed loan facility from the respondent no. 2, State Bank of India, in 2007 for a sum of Rs. 1.50 crores of Term Loan and Rs.40.00 lakh of letter of credit and cash credit. Property of Ms. Raghubir Kaur, mother of Shri Baljit Singh was mortgaged to secure the loan. The details of the property are Khata No. 274, Plot No. 815/1850, Area-Ac.1.10 decimal Mouza – Jharataranga, Lathikata Tahasil, PS Brahmani Taranga Panposh Kuanrmunda, Dist. Sundargarh recorded in the name of SARFAESI applicant and land and building situated over Khata No. 274, Plot No.815/1850/1, Area-Ac.1.00 decimal Mouza – Jhartaranga, Lathikata Tahasil, PS. Brahmmani Taranga Panposh Kuanrmunda, Dist. Sundargarh recorded in the name of the Smt. Raghubir Kaur. SARFAESI applicant had suffered huge loss out of ledger balance of Rs.3,12,64,334/- as on 30.04.2014. SARFAESI applicant deposited a sum of Rs.2,08,49,687/-. Outstanding dues as on 13.04.2014 was Rs.1,03,96,647/-. In due course loan account became irregular and it was classified as NPA by the Bank. Demand notice was issued on 08.01.2013 claiming outstanding dues of Rs.2,76,97,286/-. Auction sale notice was published by the Bank in daily newspapers wherein outstanding dues were shown as Rs.2,76,97,286.29. After issuance of the demand notice SARFAESI applicant deposited Rs. 52.50 lakh on 31.10.2014, 27.02.2015, 31.03.2015 and 16.11.2015, but respondent did not deduct the amount deposited from the loan account. Hence, SARFAESI applicant filed Writ Petition being number 18005 of 2014 on 17.09.2014 challenging the auction sale notice dated 19.08.2014 with the prayer to direct the Bank to consider the OTS application. Hon’ble High Court at Calcutta has passed a

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conditional interim order dated 22.09.2014 to the effect that auction sale may be conducted in respect of the property but no final decision shall be taken thereon without leave of this Court subject to deposit of Rs.50.00 lakh in two equal monthly instalments by the end of November, 2014.

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SARFAESI applicant deposited Rs. 52.50 lakh subsequently, but not within the time granted by the Hon’ble High Court. Mis. Case No. 20780 of 2014 was filed for extension of time. Pending writ petition SARFAESI applicant has received another notice dated 16.01.2017 rejecting the proposal for settlement. Another notice dated 29.03.2014 was received rejecting revised proposal dated 25.01.2016 wherein it was disclosed that property pertains to Plot No. 815/1850 Area Ac.1.00 has been sold to Shri Sanjay Agarwal, auction purchaser, on 20.08.2014. SARFAESI applicant was also threatened to remove the plant and machinery.

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Auction sale notice dated 28.05.2015 published in the newspapers on 29.05.2015 wherein outstanding dues were reflected as Rs.2,76,97,286.19. In the notice dated 29.03.2016 shows that Plot No. 815/1850 Area-Ac.1.00 was sold to the auction purchaser but the auction sale notice dated 28.05.2015 shows that the plot No.815/1850 was not sold. 5. Another writ petition No. 7323 of 2016 challenging the notice dated 29.03.2016 was filed on 08.04.2016. 6. Appellant has received another letter dated 27.07.2017 wherein applicant was asked to remove the plant and machinery within 15 days. Another writ petition no. 19086 of 2017 was filed before the Hon’ble High Court in Orissa at Cuttack on 06.09.2017. Writ Petition No. 7323 of 2014 and 18005 of 2014 were heard together on 20.11.2017 which were withdrawn by the applicant to challenge the action of the Bank before the competent Court of law.

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Writ Petition No. 19086 of 2017 was also withdrawn by the applicant on 28.11.2017 with liberty to approach the Bank for redressal of grievance. It is submitted that applicant was bona fide in pursuing the matter before

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the Hon’ble High Court in Orissa at Cuttack challenging the auction sale notice dated 28.08.2014. Writ petition was filed within 26 days from the date of publication of the auction sale notice. Writ petition was admitted on 22.09.2014 and disposed of on 28.11.2017. SARFAESI application was filed on 18.12.2017 which was within time.

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It was alleged by the Bank that auction sale has been confirmed and sale certificate has been issued, which could not deprive the applicant’s right to redemption of the mortgaged property and it was done during the pendency of the writ petition. Applicant is still in possession. Applicant challenged the auction sale notice dated 19.08.2014 and notice dated 27.11.2017.

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M.A. 1234 of 2017 was filed for condonation of delay in filing SARFAESI application and for giving benefit of Section 14 of the Limitation Act on the ground that applicant was bona fide in pursuing writ petitions before the Hon’ble High Court. Accordingly, the period from 17.09.2014 to 28.11.2014 be excluded from the period of limitation and SARFAESI application be treated as filed within time.

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Learned DRT Cuttack vide its order dated 16.03.2018 recorded a finding that sufficient ground is made out to condone the delay in filing the SARFAESI application. Accordingly, delay was condoned and SARFAESI application was directed to be registered. Feeling aggrieved auction purchaser has preferred the instant appeal. 11. I have heard the learned counsel for the appellant as well as respondents and perused records.

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As far as facts are concerned it is borne out from the record that in the SARFAESI application respondent no.1 had challenged the E-auction sale notice dated 19.08.2014 as well as notice dated 27.11.2017. It is also admitted fact that SARFAESI application was filed on 18.12.2017. One writ petition No. 18005 of 2014 was filed on 17.09.2014 which was dismissed as withdrawn on 20.11.2017. In the Writ Petition No. 18005 of 2014 an

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conditional interim direction was granted to the petitioner by the Hon’ble High Court in Orissa at Cuttack to the extent that auction sale may be proceeded to be conducted on the date fixed with in respect of the property of the petitioner but no final decision shall be taken thereon without leave of this Court subject to petitioner depositing a sum of Rs.50.00 lakh in two equal monthly instalments. First instalment shall be paid by the end of October, 2014 and second instalment shall be paid by the end of November, 2014.

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Thereafter another writ petition no. 7323 of 2016 was filed before the Hon’ble Orissa High Court at Cuttack by the SARFAESI applicant on 08.04.2016 which was also dismissed as withdrawn on 20.11.2017. Third writ petition no. 19086 of 2017 was filed on 06.09.2017 by the SARFAESI applicant challenging the notice dated 29.03.2016 which was also dismissed as withdrawn with liberty to approach the bank for redressal of the grievance on 28.11.2017.

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Learned counsel for Respondent no.1 at the very outset submitted that he has raised the plea of non-applicability of Section 5 of the Limitation Act for condoning the delay in filing the S.A. and they are not pressing the plea of maintainability of the application u/s 5 of the Limitation Act in moving the S.A.

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Learned counsel for the appellant has basically argued that there is no sufficient ground for giving the benefit of Section 14 of the Limitation Act. Learned counsel submitted that SARFAESI applicant had filed three consecutive writ petitions. Writ petition No. 18005 of 2014 and 7323 of 2016 were dismissed as withdrawn wherein no liberty was sought for by the SARFAESI applicant whereas the writ petition No. 19086 of 2017 was also dismissed as withdrawn with liberty to approach the Bank for redressal. In none of the writ petitions liberty to file SARFAESI application was sought for by the appellant. Hence, benefit of Section 14 of the Limitation Act could not be extended in favour of the SARFAESI applicant. It is further argued

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that there is no finding recorded by learned DRT that there was sufficient ground for condoning the delay, if any. Learned counsel further submitted that sale certificate has already been issued in favour of the appellant and proceeding under SARFAESI Act has been concluded and now right has been accrued in favour of the appellant who cannot be divested of his right.

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Learned counsel for the respondent no.1 submits that writ petition No. 18005 of 2014 was filed under bona fide belief which was filed within time from the date of notice. S.A. was filed on 18.12.2017 within time. It is further submitted that in the S.A. one prayer for quashing the notice dated 27.11.2017 was also sought. Accordingly, S.A. should be treated as filed within time. Learned counsel submitted that SARFAESI applicant is entitled for the benefit of Section 14 of the Limitation Act.

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As far as applicability of Section 14 of the Limitation Act is concerned in Akshat Commercial Pvt. Ltd. Vs. Kalpana Chakraborty [AIR 2010 Cal 138] the Division Bench of Hon’ble Calcutta High Court held that the provisions of Section 4, 6, 7, 9, 10, 11, 12, 14, 15, 16, 17 and 18 of the Limitation Act should be applied in appropriate cases. Hence applicability of Section 14 of the Limitation Act cannot be in dispute.

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In Consolidated Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. & Ors. [Civil Appeal No. 2461 of 2008] decided on 03/04/2008 Hon’ble Apex Court in Para 12 of the judgement held that on analysis of the said Section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service:

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(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;

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(2) The prior proceeding had been prosecuted with due diligence and in good faith;

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(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature;

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(4) The earlier proceeding and the latter proceeding must relate to the same matter in issue and;

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(5) Both the proceedings are in a court.

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It was further held that it should be bear in mind that an element of mistake is inherent in the invocation of Section 14. Equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong court, should be excluded.

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Learned counsel for the appellant has placed reliance upon the judgement in Vedabai Vs. Shantaram Baburao Patil And Ors. [2001 Vol.1 SCC 106]. It is a case wherein Section 5 of the Limitation Act was under consideration before the Hon’ble Apex Court wherein it was held that in exercise of jurisdiction under Section 5 of the Limitation Act, Court should have taken pragmatic approach.

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20. Reliance is also placed upon Hulas Rai Baij Nath Vs. K. B. Bass & Co. [AIR 1968 SC 111]. Facts of the cited case are not applicable to the present case. In the above case it was a matter of withdrawal of suit under Order 23 Rule 1 of the C.P.C. wherein it was held the language of Order 23 Rule 1(1) CPC gives an unqualified right to plaintiff to withdraw from a suit and if no permission to file a fresh suit is sought under Sub-rule (2) of that Rule, the plaintiff becomes liable for such costs as the court may award and becomes precluded from instituting any fresh suit in respect of that subject matter under sub-rule (3) of that Rule. In the present case the matter relates to exclusion of time consumed before the Hon’ble High Court in pursuing the writ petitions. 21. Reliance was also placed in the case of Bakhtawar Singh & Anr Vs Sada Kaur & Anr [AIR 1988 Punjab & Haryana 131] wherein it was held in Para 7 of the judgement that

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“7. On July 24 1990 the Supreme Court dismissed the appeal filed by the respondent Bada Kaur upholding the judgment of the civil courts and the high Court holding that the respondent No. 1 had lost her rights in the estate of her deceased husband Dalip Singh when she contracted 'Karewa' merriage with her brother-in-law, Chand Singh.

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Thereafter on November 20, 1990 the plaintiffs appellants again filed a fresh shit Civil Suit No, 661 of 1994. The Sub-Judge took the view that the plaintiffs suit was barred by limitation and the defendant respondent No. 1 had perfected her title by adverse possession. The Additional District Judge, Faridkot by his judgment dated August 27, 1985 as well as the High Court by the impugned judgment dated September 4, 1986 upheld the findings recorded by the Trial Court and dismissed the plaintiffs appeal against which this appeal has been directed”.

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Aforesaid judgement was confirmed by the Hon’ble Apex Court by delivering judgement wherein at Para 9 it was held that :

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“9. As regards the exclusion of time under Section 14 of the Limitation Act it was essential for its application to show that the proceedings related to the same matter in issue and the plaintiff prosecuted the suit in good faith in a court which, from defects of jurisdiction or other cause of like nature is unable to entertain it. As discussed above the plaintiffs appellants have miserably failed to show as to what was the defect of jurisdiction or any other cause of like nature by reason of which the earlier suit was not entertainable or competent. That being so, the benefit of the provisions of 14 cannot be legitimately extended to the plaintiffs, In these facts and circumstances the plaintiffs suit has rightly been dismissed as barred by limitation.”

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22. Per contra learned counsel for the respondent has placed reliance upon the case of Saraguja Transport Service Vs. State Transport Appellate Tribunal [AIR 1987 SC 88] wherein Hon’ble Apex Court has held that while withdrawal of writ petition filed in High Court without permission to file a fresh writ petition may not bar other remedies like a suit or a petition under Article 32 of the Constitution of India since such withdrawal does not amount to resjudicata, the remedy under Article 226 of the Constitution of India should be deemed to have abandoned by the petitioner in respect of the cause of action relied on the writ petition when he withdraws it without such permission.

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23. Admittedly, writ petition no. 18005 of 2014 was filed on 17.09.2014 wherein auction notice and sale notice dated 19.08.2014 and 23.09.2014 were challenged and interim order was passed by the Hon’ble High Court on 22.09.2014 directing the petitioner to deposit Rs.50.00 lakhs in two equal monthly installments to be paid by the end of October, 2014 and November, 2014. It was a conditional order which was not complied with, however, writ petition remain pending and was ultimately withdrawn and dismissed as

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withdrawn on 20.11.2017 and interim order dated 22.09.2014 was also vacated on 20.11.2017.

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24. Other writ petition no. 7323 of 2016 was filed on 08.04.2016 which was also dismissed as withdrawn on 20.11.2017.

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25. Another writ petition no. 19086 of 2017 was filed by the petitioner which was also dismissed as withdrawn on 28.11.2017 directing the petitioner to approach respondent no.2 bank for redressal of grievance. Learned counsel for the appellant submits that respondent no.1 filed consecutive writ petitions in order to delay the proceeding, however, no liberty was sought to file SARFAESI application. Accordingly, SARFAESI application filed by the respondent no.1 is time barred.

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26. Learned counsel for the respondent no.1 submits that they were pursing the cases before the Hon’ble High Court which were although withdrawn but this period should be excluded u/s 14 of the Limitation Act. 27. A s far as withdrawal of the writ petition no. 18005 of 2014 is concerned it was filed on 17.09.2014 which was well within period of limitation for challenging the auction sale notice thereafter it was dismissed as withdrawn on 20.11.2017. As has been held by the Hon’ble Apex Court in Saraguja Transport Service case (supra) period of pendency of writ petition before the Hon’ble High Court is liable to be excluded in counting the period of limitation. As far as question of seeking liberty to file SARFAESI application is concerned as has been held by Hon’ble Apex Court no liberty is required to file a suit after withdrawing the writ petition from the High Court. Hence, even if liberty was not sought for by respondent no.1 to file SARFAESI application it does not debar respondent no.1 from filing the SARFAESI application.

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In examining the matter I find that all the conditions specified by the Hon’ble Apex Court in Consolidated Engg. Enterprises case (supra) are satisfied to press Section 14 of the Limitation Act into service. 28(i). Both the prior and subsequent proceedings were further proceeding prosecuted by the same party.

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28(ii). Prior proceeding, that is, writ petition filed before the Hon’ble High Court which was prosecuted with due diligence and good faith. Writ petition was withdrawn as alternative remedy was available. 28(iii). Both the proceedings, that is, proceedings in the writ petition as well as present appeal relates to same matter in issue.

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28(iv). Writ petition was filed before the Hon’ble High Court while present appeal is filed before the Debt Recovery Appellate Tribunal. 28(v). All the necessary conditions for invoking the provision of Section 14 of the Limitation Act are satisfied. Hence, the benefit of Section 14 of the Limitation Act shall be available to the appellant.

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29. A s far as liberty granted on 28.11.2017 by the Hon’ble High Court is concerned it was a liberty granted to pursue the matter with the Respondent bank for settlement of dues, however, that liberty in no way debar the respondent no.1 from filing the SARFAESI application.

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30. On the basis of the discussions made above I am of the view that the period consumed in pendency of the writ petitions before the Hon’ble High Court shall be excluded and benefit of Section 14 of the Limitation Act should be granted to respondent no.1 in filing the SARFAESI application.

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31. Learned counsel for the appellant has placed reliance in the case of B. Arvind Kumar Vs. Govt. of India & Ors. [(2007)5 SCC 745] wherein it was held that it is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing

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such sale and title, no further deed of transfer from the court is contemplated or required.

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32. Reliance is also placed upon the case of K. Chidambara Manickam Vs. Shakeena & Ors. [AIR 2008 Mad. 108] wherein Hon’ble High Court has placed reliance upon B. Arvind Kumar case (supra). This judgement was confirmed by the Hon’ble Supreme Court in Shakeena & Anr. Vs. Bank of India [2019 SCC OnLine SC 1059].

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33. A s far as legal proposition of issuance of sale certificate is concerned Hon’ble High Court has settled the law but in the present case although there was an interim order passed on 22.09.2014 wherein a conditional order was passed. Sale certificate was issued in favour of the appellant on 01.12.2014. SARFAESI application was filed on 18.12.2017 on the same date sale deed was executed in favour of the appellant. As far as impugned order is concerned benefit of Section 14 of the Limitation Act is to be extended in favour of Respondent no.1. Accordingly, other issues can only be dealt with by the learned DRT. Accordingly, appeal fails and liable to be dismissed.

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ORDER

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34. Appeal is dismissed. Order passed by learned DRT is confirmed. Since this is an old matter, learned DRT is requested to decide the matter as expeditiously as possible.

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No order as to costs.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 20^th day of September, 2022.

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