Dismissed

Pravin Haridas Kantaria & Ors. v. the Mahanagar Co-Operative Bank Ltd.

DRAT12 Apr 2023REGULAR APPEAL/246/2009

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an appeal against the rejection of a condonation of delay application for a Securitisation Application filled under the SARFAESI Act. The Court held that Section 5 of the Limitation Act does not apply to SARFAESI proceedings.

What did the court decide?

The appeal was dismissed as it lacked merits; the limitation for filing the Securitisation Application could not be condoned.

Pravin Haridas Kantaria & Ors. versus the Mahanagar… — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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Appeal No. 246/2009

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Between

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Pravin H. Kantaria & Anr. … Appellant/s V/s.

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Mahanagar Co-operative Bank Ltd. & Ors. …Respondent/s Mr Devanshu P. Desai, Advocate for Appellants. Mr P.A. Sanwankar i/b M/s. Sanwankar & Co., Advocate for Respondents Nos.1 & 2.

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Mr Dharmendra Joshi, Advocate for Respondent No. 3.

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-: Order dated: 12/04/2023:-

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This is an appeal preferred by the Applicants in Securitisation Application (S.A.) No. 29 of 2006, on the files of the Debts Recovery Tribunal-II, Mumbai (DRT) aggrieved by the judgment dated 13/07/2009, dismissing their Securitisation Application (S.A.) filed under Section 17 (1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short).

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The above-mentioned S.A. was filed on 14.08.2006, out of time stipulated, together with I.A. No. 487 of 2006, for condonation of the delay. The said application was heard along with the final arguments of the S.A. The delay was not condoned, and the S.A. was dismissed as barred by limitation vide the impugned judgment. The Appellants are aggrieved and hence in appeal.

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3. The facts, in brief, are thus:

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The first Respondent Bank initiated Sarfaesi measures for default in payment of the debt incurred by the Appellants. According to the Appellants, while negotiations were underway, on 29.12.2003, the first Respondent Bank took physical possession of the secured assets, even without issuing notice under u/s. 13 (2) of the SARFAESI Act, which was issued only at a later date on 26.06.2004. The Appellants raised an objection to the notice, by letter dated 29.07.2004. The objections were not heeded and not even a reply was sent. The auction notice was issued on 10.09.2004, even without the necessary details of the property, or mentioning a reserve price. Notices were published on 24.10.2004, and on 09.12.2004, and the auction was ultimately held on 04.01.2005. The time for deposit of sale consideration by the auction purchaser was extended by the Respondent Bank, even without any sanction of law, and the sale was confirmed for a price less than the valuation made. It is alleged that on 23.08.2005, the Appellants came to know that the secured assets were sold in consequence of the Sarfaesi measures initiated by the Bank. The Appellants sought certain information from the Bank vide letter dated 24.08.2005. And by letter dated 12.09.2005, the Appellants protested the sale. Thereafter, the Appellants were busy with the complainant that was filed at the instance of the Respondent u/s 138 of the Negotiable Instrument Act. That apart, the first Appellant's younger brother met with a car accident. The Appellants would therefore contend that the sale is void and needs to be quashed and set aside. They

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have an excellent case on merits. The reasons for filing the S.A. belatedly are sufficiently explained.

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Per contra, the first Respondent Bank represented by the second Respondent authorised officer contested the S.A. and contend that there is an unexplained delay in filing the S.A. The account was classified as Non-Performing Asset (NPA) as early as 31.10.2002. The Appellants have admitted that physical possession of the secured asset was taken on 29.12.2003, though the possession of the secured asset was constructively taken on 04.09.2004 u/s 13 (4) of the SARFAESI Act. The whereabouts of the Appellants were not known. The possession notice was published in a daily newspaper on 04.09.2004. Thereafter, the property was got valued on 30.09.2004 by a government approved valuer for ₹1.60 crores. The Bank published auction notices in newspapers such as ‘Nava Kal’, ‘Janmabhumi’ and ‘Navashakti’ on 24.10.2004, 09.12.2004 and 01.01.2005, respectively. The same valuer thereafter devalued the property at ₹87.68 lakhs. Four bidders participated in the auction and the bid submitted by Respondent No. 3 for a sum of ₹1.07 crores being the highest, was accepted, vide letter dated 06.01.2005. Time to deposit 50% of the sale consideration was granted up to 31.03.2005 and the balance was to be paid by 15.04.2005. The Sale Certificate was issued on 10.06.2005, followed by the agreement for sale executed on 27.06.2005, and possession of the property along with the original documents was handed over to the auction purchaser on 30.06.2005. The third Respondent auction purchaser resisted the S.A. on the ground that he is a bona fide purchaser for

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value.

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The Ld. Presiding Officer after hearing both sides and considering the evidence on record observed that the S.A. was filed two years after possession of the property was taken by the first Respondent Bank on 04.09.2004 u/s 13 (4) of the SARFAESI Act. The Appellants admit having come to know about the sale of the property, on 23.08.2005 and filed the S.A. almost a year thereafter. The sufficiency of the reasons for the delay was not acceptable, and hence, dismissed the S.A. solely on the ground of limitation.

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The Ld. Presiding Officer, however, observed and opined that the Applicants/ Appellants otherwise had a good case on merits, as the Respondents did not comply with the procedures as required under the SARFAESI Act and Rules, diligently.

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The only point that arises for consideration in this appeal is whether the Ld. Presiding Officer was justified in dismissing the S.A. solely on the ground of limitation despite finding that the Appellants had a good case on merits.

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The Ld. Counsel appearing for the Appellants submits that once the Court concludes that there are merits in the case; delay should have been condoned. A meritorious case should not be dismissed at the threshold, submits the Ld. Counsel. In support of his argument, the learned counsel relies on a catena of decisions. In Collector, Land Acquisition Anantnag & Ano vs. Mst. Kathiji & Ors (1987) 2, SCC 107 the Hon’ble Supreme Court held that the courts should adopt a liberal and justice-oriented approach condoning

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delay by exercising powers conferred under Section 5 of the Indian Limitation Act, 1963. In order to enable the courts to substantial justice to parties by disposing of matters on ‘merits’. It is further observed that the expression “sufficient cause.” Employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice-that being the life-purpose for the existence of the institution of courts. The Ld. Counsel relies on the decision, State of Nagaland vs. Lipok AO & Ors (2005) 3 SCC 752 2 to argue that the expression “sufficient cause” should be considered with pragmatism rather than in a technical manner. The Ld. Counsel also relies on the decisions N. Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123, O.P. Kathpalia vs. Lakhmir Singh (dead) & Ors. (1984) 4 SCC 66 and M.K. Prasad vs. P. Arumugam (2001) 6 SCC 176 in support of his argument regarding the exercise of discretion under section 5 of the Limitation Act to advance substantial justice.

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Per contra, the learned counsel appearing for the respondents would submit that the S.A. was filed with an application for condoning a delay of 311 days. It is also pointed out that the reasons stated for the condonation of delay are not sufficient or acceptable. It is also contended that the infirmities regarding the Sarfaesi measures are not sustainable.

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After an anxious consideration of the rival contentions and the materials placed, it is found that the proceedings under the SARFAESI Act are before a statutory Tribunal, and cannot be placed on par with proceedings before a Court. The decisions relied

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upon by the Ld. Counsel for the Appellants are all with regard to proceedings before the Courts. The Tribunal shall have no powers to condone delay unless expressly conferred by the Statute creating it. In Sakuru v. Tanaji, 1985 (3) SCC 590: AIR 1985 SC 1279 , the Hon’ble Supreme Court observed thus:

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"3. ...that the provisions of the Limitation Act, 1963 apply only to proceedings in 'Courts' and not to appeals or applications before bodies other than Courts such as quasi-judicial Tribunals or executive authorities, notwithstanding the fact such bodies or authorities may be vested with certain specified powers conferred on Courts under the Codes of Civil or Criminal Procedure. The Collector before whom the appeal was preferred by the appellant herein under S.90 of the Act not being a Court, the Limitation Act, as such, had no applicability to the proceedings before him. But even in such a situation, the relevant special Statute may contain an express provision conferring on the appellate authority, such as the Collector, the power to extend the prescribed period of limitation on sufficient cause being shown by laying down that the provisions of S.5 of the Limitation Act shall be applicable to such proceedings. Hence it becomes necessary to examine whether the Act contains any such provision that entitles the Collector to invoke the provisions of S.5 of the Limitation Act for condonation of the delay in the filing of the appeal..."

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The scheme of the SARFAESI Act manifestly precludes the application of the Limitation Act. The intention of enacting special statutes is to expedite the disposal of cases. If delays are to be condoned by application of Section 5 of the Limitation Act, the very purpose of the statute will get frustrated. There is a specific time limit of 45 days for invoking the original jurisdiction of Section 17 of the SARFAESI Act, which has been found to be the essence, of the statute, and also looking into the fact that a further time limit of

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60 days for disposal of the proceedings, and giving a right to the party to appeal before the appellate forum for compliance of such provisions alleging violation thereof if not completed within four months, it was never the intention of the Legislature to apply Section 5 of the Limitation Act to such original proceeding by giving the power to entertain the application under Section 17(1) of the SARFAESI Act by merely showing sufficient cause for the delay without putting any restriction upon the Tribunal and we, therefore, hold that the time period of 45 days provided in Section 17 of the SARFAESI Act which is original in nature cannot be extended by taking aid of Section 5 of the Limitation Act. The Appellants had approached the DRT more than two years after the Sarfaesi measures were initiated by the Respondent Bank. That apart, there also does not seem to be sufficient reason for condoning delay. The law does not come to the aid of those who sleep over their rights. The Ld. Presiding Officer has rightly dismissed the application for condonation of delay, and this Tribunal finds no reason to interfere with that finding.

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The appeal lacks merits and is therefore dismissed.

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Sd/Chairperson

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mks-1

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Pravin Haridas Kantaria & Ors. v. the Mahanagar Co-Operative Bank Ltd.

Case brief

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Pravin Haridas Kantaria & Ors. v. the Mahanagar Co-Operative Bank Ltd.

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