Dismissed

M/s Maruthi Paper Converters & Ors. v. a.O.,Standard Chartered Bank

DRAT9 Feb 2023REGULAR APPEAL/83/2019

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed the appeal against an order rejecting a Securitisation Application. The Court held that confirmation of sale and issuance of sale certificates are consequential steps, not 'measures' under Section 13(4) of the SARFAESI Act. Therefore, the 45-day limitation period for challenging measures does not apply to these specific steps. The Tribunal's rejection

What did the court decide?

The appeal was dismissed as devoid of merits. The order of the Debts Recovery Tribunal dated 28.02.2018 was upheld.

M/s Maruthi Paper Converters & Ors. versus a.O.,Standard… — Company and Corporate | DRAT (2023)

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RA (SA) 83/2019

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 9^th of February, 2023

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar CHAIRPERSON

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RA (SA) 83/2019

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[SA SR No.567/2018 on the file of DRT-II, Chennai)

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Between

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M/s. Maruthi Paper Converters,

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Rep. by its Partner,

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Mr. S. Thirumalai S/o K. Santhanam, Its Head Office was functioned at

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No. 32, Badrian Street,

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Parrys, Chennai – 600 001.

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T. Bhagyalakshmi, W/o S. Thirumalai,

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T. Varunkumar, S/o S. Thirumalai, Appellants 1 to 3 are residing at,

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No. 155-156, T.T.K. Road,

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Alwarpet, Chennai – 600 018.

……Appellants

And

RA (SA) 83/2019

The Authorised Officer, Standard Chartered Bank, No. 19, Rajaji Salai, Parrys, Chennai- 600 001.

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P. Raja – ( Died), 2. a) R. Allen Thomas, S/o Late P. Raja, No.9, Lawyer Chinnathambi Street, Old – Washermenpet, Chennai – 600 021.

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2.b) R. Neusha Mary, D/o Late P. Raja, No.9, Lawyer Chinnathambi Street, Old – Washermenpet, Chennai – 600 021.

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2.c) P. Chandra, M/o P. Raja & W/o Late Pandi, No.9, Lawyer Chinnathambi Street, Old – Washermenpet, Chennai – 600 021.

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Mrs. R. Selva Asiad, W/o Late P. Raja, No.9, Lawyer Chinnathambi Street, Old – Washermenpet, Chennai – 600 021.

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….. Respondents

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Counsel for Appellants : Mr. S. Kannathasan Counsel for R 1 : Mr. Rangarajan for R&P Parntners Counsel for R 2 & R3 : Mr. K. C. Krishnamoorthy

RA (SA) 83/2019

ORDER

This Appeal is preferred against Order dated

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28.02.2018 of DRT-II, Chennai, in SA SR - 567/2018.

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Brief facts leading to this Appeal are as follows:-

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Appellants filed Securitisation Application in SR No.

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567/2018 under Section 17 of SARFAESI Act, 2002, to

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quash the confirmation of Sale and issuance of Sale Certificate dated 14.12.2017 relating to secured asset described in Schedule attached to Application.

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Tribunal below rejected Securitisation Application on the ground, it is not maintainable and barred by time. Aggrieved by said Order, present Appeal is preferred.

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Both sides filed Written Submissions and also advanced oral arguments reiterating the Written

Submissions.

RA (SA) 83/2019

Written Submissions of Appellants runs into 27 pages

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and contents of Written Submissions are about the facts of earlier litigation and merits etc., but nowhere it referred to grounds urged in the Appeal challenging impugned Order. The following are grounds on which impugned Order is challenged:-

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“

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a. The Order passed by the Presiding Officer is bad in law and facts of the case.

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b. The Learned Presiding Officer failed to appreciate that the Registry has placed a note stating that the S.A. Sr. 567/2018, on the basis of letter dated 20.12.2017 and therefore the issue with regard to limitation has to be considered by the P.O. Whereas the Presiding Officer instead of considering whether S.A. Sr. 567/2018 has been filed within limitation from the date of receipt of letter dated 20.12.2017 had misdirected himself as if the S.A. is challenging

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RA (SA) 83/2019

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the Sale Notice and had held that the S.A. is barred

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by limitation.

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c. The issue put forth by the Registry has not been properly considered by the Presiding Officer and the Presiding Officer has neither sustained the objections of registry nor did he discussed about the maintainability of the case on the basis of letter dated 20.12.2017.

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d. Had the Presiding Officer taken note of the fact that the Petitioner came to know of issuance of such Sale Certificate only on by letter dated 20.12.2017 and the S.A. has been filed on 15.01.2018 (within 45 days) he would not had rejected the S.A.

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e. The discussion of issue involved in the case by the Presiding Officer clearly indicate that he has not perceived as to what is the objection of the Registry and the issue to be decided by him.

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RA (SA) 83/2019

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f. The Learned Presiding Officer ought to have taken the S.A. on record and decided the case on merits

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instead of rejecting it.”

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From a reading of above grounds, it is clear that Office placed a note stating that SA is filed on the basis of Letter dated 20.12.2017, and issue regarding limitation aspect has to be considered by Learned Presiding Officer, but Learned Presiding Officer, instead of considering limitation aspect from the date of receipt of Letter, misdirected himself as if SA is filed challenging Sale Notice thereby held, SA is barred by limitation.

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According to Appellants, Learned Presiding Officer has not properly considered the issue put forth by Registry as SA is filed within 45 days from the date of issuance of Letter dated 20.12.2017. As seen from record, this Letter dated 20.12.2017, addressed to 1^st Appellant stating that loan account of M/s. Maruthi Paper Converters and another loan account in the name of Mr. S. Thirumalai, have been closed

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RA (SA) 83/2019

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by appropriating sale proceeds, and called upon first Appellant to receive the balance amount of Rs.5,14,149.21p. According to Appellants, aggrieved by said action of Bank, SA is preferred. As seen from Securitisation Application, the relief claimed is to quash the confirmation of Sale and issuance of Sale Certificate. In the limitation part of the Securitisation Application, it is pleaded Letter dated 20.12.2017 was received by Applicants on 24.07.2017, as such, the Application is in time.

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Section 17 of SARFAESI Act, 2002, provides a remedy to challenge the measures referred to in Sub-section (4) of Section 13 of SARFAESI Act, 2002, and such Application has to be filed within 45 days from the date on which such measure had been taken. Now, it has to be seen whether confirmation of Sale and issuance of Sale Certificate would fall under the category of “measures” referred to in Section 13(4) of SARFAESI Act, 2002.

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RA (SA) 83/2019

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As seen from the provisions under Section 13(4) of SARFAESI Act, 2002, the measures indicated are; to take possession of secured assets including the right to transfer by way of lease, assignment or sale for realizing the secured debt; and to take over the management of the business of the borrower including the rights to transfer by way of lease, assignment or sale for realizing the secured debt. So, these are the measures indicated under Section 13(4) of SARFAESI Act, 2002, and issuance of Sale Certificate or confirmation of Sale are not “measures” indicated under Section 13(4) of SARFAESI Act, 2002. Confirmation of Sale and issuance of Sale Certificate are only consequential steps. Sale of property is also a “measure” under Section 13(4) of SARFAESI Act, 2002, and if that measure is challenged and Tribunal ultimately declares that measure was not in accordance with the provisions of the Act and Rules made there under, then, consequential steps, i.e. confirmation of Sale and issuance of Sale Certificate will automatically go. So, the period for the purpose of limitation has to be calculated from the date of taking

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RA (SA) 83/2019

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measures, and as the confirmation of Sale and issuance of

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Sale Certificate are not the measures, question of calculating the limitation is either from the date of confirmation of Sale or issuance of Sale Certificate, does not arise.

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Learned Presiding Officer clearly held in his Order, aggrieved person can challenge sale conducted by the Authority, provided there are defects, within 45 days from the date of auction date, but Applicants, without challenging the sale, seeks to quash the confirmation of Sale and issuance of Sale Certificate, therefore, SA is not maintainable, so also, barred by time, and rejected the same. I do not find any wrong in the Order of Tribunal below, Learned Presiding Officer is perfectly justified in rejection the Application.

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Appellants, without showing anything as to how confirmation of Sale and issuance of Sale Certificate can be challenged under Section 17 of SARFAESI Act, 2002, raised

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RA (SA) 83/2019

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many aspects in the Written Submissions, which are no way relevant to the issue, therefore, they are not dealt with.

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On a scrutiny of entire material, I am of the considered view that Tribunal below is perfectly justified in rejecting the Application, and there are no grounds to interfere with Order dated 28.02.2018 of DRT-II, Chennai.

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For these reasons, Appeal RA (SA) 83/2019 is dismissed as devoid of merits. Both parties shall bear their own costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 9^th of February, 2023]

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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M/s Maruthi Paper Converters & Ors. v. a.O.,Standard Chartered Bank

Case brief

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M/s Maruthi Paper Converters & Ors. v. a.O.,Standard Chartered Bank

Case brief

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