Dismissed

Smt M Subathra v. State Bank of India

DRAT13 Jun 2025MISC APPEAL/31/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed the appeal against the DRT order that rejected a belated Section 17 application under the SARFAESI Act. The Tribunal held that Section 5 of the Limitation Act does not apply to the statutory 45-day window for security applications to preserve the Act's objective of speedy recovery.

What did the court decide?

The appeal filed in M.A.(S.A):31/2022 is dismissed, confirming the order of the Learned Presiding Officer, DRT-III, Chennai. Each party bears its own costs.

Smt M Subathra versus State Bank of India — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 13^th of June, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan CHAIRPERSON

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M.A.(S.A):31/2022

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(MA No. 19/2020 in SA SR No. 358/2020 on the file of DRT- III, Chennai)

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BETWEEN

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Smt. M. Subathra, W/o Mohan, No.49, Old No.21 D3, T.K. Nambi Street, Kancheepuram – 631 501.

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….Appellant

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AND

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State Bank of India, Rep. by Authorised Officer, Kancheepuram Branch, No.29, 30, 30-B, Annai Indra Gandhi Salai, Kancheepuram – 631 501.

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…..Respondent

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Counsel for Appellant : M/s. A.S. Kailasam & Associates Counsel for Respondent : Dr. T. Ramasamy

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ORDER

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Challenging the order passed in M.A. No. 19/2020 in SA SR No. 358/2020 by the Learned Presiding Officer, DRT - III, Chennai, on 11.11.2020, this Appeal is filed.

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Appellant filed an Application under Section 17 of the SARFAESI Act, 2002, in SA SR No. 358/2020 challenging the Possession Notice dated 05.03.2019, along with an Application in M.A. No. 19/2020 to condone delay of 278 days in filing the Securitisation Application. Learned Presiding Officer, not satisfied with the reasons stated for the delay, and that the Tribunal was not empowered by the statutory power to condone the delay in preferring the Application before it, dismissed the Application. Thus, this Appeal is filed.

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Learned Counsel for the Appellant submitted that the Appellant availed a Term Loan of Rs.16 Lakhs on 20.08.2008 from the Respondent Bank for construction of a residential

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house. She created security interest over scheduled property. The Appellants' husband, Mr. P. Mohan, availed financial assistance from the Respondent Bank for running his Silk Sarees manufacturing business. He discharged the loan, but the Bank failed to return the original documents, stating that the agriculture loan availed by him remains unpaid. Due to prevailing condition and a down fall in the silk industry and her husband incurred heavy loss in the business, closed his business. In the said circumstances,

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the Appellant was not able to pay her instalments. Her account was classified as an NPA. The Demand Notice dated 17.12.2018 was issued demanding a sum of Rs 25,25,753/-, followed by a Possession Notice 05.03.2019 under Section 13(4) of the SARFAESI Act, 2002. Appellant requested the Bank to return the documents relating to the T.K. Nambi Street property for sale to get rid of the financial crisis and

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for the discharge of the loan. The Bank has not yielded to

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her request. In the said circumstance, the Securitisation Application could not be filed in time, which resulted in 278 days of delay.

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The Learned Counsel for Appellant relied on the judgment of the Hon’ble High Court of Madras in P.K. Radhakrishnan & Ors. V/s The Central Bank of India reported in Manu/TN/0827/2020 and the order passed in WP (MD) No. 7879/2020 in the case on Antony Samy Vs.

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The Registrar, DRT by the Division Bench of Madurai Bench of Madras High Court, on 04.08.2020 for the proposition that DRT is empowered to entertain the Application under Section 5 of Limitation Act, to condone the delay in filing the Application under Section 17 (1) of the SARFAESI Act.

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5, In reply to this submission, Learned Counsel for Respondent Bank submitted that an Application under section 17 (1) of the SARFAESI Act, 2002, has to be filed

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within 45 days from the date on which a measure under Section 13(4) of SARFAESI Act, 2002, had been taken. There is no provision available for condoning delay in filing the Securitisation Application under Section 17(1) of SARFAESI Act, 2002. The scope of the SARFAESI Act, 2002, is for speedy recovery of debt due to Banks and Financial Institutions. With that aim, timeline has been specified for every action taken by the Bank, including measures. In case, the timeline is not followed, the measures will ultimately fail. That applies to the case of the Appellant as well, when she challenges the measures under Section 17 (1) of the SARFAESI Act, 2002. Section 5 of the Limitation Act, cannot be applicable to the proceedings initiated under Section 17(1) of the SARFAESI Act, 2002. In support of his submission, Learned Counsel for Respondent Bank, pressed into service of the order in Velar Engineering Works Pvt.

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Ltd. Vs. The Authorised Officer, Indian Bank and Ors., reported in Manu/TN/5046/2019 . He further submitted that the orders relied on by Learned Counsel for Appellant has not considered earlier decision, which took a different

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view. In case of contradictory point expressed by twoDivision Benches, the decision of the previous co-equal Bench will bind the subsequent Bench. In support of his proposition, he relied on the judgment of Hon’ble Supreme Court, in National Insurance Co. Ltd. V/s Pranay Sethi & Ors. reported in 2017 (6)CTC 493 .

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Considered the rival submissions and perused the records.

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There is no dispute with regard to the fact that the Application under Section 17 (1) of the SARFAESI Act, 2002, was not filed in time as required under Section 17 of the SARFAESI Act, 2002, but filed with a delay of 278 days. The reason for delay, according to the Affidavit filed before the Tribunal is that, the Appellant approached the Bank for release of documents pertaining to T.K. Nambi Street property and was waiting for the response from the Respondent Bank. Except this reason, no other reason was given. When an Application is filed under Section 5 of the

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Limitation Act, each and every day delay has to be explained, but that has not been done in this case.

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8. Section 17 (1) reads as follows:

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“ 17. Right to appeal (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken:

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PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation : For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this subsection.

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(2)…….”

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This Section makes it clear that an Application under Section 17 has to be filed within 45 days from the date of measures taken under section 13 (4) of the SARFAESI Act.

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Section 36 of the SARFAESI Act, 2002 prohibits Secured Creditor from taking any measures under Section 13(4) unless the claim is made within the period of limitation prescribed in the Limitation Act, which read as follows:

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“ 36. Limitation: No secured creditor shall be entitled to

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take all or any of the measures under sub-section (4) of section 13, unless his claim in respect of financial asset is made within the period of limitation prescribed under the Limitation Act, 1963 (36 of 1963).”

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It is true that the orders of Hon’ble High Court aforesaid mentioned relied on by Learned Counsel for Appellant, held that an Application under Section 5 of the Limitation Act, can be entertained by the DRT for entertaining an Application under Section 17(1) of the SARFAESI Act, 2002. It is observed in para 23 as follows:-

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“( 23) As already observed, in the light of any express bar as to the applicability of the limitation and that apart, there is no self

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contained period of limitation provided under the relevant provisions of the SARFAESI Act, as observed by the Andhra Pradesh High Court in the above cited Division Bench Judgment, this Court is of the considered view that the DRT was right in entertaining the application……..”

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This order was dated 13.01.2020. Prior to that, in Velar Engineering Works Pvt. Ltd. Vs. The Authorised Officer,

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Indian Bank and Ors., the Hon’ble High Court of Madras

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held that there is no provision available under SARFAESI Act

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for condoning the delay in filing the Application under Section 17 of the SARFAESI Act, beyond the period of 45 days and that period cannot be extended by taking aid of Section 5 of Limitation Act. The relevant portions of the order are extracted below:

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7. On a perusal of Section 17 of the SARFAESI Act, it is clear that there is no provision made under the said Section for condoning the delay in filing the SARFAESI

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Application. The SARFAESI Application must be filed within 45 days.

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8. There being 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, in essence, a suit and a further tentative time-limit of 60 days for disposal of the proceedings, and giving a right to the party to complain 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 proceedings by giving 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.

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9. The SARFAESI Application filed under Section 17(1) of the Act is like that of a suit and that the Limitation Act applies as far as may be applicable by virtue of Sections 17(7) and 24 of the two Special Laws, therefore, Section 5 of the Limitation Act has no application in the original proceedings like a suit before Debts Recovery Tribunal.

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Going by the amended Section, the proceedings under Section 17 of the Act is not an appellate proceeding, but rather an original proceeding, which is brought before a Forum prescribed under the Act and is like a suit under the Code of Civil Procedure, 1908. Thus, as a matter of fact the proceedings under Section 17 of the Act are in lieu of the Civil Suit, which remedy is ordinarily available, but for the bar under Section 34 of the SARFAESI Act and an application under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are similar provisions in its nonapplicability of Section 5 of the Limitation Act. The Debts Recovery Tribunal exercises original jurisdiction while entertaining an application filed under Section 17(1) of the SARFAESI Act.”

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In the subsequent order, relied on by Learned Counsel for Appellant, in WP (MD) No. 7819/2020 of Madurai Bench of Madras High Court dated 04.08.2020, the decision of the earlier Coram of the Bench in Velar Engineering Works Pvt.

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Ltd. Vs. The Authorised Officer, Indian Bank and Ors., has not been considered. Apparently, there are two contradictory decisions had been taken in the matter of

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application of Section 5 of the Limitation, Act to the proceedings under Section 17 (1) of the SARFAESI Act, 2002.

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The Hon’ble Supreme Court of India, in National Insurance Co. Ltd. V/s Pranay Sethi & Ors. reported in 2017 (6)CTC 493, has categorically held that the earlier decision of a co-equal Bench binds a subsequent Bench of the same strength. In the said circumstances, the orders passed in P.K. Radhakrishnan & Ors. V/s The Central Bank of India reported in Manu/TN/0827/2020 and the order passed in WP (MD) No. 7879/2020 in the case on Antony Samy Vs. The Registrar, DRT, cannot be considered to the advantage of the Appellant because the order passed in Velar Engineering Works Pvt. Ltd. Vs. The Authorised Officer, Indian Bank and Ors., reported in Manu/TN/5046/2019, was not considered in these orders. Order in Velar Engineering Works Pvt. Ltd., was prior in point of time and it binds the subsequent Bench which decided P.K. Radhakrishnan & Ors, case.

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Very recently, the Hon’ble Supreme Court of India, in Civil Appeal No.408/2023 , in the case of Tata Steel Ltd. Vs. Raj Kumar Banerjee & Ors. , held that NCLAT has no jurisdiction to entertain appeals beyond the period stipulated under statute. As rightly pointed out by the Learned Counsel for Respondent Bank, the scope of SARFAESI Act, 2002, for speedy recovery of debt due to the Banks and Financial Institutions to infuse the economy of this country, time had been set for the measures taken under SARFAESI Act, 2002, starting from classification of account as NPA, issuance of Demand Notice, Objection, Reply to Objection under Section 13 (3A) of the SARFAESI Act, 2002, and measures under Section 13(4) of SARFAESI Act,2002, etc., in the Act and its Rules. The Secured Creditor cannot initiate measures if the claim is beyond the period of limitation.

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In the said circumstances, if an Application under Section 5 of Limitation Act is entertained in an Application filed under Section 17 of SARFAESI Act, 2002, it would

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derail the very purpose of the SARFAESI Act, 2002. Moreover, it is seen that no sufficient, acceptable and satisfactory reason is given for delay of 278 days in filing the Application in the Affidavit filed in support of the Petition. In the said circumstances, this Tribunal finds that order dismissing the Application filed under Section 5 of the Limitation Act, is just and proper and it requires no interference.

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In the result, the Appeal in M.A.(S.A):31/2022 is dismissed confirming the order of Learned Presiding Officer, DRT-III, Chennai. Both the parties shall bear their own costs. All pending IA, if any, stand closed.

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[Dictated to Athistamani, PS, transcribed by her, corrected and signed by me this 13^th of June, 2025]

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[ Justice G. Chandrasekharan] CHAIRPERSON

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Smt M Subathra v. State Bank of India

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Smt M Subathra v. State Bank of India

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