Partly allowed

Anoor K Prakasam v. The Authorised Officer State Bank of India

DRAT1 Jan 2025MISC APPEAL/36/2022

Case brief

AI extract

What is this about?

The Debit Recovery Appellate Tribunal allowed an appeal against the DRT's dismissal of an application for condonation of delay. The Court held that Limitation Act provisions apply to SARFAESI Act proceedings and remitted the matter for fresh consideration on merits.

What did the court decide?

Impugned order dated 02.09.2023 set aside. Matter remitted to DRT to consider condonation of delay and decide application on merits.

Anoor K Prakasam versus The Authorised Officer State Bank of… — Banking and Recovery | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 1^st day of January, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN CHAIRPERSON

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MA (SA) 36/2022 (arising out of IA 1858/2016 in SA (NDN) No.1442/2021 )

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Between

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Mr. Anoor K. Prakasam S/o Karuppanna Gounder, No.14, 8^th Cross, Sengunthapuram, Karur.

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…..Appellant

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And

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1. The Authorised Officer, State Bank of India, Karur Branch, 13-16, Old By-Pass Road, Karur.

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2. C. Selvaraj,

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S/o Chinnasamy, L-274, Tamilnadu Housing Board, Karur.

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3. P. Kandasamy,

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S/o M. Palanisamy Gounder, No.300, Puthukulathupalayam, Karur.

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4. K. Muthusamy,

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S/o Kalianna Gounder, 4/7-1, Raju Residency, 1^st floor, Coimbatore Road, Karur.

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5. R. Dhandapani, S/o Rengasamy Gounder, 138, Kuppichipalayam Post, Karur.

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…..Respondents

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Counsel for appellant bank : M/s Aiyar & Dolia Counsel for R1 Bank : Dr. T. Ramasamy Counsel for R3 : M/s V. Rameshvel & Co. Counsel for R2, R4 & R5 : None

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ORDER

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This appeal is filed under Section 18 of SARFAESI Act challenging the order

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dated 8.3.2022 passed in IA 1858/2016 in SA (NDN) 1442/2021 on the file of DRT, Coimbatore.

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Ld. Counsel for appellant submitted that SA (NDN) 1442/2021 (SASR No.5725/2016 on the file of DRT, Madurai) was filed challenging the Auction Sale Notice dated 25.9.2012. Since there was a delay in filing the application, appellant also filed IA 1858/2016 to condone the delay of 1372 days in filing the SARFAESI Application. It is further submitted that DRT below after noting the objections of 1^st respondent bank that property was already sold in auction way back on 29.10.2012 and the entire process under the SARFAESI Act having been completed, nothing survives in the application, dismissed

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the IA without assigning any reasons. It is further submitted that application

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filed for condonation of delay in filing SA was not considered by adverting to

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the reasons stated for the delay and this finding led to dismissal of the IA.

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Ld. Counsel for appellant further submitted that appellant is the guarantor for the loan borrowed by his wife Mrs. M. Elangodi and appellant filed a Writ Petition MD No.16830/2012 challenging the sale notice and sale certificate issued in favour of respondents 2 to 5 therein. The Hon’ble High Court of Madras at Madurai Bench dismissed the WP giving liberty to the appellant to approach appropriate forum of law for appropriate remedy. Thereafter, appellant filed application under Section 17 of SARFAESI Act along with IA 1858/2016 for condoning the delay of 1372 days in filing the SARAESI Application.

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It is the further submission of Ld. Counsel for appellant that Section 5 of Limitation Act is made applicable to the proceedings before DRT, therefore, dismissal of IA filed for condonation of delay without assigning reasons is improper, therefore, this Appeal is filed to set aside the order dated 8.3.2022 passed in IA 1858/2016 in SA (NDN) No.1442/2021.

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Ld. Counsel for appellant relied on the following judgments in support of his submissions.

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a) Hon’ble High Court of Punjab in re Surinder Mahajan Vs. Debts Recovery Tribunal & Others reported in (2017) ibclaw.in 151 HC

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b) Hon’ble High Court of Madras in WP No.34860/2019 in re P.K. Radhakrishnan Vs. The Central Bank of India and three others.

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c) Hon’ble High Court of Madhya Pradsh in MP No.5324/2023 in re Aniruddh Singh Vs. Authorised Officer, ICICI Bank Ltd.

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d) Hon’ble High Court of Gujarat in WP(C) No.7135/2023 in re M/s Baruah C.C. Block Industry rep. by is Proprietor, Smt. Anju Barua & another Vs. State Bank of India and two others

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In reply, Ld. Counsel for first respondent bank opposed this petition on the ground that Section 5 of Limitation Act is not applicable to proceedings before DRT. Ld. Counsel further submitted that when a Co-ordinate Bench of Hon’ble High Court of Madras decided the issue of law, subsequent Bench of same strength cannot take a different view than that of in the matter that what has been decided by the earlier Bench and in case of difference in opinion, then, the matter has to be referred to a larger Bench by the subsequent Bench.

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In support of his contention, Ld. Counsel for R1 Bank relied on the following judgments.

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a) Hon’ble Supreme Court of India in re, National Insurance Co. Ltd. Vs.Pranay Sethi and others reported in 2017 (6) CTC 493.

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b) Hon’ble High Court of Madras in re Velar Engineering Works Pvt. Ltd. Vs. The Authorised Officer/Chief Manager, Indian Bank, Kanchipuram & others reported in MANU/TN/5046/2019

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No representation for R3.

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I have considered the rival submissions and perused the record.

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From the facts elicited above, the points that arise for consideration of this Tribunal are as follows:

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Weather the application filed for condonation of delay under the Limitation Act can be entertained before Debts Recovery Tribunal?

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If so, whether appellant made out grounds for condonation of delay by adverting to proper reasons?

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As already stated above, Ld. Counsel for appellant referred various judgments

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rendered while considering the applicability of Limitation Act to the

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proceedings before DRT with regard to condonation of delay. Relevant

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portion of the judgments are extracted as follows:

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I. Hon’ble High Court of Punjab in re Surinder Mahajan Vs. Debts Recovery Tribunal & Others reported in (2017) ibclaw.in 151 HC, , held as follows:

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“In view of the above, we hold that:

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(i) The remedy provided to any person including a borrower under Section 17 of the Act is in response to the actions and measures taken by the secured creditor through an application which is in the nature of objections to the action taken by the secured creditor.

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(ii) The provisions of Sections 4 to 24 of the Limitation Act are applicable to the proceedings to be initiated by any person aggrieved including a borrower before the Debt Recovery Tribunal under Section 17 of the Act.

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(iii) The provisions of Sections 4 to 24 of the Limitation Act are applicable to an appeal to be preferred against an order passed by the Debt Recovery Tribunal before the Debt Recovery Appellate Tribunal under Section 18 of the Act.

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(iv) Whether sufficient cause is disclosed to seek condonation of delay, is a question of fact to be determined by the Debt Recovery Tribunal and/or the Debt Recovery Appellate Tribunal in the facts of each case.

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In the light of the findings above, the order dated 23.09.2011 passed by the Debts Recovery Appellate Tribunal in CWP No.22567 of 2011 is set aside and the matter is remitted back to the Appellate Tribunal to decide the appeal on merits. The orders dated 31.05.2011 and 19.09.2011 in CWP No.17894 of 2011 are also set aside and the matter is remitted to the Debt Recovery Tribunal to decide the application for condonation of delay afresh on merits in accordance with the observations made hereinbefore.”

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II. Hon’ble High Court of Madras in WP No.34860/2019 in re P.K. Radhakrishnan Vs. The Central Bank of India and three others, held as follows:

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“22)A perusal and consideration of the said judgment would disclose that the judgments of the Hon'ble Apex Court in Baleshwar's case and International Asset's case [cited supra] reported in 2016 [1] SCC 444 and 2017 [12] SCALE 748 as well as the judgment of the Andhra Pradesh High Court reported in 2018 [5] ALT 108 : 2018 SCC OnLine Hyd 161 [Porus Laboratory case] [cited supra], have not been brought to the knowledge of the Court and therefore, the said judgment is distinguishable.

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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 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. As rightly pointed out by the learned counsel for the petitioner in WP.No.34860/2019 / 1st respondent in WP.No.251/2020, DRAT had increased the cost from Rs.10,000/- to Rs.5 Crores.

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(24)Though the conduct of the petitioner in WP.No.34860/2019 / 1st respondent in WP.No.251/2020 can be taken into consideration, the fact remains that the delay was minimal and that apart, the petitioner in WP.No.34860/2019 / 1st respondent in WP.No.251/2020 was also diligently prosecuting the proceedings in wP.No.16627/2017 and upon receipt of the copy of the Sale Certificate, made a challenge to the same by filing an appeal before DRT-I, Chennai, and to condone the delay of 99 days, has filed IA. It is not as if the appeal filed by the petitioner in WP.No.34860/2019 / 1st respondent in WP.No.251/2020 is going to be entertained straightaway for the reason that for numbering of the appeal, the petitioner in WP.No.34860/2019 / 1st respondent in WP.No.251/2020 is under mandate to make a pre-deposit and that apart, if he prays for any stay, it is always open to the Tribunal to pass conditional order and that stage is yet to come and hence, imposing a cost of Rs.5 Crores for condoning the delay, in the considered opinion of the Court, is highly exorbitant. However, taking into consideration of the fact that the right

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of the third parties in the form of auction purchasers also intervened, the cost of Rs.10,000/- imposed by the Tribunal, requires modification.

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(25)In the result, WP.No.34860/2019 is partly allowed and the cost of Rs.5 Crores imposed by DRAT, Chennai, vide order dated 16.10.2019 in MA [SA] No.63/2018, is set aside and it is modified and the writ petitioner in WP.No.34860/2019 is directed to pay a cost of Rs.30,000/- [Rupees Thirty Thousand only] to the Member Secretary, Puducherry Legal Services Authority, Puducherry, within a period of four weeks from the date of receipt of a copy of this order.

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III. Hon’ble High Court of Madhya Pradesh in MP No.5324/2023 in re Aniruddh Singh Vs. Authorised Officer, ICICI Bank Ltd held as follows.

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6.5 Noticeably, Section 17 or any other provision of SARFAESI Act does not expressly exclude the operation of beneficial provisions under the Limitation Act.

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This Court need not go into the prolixity of considering various judicial pronouncements of different Courts to resolve the controversy herein because the answer to the question framed above lies in the bare reading of Section 29(2) of the Limitation Act. (Reproduced above). 7.1 Section 29 containing saving clause lays down various contingencies in which different nature of causes of action arising under different enactments can be prevented from becoming time barred.

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7.2 Section 29(2) inter alia stipulates that if the special law does not expressly exclude the application of Sections 4 to 24 of Limitation Act, then these provisions of Limitation Act shall apply qua all causes raised under the Special Law.

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7.3 The special law i.e. SARFAESI Act does not expressly exclude the application of the provisions from Sections 4 to 24 of the Limitation Act (including Section 5) and therefore the benefit u/S.5 of Limitation Act shall be available to the cause of action raised in an application u/S 17 of SARFAESI Act.

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Now applying the aforesaid principle of law to the fact situation attending the present case, it is obvious from plain reading of SARFAESI Act that while prescribing the period of 45 days for filing an application u/S.17(1) this special Act does not expressly bar the application of Section 5 of Limitation Act.

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8.1 Consequent upon the above discussion, it is obvious that provisions of Section 5 of the Limitation Act would apply with full force and are available

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for making a prayer for condonation of delay before the DRT in applications u/S.17(1) which are filed after expiry of 45 days.

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This Court is bolstered in its aforesaid view by the decision of Apex Court in Baleshwar Dayal Jaiswal vs. Bank of India and Others [(2016) 1 SCC 444], relevant extract of which is reproduced below:-

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"14. We have already held that the power of condonation of delay was expressly applicable by virtue of Section 18(2) of the SARFAESI Act read with proviso to Section 20(3) of the RDDB Act and to that extent, the provisions of the Limitation Act having been expressly incorporated under the special statutes in question, Section 29(2) stands impliedly excluded. To this extent, we differ with the view taken by the Andhra Pradesh High Court as well as the Madras and Bombay High Courts. We are also in agreement with the principle that even though Section 5 of the Limitation Act may be impliedly inapplicable, principle of Section 14 of the Limitation Act can be held to be applicable even if Section 29(2) of the Limitation Act does not apply, as laid down by this Court in Consolidated Engg. Enterprises v. Irrigation Deptt. [(2008) 7 SCC 169] and M.P. Steel Corpn. v. CCE [(2015) 7 SCC 58].

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As a result of the above discussion, the question is answered in the affirmative by holding that delay in filing an appeal under Section 18(1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20(3) of the RDDB Act read with Section 18(2) of the SARFAESI Act. The contrary view taken by the Madhya Pradesh High Court in Seth Banshidhar Kedia Rice Mills (P) Ltd. Case [AIR 2011 MP 205] is overruled."

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In conspectus of above discussion, it is held that benefit of the provisions from Section 4 to Section 24 (both inclusive) of Limitation Act is available to the causes raised u/S.17(1) before DRT.

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Accordingly, this petition stands allowed to the following extent:

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(i) Impugned order of DRT dated 02.09.2023 passed in S.A. No.806/2022 is set aside.

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(ii) DRT is now expected to proceed to consider and decide the application for condonation of delay filed by petitioner along with S.A. No.806/2022.

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(iii) Interim order passed by this Court on 14.09.2023 shall continue till the Tribunal decides the application for condonation of delay whereafter decision of the Tribunal shall prevail

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IV. Hon’ble High Court of Guuhati in WP(C) No.7135/2023 in re M/s Baruah C.C. Block Industry rep. by is Proprietor, Smt. Anju Barua & another Vs. State Bank of India and two others held as follows:

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Having surveyed the above referred judgments, we respectfully disagree with the view expressed by the Calcutta High Court and the Orissa High Court. The Calcutta High Court as well as the Orissa High Court have failed to take note the difference between the application under Section 19 of the RDB Act and the application under Section 17 of the SARFAESI Act. Application under Section 19 of the RDB Act is like a recovery suit, wherein ordinary law of limitation as per the Limitation Act applies. However, in case of application under Section 17(1) of the SARFAESI Act, the situation is not the same. As a matter of fact, a borrower has an opportunity to file an application before the DRT under Section 17 only when the secured creditor takes an action or any measure under Section 13(4) or 14 of the SARFAESI Act, meaning thereby filing an application under Section 17 are not original proceedings but actually it is like filing of objection against the action taken by the secured creditor.

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In Hitendra Vishnu Thakur & Ors. -Vs- State of Maharashtra & Ors., reported in (1994) 4 SCC 602, the Hon’ble Supreme Court has held that right to forum and 21 | P a g e WP(C) No.7135/2023 limitation is procedural in nature. Relevant portion of the said judgment is reproduced hereunder:- “26. (ii) …….. Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature.”

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In Section 2(1)(i) of the SARFAESI Act, “Debts Recovery Tribunal” is defined, which means the Tribunal established under sub-section (1) of Section 3 of the RDB Act. Section 17(1) of the SARFAESI Act provides that any person, including the borrower, can file an application under Section 17 against the measures taken by the secured creditor under sub section (4) of Section 13 of the SARFAESI Act before the DRT established under the RDB Act. Sub-section (7) of Section 17 provides that the DRT is required to dispose of the application in accordance with the provisions of the RDB Act. Section 24 of the RDB Act provides that the provisions of the Limitation Act, as far as may be applied, to an application made to a Tribunal. A conjoint reading of the above provisions make it clear that the DRT is required to dispose of an application filed under Section 17 of the SARFAESI Act as per the provisions of the RDB Act, wherein by virtue of Section 24 of the RDB Act, the provisions of Limitation Act are applicable.

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The principle of legislation by incorporation is well recognized in India. As the provisions of the RDB Act are incorporated in the SARFAESI Act for disposal of an application filed under Section 17 and in such circumstances, in our view, there is no reason to hold that the DRT cannot entertain an application filed under Section 17 of the SARFAESI Act beyond the period of

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limitation even on being satisfied that there is sufficient cause for not filing such application within the time limit prescribed.

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The Hon’ble Supreme Court in International Asset Reconstruction Company of India Limited (supra), considering the provisions of the RDB Act, has held that Section 24 of the RDB Act provides that the provisions of the Limitation Act are applicable only to the original applications and the same could not be extended to an appeal filed against the order of the Recovery Officer under Section 30 of the RDB Act. The Hon’ble Supreme Court has concluded that legislature provided for application of the provisions of the Limitation Act to original proceedings before the Tribunal under Section 19 only and not to the appeals filed under Section 30 of the RDB Act. Since the Hon’ble Supreme Court has categorically held that by virtue of Section 24 of the RDB Act the Limitation Act would have application to the original proceedings before the Tribunal, it is clear that an application under Section 17 of the SARFAESI Act, being one such original proceedings before the DRT filed after the period of limitation, as prescribed, can be entertained while applying the provisions of the Limitation Act by virtue of Section 24 of the RDB Act.

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In view of the above discussion, we hold that the DRT can condone the delay in filing the application under Section 17 of the SARFAESI Act while applying the provisions of Sections 4 to 24 of the Limitation Act, 1963, of course, only if it is satisfied 23 | P a g e WP(C) No.7135/2023 that the delay in filing the application under Section 17 is sufficiently explained.

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Hence, we are of the view that the learned DRT has erred in dismissing the application filed by the petitioners under Section 17 of the SARFAESI Act without considering the application for condonation of delay. Therefore, the order dated 20.11.2023 passed by the learned DRT, Guwahati Bench, Guwahati is set aside. The matter is remitted back to the learned DRT to consider the application filed by the petitioners for condonation of delay in filing the application under Section 17 of the SARFAESI Act and if the delay is satisfactorily explained, the same may be condoned and the application filed by the petitioners under Section 17 of the SARFAESI Act be decided on merits.

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The relevant portion of judgment relied upon by Ld. Counsel for R1 for the

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proposition that Section 5 of Limitation Act is not applicable to applications

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filed before DRT, as follows:

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Hon’ble High Court of Madras in re Velar Engineering Works Pvt. Ltd. Vs. The Authorised Officer/Chief Manager, Indian Bank, Kanchipuram & others reported in MANU/TN/5046/2019.

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12. When the application filed under Section 17(1) of the SARFAESI Act before the Debts Recovery Tribunal is an original proceeding, Section 5 of the Limitation Act is not applicable for condoning the delay in filing the application under Section 17.

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That apart, as already stated, the petitioner cannot challenge the Possession Notices dated 04.03.2009 and 09.03.2009 after the period of limitation prescribed under Section 17 of the SARFAESI Act. The Tribunals below have rightly set aside the Sale Notices and declined to interfere with the Possession Notices. Though there is no dispute with regard to the ratio laid down by the Division Bench in the judgment relied upon by the learned senior counsel for the petitioner, for the reasons stated above, the said ratio is not applicable to the present case.

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Therefore, from the above it is clear that the petitioner did not seek to set aside the Possession Notices dated 04.03.2009 and 09.03.2009. Further, it is clear that even if a challenge was made to the said Possession Notices in the Securitisation Appeal in S.A.No.88 of 2009 on 18.06.2009, the same is barred by limitation.

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From the consideration of judgments referred above, not only Hon’ble Division Bench of Hon’ble High Court of Madras in WP No.34860/2019 held that Limitation Act is applicable to the proceedings before DRT, some other Hon’ble High Courts had also taken the same view as extracted above.

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In the said circumstances, this Tribunal is of the view that IA filed for condoning the delay in filing application can be entertained before the Tribunal below. This Tribunal also finds that Ld. Presiding Officer, DRT, Coimbatore has not discussed the reasons stated in the delay condonation petition and no specific finding on the reasons recorded. As SARFAESI Application was filed with a huge delay of 1372 days, (1) necessary finding has to be given with regard to condonation of delay in prosecuting the Writ

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Petition in WP (MD) No.16830/2012. (2) Even after giving consideration for the period spent in prosecuting the Writ Petition, whether there is delay and whether reasons stated are sufficient enough to condone delay should also be given. Points (1) and (2) are answered accordingly.

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In the result, order of Ld. Presiding Officer, DRT, Coimbatore dated 8.3.2022 passed in IA 1858/2016 in SA (NDN) No.1442/2021 is set aside and matter is remitted back to DRT, Coimbatore for hearing the parties afresh in delay condonation petition i.e. IA 1858/2016 and dispose of the IA on merits and in accordance with law as expeditiously as possible.

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Appeal MA (SA) 36/2022 is disposed of, accordingly.

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Parties are directed to bear their own costs. Pending IAs, if any stand closed.

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[Dictated to Steno(SN), transcribed by him, corrected, signed and pronounced by me in open court, this 1^st Day of January, 2025)

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Sd/-

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(JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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Anoor K Prakasam v. The Authorised Officer State Bank of India

Case brief

What is this about?

What did the court decide?

Anoor K Prakasam v. The Authorised Officer State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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