Allowed

Bengal Rajnagar Realtors Pvt. Ltd. v. Union Bank of India

DRAT20 Feb 2025REGULAR APPEAL/252/2018

Case brief

AI extract

What is this about?

The Appellant, a successful auction bidder under the SARFAESI Act, filed an application for refund after the limitation period expired because they litigated in a Civil Court without jurisdiction. The Tribunal allowed the appeal, holding time is excluded under Section 14 of the Limitation Act for bona fide proceedings in a wrong forum, and remanded the matter for disposal.

What did the court decide?

Impugned order of DRT setting aside the Section 17 application is set aside; DRT directed to dispose of the matter with opportunity of hearing on facts and court fee.

Bengal Rajnagar Realtors Pvt. Ltd. versus Union Bank of India — Company and Corporate | DRAT (2025)

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Reportable/ Not Reportable

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 252 of 2018)

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(Arising out of Dy. No. 23 of 2018 in DRT –III, Kolkata)

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HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Bengal Rajnagar Realtors Private Limited, a company incorporated under the Companies Act, 1956 and an existing “company” within the meaning of the Companies Act, 2013 represented by its Director and authorized signatory Mr. Raj Kumar Ghosh Prince Court, P-25, Princep Street Second Floor, Police Station – Bowbazar, Kolkata 700072.

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…Appellants

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-Versus-

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1. Union Bank of India, a nationalized Bank constituted under the Bank Companies (Acquisitions & Transfer of Undertakings) Act, 1970. Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai400021, Maharashtra, India and also having its Kolkata Nodal Regional Office at 225C, Acharya Jagdish Chandra Bose Road, Alepe Court First Floor, Police Station Ballygunge, Kolkata -700020.

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… Respondents

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Counsel for the parties	Mr. S. Basu Dasgupta, Learned
	Counsel Mr. Rohit
	Das, Learned Counsel for the Appellant
	Mr. Ranajit Chowdhury, Learned Counsel, Mr. Sudipto
	Chowdhury, Learned
	Counsel for
	Respondents

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JUDGMENT : On 20^th February, 2025

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THE APPELLATE TRIBUNAL :

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Instant Appeal has been preferred against an order dated 23^rd August, 2018 passed by Learned DRT-III Kolkata in Dy. No. 23 of 2018 (Bengal Rajnagar Realtors (P) Ltd. versus Union Bank of India). 2. Heard the Learned Counsel for the parties and perused the records.

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3. An Application under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’) was filed by the Appellant on 26^th June, 2018 which was declined to be registered by the Registry on 26^th June, 2018 and 18^th July, 2018 on the ground of barred by time as well as non-payment of sufficient Court fee. An Appeal is filed against the order stating that the limitation is being sought from the date of passing of the order by Learned Civil Judge Alipore in Money Suit No. 07 of 2016 for refund of the money. 4. It is stated that Appellant is an auction bidder who participated in the auction sale held on 12^th December, 2013 and offered bid of Rs.33 lacs. He paid Rs. 20,81,500/- to the Bank. Subsequently in pending T.S.A. No. 100 of 2015, a stay was granted by the Learned DRT restraining the Bank from effecting the delivery of possession. TSA No. 100 of 2015 was also allowed by the Learned DRT. Respondent Bank was directed to handover the possession of the secured assets but Bank did not take any initiative for conclusion of the same by way of deposit of the balance sale amount by the highest bidder. Accordingly, legal notice was sent by the Appellant on 09.09.2015 demanding refund of Rs.20,81,500/- with interest. Instead of replying the notice, fresh sale notice was published by the Bank on 08.02.2016. Being aggrieved, Civil Suit No. 07 of 2016 was filed by the Appellant before the Learned Civil Judge Senior Division, Alipore. Civil Suit was dismissed by the Civil Court on the issue of jurisdiction on 04.05.2018. Appellant received the certified copy of

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order on 31.05.2018. He filed the Application under Section 17 of the SARFAESI Act on 26^th June, 2018. It is submitted that cause of action arose on 31.05.2018 i.e. the date of receipt of the copy of the order. Limitation will also start from that date.

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5. Learned DRT held that the cause of action, if any, arose to the Appellant on 12^th December, 2013. He had not approached the DRT within the stipulated period, challenge to the measures under Section 13(4) of the Act were not made within 45 days for invoking the provisions of Section 17 of the SARFAESI Act. Appellant is also required to pay proper Court fees as per Rule 13(2) of the Security Interest (Enforcement) Rules, 2002. Accordingly, Application being Diary No. 23 of 2018 was dismissed by the Learned DRT.

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6. Feeling aggrieved, Appellant preferred the Appeal. 7. As far as facts of the matter are concerned as narrated above, Application under Section 17 of the Act was filed by the Appellant before the learned DRT claiming the limitation with effect from 31.05.2018 on the ground of receipt of certified copy of the Order of the Learned Civil Court dated 04.05.2018. At the very outset, Learned Registrar allowed 15 days time to remove the deficiency but the same was not done. Accordingly, vide order dated 18.07.2018 Learned Registrar declined to register the Application under Section 17 of the Act.

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8. It is undoubtedly admitted fact that the Appellant is an auction bidder in an auction conducted by the Bank on 20^th December, 2013, Appellant also paid an amount of Rs.20,81,500/-. It is also not in dispute that the sale proceedings were stayed by the Learned DRT in another proceedings and the Application under Section 17 of the Act being TSA No. 100 of 2015 was allowed by the DRT. The Appellant filed a Civil Suit No. 07 of 2016 before the Learned Civil Court which ultimately was dismissed exparte by Learned Civil Judge Senior Division Second Court Alipore on 04.05.2018 holding that the Civil Court has no jurisdiction to pass any decree in the matter. It is

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noteworthy that the Suit was not withdrawn by the Appellant with liberty to file before the Appropriate forum / Court but was duly contested before the Learned Civil Court which eventually dismissed the same.

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9. Thereafter, certified copy was obtained on 31.05.2018 and Securitisation Application under Section 17 of the Act was filed on 26^th June, 2018. Learned Counsel for the Appellant would submit that the period of Limitation of 45 days would start running from 31.05.2018 when certified copy was received by the Appellant. Court fees were also sufficiently paid by the Appellant. As far as validity or legality of the auction is concerned, that is not in dispute in this Appeal. Rather the facts are very much clear that Appellant was a successful auction bidder who deposited certain amount with the Bank but the auction ultimately could not be materialized. Matter was settled with the borrower and Title Deeds were also released in favour of the borrower by the Bank.

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10. Only issue to be considered in this Appeal is whether the Securitisation Application filed by the Appellant under Section 17 of the Act could be treated as filed within time i.e. 45 days when the cause of action has arisen?

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11. Civil Suit was filed before the Learned Civil Judge in the year 2016 being Money Suit No. 07 of 2016. Highest bid by the Appellant was made on 20^th December, 2013. But the sale could not be materialized. Thereafter instead of approaching the DRT, Appellant approached the Civil Court which has no jurisdiction in the matter in view of Section 34 of the SARFAESI Act. Section 34 of the SARFAESI Act reads as under:

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Civil Court not to have jurisdiction. –

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No. Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).

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12. Suit was also held to be filed without jurisdiction by the Civil Court vide order dated 04.05.2018. No plea for extending the benefit of Section 14 of the Limitation Act has been taken by the Appellant but even if it is to be considered even the, Appellant is not entitled for the benefit of Section 14 of the Limitation Act. Section 14 of the Limitation Act reads as under:

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Section 14 (1) of the Limitation Act 1963:

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(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

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13. In Purni Devi and another -vs- Babu Ram and Another 2024 SCC OnLine SC 482 Hon’ble Supreme Court has placed reliance upon Consolidated Engg. Enterprises versus Principal Secretary, Irrigation Department and others (2008) 7 SCC 169 and M.P. Steel Corporation versus Commissioner of Central Excise (2015) 7 SCC 58 wherein it was held that the provisions of Section 14 of the Limitation Act are to advance the cause of justice must have interpreted to do so.

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14. Principles pertaining to applicability of Section 14 of the Limitation Act were summarized by Hon’ble Apex Court in Consolidated Engg. (supra) wherein it was held that -

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“ 21 . Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. 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 in Para 31 that –

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“This Court in Consolidated Engg. Enterprises (Supra) further expounded that the provisions of this Section, must be interpreted and

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applied in a manner that furthers the cause of justice, rather than aborts the proceedings at hand and the time taken diligently pursuing a remedy, in a wrong Court, should be excluded.”

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It was further held that in Para 34 to 36 that –

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“34. The judgment of this Court in M.P. Steel (Supra) discussed the phrases, “due diligence” and “in good faith” for the purposes of invocation of Section 14 of the Limitation Act. While considering the application of Section 14 to the Customs Act, it was observed:

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“10. We might also point out that Conditions 1 to 4 mentioned in the Consolidated Engg. case [(2008) 7 SCC 169] have, in fact, been met by the Plaintiff. It is clear that both the prior and subsequent proceedings are civil proceedings prosecuted by the same party. The prior proceeding had been prosecuted with due diligence and in good faith, as has been explained in Consolidated Engg. [(2008) 7 SCC 169] itself. These phrases only mean that the party who invokes Section 14 should not be guilty of negligence, lapse or inaction. Further, there should be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party .

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xxx xxx xxx

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49. ……. the expression “the time during which the plaintiff has been prosecuting with due diligence another civil proceeding” needs to be construed in a manner which advances the object sought to be achieved, thereby advancing the cause of justice.” (emphasis supplied)

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35. The judgments in Consolidated Engg. Enterprises (Supra) and M.P. Steel (Supra) have been followed consistently by this Court. For instance in Sesh Nath Singh v. Baidyabati Sheoraphuli Coop. Bank Ltd. (2-Judge Bench), while holding Section 14 to be applicable to applications under Section 7 of the Insolvency and Bankruptcy Code, 2016 and the SARFAESI Act, it was observed:

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“ 75 . Section 14 of the Limitation Act is to be read as a whole. A conjoint and careful reading of sub-sections (1), (2) and (3) of Section 14 makes it clear that an applicant who has prosecuted another civil proceeding with due diligence, before a forum which is unable to entertain the same on account of defect of jurisdiction or any other cause of like nature, is entitled to exclusion of the time during which the applicant had been prosecuting such proceeding, in computing the period of limitation. The substantive provisions of sub-sections (1), (2) and (3) of Section 14 do not say that Section 14 can only be invoked on termination of the earlier proceedings, prosecuted in good faith.” 36. More recently, in Laxmi Srinivasa R and P Boiled Rice Mill v. State of Andhra Pradesh (2-Judge Bench), this Court followed dictum in Consolidated Engg. Enterprises (Supra) and M.P. Steel (Supra) to exclude the time period undertaken by the Plaintiff therein in pursuing remedy under Writ Jurisdiction, in the absence of challenge to the bona fides of the Plaintiff, in view of Section 14.”

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15. A perusal of the record will show that the Appellant pursued the proceedings before the Civil Court bonafidely which was ultimately dismissed for want of jurisdiction before the Civil Court. Although judgment was passed on 04.05.2018 after receipt of the copy on 31.05.2018, Appellant filed the Application under Section 17 of the Act on 26^th June, 2018. No laxity of Appellant could be found in the matter. Appellant was pursuing the proceedings bonafidely and diligently. Although proceedings were being pursued in a forum which was not competent to decide but mala fides cannot be attributed to the Appellant. Accordingly, I am of the considered view that Learned DRT has wrongly dismissed the Application being time barred. Accordingly, Appeal deserves to be allowed.

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ORDER

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Appeal is allowed. Impugned Judgment and order passed Learned DRT-III Kolkata dated 23.08.2018 in Diary. No. 23 of 2018 (Bengal Rajnagar Realtors (P) Ltd. versus Union Bank of India) is set aside. Learned DRT is directed to dispose of the S.A. after affording an opportunity of hearing to the parties in accordance with law. Issue of Court fee be looked into by the DRT after affording an opportunity of hearing to the Appellant.

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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 Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.

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Order signed and pronounced by me in the open Court on this the 20^th day of February, 2025.

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(Anil Kumar Srivastava,J)