Dismissed

Mr Rodney Ashwin Shiri v. Fed Bank Financial Services Limited

DRT17 Aug 2022SA/315/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal (DRT) dismissed an application seeking condonation of a 380-day delay in filing an appeal under the SARFAESI Act. Relying on Supreme Court precedent, the court held that the DRT lacks equitable power to extend limiting periods, dismissing the application and the main appeal.

What did the court decide?

Application for condonation of delay and main appeal dismissed. Interim order, if any, stands vacated. No order as to cost.

Mr Rodney Ashwin Shiri versus Fed Bank Financial Services… — Execution and Attachment | DRT (2022)

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tN THE DEBTS RECOVERY^{TRTBUNAL-I,KARNATAKA} AT BENGALURU

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Dated this the 17th day of^{August 2022}

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Present: Sri IMTIAZ ALI Presiding officer

r,A.No.13O3/2O22

in S'A. No.315/2022

BETWEEN:

Mr Rodney^{Ashwin Shiri,} Aged about⁴³ Years, S/o Mr Walter^Shiri

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N'lrs Raichel^Sandhya, Aged about 30 Years, Wo^{Mr Rodney Ashwin Shiri}

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Both are residlng^{at No 204,} 2'd Floor, BSR^{Koorla Residency,} Property No.56/2,^{Kogilu Village,} Yelahanka^Hobli, Bangalore^{North Taluk,} Ban;alore-560 063 " APPELLANTS

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ANDr

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The Authorized^Officer, FEDBANK Flnancial^{ServicesLimited,} Having its^{corporate olficeat} unit No.5O1,^{502,511to 513,}

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'A' wing,^5thFloor,

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Kanakia Wall Street, Andheri^{KurlaRoad, Chakala,}

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Andheri East,

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M/s B.S.R.^Enterprises, No.15,^{Curve Road,} Tusker^{Town (Queenscircle),} Bangalore-560⁰⁵¹ Represented^{bY its Partner} Mr Praveen^KumarReddy

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LA.No.1303/2022 in S.4.No.315/2022

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!lr G. Praveen Kumar Reddy, No.15, Curve Road, Tusker Town (Queens Circle), Bangalore-560 051

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Mr B. Raghavendra Reddy, No. 145, KapaleeswaT Nagar, Sun Rise Avenue, Neelan karai, Chennai-600 041

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M/s BSR Builders Engineers & Contractors, D. No.24- 1- 1641, Beside TVS Show Room, Daragamltta, Nellore, Andhra Pradesh-524 002 Represented by its Authorized Siqnatory ,. RESPONDENTS

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Counsels on record/aoDeared for:

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Appellants : Sri V. Ravi Prakash Respondent No.1 i lvlr Francis Xavier of FX & Co. Respondents No.2 to 5 : Absent

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FINAL ORDER

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The^present appeal is filed by the Appellants seeking for setting aside the impugned order dated 16.O3.2O2L passed by the Learned XXXVII Additional Chief Metropolitan Magistrate, Bengaluru, under Section 14 of SARFAESI Act (for short 'Act') in C.Misc. No.5821/2020 with respect to taking physical possession of the mortgaged property and handing it over to the secured cred itor- Fed ban k Financial Services Ltd to recover Rs.6,46,57,9OO/- with further interest thereon, cost, etc. from the borrowers.

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LA.No.1303/2022 in s.A,No.315/2022

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2, The facts leading to the^{present appealin} a^nutshell are, the Appellants are the third^{partyto the present appeal.} Respondents No,2 to 4 are^{Developers. RespondentNo,2} executed an agreement to sell^{undivided interest and a} Construction agreement^{both dated 01.72-2077in favour of} the Appellants herein^{agreeing to sell the Schedule-B property} free of all encumbrances,^{charges,liens, etc. The Appellants} availed flnancial assistance^{from StateBank ofIndia,} Yelahanka Branch,^{Bangalorefor an amountof Rs,42,51,34o/-} and accordingly after^{receipt of the entiresale consideration} amount, the Respondent^{No.2 executed a registeredsaledeed} dated 09.01.2018 and the^{Appellants have also executed} registered Memorandum^{of Depositof Title Deedsin favour of} the State Bank of^{India on 09 01.2018.It is contendedthat} the Respondent^{No.1-Fedbank FinancialServices Ltd afflxed} possession notice dated 24 07.2O2O^{claimingthat the} Schedule-B^{propertyand another25 apartments have been} taken^{possession under Section 13(4) of the Act wherein the} descriptions of the^{apartments mortgagedwere notclearly} mentioned. The^{Appellantsalong with other Flat Owners} preferred Writ Petition before the^{Hon'ble High Court of} Karnataka in W.^{P. No.94O612020challengingthe impugned} possession notice dated^{24.O7.2O2O which came tobe} dismissed as^{rendered infructuous vide its order dated} 22-04.2021when^{Counselfor Respondent made a submission}

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LA.No.r303/2022 in S.A.No.315/2022

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\ t

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that Respondent No.1^{hasalready obtained Section 14 order} dated 16.03.2021 under^{the Act. Immediatelythe Appellants} along with other Apartment Owners^{challenged the impugned} order dated 16.03.2021^{passedin Crl.Misc.No.5821/2020,6y} fllin9 Writ Petition No.6410/2021 before the^Hon'bleHigh Court of Karnataka which^came to be^{dismissed by the} Hon'ble High Court vide its order dated^{23.O4'2O21 reserving} liberty to the Petitioners to seek^{appropriaterelief under} Section 17 of the Act before the Debts^{RecoveryTribunal. The} Appellants along with other Apartment^{Ownerswho were} aggrieved by the impugned order filed^{CriminalRevision} Petition No.22412021 on the file of the City^{Civil And Sessions} Judge, Bangalore which is^{pendingconsideration.The} grounds, inter alia, urged by the Appellants in the appeal memorandum are, the Appellants^prior to^{purchaseof the} Schedule-B^property had verified the^{encumbrance certificate,} but no entries of deposit of title deeds or title^{deeds or} mortgage deed were reflected and as^such, the^Appellants were not aware and do not admit the transaction^{between the} 1st Respondent and the 2nd Respondent; no^noticeunder Sections 13(2) and 13(4) of the Act and rules^made thereunder is issued,^pasted on^{the scheduleproperty as per} Rule 3 of the Security Enforcement Rules nor^publishedas required under Act and the rules made thereunder;^1st Respondent is tryin9 to dispossess the^{Appellants in a}

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LA.No.1303/2022 in S.A.No.315/2022

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clandestine method without^having any^{authority overthe} same; 1st Respondent ought^{to have verified the encumbrance} certificate^prior to^{initiating action under the Actsince the} registered sale deed executed by^{2nd Respondent in favour of} the Appellants would have been^{reflectedin the encumbrance} certificate; 1't Respondent erred in^{registeringthe} Memorandum of Deposit^{of Title Deedswith incomplete details} viz. the floor in which the^{apartment is situated at, undivided} share in the Schedule 'A'^{Property in respectof each} apartment, car^{parkingslots etc} ,^{and in respectof entire} Schedule 'A' Property, the^{1't Respondent hand in glovewith} other Respondents has^{intentionallynot mentionedthe} conversion order details^{and BB[4P Khatanumber with a sole} intention to benefit the^{RespondentNo.2and if the samehad} been mentioned in the^{scheduleof the allegedmortgage} deed, the innocent^{purchasers like the Appellantsherein} would not have^got cheated^{from the Respondents No.2 to 4,} because of the fault^{committed by the Respondent No.1, and} tilt date the entries^{of the indenture of mortgage deed dated} 03.O2.2017 are not being^{reflected in theencumbrance} certificate and further the^{Respondent No.1 also erred in} following due^{procedure as contemplatedin the provisions of} the Act. With the^{foregoing contentionsand grounds, the} Appellants have flled the^{present appealmemorandum}

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6 I.A.No.1303/2022 in s.A.No.315/2022

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seeking for setting^{asldethe impugned orderpassedby the} Learned Magistrate.

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Along with the main application,^{Appellants have filed} the above I.A. with affidavit^{seeking to condone the delay of} 380 days in filing the^{appeal memorandum. In the affidavit,} inter alia, it is contended that^{the Appellantsalong with other} Apartment Owners on the^{advice preferred the present} application before this^{Tribunal. Appellantsfurthercontended} that in view of Section^{14 of the LimitationAct, the present} appeal^preferred by^{the Appellants is within the period of the} limitation. lt is further^{contended that upon advice, the} Appellants were^{pursuing the matter before other courtsand} subsequently upon^{coming to know about the provisionsof} the Act, the Appellants^{have preferredthe present application} before this Tribunal;^{hence theyhave sought for condoning} the delay in approaching^{this Tribunal as it was for the} bona fide reasons and^{not intentional.}

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Upon service of^{notice, the 1st Respondent entered} appearance through its^{counseland subsequently filed} objections to the^{above I.A. 1stRespondent contendedthat} the law is well settled^{that the delay could not be condoned as} a matter of right and the^{party who approaches the court}

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-t

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LA.No.1303/2022 in s.A.No.315/2022

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should explain convincing reasons to^{condone day-to-day} delay, The 1st Respondent denies the^{contention of the} Appellants that they were not aware of the^{impugnedorder} passed by the Learned Magistrate. Section 14 of the Limitation Act^provides that the^{ingredients required to be} satisfied before invoking^{Section 14 of the Limitation Act are} due diligence and^good faith. In the^{facts of the case, the} Appellants have not established^{due diligenceand goodfaith.} Instead of filing an appeal^{beforethis Tribunalas per the} liberty^given by the^{Hon'ble HighCourt in WP No.6410/2021} dated 23.O4-2O27^{within a periodof limitation, the Appellants} rather opted to avail^{remedyof revision in Crl. Revision} Petition No.224l2021 on^{the flle of the LearnedCity Civil} Judge, at Bangalore.^{The1st Respondent further contended} that the Appellants^{have not exercised due diligencein the} matter, they^{were totallycallousabout pursuing theirappeal} and they have not^{been able to give anyplausibleor} justifiable reason for condonation of^{delay' In view of the} foregoing objections,^{the 1st Respondenthas prayed for the} dismissal of^{the applicationwith cost}

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on the above^{background, I have gone throughthe} available records^{of the case, heard the argumentsaddressed}

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LA.No.1303/2022 in s,A.No.315/2022

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by the Counsels of both^sidesand the following^points arise

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for my consideration:

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a) Whether the Appellants^have made out the case for condonation of delayⁱⁿ filing the Appeal? and

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b) To what relief, the^{parties are entitled?}

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REASONS

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The Appellants are third^{parties and they have} challenged the impugned^{orderdated 16.03'2021 passedby} the Learned XXXVII Additional^{chiefMetropolitanl4agistrate,} Bangalore under Section 14 of the^Act in^{Crl. Misc,} No.5821/2020. The contentions of the Appellants^are, immediately on coming to know about the^{impugnedorder,} they filed Writ Petition before the Hon'ble^{High Courtof} Karnataka in w.P. No.6410/2021 and the Hon'ble^HighCourt dismissed their^petition reserving liberty to the^{Appellants to} seek appropriate relief under Section 17 of the^{Act beforethis} Tribunal. Appellants have further contended that^they subsequently^preferred Criminal Revision^Petition No.224/2O21on the file of the City Civil^{Court,Bangalore and} the same is^pending consideration and^{were bonafidely} pursuing their remedy before other courts and on the advice, they are before this Tribunal with the^{presentappeal.}

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I.A. No.1303/2022 in S.A. No.315/2022

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Admittedly the Appellants have^{filed the present} appeal memorandum on^{L2.O5.2O22 challengingthe Learned} Magistrate's order dated^{t6.O3.2O2L passedunder Section 14} of the Act to take^{physicalpossession of the securedasset} and to hand over the^{same to the secured creditor.Along} with the application^{filed by them under Section 17(1) of the} Act, the Appellants^{have also filed the above I'A' under} Section 22(2)(H)^{of Recovery of Debts Due to Banksand} Financial Institutions^{Act, 1993, seeking to condone the delay} of 3BO days^{in preferring the main application' The Appellants} have not^{preferredthe securitizationapplication within 45} days from the^{date of the impugnedorderpassedby the} Learned Magistrate^{on 16.03.2021' The Appellanthave filed} the securitization^{applicationon L2'O5} '2022^{and they} themselves state^{that thereis a delay of 380 days in filing the} main apPlication.

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It is apt to^{call out Section 17(1)of SARFAESI Act which} states, "Right^{to appeal: (1) Any person (including borrower)'} aggrieved^{by any of the measuresreferred to in sub-section} (4) of section^{13 taken by the securedcreditor or his} authorized^{officer under this chapter' [may makean} application^{along with such fee, as may be prescribedlto the}

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r.A.No.1303/2022 ln S.A.No.315/2022

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Debts Recovery Tribunal having^jurisdiction in the^matter within forty five days from the date on which such^measures had been taken.

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Further, the Tribunal has no^power to extend the^period of limitation on equitable grounds and has no^power to ignore that provision to relieve what it considers a distress resulting from its operation as per the Judgment of Hon'ble Supreme Court in the matter of P.K. Ramachandran vs. State of Kerala, reported in (1997) 7 SCC 556, wherein the Hon'ble Supreme Court has held thus:-

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"Law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes and the courts have no power to extend the period of limitation on equitable grounds",

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Hence, the legal maxim "dura lex sed /ex" which means "the law is hard but it is the law", stands attracted.

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Furthermore, in a special law when the statute does not prescribe for condonation of delay, the application of Section 5 of the Limitation Act also does not arise. Section 14(3) of the SARFEASI Act excludes the application of the Limitation Act 1963 and that the statute does not give express power to the DRT5 to condone delay.

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LA.No. t3o3/2022 in s.A. No.315/2022

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The Tribunal relies on the^{judgment of the Hon'bleHigh} Court oF Kerala in the^{casetitledK.P layan vs' Hong Kong&} Shanghai Banking^{CorporationLtd and ofhersdecidedon} 31.08.2015, wherein the^{Hon'ble DivisionBench has} categorically held that^{power to condonedelayin entertaining} an application under^{Section 17 of the SARFAESI Act is not} conferred on the^{DebtsRecoveryTribunal. It has furtherheld} that the Debts^{RecoveryTribunal cannot consideran} application for condonation^{of delay in an applicationunder} Section 17 of the SARFAESI^{Act. In the condonationof delay} application, the^{Appellantshave contendedthat they were} bonafidely^pursuing their^{remedy before other courts and in} view of Section^{14 of the LimitationAct, the presentappeal} preferred by the Appellants are within^{the period of the} limitation. Rebutting^{the contentions of the Appellants,the 1*} Respondent in^{its statementof objections to the condonation} of delay application^{has stated that Section 14 of the} Limitation Act^{providesthat the ingredients required to be} satisfied before^{invoking Section 14 of the LimitationAct are} due diligence^{and good faith. In the facts of thecase,the} Appellants^{have not established due diligenceand goodfaith'} Instead of filing an^{appealbefore this Tribunalas per the} liberty^{qiven by the Hon'bleHigh Court in w P No 6410/2021}

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r.A.No.1303/2022 in S.A.No.315/2022

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dated 23.O4.2O21^{within a periodof limitation, the Appellants} rather opted to avail^{remedyof revision in Crl. Revision} Petition No.224l2021 on the^{file of the LearnedCityCivil} ludge, at Bangalore. It^{is seenfrom the copy of the Crl.Misc.} No.5821/2020^produced by the^{Appellants alongwith the} appeal memo that^{lst Respondent has publishedthe demand} notice dated 23.O5.2079^{in two leading newspapersviz. "The} New Indian Express", English^{Editionand "Samyukta} Karnataka", Kannada Edition,^{in vernacular language,both} dated 06.06.2019.^{After more than a year, lst Respondent} published possession notice dated 24.07.2O2O.^{When the} demand notice was^{publishedon 06.06.2019in the aforesaid} newspapers, the^{Appellantsshould have taken steps to} approach the appropriate authorities^{toaddresstheir} grievance. As stated above, the Tribunal^has no^{power to} extend the^perlod of limitation^{on equitable grounds and has} no^power to ignore that^{provisionto relievewhat it considers} a distress resulting from^{its operation. Therefore, allowingthe} application for condonation^{of delay which is devoid of} bona fide reasons and^{sufficient cause wouldnot only be} beyond the mandate of^{Section5 of the LimitationAct, but} would be counter to the^{very objects of theSARFAESI Act,} which is legislated for^{expeditious realization of NPAdues by} enforcement of security^{interest by Banks and Financial} Institutions like Respondent^{herein. This Tribunal,therefore,}

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I.A. No.1303/2022 in S.A. No.315/2022

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finds that the I.A. No.1303/2022^{cannot be entertainedand is} liable to be dismissed. Consequently,^{S.A. No.315/2022 is} also liable to be dismissed.^{In that view of the matter, it is} not necessary to examine other^{grounds urged by the} Appellants in the SA,^{in light of our conclusionthat the} Appellants have failed to^{make out a case for condoning the} delay in^{preferring the SA. I, therefore,passfollowing:}

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ORDER

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In the result, I.A.^{No.1303 of2022for}

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condonation^{of delayis dismissed.}

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S.A. No.315/2022 also Conseq uentlY,

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dismissed.

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Interim order, if any, stands^{vacated. Pending} IAs, if anY,^also stand closed.

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There will be^{no orderas to cost'}

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(Dictated to the Stenographer, after^{itstranscriptionand necessarycorrectlons'signedand} t"'"'""" ';#;;;;iivi"" 't'^{tt'i op""court on this17rhdavof Ausust 2022)}

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.2 $'' (IMTIAZ Y hLI)'r PRESIDING^OFFICER DRT-I, BENGALURU

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+asho

Mr Rodney Ashwin Shiri v. Fed Bank Financial Services Limited

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Mr Rodney Ashwin Shiri v. Fed Bank Financial Services Limited

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