Allowed

M S M C Duramix Concrete v. Union Bank of India

DRT29 Aug 2023SA/418/2023

Case brief

AI extract

What is this about?

The Tribunal admitted an interlocutory application seeking condonation of a four-day delay in filing an application under S.17(1) of the SARFAESI Act. Relying on the Supreme Court's direction excluding the pandemic period from limitation calculations, the Tribunal held that the delay was within outer limits and condoned it, inviting registration of the application.

What did the court decide?

The delay of four days in presenting the application was condoned, and the Registry was directed to register the application.

M S M C Duramix Concrete versus Union Bank of India — Company and Corporate | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL^{- 1, KARNATAKA} ATBENGALIJRU

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PRESENT: SRI IMTIAZ ALI

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PRESIDING OFFICER

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Dated the 29s day ofAugust,2023

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INTERLOCUTORY APPLICATION^{No.1510 of2021} IN

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UNREGISTERED SECURITISATION^{APPLICATION Dy No. 1157OF 2021}

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Between

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lvl/s M.C Duramix Concrete, represented by its Managing^Partner, Mathews Mathai Abraham, S/o Mathai Abraham.

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Mathews Mathai Abraham, S/o Mathai Abraham, 14, Infant Villa, 4ft Cross, HRBR Layout,2'd Block, Kamnahalli, Bangalore, Kamataka - 560043. . . . ..Petitioners/Applicants

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And

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The Authorised Officer, Union Bank of India" 642/643,2nd Stage, Extn l$ Block, Raj aj inagar, Bangalore, Kamataka- 560010.

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Respondent/Defendant

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This Interlocutory Application having^{been heardon 16.01.2023in the presence}

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of Advocate Smt N.S Chithraja Devi^{for the petitioners/applicants, and AdvocateShd} Satyanarayana for the^{respondent/defendant, and stoodover to this day for consideration,} the Tribunal delivered the following:-

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ORDER

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This petition has been filed on^{23.08.2021under S.5 of the LimitationAct, 1963} rlw 5.24 of the Recovery of^{Debts and} Bankruptcy^{Act, 1993 (as amended from time to} time) - for short 'the RDB Act'^{- praying to condone the delayof fivedays in filing the}

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IA No.t5l0r02l in Unrcgistered SA DyNo.ll57/2021

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umegistercd Securitisation Application (SA) with Dy No.l15712021. The^petitioners are none other than the applicants in the SA.

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The case set out by the^petitioners through the notary attested affidavit of the 2nd petitioner/2nd applicant accompanying the IA in brief is as follows:- This petitioner is the Managing partner of the I't petitioner/l't applicant partnership firm engaged in the business of manufacturing of ready mix concrete. The respondenV defendant issued a legal notice on 20.03.2021 calling upon the^{petitioners/applicants} to discharge the debt of 174,42,9981- within fifteen days from the date of the notice and a demand notice on 07 .04 .2021 and also a^possession notice by affixture on 05 .07 .2021 . ln view ofthe restrictions during the^pandemic situation this petitioner could not contact an advocate and instruct him to file an application and thus there is a delay of five days in filing the unregistered Securitisation Application, which may be condoned. It is only^just and necessary to condone the delay in filing the aforesaid SA and hence the IA.

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The respondenUdefendant filed counter stiled as 'statement of objection' contending as follows:- The application is not maintainable. No case was made out by the petitioners. The delay occurred is not five days but six days. Each day's delay is not explained. On these^grounds the respondent/defendant^prayed for dismissal ofthe IA.

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The only point arises for consideration is as to whether the petitioners/ applicants are entitled to the relief^prayed for?

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The Point:- Without moving out from the merits of the case, this Tribunal would like to discuss an issue on academic^grounds. Both the^{petitioners/applicants and} the respondent/defendant have used the word 'appeal' to an application^filed on 23.08.2021 under 5.17(1) of the Securitisation and Reconstruction of Financial^Assets and Enforcement of Security Interest Act, 2002^{(as amendedfrom timeto time)} -^for short'the SARFAESI Act'.

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tA No.l5l0202l in Unregistered SA Dy No.ll57 /2021

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The Hon'ble Supreme Court in Mardia Chemicals Ltd. v. Union of India treoorted in⁽²⁰⁰⁴⁾ 4 SCC 31U has considered the stage at which a right to approach Debts Recovery Tribunal under S.l7 of the SAMAESI Act will accrue and it was held that such a right will accrue only after measures are taken under 5.13(4) of the Act and it

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reads tlus:-

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"A right lo aooroach the DRT under S.l7 ol the Act accrues onl-v after measures are taken under Section I3(4) ofthe Act: it is clarified unequivocall! that conmunication of the reasons not accepting the obiections taken W the secured borrower mov nol be taken to,qive an occasion to resorl to such Issue of a notice to the debtor by oroceedinqs the creditor does which nol are not oermissible ottract the application of ,rd., th. the ,.rtitirns principles of ndtural tl, rh. ^.t. justice. It is alwqts open to tell the deblor what he owes to repqy. No hearing can be demanded from the ffeditor at this stage. As per the Dlovisions under lhe Acl lhe borrower mav nol be entitled to challenee lhe reasons communicated or the likely action ofthe sectred creditor at lhe stase ofcommunication ofreasons. unless his right to approach lhe Debts Recoverv Tribunql os prwided under Section 17 of the Act matures on arlv measure being taken under Section 13ru) ofthe Act." (Underline is iine)

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Pursuant to the decision of the Hon'ble Supreme Court the SARFAESI Act was amended in the year 2004 with effect from I l.l1.2004.

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The Hon'ble Supreme Court in paragraphs 59,62 and 76 ofthe decision in Mardia Chemicals Ltd. v. Union o.f India freported in (2000 4 SCC 3l U has categorically held that the proceedings under S.l7 of the SARFAESI Act is not an appellate proceeding, but rather an initial action which is brought before a forum prescribed under the Act, and is like a suit under the Code of Civil Procedure in the court offrst instance. Paragraphs 59,62 xrd 76 read thus:

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"59. We mav like to observe that proceedinss under Section 17 of the Act. in fact. qre not qPpellqte proceedinss. Il seems to be a misnoner. In /act it is the initial action which is broueht before a forum^qs Prescribed under the Acl. rqising griev(tnce againsl lhe action or meqsures tdken by one ol th" parties to the conlract. It is the stase of initiql proceeding likefline a suit in ciyil court. As a mqtter of fdct yoceedWs under Section I 7 of the Act are in lieu of a civil suit tehich reme4v is ordindrill, qvailable bul for the bar under Section 34 of the Act in the^present case. ll/e molt refer to a decision of this Court in Ganga Bai v. Vijay Kumar where in respect of original and appellate proceedings a distinction has been drawn asfollows: [ (1974) 2 SCC 397, paragraph l5J

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There is a basic distinction between lhe right ofsuit dnd lhe right of appeal. There is on inherent right in every person lo bring a suit of civil nalure and unless the suit is barred by stqtute one ma)/, ql one's peril, bring a suit of one's choice. lt is no answer to a suit, howsoever frivolous to claim, that the lqw confers no such right to sue. A suitfor its mainlainability requires no duthoity oflaw and it is enough that no statule bars lhe suit. But the position in regqrd to appeals is quite the opposite. The right of appeat inheres in no one and lherefore an oppeal for its maintqinability must hqve the cleal quthority of la . That acplains wlry the right of appeal is described as a creature ofstatute.

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As indicaled earlier. lhe^position of the appeal under Section 17 of the Act is like that o.f a suit No doubt, in suits also it is :

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IA No.l5l0202l in Unregistered SA Dy No.ll57l202l

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pemissible, in given facts and circlmslances and under the provisions of the low to^qllqch the property before a decree is passed or to appoint a receiver and to make a^provision by way of interim meosure in respect of the property in suit. But for oblaining such orders a case for the sdme is lo be made out in qccordance tgith the relevant provisions under lhe lsw. There is no such provision under the Act.

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In regard to lhe submission nade by the pdrlies as indicqted in the preceding paragraphs, we would like to make it clear lhat issue of a notice to the debtor by the creditor does not qttrqct the qpplicqtion ofthe principles o/ natural justice. lt is olways open to tell the debtor what he owes to repay. No heoring can be demandedfrom the^qeditor at this stage. So {ar^qs the proyision o/apoeol is concerned, we hqve alread! discussed in the earlier part of the iudgment that proceedings under Section 17 olthe Act hove been wrongllt described as aopeal before the Debts Recwem Tribunql. It is injfoct a forum where^proceedings ore originallv initiated in case of anv^qrievance agqinst the creditor in respecl o!^qn!) measure taken under sub-section⁽⁰ o.f Seclion 13 of lhe Act. Hence, the decisions on the point as to whether provision for an appeal is essential or not are not of any assistance in the facts of the present case." (underline is mine)

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The SARFAESI Act got several amendments in the years 2002,2004 and, 2016 and by virtue of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 dated 16.08.2016, which was made applicable with effect from 01.09.2016 vide SO 2831 (E) dated 01.09.2016, the word 'application' was substituted for the words 'right to appeal'. Therefore, what is to be filed from the date of 01.09.2016 by a p€rson aggrieved by any of the measures referred to in sub-section (4) of S.l3 of the SAMAESI Act taken by the secured creditor is 'application' and not 'appeal'. S.17 of the SAMAESI Act as on 23.08.2021 (as amended from time to time) reads as below:-

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" 17, Applicdtion againsl measures to recoyer secured debls.

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(l) Any person (including borrower), oggrieved by any of the measures referred to in sub-section (a) of S.l3 taken by the secared ueditor or his authorised oflicer under this Chapter, may make an application along with such fee, as may be presuibed, to the Debts Recovery Tribunal having jurisdiction in the matter within forty-fwe days fron the date on which such measure had been tqken:

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PROYIDED that dlferent fees mry be prescribedfor making the applicqlion by the borrower and the person other than the borrower.^" (underline is mine)

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The petitioners/applicants presented on 23.08.2021 an application under

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5.17(1) of the SARFAESI Act with Dy No .115712021 aggrieved by the possession notice dated 05.07.2021. As per the statutory stipulation under S.l7(l) of the SARFAESI Act, an application ought to have been filed on or before lg.O8.2}2l but the same was happened to be filed o\ 23.08.2021 with a delay of four days in filing the same. Therefore, the petitioners/applicants filed IA 151012021 to condone such delay.

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tA No.1510/2021 in Unregistercd SA Dy No.ll57l202l

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ll. According to the petitionerVapplicants, the delay occurred due to the stringent restrictions during the pandemic situation only. The IA was filed under S.5 of the Limitation Act, 1963 tlw 5.24 of the RDB Act. It may be noted that by virtue of S.24 of the RDB Act, the provisions of the Limitation Act, 1963 are, as far as may be, made applicable only to an application made to a Tribunal. The word 'application' as per S.2(b) of the RDB Act takes in an application made to a Tribunal under S.19 only. Therefore, it may be noted that the provisions of the Limitation Act, 1963 are not applicable to an application filed under S.17(l) of the SARFAESI Act. Also, vide order dated 12.07.2023 in Miscellaneous Application IR No.10l l/2019 in Securitisation Application IR No.3708/2018 this Tribrmal categorically held that the Debts Recovery Tribunal has no power to condone the delay in frling application under S.17 (1) ofthe SARFAESI Act.

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Notwithstanding the above, the Hon'ble Supreme Court in In Re : Cosnizance for Extension o-f Limitation freported in 2022 (l) KLT 3 t 5 (SC)I taking into consideration the impact of the surge ofcovid viruses on public health and the adversities faced by the litigants directed that the period from 15.03.2020 nllZB.02.2O22 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings and that in cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022 notwithstanding the actual balance period of imitation remaining, all person shall have a limitation period of 90 days from 01.03.2022, and the relevant portion reads as below:-

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"Taking into consideration the arguments advanced by counsel and the impact of the swge of the virts on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose ofthe MA No.2l of2022 wilh the Iollowing directions: The order dated 2i.03.2020 is restored and in continuation ofthe subsequent orders dated 08-03-2021, 27.04.2021 and 23.09.2021, it is directed rhat the periodfron 15.03.2020 till 28.02.2022 shall stand excludedfor the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-jtdicial proceedings. Consequently, the balqnce period of limitqtion remaining as on 03.10.2021, if any, shall become available wirh efect fron 01.03.2022. ln cases where the limitation would fuwe expired during the period between 15.0i.2020 ti 28.02.2022, notwitlstanding the actuol balance period of limitation remaining, all persons shall hqye a limitation period of 90 days from 01-03.2022. In the evenl the actuql balance period of limitation remaining, with efec, fron 01.03.2022 is greater than 90 days, that longer period shall apply. It is further clarified that the pe od tron l5-03.20920 till 28.02.2022 shall also stand excluded in computing the period.s prescribed under 5s.23(4) and 29A of the Arbitration and Conciliation Act, 1996, 5.12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of S.l 38 of the Negotiable

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\ IA No. 15102021 in Unregistercd SA Dy No. I 157/2021

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Instruments Act, l88l and any other lows, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

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In view of the above direction by the Hon'ble Supreme Court, the petitioners/applicants were entitled to present an application under S.l7(l) of the SARFAESI Act, aggrieved by the order dated 05.07.2021 issued by the respondent/ defendant, on or before 29.05.2022 as the limitation (stipulated date of '19.08.2021') had expired during the period between 15.03.2020 and28.02.2022. However, they presented the same on23.08.2021, well before such date prescribed by the Hon'ble Supreme Court. In the above circumstances, the delay of four days in presenting the unregistered SA with Dy No.l15712021 comes within the outer limit within which this Tribunal can condone the delay as directed by the Hon'ble Supreme Court in the decision supra and this Tribunal is bound to do so.

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In the result, the delay of four days in presenting the unregistered SA with Dy No.l15712021is condoned and the Registry is directed to register the same, provided otherwise in order. As the stage of^pleadings and extenuation of evidence in support of the pleadings by both sides have already been completed, the SA after registration, if any, shall be placed before the Tribunal for hearing within three weeks from the date of registration. Posted for the needful, as above, before the Registrar, on 11.09.2023.

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lAl5l0l2021 allowed accordingly with the above directions. No costs.

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[Dictated^{to my PA, transcribed by him, correctedand pronounced by mein the open Tribunalon this-the Z* acy of} August,2l2jl \ nq 'vo? I^IMTIAZALI ] PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL - 1, KARNATAKA AT BANGALORE

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PRESENT: SRI IMTIAZ ALI PRESIDING OFFICER

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Dated the 29ft day of August, 2023

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INTERLOCUTORY APPLICATION No. l5l0 of2021 IN UNREGISTERED SECTJRITISATION APPLICATION Dy No. 1157 OF202l

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Between

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N{/s M.C Duramix Concrete, represented by its Managing Partner, Mathews Mathai Abraham, S/o Mathai Abraham and another. . . . ..Petitioners/Applicants

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. . . ..Petitioners/Applicants

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And

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The Authorised Officer, Union Bank of Indi4 642/643,2'd Stage, Extn 1$ Block, Raj aj inagar, Bangalore. Kamataka- 560010.

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Respondent/Defendant

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ORDER

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;,,,,

M S M C Duramix Concrete v. Union Bank of India

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M S M C Duramix Concrete v. Union Bank of India

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