Dismissed

Ms S and S Pharma and Food Distributors v. Canara Bank

DRT1 Feb 2024SA/293/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitisation Application filed under Section 17(1) of the Securitisation Act. The applicant faced a limitation bar for filing 51 days after the secured creditor took possession. The Tribunal held the four-five-day limit is mandatory from the date the measure was taken, rejecting arguments for extending the date of knowledge. Furthermore, the Tribunal ruled

What did the court decide?

The Securitisation Application was dismissed as barred by limitation. Further recovery proceedings by the Bank were permitted to continue.

Ms S and S Pharma and Food Distributors versus Canara Bank — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL - 1, KARNATAKA ATBENGALURU

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PRESENT: SRI IMTIAZ ALI PRESIDING OFFICER

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Dated the 01't day of February, 2024

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SECURITISATION APPLICATION NO. 293 OF 2023

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Between

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IWs S & S Pharma & Food Distributors, 2T ll,Kanakanagar, 8ft A Cross, Nagenahalli, Kasaba Hobli, Bangalore North Taluk, Bangalore, Kamataka - 560032, represented by its proprietor, Syed Audil Syed Ghouse.

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........Applicant

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And

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The authorised officer, Canara Bank, Ganga Nagar Branch,^1/1, KHM Block, Ganganagar, Bangalore, Kamataka - 560032. Defendant

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This Securitisation Application having been^heard on^24.08.2023 in^{the presence} of Advocates IWs A S Nanjundapp4 Sowmya C^{N and Priya} R^{for the applicant, and} Advocate Shri Nithin Chandra M for the defendant,^{and stood overto this dayfor} consideration, the Tribunal delivered^the following:-

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FINAL ORDER

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The applicant frled the above Securitisation Application^{(SA) on 28.06.2023} under S.17(l) of the Securitisation and^{Reconstruction of FinancialAssetsand} Enforcement of Security lnterest^{Act, 2002as amended from time to time} -^hereinafter referred to as 'the Act' -^praying to^{set asidethe order dated 24.03.2023passedby the l't} Additional Chief Metropolitan Magistrate,^{Bengaluruin Crl MiscNo.6616/2022.The} applicant is none other than the borrower^{of a financial assistanceavailed fromthe} Canara Bank.

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sA293t2023

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The defendant filed a detailed statement of objection^{contending that the} application is barred by limitation. According^{to the defendant,there is a delay of 300} days in filing the application under 5.17(1) of^{the Act challenging the orderdated} 24 .03 .2023 and hence the application^{is banedby limitation.}

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The application under 5.17(1) of the Act was filed ort^{28.06.2023. On} scrutiny, the Registry noted^a few^{defects includingdelayvide scrutinyhand verification} dated 30.06.2023. The^{Registrar had given timeup to 14.07.2023for curingthe defects.} Thereafter, the applicant filed^{a memo ort 01.07.2023.Therefore, the SA was put up to} the Registry stating that the^{defectscured by filinga memo.The Registrar orderedto} register the SA and^{placed the matter before the Tribunalon 10.07.2023 vide orderdated} 0t.07.2023.

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The applicant in the relief^{portion has challengedthe order dated} 24.03.2023 passed by the l't Additional^{chief Metropolitan Magistrate, Bengaluruin crl} Misc No.6616/2022. As^{per the time limitspecifiedunder sub-section(l) of s.17of the} Act an application under the^{said provision ought to have been filed on or before} 08.05.2023 but came to^{be filed only on 28'06.2023 with a delay of 5l days in filing the} same.

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The applicant under^{paragraph4 of the SA has pleadedthat the SA had}

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been filed within^{45 days from the date ofvacation noticeand it readsas below:-}

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,'The appeal is filed uruler s.l7 of the securitisqtion Act qnd as Per the section, the qpPeal is to be Jited^{within 45"days} fron^{the dqte on whichsuch measures hadtakenplace. ln this conneclion the} "respondent bank ias issued vqcdtion notice daled 19.06.2023 to the applicants, for taking plrysical possession of the schetlule^{property.Hence, theappealis well within limitation} Irom^{the dateofvacation} 'notice. Appellants are not ; party to the Misc Apptication 6616/2022 filed by the respondent bank before I ACMM,'is such we do^{not know when the respondmt bank obtainedorders} fron^{I ACMM. We came.to} know only when the^{respondentbankissuedyacation nolicedated19.06.2023,and hence we areJilingthis} application and there^{is no delay on our partin} frling^{the application"}

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In response to the defects^{noted by the Registry, the applicantfiled a} memo on 01.07.2023^{statingthat the applicationunderS.l7(1) of the Act has been filed} within 45 days from^{the date of knowledge. The memoreads as below:-}

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sA29312023

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"As per the ofrce objections there is delay in filing this appeal. The respondent bank^{hqs issued} yacation notice dqted 19.06.2023 to the applicants for taking physical possession of the schedule Propery. Appellants are not^{a partyto the MiscApplication6616/2022} filed^{byrespondmtbank beforeI ACMM,as} such applicants do not^{lotow when the respondentbank obtained orders daled 24.03.2023} from^{I ACMM.} .We came to know only when the respondent bank issued vacation notice dated 19.06.2023 and hence this application is filed within one^month from^{the date of knowledgeolmagistateorders dsted 24.03.2023.}

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Sub-section (l) of S.17 of the Act^{deals with the right to sue of a person}

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aggrieved by any of the^{measuretakenby the secured creditoror his authorisedofficer}

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under sub-section⁽⁴⁾ of S.l3^{ofthe Actand it reads thus:-}

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"Any person (including borrow) aggrieved by any ofthe measures^{referredlo in sub-section (4) of} S.l 3 taken by ihe seatred^{creditor or his authorisedofiicerunder this Chapter, may makeqn application} along with suchfee, as^{maybe prescribed, to the Debts RecoveryTribunalhwing iurisdiclionin themqtter} within forty-five days from^{the dqte onwhichsuch measure hod beentaken"}

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Sub-section⁽⁴⁾ ofS.13 of^{the Actdealswiththe recoursescould be taken}

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by the secured creditor^{in casethe bonowerfails to dischargehis liability in full within}

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the specified^{period in the noticeissuedunder sub-section (2), and it reads thus:-}

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"(4)lncasetheborrowerfqilstodischqrgehisliabilityinfullwithintheperiodspecifiedinsub.one o' mi'" oj^the following^{measures to recover his} section Q),^{thesecuredcredito'} 'oj''oi ""ouu"1o sectred debl,^namelY:-

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(a) take possession^{of the securedassetsof the boffower includingthe right to transferby woyof} lease, assignment^{or sale} for^{realising the secureassel:}

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lb) rake oyer^{the mandgementof rhe business of the botowerincludingthe right to trans/erby} ,oy o7 u)ir,'iirig:,"t^{o' tol" ior reolisingthesecuredasset:} PROVIDED^{tharthe righlto tansferbyway of lerrse' assignmentor saleshqllbe exercisedonly} ulherethe^{substantiatpo't o1}" i)'i'i'i'iiii"L''"ki* hetd qs;earitvfor the debt:

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PROI/LDED^{F|JRTHER thst v)herethemanagement of wholeof the} of^business such^{business or part of of.thethe} business^{is severabte'} 'n" "'u'!i""'iii';;;;ti';':;;^{**'n2 'inog;^'^} i?;;,:*;;;;;'etatabte^{to the thesecuri'v or the debt'the debt'} manaBe^{thesecltredossetsthe}

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^{to the thesecuri'v or the debt'the debt'} manaBe^{thesecltredossetsthe} (c) appoint^{any person (hereafter refefted to'?-:!::o'o'"4''o}

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po,,,,,,li,tiffiiiioiur";:f::;;7"::;"'#ii,,iiir":::!n:i:ff:l:nil:::;;;::1" ::t:i"Y;.Y;I::ii:it!r:lz"?'w'i":';;i#?"!;*0"'" g' A conjoint^{readingofss'13(4) and 17(1) of the Act revealsthat any person} aggrieved^{by any of the measuresas envisagedunder sub-section(4) of S ' 1 3 of the Act is} entitled^{to filean application under5.17(1) of the Act before a Debts RecoveryTribunal} having^{jurisdiction'lt may be noted thatwhat being challengedin the present SA is the} order^{dated24'03 '2023passed by the 1$ Additional ChiefMetropolitanMagistrate'}

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Bengaluru^{in Crl Misc No'6616/2022'}

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s4293t2023

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As per S.l7(1) of the Act, the right to sue an application before^the Tribunal accrues to a person aggrieved by any of the^measutes taken by^{the secured} creditor or his authorised officer under^{S.l3(4) of the Act only. The right to file an} application before a Debts^{RecoveryTribunalaccruesonly when a measureor an action} under 3.13(4) of the Act is^taken by^{the securedcreditoror his authorisedoffrcer. The} word 'taken' is the^{past participle} of^{the word 'take' of which had alreadyhappened.As} per the stipulation given under 5.17(1) of the^{Act the period of 45 days have to be} commenced from the^date on^{which such measurehad been taken. 'Had been' is similar} to have been and^{hasbeen, exceptthat it identifies action that bothbegan and ended in} tlle past. It is used in^{the pastperfect and past perfectprogressivetenses.where,have} been and has^{been suggesta past point in time that remains open and unfinished,had} been indicates^{somethingthat is closed and completed.At any rate, the time limit given} under s.17(1) of^{the Actis forty five daysfrom the date on which such measure had been} taken. The^{languageof the provision is veryclear' In view of the timelimit expressly} provided in clear^{language, the questionof date of knowledge does not arisetherein' The} right to sue^{accrues within forty five days from the date on whichmeasure had beentaken} only.

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It^{is essentialfor a partyto have knowledge of the actionto takea} .^{remedialmeasurewithin the time limitprescribed underthe statute'The Act is a special} law enacted^{for enforcement of security interest over the securedasset for recovery of} secured^{debt from the secured debtorswithout the assistanceof Tribunalor Court' No} leniency^{in the form of condonationof delay or date of knowledgeis shown thereunder} for an^{aggrievedperson' Therefore' the argumentof date of knowledgeas advanced by} the aPPlicant^{is rejected'}

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12.^{No interlocutory application has beenfrled by the applicant for} cordonation^{of delay'It may be noted that by virtueof S'24of the Recoveryof Debts and}

sA 2%/2023

Bankrupcy Act, l9l provisions fiom firne ro ",o,"^{.J,,1_*.:1ded} for short 'the RDB Act' - the Act' 1963*"' -o""'apprication oade ro :**' as mav be' made applicable to an Tribunal' The word '*;": takes in * uppri.urior' . as per s'2@) of the RDB Act a rriuunar o r.-,u""'' may be noted *, *" l-oif 9 of the RDB Act only' Therefelq 11 provisions of the Limitation apprication fired under 1963 ate not applicable to an of rhe Act' ;o"' Mscellaneous oorrr"r^'''t ' vide order dabd D.07.2023 in IR No.r'rll20r, ,: No.3708/201,rrr rror, securitisation Application IR categorically held that *t power to condone ,r. or'u' Recovery Tribunal has no in filing application *"^'"0" become absorute a nrur sA2s3/2023.-,",rrr]1".0".1'r"",llol'#;,ffi ,",:r,r:r,ffi Metropolitan Magistrate, Bengaluru in .rrCrl ryusc Msc No.66 this Tribunal. 16/2022 cannot be condoned by

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13' In the above facts and circumstances of the case and in view of the discussion as above' the deray of 5l days in presenting Securitisation Application 293/2023 cannot be condoned and thus the same cannot be entertained by this Tribunal and thus is liable to be dismissed as baned by limitation.

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In the result, IA Nos.l352l20 23 and. 1353/2023 are closed and SA 29312023 is dismissed. The defendant, notwithstanding anything to the contrary .^{containedin any other law for the} time being in force, is permitted to continue with trre further proceedings in pursuant to the order dated 2 4.03.2023 passed by the l,t Additional chief Metropolitan Magistrate, Bengaluru in crl Misc No.661612022 for recovery of the secured debt Iiom the secured debtors by enforcing his security interest over the secured assets. The parties shall suffer their respective costs.

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sA2%/2023

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lS. Comrnunicate ** copy o f rthis final order to r secdon (D of s.r , *,::-:: ""nt^{Act r/w R.} r 6 I993 (as amended , ril":;f :,:#;,,r:;:.':-,):1,,,**"DebsRec';"ffi^{;ffi ;i-.}

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tcted and pronounced by nne in the open Tribun( on this the Dts

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ro s4 2s3/2023

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SCEEDU]LE PROPERTIES

All that piece anr new No ,r,, #T::^{'r!;,:;:;,:beingtheresidenr} Kanaka Nus*, Bangarore, .-* J": ;'H::;T'T'::::: ffi: municipal No' 27, earlier bearing site *". ,, 'a;;;:::::" .bearine No: 26/8, situated at Vishwanatha Nagenahaui ",,.uj]I"rr# Hl; Bangalore north Taruk, measuring east to west 40 feer and north to south 2g feef totally measuring 1,160 square feet arongwith the construction standing thereon comprising of stilt floor having 9 squares, ground floor measuring 9 squares, first floor measuring 9 squares and the second floor measuring 9 squares and bounded :

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On the east by : site Nos. 29 and30 On the west by : road .l

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On the north by : Road

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Onthe south by : Remaining portion of BBMP No. 27

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