The Debts Recovery Tribunal dismissed an application to condone delay in filing a securitization application. The court held that under Section 17 of the SARFAESI Act, the 45-day limitation is mandatory and not subject to condonation under Section 5 of the Limitation Act.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
01/04/2024 |
Ex. No. |
Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. Order in IA No.3/2023 in SA No.38/2023 Dr. Shital Vinay Patil & Ors. Vs. Phoenix ARC Pvt. Ltd. & Ors. |
Next date |
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| DR | T1 MUMBA Advocate Ajitkumar i/b C N Kumar, appeared for the Applicants. Advocate Vinay Deshpande i/b V. Deshpande & Co. appeared for the Respondent. 1. Today the matter is listed for orders on the issue of maintainability of the present SA. 2. Ld. Counsel for the Respondents raised an objection that the present SA is barred by limitation. 3. On the other hand, Ld. Counsel for the Applicnats moved an application i.e. IA No.3/2023 for condonation of delay in filing the present SA. IA No.3/2023 4. By way of the present IA, the Applicants prayed to condone the delay, if any, in filing the present SA and decide the SA on merits. |
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| RT1 MUMBAI 5. It is stated that the Applicants are the owners of properties i.e. (1) Office No.1 (2nd Floor), (ii) Shop No.17 (Ground Floor), (iii) Shop No.18 (Ground Floor), (iii) Consulting & Hospital (1st Floor), in “Neel Orchid” CHSL, Plot No.41, Sector No.10, New Panvel (AV) Tal. Panvel, Dist. Raigad (iv) Shop No.1, 2, 3, 4, 5, 6, 7, 8 & 9, (Ground Floor), in “Osho Kabir” CHS Ltd., Plot No.42, Sector No.10, Khanda Colony, New Panvel (w), Tal Panvel), Dist. Raigad. (“the subject properties”). 6. It is stated in the IA that the during the COvid-19 pandemic and during the existence of order passed by the Hon’ble Bombay High Court in suo motu Public Interest Litigation (PIL No.1/2020), wherein held that no coercive action should be taken, the Respondent No.1 filed an application under Section 14 of the SARFAESI Act, 2020 and obtained an ex-parte order on 05.01.2021 for taking physical possession of the running |
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| D Hospital, which was very unfortunate and against the interest of society at large. 7. It is also stated that on 15.12.2022, the Applicant came to know about a notice of dispossession issued by Mandal Adhikari, Panvel affixed on the Hospital for taking physical possession of Consulting & Hospital a |
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| RT1 MUMBAI running hospital at First Floor, on 20.12.2022, when the Applicants had approached this Tribunal and filed SA (TSA No.511/2022). 8. It is also stated that on 19.12.2022, the SA came up for urgent hearing before the Ld. DRT-2 (in-charge) when the Advocate for Respondent No.1 has made a statement that they have sold Shop No.1 to 9 and recovered Rs.3.50 crores however, no details of sale process provided to the Applicants. By a letter dated 19.12.2022, the Advocate for Applicants has issued a letter to Advocate for Respondent No.1 and requested to give copy of affidavit disclosing the details of sale process however, inspite of the receipt of the said letter, the Respondent No.1 deliberately withhold that vital information of sale process, the reason best known to them. 9. It is also stated that on 20.12.2022, during the urgent hearing on Interim |
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| D Application before this Tribunal, when Respondent No.1 instead of filing an Affidavit, |
they have tendered across the bar a compilation of documents and surprisingly annexed a copy of purported sale certificate dated 10.11.2022 claiming that they have sold commercial shop No.1 to 9 however, they have failed to disclose the complete details of sale |
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| process including the mode of payment, statement of account reflecting the receipt of payment etc. |
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| RT1 MUMBAI 10. In reply to the IA, the Respondent objected to the present IA as well as SA. It is stated that there is no sufficient cause made out in the entire SA indicating as to what prevented the Applicants to approach this Tribunal within the stipulated time of 45 days to challenge any of the measures taken by the Respondent under the provisions of the SARFAESI Act. The Applicant is all along aware about the measures taken by the Respondent from time to time from issuing a notice under Section 13(2) of the SARFAESI Act, to putting up the property for sale by way of public auction despite knowing fully well, the Applicant has chosen not to challenge the auction thus, the said auction has attained finality. |
| D 11. It is also stated that the Writ Petition filed by the Petition before the Hon’ble High Court of Bombay impugning the order passed |
| by Ld. CMM under Section 14 of the |
| SARFAESI Act, 2002, the Applicant has admitted that the Respondent has sold the secured assets i.e. the Shops on 02.09.2022. It is stated that the Writ Petition was filed on |
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| RT1 MUMBAI 10.09.2022 and was subsequently withdrawn on 05.12.2022. Thus, it is stated that despite having the knowledge of sale, the Applicants opted not to challenge the same therefore, now the Applicants are estopped from contending that they are not aware about the sale being conducted and it is for this reason also the interim relief deserves to be rejected. 12. It is also stated that the issue raised in the present SA are already raised by the Applicants in TSA No.511/2022 and the same substantially heard on merits and is reserved for orders and no interim relief was granted to the Applicants, thus, it is stated that the present interim relief application deserves to be rejected in limine. 13. Considered the submissions of the parties perused the records. 14. In the present SA, the Applicants |
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| D challenged the demand notice dated 27.09.2019; possession notice; sale notice dated 27.07.2022 as well as sale certificate dated 10.11.2022 in respect of the Shop No.1 to 9 of the subject properties, whereas the present SA is filed on 27.12.2022 alongwith the condonation of delay application. |
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| RT1 MUMBAI 15. Therefore, the sole issue which is required to be decided in the present matter is whether this Tribunal has jurisdiction to condone the delay in filing the Securitization Application. 16. Admittedly, the challenge of demand notice, possession notice, sale notice dated 27.07.2022 as well as sale certificate, is barred by limitation. 17. As per the Applicants, they were not aware about the auction sale notice dated 27.07.2022 as well as the auction conducted on 02.09.2022, and it is only on 19.12.2022, when the TSA No.511/2022 came up for urgent hearing before the Ld. DRT-2 (in-charge), the Advocate for Respondent No.1 has made a statement that they have sold Shop No.1 to 9 and recovered Rs.3.50 crores, therefore, it is stated that the delay, if any, in filing the present SA may be condoned. |
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| D 18. However, the said contention of the Applicants is not acceptable as in the Writ Petition filed by the Applicants on 10.09.2022 before the Hon’ble High Court of Bombay, the Applicant has admitted in para (i) to (k) that: (i) Thereby, the Tahsildar Panvel was appointed to take possession of the secured assets viz. 1) Office |
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| DRT1 MUMBAI No.1(2nd Floor), Shop No.17 (Ground Floor), Shop No.18 (Ground Floor), Consulting & Hospital (1st Floor), in “Neel Orchid” CHSL, Plot No.41, Sector No.10, New Panvel (AV) Tal. Panvel, Dist. Raigad 2) Shop No.1, 2, 3, 4, 5, 6, 7, 8 & 9, (Ground Floor), in “Osho Kabir” CHS Ltd., Plot No.42, Sector No.10, Khanda Colony, New Panvel (w), Tal Panvel), Dist. Raigad. Respondent No.3, the Tahsildar-Panvel was further directed to take further steps *after taking possession of the secured assets to prepare inventor of the articles along with possession of the secured assets. j) Respondent No.1, claiming to have possession of the secured assets, proceeded to place the secured assets for auction and scheduled the auction for 2nd September, 2022. k) The Petitioners meanwhile, continued in its endeavor of secure such financial assistance to ensure payments of the amounts claimed by Respondent No.1. In lieu of the same, one ‘Mediniya Developers Pvt. Ltd” affirmed to purchase the secured assets mentioned hereinabove and settle the dues amounting to Rs.6,79,78,209/- (Rupees Six Crore Seventy nine Lakh Seventy Eight Thousand Two Hundred Nine) with Respondent No.1…” (emphasis supplied) |
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19. It is clear from the above paras that the Applicants were well aware about the sale notice dated 27.07.2022 as well as sale conducted on 02.09.2022 whereas the present SA is filed on 27.12.2022, thus, the same is barred by limitation. |
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| MBAI 20. Even otherwise, this Tribunal has no power to condone the delay as held by various pronouncements by the Hon’ble Supreme Court, Hon’ble High Courts and the Hon’ble DRAT, Mumbai. |
| DRT1 MU 21. Recently, in Bank of Baroda & Anr. v. M/s Parasaadilal Tursiram Sheetgrah Private Limited, Civil Appeal No. 5240/2022, decided on 11.08.2022, the Hon’ble Supreme Court in para 12 has emphasis regarding the limitation of 45 days couple with object of the SARFAESI Act, 2002 in following manner: “12. The reason for providing a time limit of 45 days for filing an application under Section 17 can easily be inferred from the purpose and object of the enactment. In Transcore v. Union of India and Anr. this Court held that the SARFAESI Act is enacted for quick enforcement of the security. It is unfortunate that proceedings where a property that has been brought to sale and third-party rights created under the |
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| DRT1 MUMBAI provisions of the Act, have remained inconclusive even after a decade.” (emphasis supplied) 22. Similarly, the Hon’ble High Court of Madras in Velar Engineering Works Private Limited Vs. The Authorised Officer/Chief Manager, Indian Bank, Kanchipuram & Others, has held that: “7.On a perusal of Section 17 of the SARFAESI Act, it is clear that there is no provision made under the said Section for condoning the delay in filing the SARFAESI Application. The SARFAESI Application must be filed within 45 days. 8.There being a specific time-limit of 45 days for invoking the original jurisdiction of Section 17 of the SARFAESI Act, which has been found to be, in essence, a suit and a further tentative time-limit of 60 days for disposal of the proceedings, and giving a right to the party to complain before the Appellate Forum for compliance of such provisions alleging violation thereof if not completed within four months, it was never the intention of the legislature to apply Section 5 of the Limitation Act to such original proceedings by giving power to entertain the application under Section 17(1) of the SARFAESI Act by merely showing sufficient cause for the |
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| DRT1 MUMBAI delay without putting any restriction upon the Tribunal and we, therefore, hold that the time period of 45 days provided in Section 17 of the SARFAESI Act which is original in nature cannot be extended by taking aid of Section 5 of the Limitation Act. 9.The SARFAESI Application filed under Section 17(1) of the Act is like that of a suit and that the Limitation Act applies as far as may be applicable by virtue of Sections 17(7) and 24 of the two Special Laws, therefore, Section 5 of the Limitation Act has no application in the original proceedings like a suit before Debts Recovery Tribunal. Going by the amended Section, the proceedings under Section 17 of the Act is not an appellate proceeding, but rather an original proceeding, which is brought before a Forum prescribed under the Act and is like a suit under the Code of Civil Procedure, 1908. Thus, as a matter of fact the proceedings under Section 17 of the Act are in lieu of the Civil Suit, which remedy is ordinarily available, but for the bar under Section 34 of the SARFAESI Act and an application under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are similar provisions in its non-applicability of Section 5 of the Limitation Act. The Debts Recovery Tribunal exercises original jurisdiction while entertaining an application filed |
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| DRT1 MUMBAI under Section 17(1) of the SARFAESI Act.” (emphasis provided) 23. It is pertinent to note herein that the SLP(C) No.-008201-008204 / 2020 filed against the judgment of the Hon’ble High Court was dismissed by the Hon’ble Supreme Court vide order dated 09.07.2020, with the following observations: “We are not inclined to interfere with the impugned order passed by the High Court. Consequently, the special leave petitions are dismissed” (emphasis added) 24. The same observation was reiterated by a Single Bench of the Hon’ble Kerala High Court in The Authorized Officer, Indian Bank Vs. K. J. George, AIR Online 2020 KER 800, wherein it is held that: “In the light of the positions of law crystalised in the above quoted judgments, it can be manifestly concluded that neither the Debts Recovery Tribunal has power to condone the delay while exercising the powers under Section 17 of the SARFAESI Act nor this Court can extend the time of limitation for entertaining an application under Section 17 of the SARFAESI Act. The learned Debts Recovery Tribunal, while |
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| D | RT1 MUMBAI passing the impugned order, committed an error of law by overlooking the settled law on the aspect of limitation in entertaining an application under Section 17 of the SARFAESI Act. W.P.(C) No.38409 of 2010 filed by respondent Nos.1 and 2 was in respect of demand notices dated 06.11.2009 and 27.07.2010 as well as sale notice dated 20.11.2010. Nothing prohibited the petitioners in that writ petition (respondents 1 and 2 herein) to bring to the notice of this Court subsequent development in the matter. Learned Debts Recovery Tribunal committed an error by putting blame regarding non disclosure of this fact on the petitioner herein. It was a specific case of the petitioner herein while defending W.P.(C) No.38409 of 2010 that the remedy lies elsewhere and therefore, this Court had dismissed the said writ petition by relegating the petitioner to the Debts Recovery Tribunal. The dismissal was without prejudice to the right of the petitioners in the said writ petition to take up all their contentions before the Debts Recovery Tribunal.” (emphasis supplied) 25. It is worth noting that the Special Leave Petition filed against the judgments of the Hon’ble Kerala High Court is pending before |
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| the Hon’ble Supreme Court, however, the |
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| operation of the judgments has not been stayed. |
| DRT1 MUMBAI 26. The identical observations has been made by the Hon’ble Orissa High Court in BM, The Urban Co-operative Bank Ltd., Cuttack Vs. Registrar, Debts Recovery Tribunal and Anr, W.P.(C) No.8100 of 2019 decided on 12 May, 2021, and held that: “....The resultant legal position is that the DRT has no power to condone the delay in filing an appeal before it either under Section 17 (1) of the SARFAESI Act or Section 30 (1) of the RDB Act. 30. As can be seen Section 17 (7) of the SARFAESI Act expressly states that the DRT shall dispose of an application under Section 17 (1) thereof in accordance with the provisions of the RDB Act. Neither Section 17 (1) SARFAESI Act nor Section 30 (1) of the RDB Act permits the DRT to condone the delay in filing an appeal beyond the prescribed period. In that view of the matter, in the present case the DRT was in error in condoning the delay and allowing Opposite Party No.2 to proceed with the appeal filed by her before it….” (emphasis provided) |
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| DRT1 MUMBAI 27. In Pravin H. Kantaria & Anr. Vs. Mahanagar Co-operative Bank Ltd. & Ors., Appeal No.246/2009, decided by the Hon’ble DRAT, Mumbai on 12.04.2023, wherein it is held that: “The scheme of the SARFAESI Act manifestly precludes the application of the Limitation Act. The intention of enacting special statutes is to expedite the disposal of cases. If delays are to be condoned by application of Section 5 of the Limitation Act, the very purpose of the statute will get frustrated. There is a specific time limit of 45 days for invoking the original jurisdiction of Section 17 of the SARFAESI Act, which has been found to be the essence, of the statute, and also looking into the fact that a further time limit of 60 days for disposal of the proceedings, and giving a right to the party to appeal before the appellate forum for compliance of such provisions alleging violation thereof if not completed within four months, it was never the intention of the Legislature to apply Section 5 of the Limitation Act to such original proceeding by giving the power to entertain the application under Section 17(1) of the SARFAESI Act, by merely showing sufficient cause for the delay without putting any restriction upon the Tribunal and we, therefore, hold that the time period of 45 days provided in |
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| D | RT1 MUMBAI Section 17 of the SARFAESI Act which is original in nature cannot be extended by taking aid of Section 5 of the Limitation Act. The Appellants had approached the DRT more than two years after the Sarfaesi measures were initiated by the Respondent Bank. That apart, there also does not seem to be sufficient reason for condoning delay. The law does not come to the aid of those who sleep over their rights. The Ld. Presiding Officer has rightly dismissed the application for condonation of delay, and this Tribunal finds no reason to interfere with that finding.” (emphasis provided) 28. Similarly, the Hon’ble DRAT, Mumbai in Mr. Anil Kamalakar Kawale Vs. LIC Housing Finance Ltd. & Anr. Misc. Appeal No.244/2010 decided on 01.11.2022, observed that: “12. After having gone through the decisions cited on both sides, it is seen that the Appellant was aware of the Sarfaesi proceedings initiated against him by the Bank. He states that he did not receive the notice under Sec. 13(2). But it is also pertinent to note that he was aware of the possession notice affixed on the front door of the flat which was occupied by none other than his own relatives. |
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| RT1 MUMBAI They were also dispossessed by the Bank. All these actions did not persuade the Appellant to take appropriate action. The sale notice was published in a newspaper having circulation in the area where the Appellant resides. Still, he pretends to be ignorant of that. He states that it was his friend who informed him about the notice that appeared in the newspaper. Even if the Appellant is not purchasing or reading the newspaper in which the publication had appeared, he cannot say that he was not aware of the notification. There is a presumption that he was aware of the public notice. 13. The Hon’ble Supreme Court has in Standard Chartered Bank V/s MSTC observed that RDB Act is a special law and the proceedings are before a statutory Tribunal. The scheme of the Act manifestly provides that the legislature has provided |
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| D for the application of the Limitation Act to the original proceeding before the Tribunal under Sec. 19 only. And that while preferring an Appeal under Sec. 30 the legislative intent for exclusion was expressed. The application of |
| Sec. 5 of the Limitation Act by resort to Sec. 29 (2) of the |
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| D | RT1 MUMBAI Limitation Act 1963, therefore, does not arise. And it was held that an Appeal preferred beyond the period of 30 under Sec. 30(1) of the RDB Act cannot be condoned by the application of Sec. 5 of the Limitation Act, as held by the Hon’ble Apex Court in an earlier decision in International Asset Reconstruction Co. of India Ltd. V/s Official Liquidator (2017) 16 SCC 137 and concluded that for an application for review under Rule 5 A of the D.R.T. Rules also delay cannot be condoned by an application of Sec. 5 of the Limitation Act. The instant case is with regard to the application of Sec. 5 of the Limitation Act for an application filed under Sec. 17 of the SARFAESI Act beyond the period of 45 days. There is no provision in the said Act to condone the delay and therefore, the application of Sec. 5 of the Limitation Act is out of the question. There is no reason to interfere with the findings of the Ld. Presiding Officer in the impugned order.” (emphasis added) |
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| 29. Thus, from the abovesaid dictum of various courts including the Hon'ble Supreme Court, this Tribunal has no jurisdiction to |
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| DRT1 MUMBAI condone the delay in filing the Securitisation Application. 30. Therefore, in view of the above, the present IA is hereby dismissed. 31. Consequently, the SA is also hereby dismissed. 32. File be closed and consigned to the record room. P.O. DRT-I |
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2 issues framed by the court
Whether the Debt Recovery Tribunal has jurisdiction to condone the delay in filing a Section 17 application under the SARFAESI Act.
Whether Section 5 of the Limitation Act applies to condone delay in original proceedings under the SARFAESI Act.
Colour shows how this judgement treated each authority
Bank of Baroda & Anr. v. M/s Parasaadilal Tursiram Sheetgrah Private Limited, Civil Appeal No. 5240/2022, decided on 11.08.2022Explained¶21
Velar Engineering Works Private Limited Vs. The Authorised Officer/Chief Manager, Indian Bank, Kanchipuram & OthersExplained¶22
In Bank of Baroda & Anr. v. M/s Parasaadilal Tursiram Sheetgrah Private Limited, para 12Explained¶21
The Authorized Officer, Indian Bank Vs. K. J. George, AIR Online 2020 KER 800Explained¶24
BM, The Urban Co-operative Bank Ltd., Cuttack Vs. Registrar, Debts Recovery Tribunal and Anr, W.P.(C) No.8100 of 2019Explained¶26
Pravin H. Kantaria & Anr. Vs. Mahanagar Co-operative Bank Ltd. & Ors., Appeal No.246/2009, decided by the Hon'ble DRAT, Mumbai on 12.04.2023Explained¶27
Mr. Anil Kamalakar Kawale Vs. LIC Housing Finance Ltd. & Anr. Misc. Appeal No.244/2010Explained¶28
Standard Chartered Bank V/s MSTCExplained¶31
International Asset Reconstruction Co. of India Ltd. V/s Official Liquidator (2017) 16 SCC 137Explained¶33
Dr. Shital Vinay Patil & Ors.
Phoenix ARC Pvt. Ltd. & Ors.
Dr. Rekha G. Dhakar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
