Mr. Srinivas Manne Parayya Vs Mr. Sreenivas Babu T G

MR. SRINIVAS MANNE PARAYYA SON OF MR. MANNE RAMAKRISHNA NARASIMHA SWAMY AGED ABOUT 36 YEARS, RESIDING AT NO. 291, C.5, 4^TH MAIN BDA QUARTERS, DOMLUR BENGALURU - 560 071.

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Digitally signed by KORLAHALLI BHARATHIDEVIKRISHNACHARYA Location: HIGH COURT OF KARNATAKA

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MR. SHIVANAGOUDA PATIL SON OF MR. VEERANAGOUDA NINGANAGOWDA PATIL AGED ABOUT 37 YEARS, RESIDING AT NO.47 RANI CHANNAMA NAGAR

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DHARWAD - 580 001.

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…PETITIONERS

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(BY SRI. ADITHYA SONDHI, SENIOR COUNSEL FOR SRI. KARAN JOSEPH, ADVOCATE)

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AND:

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MR. SREENIVAS BABU T.G. SON OF MR. T.GOVINDASWAMY AGED MAJOR, RESIDING AT NO.18, GLENTAIN CLOSE LETTERKENNY,

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HC-KAR

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COUNTRY DONEGAL REPULBIC OF IRELAND.

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PRESENTLY AT D.NO. 761, 5^TH BLOCK 60^TH CROSS, RAJAJINAGAR BENGALURU - 560 010.

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THE DEPUTY VICE PRESIDENT MR. V.N. NARAYAN AXIS BANK LIMITED RETAIL ASSET CENTRE NO.8, 3^RD FLOOR, 32^ND E CROSS 4^TH BLOCK, JAYANAGAR BENGALURU - 560 041.

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MRS. KOKILA NAGARAJ WIFE OF MR.SREENIVAS BABU T.G. AGED MAJOR RESIDING AT NO.107, 4^TH CROSS, 2^ND STAGE, R.K. LAYOUT, BENGALURU- 560 070.

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…RESPONDENTS (BY SRI. POONACHA M.U., ADVOCATE FOR R1, SRI. JAI. M. PATIL, ADVOCATE FOR R2, VIDE ORDER DATED 21.01.2020, NOTICE TO R3 IS DISPENSED WITH)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED DRAT ORDER DTD 27.05.2019 PASSED BY THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI IN R.A.(S.A.) NO.76/2015 VIDE ANNX-A AND TO QUASH THE IMPUGNED DRT ORDER DTD 12.10.2015, PASSED BY THE DEBTS RECOVERY TRIBUNAL AT BENGALURU IN S.A.NO.594/2014 VIDE ANNX-B AND CONSEQUENTLY DISMISS S.A.NO.594/2014 FILED BY THE R-1 BEFORE THE DEBTS RECOVERY TRIBUNAL AT BENGALURU.

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3 -

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HC-KAR

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE JAYANT BANERJI and HON'BLE MR. JUSTICE UMESH M ADIGA

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ORAL ORDER

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(PER: HON'BLE MR. JUSTICE JAYANT BANERJI)

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Heard the learned Senior Counsel appearing for the

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petitioners and the learned counsel appearing for the respondent-borrower.

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The petitioners are auction purchasers of an immovable property that was sold in a public auction by the respondent No.2-Bank in exercise of its power under Section 13(4) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,¹ read with the provisions of Rules 8 and 9 of the

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Security Interest (Enforcement) Rules, 2002² . A Sale Certificate dated 06.01.2011 was issued in their favour,

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1 SARFAESI Act

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2 Rules, 2002

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HC-KAR

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which was executed by respondent No.2 as authorized

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officer of the Bank.

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After a period of over two years i.e., on 28.01.2013, an application under Section 17 of the SARFAESI Act was filed by the respondent No.1 before the Debts Recovery Tribunal, Karnataka, at Bengaluru,³ bearing No.SA.549/2014, seeking to declare the Sale Certificate dated 06.01.2011 bad in law and to be set aside and, measures taken by the respondent No.2 - authorised officer under the provisions of Section 13(2) and Section 13(4) of SARFAESI Act, be declared as invalid. A further direction was sought to deliver back the scheduled property to the applicant and respondent No.2 therein (presently the estranged wife of respondent No.1, who is arrayed as respondent No.3 in the instant petition).

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In the objections filed by the petitioners before the DRT, a categorical objection was taken with regard to the

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3 DRT

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HC-KAR

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application filed by the applicant being barred by time. A statement of objections was also filed by the respondent No.2, in which a specific objection with regard to limitation was raised. However, it is contended that overlooking the objections as to limitation, the DRT proceeded to consider the point whether a sale notice, sale proceedings and sale certificate were illegal, without addressing the issue of maintainability of the application given the objections raised as to limitation.

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In the reasons given in its order, the DRT found that the provisions of Rules 8 and 9 of the Rules, 2002, were not followed and there were material irregularities and violations by the respondent-bank in proceeding to auction the property in dispute. Accordingly, SA.No.549/2014 was allowed and the impugned notice, sale proceedings and sale certificate were set aside and declared as illegal. Further directions were also issued.

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HC-KAR

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The petitioners then challenged the aforesaid

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order of the Debt Recovery Tribunal passed on 12.10.2015 before the Debt Recovery Appellate Tribunal, at Chennai, in RA (SA) 76/2015. By the impugned order of 27^th May 2019, the appeal was disposed of with the following directions :

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" The counsel for appellants/auction purchasers submits that part of the order by which sale was set aside was also not correct on facts because bank has ensured the services of all notices after due compliance of mandatory provisions.

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However, in view of the fact that respondent/ borrower chose to remain absent despite due service and also failed to comply the conditions of DRT, lapse on the part of borrower can be highlighted before DRT itself before coming to this Tribunal.

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The impugned order has already made it clear that if borrower will not comply the conditions, then the appellant will be at liberty to move the Tribunal for suitable relief required under law.

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In such a situation approaching this Tribunal at this juncture seems pre-matured. Accordingly appeal stands disposed of in following terms:

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HC-KAR

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The auction purchaser shall move to Tribunal highlighting the lapse and instance of noncompliance of order of Tribunal and will ask for relief in his favour (auction purchaser). It is made clear that borrower choose to remain absent despite due service and they have failed to comply the conditions of Tribunal also.

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Needless to write, in the event of any adverse order by DRT, parties will be at liberty to approach this Tribunal again without impediment of filing this appeal. The time spent by auction purchaser in this Tribunal will be excluded from the period of limitation and the appellant is directed to approach DRT within a period of one month from the date of receipt of this order. The SA will be revived on suitable application preferred by auction purchaser.

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With the above observations, Appeal stands disposed of."

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The contention of the learned Senior Counsel for

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the petitioners is that the provision of limitation is a mandatory provision and the time period provided therein of 45 days is strictly to be construed which is the intendment of the SARFAESI Act. It is stated that the

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HC-KAR

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DRT being a Tribunal, there is no inherent power vested in it and neither has any inherent power been conferred on it by the SARFAESI Act. That being the case, it is contended that it was not open to the Tribunal, as well as the Appellate Tribunal to ignore the objection of limitation

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made on behalf of the petitioners and proceed to adjudicate the matter on other issues.

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Learned Senior Counsel has placed before the Court the application moved before the DRT by the respondent No.1 herein, who is one of the borrowers. It is stated that the loan application was moved jointly by the respondent No.1 and the respondent No.3. These respondents had jointly executed a Power of Attorney in favour of the mother-in-law of respondent No.1, who was a signatory to the Sale Deed in respect of the property that was purchased by the respondent No.1 and respondent No.3 jointly, the monetary consideration of which was by way of a loan advanced by the Bank. The contention is that therefore, the ground raised by the

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petitioners that the application filed was way beyond time, ought to have been considered at the initial stage by the Tribunal and the Appellate Tribunal, inasmuch as, the Power of Attorney Holder, was resident of India during the period, while the respondent Nos.1 and 3 were residing in Ireland.

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Learned Senior Counsel has relied upon the judgment of a Co-ordinate Bench of this Court in the case of Kailasam P., -vs- The Karnataka Bank Ltd., and others, passed in Writ Petition No.11273/2014 (GMDRT), dated 20^th February 2025, by which, this Court interpreted the provisions of limitation appearing in Section 17(1) of the SARFAESI Act and, relying upon several decisions both of the Supreme Court, as well as, of the United Kingdom, held that the period of limitation of 45 days prescribed under Section 17(1) of the SARFAESI Act is mandatory and under no circumstance, can the delay be condoned once the prescribed period of 45 days

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expires.

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HC-KAR

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Learned counsel for the respondent, on the other hand, has referred to the provisions of Rules 8 and 9 of

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the Rules, 2002, to contend that the provisions are mandatory in nature and the procedural requirements therein have to be strictly complied with. It is stated that the DRT, as well as the Appellate Tribunal were justified in allowing the application filed by the respondent No.1 and in rejecting the appeal of the petitioners as there was absolute violation of those provisions. Learned counsel in support of his contentions has relied upon a judgment of the Supreme Court in the case of Vasu P. Shetty -vs-

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Hotel Vandana Palace and others⁴ .

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Having considered the rival submissions and the

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materials on record, the matter that requires to be considered is that whether, given the provision of limitation made in sub-section (1) of Section 17 of the SARFAESI Act, was it open for the DRT and the Appellate

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4 (2014) 5 SCC 660

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HC-KAR

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Tribunal, to have not considered that issue in its correct perspective, and to have proceeded to decide the matter on the issue of non-compliance of the Rules by the Bank.

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The judgment of this Court in the case of Kailasam P. , has elaborately dealt with the issue of limitation as provided under the SARFAESI Act. It has been observed that, no provision is made by the Parliament for condoning the delay in approaching the DRT against the orders of the kind, whatever be the cause therefor and howsoever justifiable it may sound. The Court observed that, unless power to condone delay is legislatively granted expressly or by inference, a Tribunal of the kind cannot condone delay. The Court noted that the Tribunals, unlike conventional Courts, do not have inherent power. A Tribunal is not a Court and therefore, the Limitation Act is not applicable, subject to all just exceptions. It was observed that, it is the policy of the Parliament that one who wants to have redressal, has to

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knock at the doors of DRT within 45 days and thereafter,

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those doors should permanently stand closed.

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This Court then drew support from the judgment of Apex Court in the case of Bank of Baroda -vsM/s.Parasaadilal Tursiram Sheetgrah Pvt. Ltd.,⁵ which judgment in turn relied upon the judgment of the Supreme Court in the case of Transcore -vs- Union of India and

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another.⁶ Various other judgments also were relied on.

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There is another aspect of the matter. The application filed by the respondent No.1 before the Debt Recovery Tribunal, Bengaluru, is on record and filed as Annexure-`K-1'. With regard to limitation, in the aforesaid application, it is stated that, he is working as a Software Engineer in Ireland and had come to Bengaluru on 03.12.2012 and thereafter, he visited the respondentBank to ascertain the status of the loan transaction in

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5 (2023) 19 SCC 751

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6 AIR 2007 SC 712

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HC-KAR

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respect of the scheduled property and was informed that the property had already been sold to the petitioners and Sale Certificate issued on 06.01.2011. Immediately thereafter, the applicant tried to contact his advocate, but since the Civil Courts were closed during vacations, the applicant and his counsel followed up the matter and obtained the Sale Certificate and the Encumbrance Certificate from the concerned Sub-Registrar on 07.01.2013 and it was only then that he had knowledge, whereafter the application was filed within time.

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However, a perusal of body of the application reflects that respondent Nos.1 and 3, as husband and wife, had applied for the loan to the Bank for purchase of the scheduled property in question. Both were working as Software Engineers in Ireland, drawing good salary. They had visited the Bank for finalizing the loan transaction, but, did not have sufficient time for complying with the requirements with regard to the registration of the Sale Deed and hence, they executed a Power of Attorney in

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favour of Smt.Savitri (i.e., mother -in-law of the respondent No.1) and accordingly, the Sale Deed was executed on the basis of the Power of Attorney. However, due to strained relationship between the respondent Nos.1 and 3, they started living separately and proceedings for dissolution of marriage was initiated. A decree of divorce was also granted. The Immigration Authorities in Ireland were not inclined to renew the working VISA to the applicant and so the applicant (respondent No.1) was not in a position to come to India. After renewal of the working VISA of the applicant during April 2012, he could only come to Bengaluru on 3^rd December 2012 and thereafter, he approached the respondent-bank.

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The aforesaid narration thus reflects that Power of Attorney was executed by respondent No.1 and respondent No.3 jointly in favour of the mother-in-law of respondent No.1. There is no averment and nothing has been pointed out by the learned counsel for the respondent that at any point of time the Power of Attorney

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was revoked during the relevant period. That being the case, it would not lie in the mouth of respondent No.1 to contend lack of knowledge of the proceedings initiated under Section 13(2) or Section 13(4) of the SARFAESI Act.

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As is evident from perusal of the order of 12.10.2015 passed by the DRT, Bengaluru, the demand notice was published in two Newspapers on 21.08.2010. It is also the case of the respondent bank, as noted in the order of the DRT that the demand notice under Section 13(2) dated 04.08.2010 was issued to the respondent No.1 and respondent No.3 as well as their attorney calling upon them to discharge their liability. Thereafter, the respondent-Bank issued sale notice dated 10.11.2010 calling upon the respondents No.1 and 3 to pay the outstanding amount. The said notice was also published in two leading Newspapers on 17.12.2010 and then corrigendum notice were issued. The property in dispute was then sold on 06.01.2011 in favour of the petitioners. The aforesaid narration therefore reflects that

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HC-KAR

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given the due publication of the notices, both of demand and of sale, and further, given the fact that the power of attorney executed by respondents No.1 and 3 in favour of the mother-in-law of respondent No.1 was never revoked during the relevant period, it cannot be said that the petitioners had no notice.

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As far as the contention of the learned counsel for the respondent that the corrigendum issued was completely illegal as the mandatory provision of Rules 8 and 9 of the Rules 2002 were not complied with, that, in our considered opinion, would be an issue that could be considered by the DRT after the hurdle of maintainability of the application (being beyond limitation) was crossed and not prior to that.

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Therefore, in view of the facts and circumstances mentioned above, we hold that the orders impugned passed by the appellate Tribunal on 27.05.2019, in RA. (SA) No.76/2015 and the order of the DRT dated

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HC-KAR

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12.10.2015 in S.A.No.549/2014 enclosed as Annexure -B cannot sustain and are hereby set aside. The sale notice in favour of the petitioners shall be acted upon in accordance with law.

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The Writ Petition is accordingly allowed.

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Sd/(JAYANT BANERJI) JUDGE

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Sd/(UMESH M ADIGA) JUDGE

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bk/BVK List No.: 1 Sl No.: 26

Mr. Srinivas Manne Parayya v. Mr. Sreenivas Babu T G

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Mr. Srinivas Manne Parayya v. Mr. Sreenivas Babu T G

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