ADITYA BIRLA FINANCE LTD. Versus MANGLESH CHAMPAKLAL GANDHI & ORS LPA 224 of 2020
Facts:
1) Appeal is against the judgment and order dated 07.10.2019 passed by the learned Single Judge in allowing the writ petition remanding the matter to the Debts Recovery Appellate Tribunal (DRAT) to decide the Appeal No. 28 of 2019 on merits, which in turn was directed against the order dated 08.01.2019 passed by the Debts Recovery Tribunal (DRT) in Securitisation Application No. 27 of 2019, whereby the entire proceeding of recovery initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘SARFAESI Act, 2002’) by the appellant herein has been quashed with the liberty to the appellant financial institution/ secured creditor to proceed afresh in accordance with law to recover its dues.
Issue: Whether the appeal can be allowed ?
Arguments:
Appellant:
1) Counsel submitted that Recovery Tribunal had no jurisdiction to condone the delay, inasmuch, as the proceedings before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act, 2002, are in the nature of original proceedings like a civil suit. Section 5 of the Limitation Act applies only to appeal or application and not to the original suit proceedings for the clear language employed therein.
2) It was submitted that No provision of any other Act can be imported to relax the time limit of 45 days prescribed in Sub-section (1) of Section 17 to challenge any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor or its authorised officer
3) In the Securitisation Application filed under Section 17(1) of the SARFAESI Act, 2002, the borrower cannot be permitted to challenge the proceedings initiated from the date of issuance of section 13(2) Notice till the date of taking physical possession by preparation of panchnama on 03.11.2018, subsequent to Section 14 order passed by the competent authority.
4) Counsel submitted that Securitisation Application under Section 17(1) was not accompanied by an application under Section 5 of the Limitation Act and from the statement made in the application itself, it is clear that the applicant borrower had computed limitation from the date of issuance of the sale notice, i.e. 30.11.2018 and the possession notice dated 03.11.2018 under the SARFAESI Act, 2002, to assert that the application under Section 17(1) was well within the prescribed period of limitation under Section 17 of the SARFAESI Act, 2002.
Decision: Hon’ble HC dismissed the appeal.
Rationale:
1) HC noted that there is no dispute about the fact that the application under Section 17 of the Limitation Act has been preferred by the borrower against the sale notice dated 30.11.2018 and the possession notice dated 03.11.2018, within the period of 45 days thereof. The application under Section 17(1), therefore, could not have been rejected being barred by limitation, provided under Section 17(1) of 45 days from the date of taking of such measures.
2) It held that Any such indulgence granted by the DRT to examine the validity of the actions or measures taken by the Bank prior to the ssuance of the possession notice or the sale notice, would not only be in flagrant violation of the procedure under the SARFAESI Act, 2002, but also frustrates the object of the Act for ensuring recovery of secured debt within a time bound manner.
3) The SARFAESI Act being a Special law, having stringent measures for recovery of debts, its provisions are to be strictly construed and on any challenge made by the borrower under Section 17 of the Act, correctness of all or any of the steps/measures taken by the secured creditor under Section 13(4) may be enquired into, in the facts of a particular case.
4) It held that it is difficult to hold that the borrower will be denuded of his right to seek redemption of mortgage prior to the stage contemplated under Section 13(8) of the SARFAESI Act, 2002. The cause of action to file an application under Section 17(1) arises as and when one or other such measures to recover the secured debt is taken by the secured creditor.
Order:
