Bank Of India vs M/s Hariom Traders

R. D. Khare, Chairperson

The above mentioned appeals have been filed by the appellant-Bank under section 18 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act") against the same judgment/orders dated 06.02.2023 passed by the Tribunal below in S.A. No. 163 of 2020 and S.A. No. 164 of 2020, by which the amendment applications filed along with the delay condonation applications in both the S.As. were allowed, therefore, these are being decided by this common order.

The brief facts of the present case as stated in the Appeal Dy. No. 296/2023 are that the respondent no.1 was granted a cash credit facility, for which the respondent nos. 2 to 4 stood as guarantors and the respondent nos.3 & 4 created equitable mortgage over their property in question. Since the borrowers did not repay the loan in terms of the agreement, therefore, the account was classified as NPA and thereafter a demand notice dated 05.07.2019 was issued under section  13(2) of the SARFAESI Act, 2002. Since the borrower did not repay any amount against the said demand, therefore, the symbolic possession of the property in question was taken by the Bank by issuing possession notice dated  08.01.2020 under section 13(4) of the said Act, which was published in the newspapers on 14.01.2020.

The borrowers challenged the demand notice and possession notice issued by the Bank by filing the securitization applications No. 163/2020 and 164/2020 before the Tribunal below, stating that the demand notice was not served on them in accordance with rule 3 and the possession notice was also not served and the same was published on the same day i.e. 14.01.2020 which is not permissible under the law.

It appears that during the pendency of the aforesaid S.A., the appellant-Bank issued auction notice dated 06.08.2021 scheduling the auction of the property in question to be held on 07.09.2021, which was challenged by the borrowers by filing an amendment application along with delay condonation application before the Tribunal below. The Tribunal below vide order impugned allowed the application for condonation of delay subject to deposit of Rs. 25000/- and after deposition of cost, the borrowers were permitted to amend the pleadings of the aforesaid S.As. Being aggrieved by the said orders, both the present appeals have been filed by the appellant-Bank.

5  Learned counsel for the appellant-Bank submitted that the delay cannot be condoned by imposing cost in view of the settled principle of law as laid down by the Honrble Apex Court in its various judgments.

The learned counsel for the appellant further submitted that the respondent nos. 1 & 2-Borrowers filed the S.A. on 27.02.2020, to which the Bank filed its reply on 08.01.2021. The learned counsel also submits that the e-auction notice dated 06.08.2021 was issued, whereby e-auction was fixed for 07.09.2021, on which date the auction was successfully conducted and sale certificate in favour of the successful bidders was issued on 08.10.2021. It was further contended that the respondents-borrowers filed a stay application on

07.12.2021 for quashing the auction dated 07.09.2021, copy of the said application is on record and vide order dated 02.05.2022, the Tribunal below directed the Bank not to register the sale certificate. It was also contended that on 05.12.2022, the borrowers filed an application for amendment in the S.A. along with application for condonation of delay as well as the application for quashing the sale/E-auction dated 07.09.2021/copy of publication of sale notice dated 06.08.2021 and all the proceedings pursuant to the said auction sale notice. As such the borrowers for the first came to know about auction sale, when the stay application was filed i.e. on 07.12.2021, whereas the aforesaid amendment application was filed on 05.12.2022. Thus, it was contended that the order impugned has been passed by the Tribunal below in total disregard to the fact and evidence on record with regard to the sale proceedings, hence the same is not sustainable. It was therefore prayed that the appeals may be allowed and the order impugned may be quashed with costs.

7  Learned counsel for the respondent-Borrowers submitted that the Tribunal below has rightly passed the order impugned and allowed the amendment application along with the delay condonation application filed by the borrowers. The learned counsel further contended that the borrowers for the first time came to know about the auction sale, when the appellant-Bank filed its reply to the stay application dated 07.12.2021 filed by the borrowers on 12.10.2022 i.e. after 10 months and it was also contended that for the first time, the Bank brought on record the documents relating to the auction sale and sale certificate dated 08.10.2021 as well as details of the payment made by the auction purchasers. Thereafter, the borrowers filed amendment application along with delay condonation application on 05.12.2022 before the Tribunal below.

The learned counsel also contended that the delay occurred in filing the amendment application with regard to the auction sale conducted on 07.09.2021 was not deliberate or intentional, as the appellant-Bank has never informed about the said auction sale prior to filing of reply of stay application. It was therefore contended that the order impugned is not required to be interfered, hence, the appeals filed by the Bank may be dismissed with heavy costs.

9  The auction purchasers in persons adopted the arguments as raised by the learned counsel for the appellant-Bank.

Heard the learned counsels for the parties and considered the material available on record.

The main controversy involved in the present case is, as to whether the Tribunal below has rightly condoned the delay occurred in filing the amendment application by the borrowers and if yes, as to whether the DRT has power to condone the delay under the proceedings of SARFAESI Act?

It is to be seen that the respondent has challenged the demand notice and possession notice by filing the S.As No. 163 and 164/2020 before the Tribunal below. During the pendency of the said S.As., the appellant Bank issued auction notices dated 06.08.2021 scheduling auction of the properties in question on 07.09.2021 and the properties were sold to the respondents No. 5 and 6 and sale certificate has been issued in favour of the said respondents on 08.10.2021. The respondents-borrowers filed the Stay Application on 07.12.2021 against the said auction sale and the Tribunal below has granted the interim relief on 02.05.2022 in favour of the respondent-borrower directing that the appellant-Bank shall not register the sale, if not already registered. Thereafter, the appellant-Bank filed its reply on 12.10.2022 to the stay application along with documents pertaining to the auction sale, which is after 10 months. Subsequently, the respondents-borrowers filed an impleadment application on 18.11.2022 for impleading the auction purchasers, which was allowed on the very same day and accordingly they were impleaded as parties in the aforesaid S.As.

In view of the discussions as held above, it can be said that the respondents-borrowers for the first time came to know about the auction sale dated 07.09.2021 on 07.12.2021, when the stay application was filed seeking relief against the said auction, but the borrowers in their stay application has clearly stated that they had come to know about the auction sale of the property in question from some reliable sources, but there is no disclosure of date of auction and name of the auction purchaser, meaning thereby, they were not having any documents pertaining to proceedings of the auction sale. It is admitted by the appellant that the Bank has filed its reply on 12.10.2022 to the stay application dated 07.12.2021 along with all the documents with regard to auction sale dated 07.09.2021. As such the borrowers had got complete information/documents of auction sale on 12.10.2022 and thereafter they filed amendment application along with delay condonation application on 05.12.2022. Section 17 of the SARFAESI Act gives the period of limitation of 45 days for challenging any measures taken under section 13(4) of the SARFAESI Act. Thus the amendment application was filed on 54th day and after excluding the period of limitation of 45 days, the said application was filed beyond the period of 9 days, which is condonable.

After considering the matter in its entirety, it is prime facie found that the borrowers remained vigilant at every point of time and they were pursuing their cause diligently, but it is observed that the delay caused in the proceedings on account of the appellant-Bank. However, as per settled principle of law, a party should not be deprived of the justice on technical ground. As such the Tribunal below has rightly condoned the delay in filing the amendment application subject to cost of Rs. 25000/-.

So far as the power of the Tribunal below to condone the delay is concerned, the Hon'ble High Court of Madhya Pradesh and Jabalpur has passed a judgment dated 03.01.2024 in the matter of Anirudh Singh Vs. Authorized Officer, ICICI Bank Ltd. holding that provisions of section 5 of the Limitation Act would apply with full force and are available for making a prayer for condonation of delay before the DRT in applications under section 17 (1), which are filed after expiry of 45 days. As such the contention of the appellant-Bank that the Tribunal below has no power to condone the delay is misconceived.

In view of the above, the orders impugned do not call for any interference by this Tribunal and both the appeals filed by the Bank are liable to be dismissed. Accordingly, the same are dismissed with no order as to costs.

A copy of this judgment be forwarded to the parties as well as the DRT concerned and be also uploaded on the e-drt portal.