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Judgment
JUSTICE R. D. KHARE, CHAIRPERSON
The present appeal has been filed under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short the SARFAESI Act against the order dated 28.11.2022, whereby the S.A. No. 74/2018 filed by the appellant has been dismissed by the Tribunal below being barred by time.
Brief facts of the matter are that the appellant is neither borrower nor guarantor or mortgager but he is an auction purchaser. The respondent-Bank had granted some credit facilities to M/s Jeevan Jyoti Charitable Trust and M/s Arpit Hospital, for which the property in question was mortgaged. Since the borrowers did not repay the loan as per terms of the agreement, therefore, the account was classified as NPA and the respondent-Bank after issuance of demand notice under section 13(2) and possession notice under section 13(4) of the SARFAESI Act issued auction sale notice scheduling the auction on 20.03.2015. Pursuant to the said auction sale notice, the appellant deposited Rs. 31.50 lacs towards EMD for participating in the said auction. Accordingly, the appellant participated in the said auction and offered a bid of Rs. 3,14,94,000/- and he was declared highest bidder through electronic mode subject to confirmation of the sale by the Bank. The respondent-Bank vide letter dated 20.03.2015 informed the appellant that he was found to be highest bidder and required to deposit 25% of the bid amount excluding the EMD. The said letter further stipulates that the sale will be confirmed in terms of the order dated 16.03.2015 passed by this Appellate Tribunal in the appeals filed by the borrowers. The said letter was replied by the appellant through e-mail dated 20.03.2015 requesting therein to provide the copy of the order dated 16.03.2015 passed by this Appellate Tribunal, which was also replied by the Bank through e-mail dated 20.03.2015 informing that the sale could not be finalized till the disposal of the appeals filed by the borrower.
It appears that thereafter, the Bank and borrowers entered into settlement with the Bank on 16.03.2017 vide compromise letter dated 16.03.2017 and pursuant to it, all the appeals filed by the borrowers were dismissed as withdrawn vide order dated 15.04.2017. It is averred that due to non deposit of auction amount, the respondent-Bank forfeited 10% EMD, which was communicated to the appellant vide letter dated 15.09.2017. The copy of the said letter dated 15.09.2017 passed by the authorized officer of the respondent-Bank is at page No. 34 of the paper-book.
The appellant challenged the letter dated 15.09.2017 before the Tribunal below by filing S.A. No. 74/2018 along with condonation of delay on 26.02.2018, which has been dismissed vide order impugned by the Tribunal below being barred by time. Being aggrieved by the said order the present appeal has been filed by the appellant.
Learned counsel for the appellant submitted that the appellant is neither borrower nor guarantor or mortgagor, but it had submitted a tender to participate in the auction scheduled by the Bank on 20.03.2015 and deposited the EMD to the tune of Rs. 31.50 lacs. It was further contended that the respondent-Bank had issued sale notice for auction of the secured asset under section 13(4) of the SARFAESI Act and the appellant did not know that there was any litigation between the Bank and the mortgagor/borrower, therefore, the appellant participated in the auction held on 20.03.2015 by the respondent-Bank by depositing the aforesaid EMD and tendered its bid, in which the appellant was declared successful bidder through electronic mode subject to confirmation by the authorized Officer. It was also argued that the authorized officer of respondent-Bank vide letter dated 20.03.2015 informed that as per e-auction report, the appellant's bid have been declared highest and it was subject to the confirmation after disposal of appeal No. R-18/2015, Appeal No. R-19/2015 and Appeal No. R- 20/2015 and Appeal No. R-21/2015. It was also argued by the learned counsel for the appellant that thus the bid, which was given by the appellant, was not accepted unconditional subject to outcome of the appeals as mentioned above, therefore, it was not obligatory for the appellant to deposit 25% of the bid amount as per provisions of the Act. It was further contended that thereafter, the appellant made various communications to the respondent-Bank to provide details about the litigation pending so that it can take conscious decision with regard to future course of action and copy of the interim order dated 16.03.2015 passed by the DRT was provided to the appellant.
Learned counsel further contended that once the restrained order was passed, it was the duty of the respondent-Bank to disclose the intervening circumstances affecting the right of the contracting party, which was not done, as the respondent-Bank was party to the said proceedings. It was further contended that during pendency of the appeals and continuation of the interim order dated 16.03.2015 passed by the DRAT, Allahabad, the Bank entered into compromise settlement with the borrowers, on the basis of which the appeals were allowed to be withdrawn vide order dated 15.04.2017, but the said order was not communicated to the appellant, therefore, the appellant remained in bonafide belief that the Bank will open the bid after dismissal of the appeals of the borrowers. It was also contended that once the Bank has entered into compromise with the borrowers and got the appeals dismissed as withdrawn, the Bank had no right to forfeit the EMD amount deposited by the appellant and on 15.09.2017 the appellant was sent the order impugned communicating the forfeiture of 10% EMD amount.
Learned counsel further submitted that the appellant filed the S.A. No. 74/2018 before the Tribunal below challenging the aforesaid order dated 15.09.2017 issued by the authorized officer forfeiting 10% EMD amount, wherein the valid ground of delay was also detailed, which showed that there was no deliberate or intentional delay on part of the appellant in filing the said S.A. It was further contended that the right of the appellant to file the S.A. before the Tribunal below was made open only after the judgment passed by the Hon'ble Apex Court in Agarwal Tracom Pvt. Ltd. Vs. Punjab National Bank and Ors., AIR 2017 Supreme Court 5562. It was also contended that without going into the ground and reason for delay and appreciating the fact that the delay was not deliberate and intentional, the delay condonation application has been dismissed and consequently the S.A. also by the Tribunal below, which is order impugned in the present appeal. In this regard, the learned counsel has referred to para 3 of the delay condonation application at page 55 of the paper book, which is copy of the application for condonation of delay. It was also contended that the judgment referred to by the Tribunal below in the order impugned do not apply in the present case, as the delay occurred in filing the present S.A. is not deliberate and intentional. Learned counsel for the appellant has referred to a judgment passed by the Hon'ble Supreme Court in Civil Appeal No. 4628 of 2023-Raheem Shah and Anr. Vs. Govind Singh & Ors., decided on 24.07.2023, wherein it is held that at the time of deciding the delay condonation application, the court should not be very technical. It was, therefore, prayed that the order impugned may be set aside and the appeal may be allowed.
Learned counsel for the respondent-Bank has referred to page 55 of the paper book, which is copy of the application for condonation of delay and has stated that on the last two lines of para 2 of the said application, it has been stated that the appellant was communicated the forfeiture of 10% EMD amount vide communication letter dated 15.09.2017 and the submission made on behalf of the appellant that thereafter they contacted the counsel, who advised the appellant to file civil suit for the relief claimed in the present S.A. and ultimately the S.A. was filed on 26.02.2018 after obtaining necessary record from the respondent-Bank on 05.02.2018, as it is a story made by the appellant to make ground for condonation of delay without explaining as to why he did not approach immediately after communication of the forfeiture letter dated 15.09.2017 and the delay of about 5 months in filing the S.A. has occurred, therefore, the order impugned is a just, legal and valid and does not call for any interference by this Tribunal. It was further contended that the judgment referred to by the Tribunal below in the order impugned will squarely apply in the present case.
Learned counsel also submitted that the appellant was well aware about the interim order dated 16.03.2015 passed by the DRAT, Delhi holding additional charge of DRAT, Allahabad through publication dated 18.03.2015 and even then it participated in the auction dated 20.03.2015 and deposited the EMD to the tune of Rs. 31.50 lacs. It was further contended that on being declared highest bidder, the appellant was required to deposit 25% of the bid amount, but he failed, therefore, the respondent-Bank had every right to forfeit the earnest money and accordingly, the same was forfeited vide letter dated 15.09.2017. It was further contended that the appellant had already been informed through e-mail dated 24.03.2015 that the Bank is constrained to proceed in the matter towards forfeiture of the earnest money and the alleged letter dated 15.09.2017 was given by the Bank in reply to the letter dated 28.08.2017 of the appellant, which was received by the Bank on 05.09.2017. It was lastly contended that the auction sale stood frustrated automatically in March, 2015 and the matter was compromised in the year 2017, so the appellant is not entitled for any refund of the forfeited earnest money. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.
Having heard the learned counsels for the parties and considering the material available on record, undisputedly, the appellant is neither borrower nor guarantor or mortgagor, but it is an auction purchaser.
The controversy involved in the present case is, as to whether the Tribunal below has rightly rejected the application for condonation of delay filed by the appellant or not?
The fact is that the respondent-Bank has forfeited the EMD amount of the appellant vide letter dated 15.09.2017 and the S.A. was filed on 26.02.2018 along with application for condonation of delay. Thus there was delay of more than five months in filing the present S.A.
It is settled proposition of law that the length of delay is not material, if there are sufficient grounds to condone the delay and also that generally, the court should be liberal in condoning the same, but for this purpose, the applicant has to show the sufficient reason, which may entitle him for condonation of delay. In the instant case, admittedly, the impugned order/letter was passed/issued on 15.09.2017 by the Bank, by which the amount of EMD was forfeited and the same is stated to have been received by the appellant on 25.09.2017, so the Securitization Application (S.A.) ought to have been filed on or before 09.11.2017, but the same was filed on 26.02.2018 with the delay of about 108 days excluding the period of limitation as prescribed under the Act and Rules made thereunder. The reasons as shown are that the appellant was advised to file Civil Suit before the Civil Court against the said forfeiture and secondly, was informed that there is limitation of three years for filing the S.A. from the date of cause of action and thereafter, the appellant consulted the present counsel on 03.02.2018 and copy of order dated 16.03.2017 was received on 05.02.2018, but it seems to be a concocted story cooked by the appellant for the reason that no date has been mentioned, on which dates, he consulted the counsel and was advised for filing Civil Suit and secondly, no name has been mentioned, to whom he contacted and was informed that the limitation for filing the S.A. is three years. Thus, it cannot be believed that such inordinate delay occurred due to wrong advice of any advocate. The another contention of the appellant that forum for remedy against forfeiture was not settled before the judgment passed by the Apex Court in the case of M/s Agrawal Tracom Pvt. Ltd. Vs Punjab National Bank (Supra) also does not render any assistance to the appellant in getting the delay condoned, because the said judgment was delivered on 27.11.2017and the S.A. was filed on 26.02.2018. For the sake of argument, if it is assumed that the cause of action firstly arose on the date when the said judgment delivered, even then the S.A. filed by the appellant is barred by limitation. Thus, there are clear lapses and latches on part of the appellant and no plausible explanation much less sufficient cause is there on record to condone such inordinate delay.
However, the other points argued by the learned counsels for the parties pertain to the merits of the case, which cannot be considered and decided by this Tribunal, as the S.A. was dismissed by the Tribunal below only on the ground of delay.
In view of the discussions as recorded above, the order impugned does not call for any interference by the Tribunal and consequently, the appeal filed by the appellant is dismissed with no order as to costs.