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Judgment
Ashok Menon, Chairperson
The dismissal of Miscellaneous Application No. 14/2017 (M.A.) for condonation of delay in filing the Securitisation Application (S.A.) u/s 17(1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act,2002 (“SARFAESI Act”, for short) by the Debts Recovery Tribunal, Aurangabad (D.R.T.) vide order dated 16.03.2021 is in challenge in this appeal. The facts in brief are thus.
The appellant is the borrower who had admittedly borrowed money from the 1st respondent Bank of India, Latur Branch and defaulted in repayment resulting in the account being classified as a non-performing asset (NPA). The 1st respondent thereafter initiated action under the provisions of the SARFAESI Act for recovery of the debt due. A demand notice was issued u/s 13(2) on 07.01.2016. The appellant paid some amount resulting in the Sarfaesi action being dropped. Thereafter, on continued default, another demand notice u/s 13(2) was issued on 21.09.2016 demanding the sum of ₹15,35,372/-. The appellant approached the bank seeking an extension to pay off the amount. The bank was not inclined to grant him further time and proceeded to take further measures under the SARFAESI Act. Notice was issued on 03.12.2016, and the symbolic possession of the secured asset was taken on 11.12.2016. A paper publication was made as required under the rules on 15.12.2016. An auction sale notice was issued for the sale of the property scheduled on 28.02.2017.
The appellant approached the D.R.T. by filing S.A. No. 18/2017 in consequence of the taking of symbolic possession of the subject property. The appellant did not get any interim relief, and it was submitted that the sale had already concluded and been confirmed, with a sale certificate issued on 15.03.2017 and possession handed over to the auction purchaser. Hence, S.A. No. 18/2017 had become infructuous and disposed of.
The appellant contends that he came to know about the sale only on 12.04.2017 when submissions were made by the counsel for the bank before the D.R.T. during the hearing of the interlocutory application for protection. It is understood that the 2nd respondent has purchased the property in the auction sale for a sale consideration of ₹24,22,000/-. The appellant contends that the property is undervalued and that the property was worth more than ₹ 47 lakhs and even the distress value would be ₹ 42,43,000/-. It is further submitted that the appellant had paid ₹ 9,90,000/- on the date of the alleged sale which was adjusted towards the debt. But despite the payment, the sale was not deferred. The appellant applied to get a copy of the sale certificate on 24.04.2017 and thereafter filed the present S.A. on 01.05.2017 with M.A. No. 14/2017 to condone a day’s delay.
In M.A. No. 14/2017 it is contended that he came to know about the sale only when it was submitted before the D.R.T. in the earlier S.A. and the period of limitation is reckoned from the date of issuance of the sale certificate on 15.03.2017 and hence there is only a day’s delay in filing the S.A according to the appellant which he submits may be condoned.
Per contra, the respondent bank contends that the appellant had filed I.A. No. 57/2017 in S.A. No. 18/2017 admitting that the sale notice dated 25.01.2017 was served for the sale to be conducted on 28. 02.2017. Having admitted the receipt of the sale notice and having come to know about the conduct of the sale, the appellant could not have submitted that he came to know about the sale only on 26. 04.2017. There was an excess amount of ₹ 6,25,000/- received in the sale which was deposited in the appellant’s account by way of a demand draft on 06.04.2017. Hence, there is no gainsaying that the appellant came to know about the sale only on 26.04.2017 and hence, the application for condonation cannot be condoned.
After considering the rival contentions, the Ld. Presiding Officer observed that the sale was confirmed on 08.03.2017, the sale certificate was issued on 15.03.2017 and the appellant also had received the demand draft for ₹ 6,25,000/- being the excess amount received in the sale on 06.04.2017. Having accepted the excess amount and utilized it for its own purpose, the appellant could not have later come up with a challenge to the sale belatedly and sought condonation of delay.
The question of whether the delay in filing the S.A. u/s 17(1) of the SARFAESI Act beyond the period of 45 days stipulated in the statute could be condoned is subject to contradictory views by various High Courts. The Division Bench of Hon’ble Madhya Pradesh High Court has recently in Anirudh Singh versus The Authorized Officer, ICICI Bank Ltd. ILR 2024 MP 754 (DB) held that the delay in applying u/s 17(1) of the SARFAESI Act can be condoned u/s 5 of the Limitation Act because the SARFAESI Act does not expressly exclude the application of the provisions under Sections 4 to 24 of the Limitation Act and therefore, Section 5 of Limitation Act would apply in its full force and is available for making a prayer for condonation of delay. The Division Bench of the Hon’ble Gujarat High Court has in Aditya Birla Finance Ltd. vs. Manglesh Champaklal Gandhi . has also held that the delay in applying under Sec. 17(1) of the SARFAESI Act can be condoned. There are contrary views held by the Hon’ble Kerala High Court in The Authorized Officer, Indian Bank versus K.J. George & Ors 2020 SCC OnLine Ker 4886.
The Hon’ble Supreme Court in Bank of Baroda vs Parasaardilal Tulsiram Sitagar Pvt. Ltd. & Ors. 2022 SCC Online 1006 held thus:
“12. The reason for providing time limit of 45 days for filing an application u/s 17 can easily be inferred from the purpose and object of the enactment. In Transcore vs Union of India (2008) 1 SCC 125, this Court held that the (SARFAESI Act is enacted for quick enforcement of the security). It is unfortunate that proceedings where a property has been brought to sale and third party rights created under the provisions of the Act, had remained inconclusive even after a decade.”
However, it was only an obiter and the ratio decidendi of that decision was not regarding the applicability of Section 5 of the Limitation Act to condone delay of the application filed u/s 17(1) of the SARFAESI Act.
indeed, the Courts are generally of the view that Section 5 of the Limitation Action has to be applied liberally and the delay needs to be condoned and that an otherwise meritorious case should not be dismissed at a threshold on the ground of limitation.
In the instant case, I do not find any merits. The appellant was aware of all the proceedings that took place under the SARFAESI Act concerning the subject property. He has admitted receipt of the auction sale notice. He has also received the excess amount of the sale consideration by way of a demand draft. After the sale was confirmed on the date of issuance of the sale certificate on 15.03.2017, the appellant has allegedly offered to pay ₹ 9,90,000/-. It is, therefore, totally unacceptable that the appellant came to know about the sale only on 26.04.2017. The circumstances under which the sale of property by auction or other means under the SARFAESI Act may be set aside after its confirmation is dealt with by the Hon’ble Supreme Court in its recent decision in Celir LLP versus Mr Sumati Prasad Bafna & Ors. 2024 INSC 978 wherein earlier decisions of the Hon’ble Supreme Court were relied upon to hold that a sale cannot be set aside on grounds which are frivolous except on very limited grounds like fraud. It was also held that the purpose of an open auction is to get the most remunerative price and as such the Courts shall exercise their discretion to interfere where the auction suffers from any fraud or inadequate consideration or interpreting that too with circumspection keeping in view the facts of each case. There is no evidence that the appellant had raised any objection regarding the inadequacy of the price in the instant case at any time before the sale.
Hence, I find that this is not a meritorious case where the delay can be condoned. The appellant wants to undo the sale which has taken place in accordance with law which cannot be permitted to be upset, and that too belatedly. Hence, I find no reason to interfere with the impugned order of the D.R.T. dismissing the application for condonation of delay.