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Judgment
Ashok Menon, Chairperson
The Appeal is filed challenging the order dated 30.01.2023 in Securitisation Application (S.A.) No. 03 of 2023 on the files of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) declining to grant the protection sought by the Applicants against the Sarfaesi measures initiated by the Respondent bank against the secured assets under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act”, for short) to recover the debt due from the borrowers who are Respondents Nos 2 to 4.
The Appellants claim to be bonafide purchasers of the properties comprised in Plots Nos. 7/ B and 8 at Patan under two registered sale deeds Nos. 5227 and 5228 respectively on 02.09.2015 from Respondents Nos. 2 to 4. On coming to know about the Sarfaesi measures instituted by the first Respondent bank against the properties that they had purchased, the Appellants approached the D.R.T. with the S.A.
It is alleged that the borrowers had availed a loan of ₹682.75 lakhs from the bank and as security for the debt, mortgaged 13 items of properties. Two items of properties situated in Patan are the subject matter of this litigation. 11 items of mortgaged properties are situated in Palanpur. The borrowers had allegedly created a mortgage by deposit of title deeds and the memorandum of deposit was also registered at the Sub-Registrar’s Office on 20.01.2015. The borrowers had purchased the subject properties under two assignment deeds Nos. 3617 and 3618 executed on 03.07.2012. The Appellants had allegedly purchased the subject properties on 02.09.2015 after the mortgaging of the properties.
The Appellants would contend that they did not know about the existence of the mortgage even after due diligence. The registration of the mortgage was done at the Sub-Registrar’s Office at Palanpur. Intimation ought to have been given to the Sub-Registrar’s Office at Patan but that was not conveyed and therefore, the Appellants contend that they are bonafide purchasers without notice.
The debt was not repaid in time resulting in the classification of the account as a non-performing asset (NPA) followed by the issuance of a demand notice under Sec. 13(2) of the SARFAESI Act on 24. 09.2019 demanding an outstanding debt of ₹4,62,02,336/-. An auction sale notice was issued on 18.07.2019 for the sale of the subject properties on 27.08.2019. Coming to know about this, the Appellants had earlier filed S.A. No. 173 of 2019 before the D.R.T. which was allowed, finding that the demand notice was defective and served at the wrong address. The Appellants had filed yet another S.A. No. 183 of 2019 on 22.08.2019 which was again disposed of on 27.08.2019.
Thereafter, symbolic possession of the subject properties was taken on 24.07.2020 and an order was obtained under Sec. 14 of the SARFAESI Act from the District Magistrate, Patan on 02.05.2022. The Commissioner appointed by the District Magistrate issued a notice intending to take physical possession of the properties on 30. 01.2023.
The Appellants filed the present S.A. and sought protection from being dispossessed. Vide the impugned order, the prayer was declined for the reason that the Appellants had purchased the properties after the creation of the mortgage and had not acted with due diligence. The Appellants are aggrieved and hence, in appeal.
This appeal was filed on 24.06.2023 with a delay of 104 days. By this application, the Appellants seek to condone the delay. It is alleged that Respondents Nos 2 to 4 had assured that they would resolve the issue with the bank and that all the debt due concerning the subject properties would be cleared by the end of March 2023. In anticipation, the Appellants waited for two months which caused the delay. Hence, they prayed that the delay may be condoned.
The Respondent bank has vehemently opposed the application by stating that the Appellants have no bonafide in filing this application. It is stated that the reason for the delay has not been sufficiently explained. The Appellants also did not purchase the properties after due diligence.
It is further stated that the physical possession of the properties has been taken with the assistance of Mamlatdar and the properties were already sold in the auction and registered sale deeds executed in favour of the auction purchasers on 04.07.2023 and possession handed over. Hence, it is submitted that the condonation of delay and entertaining the appeal would adversely affect the interest of the bank as well as the auction purchaser.
Heard the Ld. Counsel Ms Sanjana Ghogare appearing for the Appellants and the Ld. Counsel Ms Nalini Lodha appearing for the Respondent bank. Records perused.
The Ld. Counsel appearing for the Respondent bank relies on the decision of the Hon’ble Supreme Court in Pathapati Subba Reddy (died) by Lrs Ors vs. The Special Deputy Collector (LA) Special Leave Petition (Civil) No. 31248 of 2018 (2024 INSC 286) to argue that delay cannot be condoned.
There are several decisions rendered by the Hon’ble Supreme Court like Ramanlal, Motilal and Chhotelal vs Rewa Coalfields Ltd. AIR 1962 SC 361, Collector Land Acquisition Anantnag & Ors. vs. Katiji & Ors. (1987) 2 SCC 107 and Basawaraj and Anr. vs. Special Land Acquisition Officer (2013) 14 SCC 81 on the point of condonation of delay under Sec. 5 of the Limitation Act.
The discretion of the court to condone delay has been upheld in most of the cases. The only requirement is that the discretion has to be exercised judiciously based on the facts and circumstances of each case. The expression ‘sufficient cause’ as occurring in Sec. 5 of the Limitation Act has to be liberally interpreted provided there is no negligence, inaction, or lack of bonafide writ large. The length of the delay is immaterial. The decision relied upon by Ms Nalini seeks condonation of 5659 days of delay the Hon’ble Supreme Court refused to condone the delay going by the facts and circumstances of that case. The facts in the present case are different and no analogy can be drawn. The merits of the case need not be gone into this stage. The Appellant would contend that they were under the bonafide belief that the borrower would settle the matter with the bank which did not happen. The explanation given is acceptable.
Hence, the application is allowed and the delay is condoned subject to the payment of the costs of ₹10,000/- to the D.R.T. Bar Association for the purchase of books and periodicals within two weeks, failing which the application shall stand dismissed.
Post before the Registrar on 15.05.2024.