GEORGE JACOB Vs. POORAM MILLS KOODALAPAD

JUDGEMENT

(1.) The OP(DRT) is filed by an auction purchaser of property belonging to the 2nd respondent, which was brought to sale in proceedings under the Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter referred to as the 'SARFAESI Act', at the instance of the 4th respondent bank. In the OP(DRT), the challenge is essentially against Ext.P6 order dated 25.05.2016, whereby the Debt Recovery Tribunal (DRT) condoned a delay, of almost 295 days, occasioned by the 2nd respondent in filing an application, under Section 17 of the SARFAESI Act, for the purposes of setting aside the sale that was effected in favour of the petitioner herein on 12.06.2015. Also impugned in the OP(DRT) is Ext.P9 order dated 25.08.2016 of the DRT, which directs the petitioner herein not to demolish the property purchased by him, pursuant to the auction that was held on 12.06.2015, pending disposal of the securitisation application by the DRT. The facts stated in the OP(DRT) would indicate that, the 1st respondent herein is a partnership firm in which respondents 2 and 3 are the partners. The 1st respondent availed a loan facility from the 4th respondent bank in connection with its business activities and the properties owned by the 2nd respondent, to an extent of 25.02 Ares of land, were mortgaged with the respondent bank as security for the loan granted. Pursuant to a default occasioned by the respondents in effecting repayment of the loan amount, proceedings were initiated by the respondent bank under the SARFAESI Act for recovery of the defaulted loan amounts. It was as part of the said recovery proceedings that a sale notice was issued to the 2nd respondent, and thereafter, a sale of the property effected on 12.06.2015. The petitioner in the OP(DRT) is the auction purchaser of the property that was auctioned on 12.06.2016. It is seen that, pursuant to the auction on 12.06.2015, Ext.P2 sale certificate was issued in favour of the petitioner on 01.07.2015, and it is stated that immediately thereafter the property was registered in favour of the petitioner and a mutation also effected in favour of the petitioner. Respondents 1 to 3 appear to have filed an application under Section 17 of the SARFAESI Act before the DRT on 23.07.2015. The said application, however, was not accompanied with the requisite court fee as contemplated under Section 17 of the Act. The application was therefore returned to the said respondents for curing the defect. The subsequent re-presentation of the application by the respondents was only after 295 days, when the said respondents re-presented the application before the DRT, together with Ext.P5 application, for condonation of the delay occasioned in re-presenting the application. By Ext.P6 order, the DRT condoned the delay in representing the application, and thereafter, passed Ext.P9 order directing the petitioner herein, who was impleaded in the securitisation application filed by respondents 1 to 3 before the DRT, to restrain from demolishing/dismantling the property building plant and machinery, that was the subject matter of the securitisation application before the Tribunal, until the next date for the purposes of securing the ends of justice. As already noted in the OP(DRT), Exts.P6 and P9 orders are impugned by the petitioner herein, on the ground that, while Ext.P6 order is vitiated on account of a lack of jurisdiction in the Tribunal to condone a delay in the filing of an application under Section 17 of the SARFAESI Act, Ext.P9 order is vitiated on account of the directions contained therein to the petitioner, who is admittedly the owner of the property in question, pursuant to the sale that was confirmed in his favour in the proceedings before the DRT.

(2.) A counter affidavit has been filed on behalf of the respondents 1 to 3, wherein, while controverting the averments in the OP(DRT), Exts.P6 and P9 orders of the DRT are justified based on the reasons stated therein. In particular, it is contended that, by virtue of the provisions of Section 17 (7) of the SARFAESI Act, which make the provisions of the Recovery of Debts Due to the Bank and Financial Institutions Act and Rules made thereunder applicable to proceedings before the DRT and Rule 5 (3) of the Debt Recovery Tribunal Procedural Rules, the DRT was well within its powers to condone the delay of 295 days occasioned by the said respondents in representing the application under Section 17 of the SARFAESI Act. With reference to Ext.P9 order that is impugned in the OP(DRT), it is the stand of the respondents that the direction to the petitioner herein, not to demolish the property that forms the subject matter of the securitisation application before the DRT, during the pendency of the said application, is one that was passed to preserve the property pending disposal of the application, and therefore, the direction in Ext.P9 order could not be found fault with. It is also pointed out that I.A.No.1821 of 2016 has also been preferred before the DRT, in the pending S.A, for the purposes of appointing an approved valuer for valuing the property, which, according to the respondents, was sold at a lesser value than what it would have normally fetched in a validly conducted auction.

(3.) On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find from a perusal of Ext.P6 order that, the DRT had effectively condoned the delay occasioned in re-presentation of an S.A by respondents 1 to 3 herein. The question that arises for consideration is whether the DRT does have a power to condone a delay occasioned by an applicant under Section 17 while re-presenting an application. A further question that arises is whether the provisions of the SARFAESI Act contemplate a re-presentation of an application under Section 17? A reading of Section 17 of the SARFAESI Act would clearly indicate that the only application that is contemplated under the said Section, against any of the measures referred to in sub section (4) of Section 13 taken by the secured creditor or his authorised officer, is one that is preferred along with the fee that is prescribed under the Act and Rules. An application accompanied by the prescribed fee has to be filed within 45 days from the date on which the measures referred to above are taken. It is not in dispute that an application that is preferred beyond the period of 45 days from the date of the cause of action specified under the Section cannot be maintained in the absence of any power in the DRT to condone the delay in preferring the application beyond the period of 45 days. In my view, when an application without the prescribed fee is preferred before the DRT, the same cannot be treated as an application for the purposes of Section 17 of the Act. Accordingly, if an application without the prescribed fee is preferred at any time within the period of 45 days from the prescribed date, the Tribunal can, at best, grant the applicant sufficient time to condone the defect with regard to the non-payment of fee, within the period of 45 days that is contemplated for maintaining the application itself, under Section 17 of the Act. If on the other hand, no application, together with the prescribed fee, is preferred before the Tribunal within the period of 45 days mentioned in the said Section, then it has to be found that no application has been filed for the purposes of Section 17 of the Act. In the instant case, inasmuch as it is not in dispute that the application initially filed by the respondents 1 to 3 on 23.07.2015 was not accompanied by the requisite fee, and further, the deficiency in the fee was made up only 295 after days when the application together with the fee was re-presented before the Tribunal, I am of the view that the DRT had no power under Section 17 to condone the delay in filing an application under Section 17 beyond the period of 45 days from the prescribed date on which the cause of action arose. In my view, the Tribunal could not have exercised a power to condone the delay, as it did, in Ext.P6 order. I am not persuaded to accept the contention of the learned counsel for the respondents 1 to 3 that the provisions of Section 17 (7) of the SARFAESI Act, read with the provisions of the Recovery of Debts Due to the Bank and Financial Institutions Act and the Rules made thereunder, would come to his aid in justifying the order of the DRT condoning the delay. The provisions of Section 17 (7) of the SARFAESI Act begin with a saving provision which indicate that the provisions of Section 17 (7) would apply only save as otherwise provided in the SARFAESI Act. Inasmuch as there is a specific procedure for maintaining an application, that is prescribed under Section 17 of the SARFAESI Act, I am of the view that the recourse to the provisions of Section 17 (7) and the provisions of the Recovery of Debts Due to the Bank and Financial Institutions Act cannot be resorted to by the petitioner to justify Ext.P6 order of the DRT. I note in this connection that while dealing with a similar contention, a Division Bench of this Court held as follows in paragraph 6 and 7 of the judgment dated 31.08.2015 in W.A.No.1797 of 2009.