MS Shree Rajmoti Industries vs UNION BANK OF INDIA on 25 January 2024

**ORDER**

1. 1. The Applicant has filed the present application for condonation of delay of 17 days in filing Securitization Application for challenging the action taken by the Respondent Bank under the SARFAESI Act and Rules framed thereunder and for other incidental reliefs.

2. 2. The Applicant has averred that the Respondent Bank had taken possession of the factory premises along with all goods of the Applicant which are not mortgaged or hypothecated with the Respondent Bank on 30/09/2023. The period of 45 days would end on 14/11/2023 from the said date. The Applicant has lodged the accompanying

Securitisation Application before this Tribunal on 02/12/2023. Hence, there is a delay in filing the present SA.

1. 3. The Applicant has further averred that Mr. Sameer Madhukant Shah, partner of the Applicant, suffered from Chikungunya infection on 10/11/2023 and was not able to attend the business regularly. The said partner started attending office partially from 29/11/2023. He is a heart patient and has also undergone bypass surgery. The Applicant has further stated that the Applicant contacted Advocate in Ahmedabad on 29/11/2023 and requested the Advocate to file the present Application. The Advocate drafted the Application on 01/12/2023 and it was affirmed by the Applicant on 01/12/2023. Therefore, due to bona fide reasons, there is delay in filing the present matter. The delay is short and is unintentional.

2. 4. The Respondent Bank has filed its written submissions to the present application and denied the averments made by the Applicant. It has further contended that the goods lying in the factory premises were also hypothecated with the Respondent Bank and the Respondent Bank had initiated proceedings under SARFAESI Act even against the hypothecated goods and securities as evident from the Demand Notice dated 03/07/2018 issued by the Respondent Bank.

1. 5. The Respondent Bank has further stated that delay is not explained by the Applicant nor any proof is attached by the Applicant in support of its averments. The Applicant has not been able to make out satisfactory and sufficient reasons to condone the delay.

2. 6. The Respondent Bank has further contended that the present proceedings are second round of litigation and the Applicant has deliberately suppressed the fact with regard to filing of earlier SA and orders passed therein. The Applicant had earlier filed SA No.209 of 2019 before this Tribunal inter alia challenging the actions taken by the Respondent under SARFAESI Act including Demand Notice dated 03/07/2018 wherein the Respondent also sought enforcement of Hypothecated Assets including stocks, goods and machinery. In the said SA, the Applicant had also challenged the order dated 06/03/2019 on the basis of which the Respondent has taken possession of the properties on 30/09/2023. As there was delay in challenging the action till symbolic possession, the Applicant had filed Delay Condonation Application in the said SA. After hearing the parties, this Tribunal vide order dated 13/12/2019 rejected the Delay Condonation Application filed by the Applicant on the ground of waiver of objections. Thereafter the matter was heard finally on the validity of action taken u/s 14 of the SARFAESI Act, including order dated 13/12/2019 passed

by Ld. District Magistrate and this Tribunal vide judgment dated 22/01/2020 dismissed the said SA on merits. Hence, all the actions taken by the Respondent Bank under the provisions of SARFAESI Act, right from issuance of Demand Notice till passing of order by Ld. District Magistrate are already approved by this Tribunal and the said Demand Notice categorically mentions enforcement of security interest of the Respondent over the goods as well. Therefore, now challenge of the Applicant to the action of the Bank in taking physical possession of the goods is barred by the principle of constructive res judicata.

1. 7. The Respondent Bank has further contended that the Applicant challenged the said order before Hon'ble DRAT, Mumbai by filing Appeal (L) No.243 of 2020 and the said matter was taken up for hearing of waiver application filed by the Applicant seeking waiver of the amount of pre-deposit on 22/05/2023. After hearing the parties, the Hon'ble DRAT, Mumbai vide order dated 22/05/2023 directed the Applicant herein to deposit an amount of Rs.25 Crores as pre-deposit out of which the Applicant was directed to pay Rs.5 Crore on or before 01/06/2023 and Rs.10 Crore on or before 29/06/2023 and remaining Rs.10 Crore on or before 27/07/2023. However, the Applicant did not deposit any amount in pursuance to the

said order and hence, the Appeal got automatically dismissed.

1. 8. The Respondent Bank has further contended that the Applicant thereafter approached the Hon'ble High Court of Gujarat by way of SCA No.9564 of 2023, which was disposed of by the Hon'ble High Court vide judgment dated 30/06/2023 and modified the order passed by Hon'ble DRAT, Mumbai by directing the Applicant to deposit a sum of Rs.11.35 Crore before Hon'ble DRAT out of which Rs.3.5 Crore was to be paid on or before 11/07/2023 and upon failure to adhere to the schedule, the Appeal before Hon'ble DRAT stands dismissed. The Applicant again did not deposit a single penny in terms of the order passed by the Hon'ble High Court of Gujarat and hence, the Appeal filed by the Applicant before Hon'ble DRAT, Mumbai stands automatically dismissed.

2. 9. The Respondent Bank has further contended that all the above facts clearly establish that the orders passed by this Tribunal in SA No.209 of 2019 has attained finality whereby the actions taken by the Respondent under the provisions of SARFAESI Act stand approved. Therefore, at this stage, in the second round of litigation, the Applicant cannot be permitted to reopen the same, that too without disclosing all the above facts. Hence, the present MA is barred on account of suppression of material facts.

1. 10. The Respondent Bank has further contended that after dismissal of the Appeal of the Applicant i.e. the borrower and realizing the fact that the Applicant is left with no legal means whereby it can delay the process of taking over possession of the property, the alleged workers of the Applicant in collusion with the Applicant had filed SCA No.14222 of 2023 before the Hon'ble High Court of Gujarat with sole motive to frustrate recovery of huge public dues of more than Rs.75.95 Crore of the Respondent and the dues of the entire consortium of banks is more than Rs.133 Crore on the ground that instead of taking physical possession of the factory premises the Respondent Bank should take over management of the firm by exercising the provision of Section 13(4)(1) or 13(4)(C) of the SARFAESI Act. However, the said Petition was also dismissed vide order dated 18/09/2023.

2. 11. The Respondent Bank also relied on the judgment of the Hon'ble Madras High Court in CRP (NPD) Nos.3785 to 3787 of 2012, WP (31251) of 2018, **Velar Engineering Works Pvt. Ltd. vs. Authorized Officer, Indian Bank**, MANU/TN/5046/2019 decided on 05.09.2019, and affirmed by Hon'ble Supreme Court in SLP Civil (Dairy No.) 7023/2020 decided on 09.07.2020 in the same matter and reported in MANU/SCOR/32577/020 and stated that this Tribunal has no jurisdiction to condone /

the delay in filing SA and hence, the present MA and SA both may be dismissed.

1. 12. I have heard the Ld. Counsel for the parties at length and perused the judgments relied on by them in support of their respective submissions.

2. 13. Considering rival submissions of parties and law prevailing on the point of limitation, it would be pertinent to refer to the recent judgment of the **Hon'ble Debts Recovery Appellate Tribunal, Mumbai dated 12/04/2023 in Appeal No.246/2009 in the case of Pravin H. Kantaria and another V/s. Mahanagar Coop. Bank Ltd. And others.** It has been held therein as under:

*"After an anxious consideration of the rival contentions and the materials placed, it is found that the proceedings under the SARFEASI Act are before a statutory Tribunal, and cannot be placed on par with proceedings before a Court. The decisions relied upon by the Ld. Counsel for the Appellants are all with regard to proceedings before the Courts. The Tribunal shall have no powers to condone delay unless expressly conferred by the Statute creating it. In Sakuru v. Tanaji, 1985 (3) SCC 590: AIR 1985 SC 1279, the Hon'ble Supreme Court observed thus:*

*"3. ... that the provisions of the Limitation Act, 1963 apply only to proceedings in 'Courts' and not to appeals or applications before bodies other than Courts such as quasi-judicial Tribunals or executive authorities, notwithstanding the fact such bodies or authorities may be vested with certain specified powers conferred on Courts under the Codes of Civil or Criminal Procedure. The Collector before whom the appeal was preferred by the appellant herein under S.90 of the Act not being a Court, the Limitation Act, as such, had no applicability to the proceedings before him. But even in such a situation, the relevant special Statute may contain an express*

provision conferring on the appellate authority, such as the Collector, the power to extend the prescribed period of limitation on sufficient cause being shown by laying down that the provision of S.5 of the Limitation Act shall be applicable to such proceedings. Hence, it becomes necessary to examine whether the Act contains any such provision that entitles the Collector to invoke the provisions of S.5 of the Limitation Act for condonation of the delay in the filing of the appeal....."

*The scheme of the SARFAESI Act manifestly precludes application of the Limitation Act. The intention of enacting special statutes is to expedite the disposal of cases. If delays are to be condoned by application of Section 5 of the Limitation Act, the very purpose of the statute will get frustrated. There is a specific time limit of 45 days for invoking the original jurisdiction of Section 17 of the SARFAESI Act, which has been found to be the essence, of the statute, and also looking into the fact that a further time limit of 60 days for disposal of the proceedings, and giving a right to the party to appeal before the appellate forum for compliance of such provisions alleging violation thereof if not completed within four months, it was never the intention of the Legislature to apply Section 5 of the Limitation Act to such original proceeding by giving the power to entertain the application under Section 17(1) of the SARFAESI Act by merely showing sufficient cause for the delay without putting any restriction upon the Tribunal and we, therefore, hold that the time period of 45 days provided in Section 17 of the SARFAESI Act which is original in nature cannot be extended by taking aid of Section 5 of the Limitation Act. The Appellants had approached the DRT more than two years after the Sarfaesi measures were initiated by the Respondent Bank. That apart, there also does not seem to be sufficient reason for condoning delay. The law does not come to the aid of those who sleep over their rights. The Ld. Presiding Officer has rightly dismissed the application for condonation of delay, and this Tribunal finds no reason to interfere with that finding.*

*The appeal lacks merits and is therefore dismissed."*

1

14. At this stage, a reference also deserves to be made to the judgment of Hon'ble High Court of Judicature at Madras in **Velar Engineering Works' case (Supra)** wherein it has been held that proceedings of SA are akin to the Original Civil Suit, to which section 5, Limitation Act does not apply and this Tribunal has no power to condone the delay, if any, in filing the above SA u/s 5 of Limitation Act, read with section 17(7) of SARFAESI Act 2002 and section 24 of RDB Act, 1993. According to Section 17(1), an application u/s 17 of the Act, 2002, may be filed within 45 days from the date for which measures have been undertaken by secured creditor u/s 13(4) and there is no provision for condonation of delay in filing SA u/s 17(1) beyond this period. Further, Hon'ble High Court of Judicature at Madras in **Velar Engineering (Supra)** in para 7, 8 & 9 has held as follows:

*"7. On a perusal of Section 17 of the SARFAESI Act, it is clear that there is no provision made under the said Section for condoning the delay in filing the SARFAESI Application. The SARFAESI Application must be filed within 45 days.*

*8. There being a specific time-limit of 45 days for invoking the original jurisdiction of Section 17 of the SARFAESI Act, which has been found to be, in essence, a suit and a further tentative time-limit of 60 days for disposal of the proceedings, and giving a right to the party to complain before the Appellate Forum for compliance of such provisions alleging violation thereof if not completed within four months, it was never the intention of the legislature to apply Section 5 of the Limitation Act to such original proceedings by giving power to entertain the application under Section 17(1) of the SARFAESI Act by merely showing sufficient cause for the delay without putting any restriction upon the Tribunal and we, therefore, hold that the time period of 45 days provided in Section 17 of the*

*SARFAESI Act which is original in nature cannot be extended by taking aid of Section 5 of the Limitation Act.*

*9. The SARFAESI Application filed under Section 17(1) of the Act is like that of a suit and that the Limitation Act applies as far as may be applicable by virtue of Sections 17(7) and 24 of the two Special Laws, therefore, Section 5 of the Limitation Act has no application in the original proceedings like a suit before Debts Recovery Tribunal. Going by the amended Section, the proceedings under Section 17 of the Act is not an appellate proceeding, but rather an original proceeding, which is brought before a Forum prescribed under the Act and is like a suit under the Code of Civil Procedure, 1908. Thus, as a matter of fact the proceedings under Section 17 of the Act are in lieu of the Civil Suit, which remedy is ordinarily available, but for the bar under Section 34 of the SARFAESI Act and an application under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are similar provisions in its non-applicability of Section 5 of the Limitation Act. The Debts Recovery Tribunal exercises original jurisdiction while entertaining an application filed under Section 17(1) of the SARFAESI Act."*

1. 15. Thus, it is clear from the above observations and finding of Hon'ble Madras High Court that provision u/s 17 are like that of a Regular Civil Suit in which Section 5 of Limitation Act is not applicable.

2. 16. It may also be noted that the above findings of Hon'ble Madras High Court have been affirmed by Hon'ble Supreme Court in SLP Civil Dairy No.7023/2020 as above in which Hon'ble Supreme Court, vide its order dated 09/07/2020 was not inclined to interfere with impugned order passed by the Hon'ble High Court of Madras and the above SLP was dismissed accordingly.

3. 17. In view of the above ratio as laid down by Hon'ble DRAT, Mumbai and the Hon'ble High Court of Madras, as affirmed by Hon'ble Supreme Court, this Tribunal is of the /

view that application for condonation of delay in filing the above SA is not maintainable and delay in filing SA cannot be condoned u/s 5 of Limitation Act r/w Section 17(7) of SARFAESI Act, 2002. As such, the above Misc. Application filed for condonation of delay in filing SA is hereby dismissed and disposed of accordingly.

18. Let file be consigned to records.

Pronounced in Open Court on this the 25^th day of January, 2024.

(Laxman Madnani) Presiding Officer DRT-II, Ahmedabad

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