Simplified Explanation of the Judgment
In this case, the Patna High Court was asked to decide whether the Debts Recovery Tribunal (DRT) has the legal authority to condone (i.e., excuse) delays in filing applications under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).
The matter arose when a petitioner, who had lawfully purchased a property through an auction conducted by a bank, found that another person (respondent no.3) had challenged the auction after a significant delay of over 2000 days. This challenge was filed before the DRT, which allowed the delay to be condoned. The petitioner objected, claiming that the DRT has no legal power to condone such delays.
The petitioner’s main argument was based on a Supreme Court decision in International Asset Reconstruction Company v. Official Liquidator of Aldrich Pharmaceuticals Ltd., which held that Section 24 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) allows the Limitation Act to apply only to applications under Section 19 of that Act—not to appeals or proceedings under other provisions like Section 17 of the SARFAESI Act.
The respondent, however, argued that he was not served with statutory notices under the SARFAESI Act, and he only became aware of the auction years later. Based on this, he filed a writ petition, which the High Court had earlier disposed of with liberty to approach the DRT. The DRT then condoned the delay and admitted the challenge.
The Patna High Court examined whether the DRT can legally condone the delay in filing an application under Section 17(1) of the SARFAESI Act. It noted that Section 17(7) of the SARFAESI Act mandates that such applications be disposed of as per the RDB Act and related rules. The Court also discussed several decisions from other High Courts, many of which have held that Section 5 of the Limitation Act can apply to proceedings under Section 17 of the SARFAESI Act.
After analyzing various Supreme Court judgments, the Patna High Court concluded that the DRT, though a tribunal and not a court, could condone the delay if the statutory scheme of the SARFAESI Act allows it. Since Section 17(7) explicitly connects the SARFAESI application process to the RDB Act procedures, and because the overarching purpose of the Act is to provide remedies to aggrieved persons, the Court upheld the DRT’s decision to condone the delay.
Significance or Implication of the Judgment
This judgment has wide implications for borrowers and auction purchasers. It clarifies that delays in challenging auction sales under SARFAESI can, in certain circumstances, be condoned by the DRT. This provides an opportunity for aggrieved parties to seek justice even if they miss the statutory 45-day deadline—especially when they were not properly served with notices or had legitimate reasons for delay.
For the public and financial institutions, this ruling reinforces the importance of proper notice and due process. Banks must ensure strict compliance with SARFAESI procedures, especially in serving notices to borrowers and owners of mortgaged properties.
Legal Issue(s) Decided and the Court’s Decision
- Whether the DRT can condone delay in applications under Section 17(1) of the SARFAESI Act?
- Held: Yes, if the statutory scheme of the SARFAESI Act, including Section 17(7), is read with the RDB Act, the DRT has the power to condone delay.
- Whether the Limitation Act applies to such proceedings before DRT?
- Held: Yes, through Section 24 of the RDB Act and Section 17(7) of the SARFAESI Act, the Limitation Act can apply to DRT proceedings.
Judgments Referred by Parties
- International Asset Reconstruction Co. v. Official Liquidator of Aldrich Pharmaceuticals Ltd., AIR 2017 SC 5013
- Sakuru v. Tanaji, AIR 1985 SC 1279
- Ganesan v. Commissioner, TN HRCE Board, AIR 2019 SC 2343
- N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123
Judgments Relied Upon or Cited by Court
- M.P. Steel Corporation v. CCE, (2015) 7 SCC 58
- Transcore v. Union of India, AIR 2007 SC 712
- Bharat Petroleum v. N.R. Vairamani, (2004) 8 SCC 579
Case Title
CWJC No.17999 of 2017
Case Number
CWJC No.17999 of 2017
Citation(s)
2020 (1) PLJR 764
Coram and Names of Judges
Hon’ble Mr. Justice Rajeev Ranjan Prasad
Names of Advocates and who they appeared for
- Mr. T.N. Maitin, Sr. Adv., and Mr. Md. Kamil Akhtar, Adv. — for the petitioner
- Mr. Ajay Kumar Sinha — for the bank
- Mr. Sanjeev Kumar — for respondent no.3
Link to Judgment
https://patnahighcourt.gov.in/viewjudgment/MTUjMTc5OTkjMjAxNyMxI04=-FvS9ICuAoSo=
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