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2013 DIGILAW 1947 (ALL)

ARCI Ltd. v. Shamken Multifab Ltd.

2013-07-25

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA (CHAIRPERSON) 1. They are heard. This is an appeal preferred by the appellant under Section 18 of the SARFAESI Act, 2002 challenging the order passed by the Tribunal in S.A. No. 134/13. By this order the securitisation application preferred by the appellant has been dismissed on the ground of limitation. The Tribunal has recorded the finding that the securitisation application preferred by the appellant was barred by limitation and the appellant had been negligent in prosecuting the case and, thereafter, the Tribunal has come to a conclusion that the cause shown by the appellant for the purpose of condonation of delay does not constitute the sufficient cause. 2. The relevant facts for the adjudication of the present case are that the appellant is claiming itself to be a secured creditor. It was assigned the debt up to the extent of 44% of the total dues against the respondent No. 1. The dues after the assignment were not paid, therefore, the appellant took the steps under Section 13(2) of the SARFAESI Act, 2002 and, thereafter, because of non-payment of the dues as demanded by the appellant being a secured creditor proceeded to take action under Section 13(4) of the Act, 2002. 3. The appellant applied for handing over the possession by moving an application under Section 14 of the SARFAESI Act, 2002 and, ultimately, the District Magistrate passed an order on 24th March, 2011. The said order was carried out and the possession of the secured asset was handed over by the District Magistrate to the appellant which is the secured creditor. 4. Thereafter, it was the case of the appellant that the respondent No. 1 forcibly has taken the possession of the secured asset and the relevant information was given to the District authorities, who have not taken any action to protect the secured asset of the appellant. Therefore, the appellant preferred a writ petition before the Hon’ble High Court of Judicature at Allahabad which was registered as Civil Writ Petition No. 50688/2011. The said petition ultimately was dismissed by the Hon’ble High Court by its order dated 4th May, 2012. Therefore, the appellant preferred a writ petition before the Hon’ble High Court of Judicature at Allahabad which was registered as Civil Writ Petition No. 50688/2011. The said petition ultimately was dismissed by the Hon’ble High Court by its order dated 4th May, 2012. The said writ petition was dismissed by the Hon’ble High Court on the ground that since the dispute arises to the order passed by the District Magistrate under Section 14 of the Act, 2002, therefore, appropriate remedy for the secured creditor i.e. the appellant is filing of an application under Section 17 of the Act, 2002. 5. Thereafter, the appellant moved an application to the Tribunal and the same was filed under Section 17 of the Act, 2002. The appellant also moved an application for condonation of delay. 6. When the respondents were noticed, then they raised an objection that the facts mentioned in the application for condonation of delay does not constitute sufficient cause for condonation of delay. The Tribunal heard the parties and thereafter, came to a conclusion that the facts and circumstances so pleaded by the appellant in their securitisation application do not constitute the sufficient cause, hence the application for condonation of delay was rejected. The order passed by the Tribunal has been challenged in the present appeal. 7. This is to be seen that in the present case the Tribunal has taken into account that there was delay of 177 days + 80 days in preferring the securitisation application. The Tribunal further was of the view that the 80 days were not explained sufficiently, therefore, there was no reason to allow the application for condonation of delay. 8. In this regard, this is to be seen that the judgment passed by the Tribunal seems to be an appropriate. The application before the DRT was filed after the order passed by the Hon’ble High Court on 4th May, 2012. 9. Application for obtaining the certified copy was moved on 23rd July, 2012 and on the same day, certified copy was delivered by the Hon’ble High Court, There was no explanation offered by the appellant satisfactorily or otherwise, as to why the Appellant has taken 80 days’ time to move the application for obtaining the certified copy. 10. 9. Application for obtaining the certified copy was moved on 23rd July, 2012 and on the same day, certified copy was delivered by the Hon’ble High Court, There was no explanation offered by the appellant satisfactorily or otherwise, as to why the Appellant has taken 80 days’ time to move the application for obtaining the certified copy. 10. Apart from the aforesaid, this is also to be seen that in the present case, the Hon’ble High Court has dismissed the petition and the appellant was also aware of dismissal of its petition by the Hon’ble High Court vide its order dated 4th May, 2012. Filing of the certified copy was not the requirement of filing the application under Section 17 of the Act, 2002. Thus, the application under Section 17 of the SARFAESI Act, could have been filed even without certified copy. Certified copy of the order could have been filed at a later stage, but no explanation was offered to the satisfaction of the Tribunal and this appellate Tribunal as to why immediately after passing of the order by the Hon’ble High Court the securitisation application was not preferred. The period to prefer the securitisation application by virtue of Section 17 of the Act, 2002 is prescribed as 45 days from the date the secured creditor has taken any measure under Section 13(4) of the SARFAESI Act, 2002. Even assuming but not admitting that for the purpose of filing an application to the Tribunal under Section 17 of the SARFAESI Act, 2002 the date of the order passed by the Hon’ble High Court by which the petition was dismissed i.e., 4th May, 2012 if it is treated to be a starting point of limitation, then the appellant waited for 80 days to get the certified copy, as the application to get the certified copy itself was moved on 23rd July, 2012 after expiry of 45 days and on the same the certified copy was supplied. 11. At this juncture, it will be beneficial to refer to judgment passed by the Karnataka High Court in Defence Colony Co-operative Housing Society Ltd. v. Lt. Col. B.J. Shantharaj, AIR 1998 Knt. 11. At this juncture, it will be beneficial to refer to judgment passed by the Karnataka High Court in Defence Colony Co-operative Housing Society Ltd. v. Lt. Col. B.J. Shantharaj, AIR 1998 Knt. 20, wherein the Karnataka High Court has held that in order to claim exclusion of time under Section 14 of Limitation Act, 1963, the time spent in pursuing proceedings in the wrong Court, it is not necessary that said proceedings should be withdrawn before filing second Suit. Thus, even assuming that the writ petition was filed before the Hon’ble High Court of Allahabad which was having no jurisdiction therefore, the appellant should not have waited for order of dismissal of the writ petition till 4th May, 2012 and this is also to be seen that there was no obstacle to file application under Section 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal. 12. The appellant is not an organization of rustic villagers and is also not run by rustic villagers but the appellant, as claimed in the application for condonation of delay, has fleet of experts working in a team to watch the cases pending throughout the country including this case. The fleet of experts working in the team even could not think about the obtaining of the certified copy. If one of the members being a leader of the team is said to have resigned and another person was to be appointed, then that does not mean that the whole team will become defunct. The team members still have been in the team and according to he averments in the application for condonation of delay and also the ground raised in the appeal, the team members are experts of their filed and why such experts of the team have not taken care to decide whether the certified copy will be required? The application for certified copy was not moved immediately or within a reasonable period after when the judgment was pronounced by the Hon’ble High Court on 4th May, 2012. The Counsel, who appeared for the appellants, could have been instructed to get the certified copy, and application should have been filed within a reasonable time. 13. The application for certified copy was not moved immediately or within a reasonable period after when the judgment was pronounced by the Hon’ble High Court on 4th May, 2012. The Counsel, who appeared for the appellants, could have been instructed to get the certified copy, and application should have been filed within a reasonable time. 13. It is not the case of the appellants that they were not aware of the order passed by he Hon’ble High Court on 4th May, 2012 by which their petition was dismissed and the Hon’ble High Court directed that the appropriate remedy for the appellant against the action would be the remedy under Section 17 of the Act, 2002. 14. Another aspect is also relevant that whether afresh period of limitation would commence after the judgment passed by the Hon’ble High Court on 4th May, 2012. 15. Before the Hon’ble High Court the appellant filed a Writ Petition No. 50688/2011 against the order passed by the District Magistrate on 17th August, 2011. By this order the District Magistrate stayed its own order which was passed on 24th March, 2011 by which he directed to hand over the possession to the appellant and it was not the prayer before the Hon’ble High Court that the possession which has been taken on 1st September, 2011 by the respondents should be restored to the appellant. 16. The Counsel for the respondent submitted that during the pendency of the petition the District Magistrate has withdrawn its order dated 17th August, 2011, but the appellant did not amend its prayer that the possession be restored to them as the possession was taken over from the appellant on 1st September, 2011 by the respondent No. 1 as alleged by the appellants. Without amending the prayer before the Hon’ble High Court, the appellant filed the additional affidavit before the Hon’ble High Court. For this reason, the Hon’ble High Court stated that subject matter of the petition, which was against the order passed by the District Magistrate on 17th August, 2011 by which the stay order was granted to its own order dated 31st August, 2011 since has arisen out of the order passed by the District Magistrate, therefore, the remedy, to the appellant was available under Section 17 of the Act, 2002. 17. 17. This is to be seen that during the pendency of the petition itself the District Magistrate has withdrawn its order dated 17th August, 2011 therefore, if the possession of the secured asset was alleged to be illegally and forcibly taken by the respondent No. 1, then it was not the prayer in the petition before the Hon’ble High Court that the possession be restored to them. If the possession of the secured asset was taken illegally by the borrower on 1st September, 2011 itself. Thus, filing of the petition before the Hon’ble High Court against the stay order passed by the District Magistrate on 17th August, 2011 was only the prayer and taking over the possession on 1st September, 2011 was not the prayer and the prayer as such was raised by the appellant in the securitisation application. 18. For the purpose of claiming the benefit of Section 14 of the Limitation Act, 1963 what is further to be seen is that whether the filing of the writ petition before the Hon’ble High Court was a proceedings before a wrong forum and whether the Hon’ble High Court was suffering from defect of jurisdiction or other cause of a like nature, or whether the Hon’ble High Court was unable to entertain it? In this reference, Sub-section (2) of Section 14 of the Limitation Act, 1963 provides that in computing the period of limitation for any application, the time during which the Applicant has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of Appeal or revision, against the same party for the same relief, shall be excluded, where such proceeding is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it? 19. The words “Good faith” are defined under Section 2(h) of the Limitation Act, 1963 which means nothing shall be deemed to be done in good faith which is not done with due care and attention and there is nothing on record in the present case to show that the institution of the writ petition before the Hon’ble High Court was in good faith with due care and attention. This is to be seen that for claiming the benefit under Section 14 of the Limitation Act, 1963, on the basis of filing of the writ petition before the Hon’ble High Court, it cannot be said that the Hon’ble High Court, was not having jurisdiction or was suffering with the defect of jurisdiction or was unable to entertain the writ petition as the Hon’ble High Court has refused to exercise its jurisdiction on the ground of existence of alternate remedy. Thus, it is not the case that the Hon’ble High Court was not having jurisdiction at all to entertain the writ petition. The Hon’ble High Court was having jurisdiction but it refused to exercise the jurisdiction on the ground of existence of alternate remedy of filing the application under Section 17 of the SARFAESI Act, 2002. Thus, the exclusion of time would only be available to the appellant if they could be able to establish that the Hon’ble High Court was having no jurisdiction and the filing of the writ petition before the Hon’ble High Court was in a wrong Court but that is not the case here, on the contrary because as per the judgment passed by the Hon’ble High Court, the Hon’ble High Court refused to entertain the writ petition though, it was having jurisdiction to entertain the writ petition on the ground of existence of alternate remedy. 20. Apart from the aforesaid, for the purpose of claiming benefit under Section 14(2) of the Limitation Act, 1993 which provides that in computing the period of limitation for any Suit the time during which plaintiff has been prosecuting with due diligence another civil proceedings having no jurisdiction. The word “Suit” is also defined in Section 2(1) of the Limitation Act, 1963 according to which the Suit does not include an Appeal or an application. It is doubtful to accept that the writ petition under Articles 226 and 227 of the Constitution of India would be stated to be a Suit and if it is an application in form of writ petition then as per the definition given under Section 2(h) of the Limitation Act, the application or form of writ petition would not constitute a Suit and, thus, even otherwise, the benefit of Section 14 of the Limitation Act, 1963 is not available to the appellants. 21. 21. Under the circumstances, when the securitisation application was preferred and the ground was taken for the purpose of condonation of delay that after the order passed by the Hon’ble High Court on 5th August, 2011 cannot be accepted that afresh period of limitation would commence in favour of the appellant for the purpose of filing of the application under Section 17 of the Act, 2002. 22. Of course the question with regard to taking and not taking of the possession by the respondent-Company has not been dealt with by me on merits. The fact as such only has been referred to for the purpose of ascertaining the limitation claimed by the appellant before the DRT about relevant prayer as prayed for by the appellant is in his securitisation application. 23. As stated aforesaid, there was nothing for the appellant to wait for getting the certified copy, but the application under Section 17 could have been filed without even certified copy but unnecessarily the fleet of experts working in a team of the appellant waited to get the certified copy and applied after the period of 80 days i.e. even after expiry of the period of limitation of 45 days as prescribed under Section 17 of the Act, 2002. Thus, the delay of 80 days is a delay which shows negligence of the officers of the appellant-company. With regard to the period consumed by the appellant by filing the petition in the Hon’ble High Court the order dated 17th August, 2011 by which the stay was granted by the District Magistrate to its own order dated 24th March, 2011 was stayed, that itself was withdrawn during the pendency and no relief for the restoration of the possession which is alleged to have been taken by the respondent-borrower on 1st September, 2011 was the relief before the High Court. The relief as such was not claimed but was highlighted before the Hon’ble High Court only by way of additional affidavit. Thus, even assuming that the period consumed by the appellant of 122 days before the Hon’ble High Court could be condoned but there is no satisfactory explanation to the conduct as to why the appellant moved for getting the certified copy on 23rd July, 2013 and whether it was mandatory to file the certified copy before the Tribunal for maintaining the application under Section 17 of the Act, 2002? In view of the aforesaid, the order passed by the Tribunal by which the Tribunal has refused to condone the delay does not require any interference and the appeal has no merit, hence, the same is dismissed. Order announced in presence of the Counsel for the appellant and respondents in open Court.