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2014 DIGILAW 2658 (MAD)

Thirumuruga v. Ebramusa

2014-08-18

S.RAJESWARAN, S.VAIDYANATHAN

body2014
Judgment : S. Vaidyanathan, J. 1. The Indian Bank/second respondent had initiated proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of the secured asset mortgaged by one Dr.Balasubramanian for the loan amount availed by M/s.G.K.Movie Land/4th respondent herein and took possession of the said property on 5.3.2005 and brought the same for sale in auction, wherein, the petitioners herein stood as successful bidders and subsequently, the sale was confirmed and a sale certificate was also issued in their favour. 2. While so, the first respondent who claims to be the purchaser of the secured asset by way of a sale deed, dated 14.8.2009 from the legal heirs of Late Dr.Balasubramanian, the respondents 6 to 8 herein, filed an appeal in S.A.No.280 of 2009 before the Debts Recovery Tribunal-I, Chennai, challenging the auction sale notice issued by the 2nd respondent bank, wherein, an order of interim stay came to be granted subject to the condition that the first respondent shall deposit a sum of Rs.55 lakhs on or before 18.1.2010, however, subsequently, the said order of interim stay came be vacated since the above said condition was not complied with by the first respondent. 3. The legal heirs of Late Dr.Balasubramanian had also challenged the auction sale notice by way of SA No.214 of 2009 and obtained an order of interim stay, however, by order, dated 12.11.2009, the said order of interim stay came to be vacated on the ground there was a suppression of facts. Thereafter, as there was no legal impediment, the second respondent bank proceeded with the sale and conducted the same on 15.5.2010, wherein, the first petitioner herein stood as successful bidder and he deposited 25% of the sale proceeds and thereby, the sale came to be confirmed in his favour. 4. While that be so, the first respondent came forward with S.A.No.155 of 2010 before the Tribunal, seeking to set aside the above said sale, on various grounds including that there was a violation of terms of sale inasmuch as, the first petitioner, being the successful bidder had failed to deposit the balance sale consideration within the stipulated period. However, by order, dated 20.12.2010, the Tribunal dismissed the same. Aggrieved by the said order, the first respondent filed an appeal in R.A.(SA) No.41 of 2011 before the Debts Recovery Appellate Tribunal. However, by order, dated 20.12.2010, the Tribunal dismissed the same. Aggrieved by the said order, the first respondent filed an appeal in R.A.(SA) No.41 of 2011 before the Debts Recovery Appellate Tribunal. During the pendency of the same, the first respondent came forward with an application in I.A.No.694 of 2013 in R.A.(SA) No.41 of 2011, seeking permission to raise additional grounds. Resisting this application, the petitioners have also filed their counter affidavit. 5. On consideration of the facts and circumstances and on hearing the learned counsel on both sides, the Appellate Tribunal, by order, dated 24.12.2013, allowed the above said application, permitting the first respondent to raise the additional grounds. 6. Challenging the said order, the petitioners have come forward with the present writ petition. 7. Mr.R.C.Paul Kanakaraj, learned counsel appearing for the petitioners would contend that the Tribunal has erroneously allowed the application filed for raising additional grounds, which is not maintainable either on law or on facts since the first respondent has no locus standi as he is neither a borrower nor a guarantor/mortgagor and the so-called grounds pertaining to the violations of terms and conditions of the sale, can be raised only by the borrower or mortgagor and not the first respondent who claimed right over the secured asset having purchased the property from the legal heirs of the original owner/borrower, which sale is voidable and therefore, allowing such application by the Tribunal, would certainly cause great prejudice to the petitioners who are the successful purchasers and it is not open to the first respondent to agitate his right in the SARFAESI proceedings before the Tribunal, however, he can always establish his right over the property before the appropriate forum in accordance with law. He would also contend that by way of raising additional grounds, the first respondent is nothing but introducing a new case and such grounds were sought to be raised during the pendency of the appeal, which cannot be entertained since barred by limitation. Therefore, the learned counsel sought for setting aside the impugned order of the Tribunal. In support of his contentions, on limitation aspect, the learned counsel for the petitioners relied upon the following decisions, viz., i) “State of Maharashtra Versus Hindustan Construction Company Limited (2010) 4 SCC 518 , wherein, the Hon'ble Supreme Court has held as under in para 29 and 32: “29. In support of his contentions, on limitation aspect, the learned counsel for the petitioners relied upon the following decisions, viz., i) “State of Maharashtra Versus Hindustan Construction Company Limited (2010) 4 SCC 518 , wherein, the Hon'ble Supreme Court has held as under in para 29 and 32: “29. There is no doubt that application for setting aside an arbitral award under Section 34 of 1996 Act has to be made within time prescribed under sub-section(3) i.e., within three months and a further period of thirty days on sufficient cause being shown and not thereafter. Whether incorporation of additional grounds by way of amendment in the application under Section 34 tantamounts to filing a fresh application in all situations and circumstances. If that were to be treated so, it would follow that no amendment in the application for setting aside the award howsoever material or relevant it may be for consideration by the Court can be added nor existing ground amended after the prescribed period of limitation has expired although application for setting aside the arbitral award has been made in time. This is not and could not have been the intention of Legislature while enacting Section 34. “30. ..... ..... “31. .... ..... “32. It is true that, the Division Bench of Bombay High Court in Vastu Invest and Holdings Pvt. Ltd.4 held that independent ground of challenge to the arbitral award cannot be entertained after the period of three months plus the grace period of thirty days as provided in the proviso of subsection (3) of Section 34, but, in our view, by `an independent ground' the Division Bench meant a ground amounting to a fresh application for setting aside an arbitral award. The dictum in the aforesaid decision was not intended to lay down an absolute rule that in no case an amendment in the application for setting aside the arbitral award can be made after expiry of period of limitation provided therein.” ii) “Akshat Commercial Pvt.Ltd. And another Versus Kalpana Charaborty and others (AIR 2010 Calcutta 138), wherein, the Calcutta High Court has held that the proceedings 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, Section 29(2) of the Limitation Act has no application. The other provisions of the Limitation Act for instance Sections 4, 6, 7, 9, 10, 11, 12, 14, 15, 16, 17, 18, etc. should however apply in appropriate cases. iii) “Dr.Zubida Begum and another Versus Indian Bank, etc., ( 2012 (5) CTC 369 ), wherein, a Division Bench of this Court has held as under in para 61 and 62. “61. The SARFAESI Act gives only thirty days time to file an appeal. The parliament wanted the Banks to recover the debts early without the intervention of Courts. The remedy of appeal under Section 17 and the second appeal under Section 18 are the adjudicatory mechanisms available to the parties to test the legality and correctness of the steps taken by the secured creditor under sub-section (4) of Section 13 of the SARFAESI Act. The parties must be diligent in prosecuting the appeals. Law will not come not the rescue of those who are negligent and careless. “62. Even while providing these forums to redress the grievances of borrowers , guarantors and others affected, the parliament wanted early resolution of the dispute as otherwise there would be no meaning in introducing a new law for speedier recovery, not withstanding the existence of another enactment on the subject. Therefore, it could be safely concluded that the decision to limit the period of filing the appeal without a proviso for extending the provisions of the Limitation Act, was a conscious decision. It is not for the Courts to conduct an enquiry to decide as to whether time is too short to approach the Appellate Tribunal. 8. Per contra, Mr.N.C.Ramesh, learned senior counsel appearing for the first respondent would contend that the so-called additional grounds which were sought to be raised, came to the knowledge of the first respondent only during the pendency of the appeal, when the second respondent bank filed its counter and on applying under the Right to Information Act and the said grounds are only pertaining to the violations of terms and conditions of the sale since the first petitioner has not complied with the requirements of the Tender and the auction sale, viz., non-depositing of 25% on the date of confirmation of sale, balance 75% of the sale proceeds within the stipulated time, conduct of the Authorised Officer in granting extension of time to the first petitioner for payment, etc. Therefore, the learned senior counsel would contend that the said additional grounds have considerable significance to decide the issue pertaining to the confirmation of sale and the first respondent is not introducing any new case by way of additional grounds and the same are in fact, with the knowledge of the second respondent bank and purely based on the facts that had transpired from the date of the advertisement for the sale of the secured asset till the impugned sale confirmation in favour of the auction purchaser/first petitioner herein. Therefore, having considered the relevancy of the said grounds which would not cause any prejudice to the second respondent, the Tribunal has rightly allowed the application, which requires no interference by this Court. 9. Heard the learned counsel on either side and perused the entire materials placed before us. 10. At the outset, we are not adverting to go into the merits or relevancy of the additional grounds that were sought to be raised by the first respondent since we are of the view that it is a matter for consideration by the Tribunal. The only issue raised in this Writ Petition is, whether the first respondent, being neither a borrower nor mortgagor, has locus standi to file an application before the Tribunal seeking to raise additional grounds and whether such application is barred by limitation? 11. It is significant to note that as against the impugned order, dated 24.12.2013, the second respondent/Bank has not filed any appeal. It is the case of the first respondent before the DRAT that he has purchased the secured property from the legal heirs of Late Dr.Balasubramanian, viz., the respondents 6 to 8 herein which was brought for sale in auction by the bank wherein, the first petitioner herein stood as successful bidder and since he claimed right and title over the said property by virtue of sale, dated 14.08.2009 under Document No.255 of 2009, he is absolutely an aggrieved person as his interest over the property got affected by way of auction sale and hence, he has every locus to approach the Debts Recovery Tribunal by filing an application under Section 17 of the Act. Accordingly, the first respondent approached the Tribunal by filing S.A.No.155 of 2010 questioning the auction sale conducted by the Bank on various grounds including that there was a violation of terms and conditions of the sale since the first petitioner, being the successful bidder, had failed to deposit the balance sale consideration within the stipulated period. By order, dated 20.12.2010, the Tribunal dismissed the same. Aggrieved by the said order, the first respondent filed an appeal in R.A.(SA) No.41 of 2011 before the Debts Recovery Appellate Tribunal. During the pendency of the same, the first respondent came forward with an application in I.A.No.694 of 2013 in R.A.(SA) No.41 of 2011, seeking permission to raise additional grounds. By order, dated 24.12.2013, the Appellate Tribunal allowed the above said application, permitting the first respondent to raise the additional grounds. 12. According to the first respondent, he has purchased the secured property from the legal heirs of Late Dr.Balasubramanian and since he had right and title over the said property, which was taken over and sold by the second respondent Bank by initiating SARFAESI proceedings, being aggrieved over it, he is having every locus to maintain the petition under Section 17 of the Act before the Tribunal. 13. For better appreciation, it is relevant to extract Sections 17(1) & 18 of the SARFAESI Act, which read as under: “17. Right to appeal-(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken: PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower. 18. Appeal to Appellate Tribunal (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal: PROVIDED that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower: 14. A conspectus reading of the above, it would make clear that any person (including borrower) who is aggrieved, can make an application before the Debts Recovery Tribunal. Similarly, any person against whom any adverse order is passed, can file an appeal before the Debts Recovery Appellate Tribunal. Both the provisions stipulates the time limit within which, an application and appeal thereof has to be filed. In fact, the word any person mentioned in Section 17 has been considered and explained by the Hon’ble Supreme Court in United Bank of India versus Satwati Tondon reported in 2010(8) SCC 110 , wherein, it has been held as under in para 17: “17. ..... The expression `any person' used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective. ....” (emphasis added) Therefore, whoever is aggrieved or affected by the action initiated under the provisions of the SARFAESI Act, he is absolutely having remedy by approaching the Debts Recovery Tribunal. He should not be necessarily a guarantor or borrower, but he may be a third party who should be aggrieved or affected by the action taken under the provisions of the Act. Hence, the contention of the learned counsel for the petitioners that the first respondent neither being a borrower nor mortgagor, has no locus standi to file an application before the Tribunal seeking to raise additional grounds, cannot be sustained. Since the first respondent claimed right and title over the said secured property by virtue of sale, dated 14.08.2009 said to have been purchased from the legal heirs of Late D.Balasubramaniam, which property was brought for sale by the second respondent bank, he can be termed as aggrieved person having tangible grievance and included under the purview of any person mentioned in Section 17 of the Act. 15. The appellate Tribunal, while allowing the application for raising additional grounds, has held as follows in para 11: 11. 15. The appellate Tribunal, while allowing the application for raising additional grounds, has held as follows in para 11: 11. Therefore, from the fact that none of the additional grounds sought to be filed i.e., additional ground Nos. A to L can be said to be unrelated to the prayer made in SA No.155/2010 before the Tribunal below, from the fact that at best the points set out in the additional grounds may be said to be contraventions of the provisions of the SARFAESI Act by the Authorized Officer as stated by the petitioner, from the fact that no prejudice would be caused to the respondents if submissions are permitted to be made based on the additional grounds of appeal, from the fact that the respondents are always at liberty to controvert the submissions that may be made by the petitioner at the time of hearing of the appeal this Tribunal is driven to conclude that no harm would be caused to the respondents if submissions are permitted to be made by the petitioner on the additional grounds as well as such being the case, this Tribunal is driven to conclude that this IA is entitled to be allowed.” 16. Since the first respondent before the appellate Tribunal said to be an affected person for the steps taken by the Authorised Officer and having purchased the property from the legal heirs of Late Dr.Balasubramanian, it is clear that the first respondent before the appellate Tribunal is aggrieved person and is entitled to approach the Debts Recovery Tribunal under Section 17 of the Act and also can approach the Debts Recovery Appellate Tribunal in case any adverse orders were passed against him. That apart, from a reading of the order extracted supra, it is clear that no new grounds have been raised to modify the existing prayer. If really the prayer itself is going to be amended by means of new grounds, then the contention raised by the learned counsel for the petitioners that ‘the first respondent, in order to save the limitation, was attempting to introduce a new case can be accepted. But that is not the case herein. If really the prayer itself is going to be amended by means of new grounds, then the contention raised by the learned counsel for the petitioners that ‘the first respondent, in order to save the limitation, was attempting to introduce a new case can be accepted. But that is not the case herein. Even otherwise, as regards the question of limitation which was argued at length, we are of the considered view that it is a mixed question of fact and law and it is open to the petitioners to raise this point at any stage before the Tribunal. 17. In view of the above discussion, we find no illegality or irregularity in the order of the appellate Tribunalin order to interfere with the same. Accordingly, the Writ Petition is liable to be dismissed as devoid of merits. 18. A plain reading of the additional grounds that were sought to be raised and allowed by the Tribunal, it is explicit that the said grounds are pertaining only to the violation of terms and conditions of the sale, said to have been committed by the first petitioner/auction purchaser and the Authorised Officer of the Bank. According to the first respondent, those grounds are borne by the records and they are relevant and necessary for proper adjudication of the issue of setting aside the sale. Therefore, as rightly contended by the learned counsel appearing for the first respondent that no new case is going to be introduced by the first respondent in the form of raising additional grounds. We are entirely in agreement with the said contention. The Appellate Tribunal is of the considered view that no prejudice would be caused to the petitioners if the so-called additional grounds are allowed and the petitioners are always at liberty to controvert the said grounds at the time of hearing the appeal. The said view of the Appellate Tribunal, in our opinion, is perfectly justified and requires no interference. 19. As regards the limitation aspect, the learned counsel appearing for the petitioners made vehement submissions, with which, we are not inclined to venture upon since the petitioners are at liberty to agitate the same at any stage before the Tribunal as it is a mixed question of law and fact to be considered and decided by the Tribunal. 19. As regards the limitation aspect, the learned counsel appearing for the petitioners made vehement submissions, with which, we are not inclined to venture upon since the petitioners are at liberty to agitate the same at any stage before the Tribunal as it is a mixed question of law and fact to be considered and decided by the Tribunal. In the Result, the Writ Petition fails and it is dismissed with no orders as to costs. Consequently, connected MP is closed.