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2021 DIGILAW 187 (ORI)

Suresh Agarwal v. Ores Enterprises Private Limited

2021-04-15

B.P.ROUTRAY

body2021
ORDER 1. This matter is taken up by video conferencing mode. 2. This is a petition challenging an order dated 6th October 2020 of the Debts Recovery Appellate Tribunal (DRAT), Kolkata whereby an order dated 28th June 2019 of the Debts Recovery Tribunal (DRT), Cuttack in MA No.89 of 2019 arising out of OA No.381 of 2011 was set aside and Opposite Party No.1-M/s. Ores Enterprises Pvt. Ltd was permitted to file an appeal against the proceedings of the Recovery Officer (RO), DRT, Cuttack before the DRT for disposal of such appeal within four weeks from the date of filing of the appeal. 3. On 18th November 2020, while directing notice to be issued in this case, the following order was passed: 'The Court is convened through Video Conferencing mode. Heard learned counsel for the petitioner. The contention of learned counsel for the petitioner is that the Debt Recovery Appellate Tribunal, Kolkata in the impugned order dated 06.10.2020 was not justified in directing that the time spent by the opposite party-M/s. Ores Enterprises (P) Ltd. in the DRT and DRAT shall be exempted for the purpose of hearing of the appeal before the learned Presiding Officer, DRT, Cuttack. Learned counsel for the petitioner citing a decision in the case of International Asset Reconstruction Company of India Limited vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Another, reported in (2017) 16 SCC 137 , argued that the Hon'ble Supreme Court has held that the prescribed period of 30 days for preferring appeal against order of Recovery officer under Sections 25 to 28 cannot be condoned by application of Section 5 of the Limitation Act for the reason that there is no power with the Recovery Officer for condonation of delay. Delay in the present case, according to the petitioner, is more than one year. Issue notice. Notice be issued to the opposite parties by Speed Post with A.D. returnable by 13.01.2021. Requisites for such notice be filed within a week. List this matter on 13.01.2021. It is directed that in the meantime operation of the order dated 06.10.2020 (Annexure-14) passed by the Debt Recovery Appellate Tribunal, Kolkata in O.A. No.381 of 2011 shall remain stayed. Notice be issued to the opposite parties by Speed Post with A.D. returnable by 13.01.2021. Requisites for such notice be filed within a week. List this matter on 13.01.2021. It is directed that in the meantime operation of the order dated 06.10.2020 (Annexure-14) passed by the Debt Recovery Appellate Tribunal, Kolkata in O.A. No.381 of 2011 shall remain stayed. As lock-down period is continuing for COVID-19, learned counsel for the petitioner may utilize the soft copy of this order available in the High Court's website or print out thereof at par with certified copies in the manner prescribed, vide Court's Notice No.4587, dated 25.03.2020.' 4. The background facts are that M/s. Anmol International Pvt. Ltd. (Opposite Party No.2) had borrowed a loan from the Housing and Urban Development Corporation Limited (HUDCO) (Opposite Party No.5) creating an equitable mortgage of the property situated at Udit Nagar, Khata No.365/388, Plot No.554/1886, area Ac.0.255 Decimal (property in question). Upon Opposite Party No.2 defaulting in payment of the loan, proceedings were initiated against it, which culminated in a decree by the DRT, Cuttack on 9th November 2016 in O.A. No.381 of 2011 (HUDCO v. M/s.Anmol International Pvt. Ltd. and others). 5. In the above proceedings, the present Opposite Party No.1 i.e. M/s. Ores Enterprises Pvt. Ltd. was Opposite Party No.5, as a guarantor for the loan availed of by Opposite Party No.2. 6. Pursuant to the said decree, the RO, DRT, Cuttack issued a proclamation of sale in R.P. No.87/2016/CTC putting up the property in question for auction sale with a reserve price of Rs.5,77,82,000/-. In that notice, it was stated that the outstanding dues as far as Opposite Party No.2 is concerned was Rs.10,22,30,746.00 with p&fi interest @ 11.25 % per annum from 5th February, 2019 till realization of the dues. 7. When the public auction was held on 4th February 2019, the RO, DRT, Cuttack finalized the sale in favour of the present Petitioner, who was the highest bidder with an amount of Rs.5,83,32,000/-, which was above the reserve price. 8. According to the Petitioner, Opposite Party No.2 filed MA No.8 of 2019 before the RO to set aside the sale. By an order dated 25th April 2019, the RO directed Opposite Party No.2 to deposit the recoverable amount by 30th April 2019, and listed the application on that date. 8. According to the Petitioner, Opposite Party No.2 filed MA No.8 of 2019 before the RO to set aside the sale. By an order dated 25th April 2019, the RO directed Opposite Party No.2 to deposit the recoverable amount by 30th April 2019, and listed the application on that date. Opposite Party No.2 challenged the said order of the RO by filing W.P.(C) No.8614 of 2019 in this Court. The said writ petition was disposed of by this Court on 30th April 2019, directing Opposite Party No.2 to avail the alternative remedy of appeal before the DRT, Cuttack and directing for maintaining status quo for ten days. 9. Thereafter, Opposite Party No.2 filed an appeal under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). In absence of any interim order passed by the DRT, Cuttack, the RO proceeded to issue a sale confirmation and sale certificate in favour of the present Petitioner on 13th May 2019, with the Petitioner having deposited the entire sale amount before the RO. Thereafter, a registered sale deed was executed on 24th May 2019, in favour of the Petitioner. 10. As far as Opposite Party No.1 is concerned, it filed W.P.(C) No.3165 of 2019 in this Court. The said writ petition was disposed of on 7th February 2019, noting that the interim order of this Court had not been complied with and further that the DRT, Cuttack was already seized of the auction. A second writ petition, W.P.(C) No.10105 of 2019, was filed by Opposite Party No.1 challenging the order dated 13th May 2019 of the RO confirming the sale in favour of the present Petitioner. This was disposed of by the Court on 18th June 2019, with liberty to Opposite Party No.1 to move the DRT, Cuttack. 11. Yet another writ petition i.e. W.P.(C) No.9631 of 2019 was filed by Opposite Party No.2 challenging the action of the Sub- Registrar, Panposh in not considering the objection raised by it. By an order dated 29th May 2019, this Court dismissed the said writ petition. 12. Opposite Party No.2 thereafter filed an appeal under Section 30 of the RDB Act before the DRT, Cuttack challenging the order dated 25th April 2019 of the RO. By an order dated 29th May 2019, this Court dismissed the said writ petition. 12. Opposite Party No.2 thereafter filed an appeal under Section 30 of the RDB Act before the DRT, Cuttack challenging the order dated 25th April 2019 of the RO. M.A. No. 1416 of 2019 filed by Opposite Party No.2 for setting aside the order dated 13th May 2019 of the RO settling the sale and issuing sale certificate in favour of the Petitioner was dismissed by the DRT, Cuttack on 3rd June, 2019. The appeal under Diary No.1263 of 2019 was subsequently dismissed on 26th October, 2020. 13. Opposite Party No.1 filed MA No.89 of 2019 before the DRT, Cuttack in the disposed of O.A. No.381 of 2011 with a prayer offering to pay the reserve price of the e-auction. Thereafter, Opposite Party No.1 filed W.P.(C) No.6837 of 2019, which was disposed of by this Court on 27th March 2019, with a direction to the DRT Cuttack to consider MA No.89 of 2019. Pursuant to the above direction, the DRT, Cuttack passed an order dated 28th June 2019, dismissing the MA 89 of 2019. 14. The next set of proceedings what are relevant as far as the present petition is concerned is that , aggrieved by the order dated 28th June 2019 of the DRT rejecting its MA No.89 of 2019, Opposite Party No.1 filed an appeal before the DRAT, Kolkata. It appears that the said appeal was filed on 19th September, 2019. An application No.324 of 2019 was also filed seeking condonation of delay of 58 days in filing the appeal. The reason given therein was that the copy of the order of the DRT was not supplied to Opposite Party No.1 and it became aware of the order only on 29th August, 2019 in CONTC No.1057 of 2019 in the High Court. 15. Affidavits were filed both by the present Petitioner and HUDCO, specifically taking a plea that the appeal was barred by limitation. 16. It is stated the appeal was heard by the DRAT, Kolkata on 11th October 2019, 9th December 2019, 28th January 2020 and 10th February, 2020. According to the Petitioner, it is only when he received notice in Appeal No.1 of 2020 in the DRT, Cuttack that he realized that the appeal of Opposite Party No.1 had been disposed of by the DRAT, Kolkata on 6th October, 2020. 17. According to the Petitioner, it is only when he received notice in Appeal No.1 of 2020 in the DRT, Cuttack that he realized that the appeal of Opposite Party No.1 had been disposed of by the DRAT, Kolkata on 6th October, 2020. 17. The impugned order dated 6th October 2020 of the DRAT, Kolkata reads as under: 'The Auction Sale in this case has already taken place when M.A. No.89 of 2019 was pending before the Learned Presiding Officer, DRT, Cuttack. The Appellant has a right to file an appeal before the Learned P.O. DRT against the proceedings of the Recovery Officer of DRT and such being the case, the appellant may exercise its right to file an appeal before the Learned P.O. of DRT. Therefore, it is made clear that the Appellant may file an appeal against the proceedings of the Learned Recovery Officer, DRT, Cuttack before the Learned P.O. and if an appeal is filed the Learned Presiding Officer is directed to hear the appeal and dispose of the same within a period of four weeks from the date filing of the appeal. The time spent in the DRT and this Tribunal shall be exempted for the purpose of hearing of the appeal before the Learned Presiding Officer, DRT, Cuttack. The appellant and the Respondents shall co-operate with the Tribunal below to enable the Learned Presiding Officer, DRT, Cuttack to pass orders in the appeal under Section 30 of the RDB Act, 1993 within the stipulated time.' 18. Thereafter, the present petition was filed in which the order as noted above was passed by this Court on 18th November, 2020. 19. The issue highlighted in the above order passed by this Court is that after the judgment of the Supreme Court in International Asset Reconstruction Company of India Limited vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Another (2017) 16 SCC 137 , the legal position is clear that Section 5 of the Limitation Act does not apply to an appeal under Section 30 of the RDB Act. In other words, the DRT has no power to condone the delay in filing the appeal beyond the period of 30 days from date of which a copy of the order of the RO is issued to the Party. 20. In other words, the DRT has no power to condone the delay in filing the appeal beyond the period of 30 days from date of which a copy of the order of the RO is issued to the Party. 20. The question that arises as far as the present case is concerned is whether the DRAT would have permitted the Petitioner to file an appeal against the order of the RO before the DRT by condoning the delay in filing such appeal and stating that time spent in the DRT and DRAT would be exempt for the purposes of hearing of the appeal by the DRT ? 21. In the present case, it must be noted that to begin with the Petitioner had not even challenged the order of the RO before the DRT. What Opposite Party No.1 had done was to file MA No. 89 of 2019 before the DRT with a prayer to make the payment of reserve price of the e-auction conducted by the RO in RP No.87 of 2016. In other words, the order dated 13th May 2019 of the RO settling the sale in favour of the present Petitioner was never challenged to begin with by Opposite Party No.1. It must be recalled here that under Section 30 of the RDB Act such an appeal would have to be filed within 30days from the date of order of the R.O. i.e. 13th May 2019. Even if it is taken that such limitation will begin to run from the date the party aggrieved becomes aware of the order, clearly on the date that Opposite Party No.1 filed MA No.89 of 2019 before the DRT, it was already aware of the order of the RO. By that date, Opposite Party No.1 had not filed any appeal in the DRT. In other words, it gives up the right to file an appeal on the date it filed MA No.89 of 2019 in the DRT. 22. That being the position, the question of the DRAT permitting Opposite Party No.1 to file an appeal by the impugned order passed on 6th October 2020, long after the expiry of the 30 day period within which such appeal had to be filed, does not arise. 22. That being the position, the question of the DRAT permitting Opposite Party No.1 to file an appeal by the impugned order passed on 6th October 2020, long after the expiry of the 30 day period within which such appeal had to be filed, does not arise. In other words, after the judgment of the Supreme Court in International Asset Reconstruction Company of India Limited (supra), the DRT did not have the power to condone the delay in filing the appeal beyond 30 days from the date of the order of the RO. It is inconceivable that the DRAT which is again a body limited by statute, could have the power to condone the delay in filing the appeal before the DRT. 23. It should be noted here that unlike the High Court under Article 226 of the Constitution, the DRAT is a statutory body, whose powers are prescribed by the statute. While it can condone the delay in the filing of an appeal before itself by virtue of the proviso to Section 20 (3) of the RDB Act, the DRAT has no power to condone the delay in filing of the appeal before the DRT against an order of an RO. 24. That being the position, by the impugned order, the DRAT could not have possibly permitted the Petitioner to file an appeal against the order of the RO before the DRT long after the expiry of 30 days after knowledge of the order of the RO. This is in addition to the fact that with Opposite Party No.1 not having chosen to challenge the order dated 13th May 2019 of the RO in the first place by filing an appeal before the DRT, it could not have at the stage of an appeal against the order of the DRT rejecting its offer to pay the reserve price, permitted Opposite Party No.1 to file such appeal. 25. Viewed from any angle, the impugned order of the DRAT, Kolkata is unsustainable in law and is accordingly hereby set aside. Consequently, the Appeal No.1 of 2020 pending before the DRT, Cuttack shall not continue and stand disposed of. 26. The writ petition is accordingly allowed, but in the circumstances, no order as to costs. 27. 25. Viewed from any angle, the impugned order of the DRAT, Kolkata is unsustainable in law and is accordingly hereby set aside. Consequently, the Appeal No.1 of 2020 pending before the DRT, Cuttack shall not continue and stand disposed of. 26. The writ petition is accordingly allowed, but in the circumstances, no order as to costs. 27. As the restrictions due to resurgence of COVID-19 situation are continuing, learned counsel for the parties may utilize a printout of the order available in the High Court's website, at par with certified copy, subject to attestation by the concerned advocate, in the manner prescribed vide Court's Notice No.4587, dated 25th March, 2020 as modified by Court's Notice No.4798, dated 15th April, 2021.