M.K.NASSARUDEEN MUSALIAR v. STATE BANK OF INDIA

ADDL.R4 WE BUILD (P) LTD. HAVING ITS REGISTERED OFFICE AT TC 16/713, JAGATHY. REPRESENTED BY ITS MANAGING DIRECTOR MR. C KAMALASANAN S/O. CHELLAPPAN AGED 80 YEARS, RESIDING AT "SHRUTHY", TC16/712, JAGATHY, THIRUVANANTHAPURAM- 695014 (ADDL.R4 IS IMPLEADED AS PER ORDER DATED 17.1.2024 IN IA.1/2023 IN WPC.31632/2023) BY ADVS. JAWAHAR JOSE MILLU DANDAPANI CISSY MATHEWS(K/423/2007) SAFEER BAWA A.S.(K/002552/2022) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.01.2024, ALONG WITH OP (DRT).278/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP(DRT).278/2023 & WP(C).31632/2023 : 5 : N. NAGARESH, J. ````````````````````````````````````````````````````````````` O.P. (DRT) No.278 of 2023 and W.P.(C) No.31632 of 2023 ````````````````````````````````````````````````````````````` Dated this the 17th day of January, 2024 J U D G M E N T ~ ~ ~ ~ ~ ~ ~ ~ ~ OP(DRT) No.278/2023 has been filed by the petitioners aggrieved by Ext.P13 order passed by the Debts Recovery Tribunal-II, Ernakulam in MA No.250/2022 in URSA(Diary) No.1804/2022. The petitioners state that they have availed financial facilities from the 1st respondent-State Bank of India. The account of the 1st petitioner-Company was declared as NPA. The petitioners approached the DRT-II, Ernakulam filing SA No.144/2019. The said SA was dismissed by the DRT.

2. The Bank thereafter issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The OP(DRT).278/2023 & WP(C).31632/2023 : 6 : petitioners state that when they submitted reply to the notice, the Bank issued a letter dated 07.09.2018 withdrawing all earlier proceedings. A fresh demand notice under Section 13(2) was issued on 20.09.2018. Though the petitioners filed objections, the Bank continued with the recovery proceedings. SA No.144/2019 filed by the petitioners was dismissed by the DRT.

3. The petitioners state that they preferred an appeal before the Debts Recovery Appellate Tribunal as AIR(SA) No.121/2020. The appeal was dismissed for default. In the meanwhile, the respondents initiated proceedings for sale of the secured assets and Ext.P3 sale notice dated 26.11.2021 was issued. The petitioners challenged Ext.P3 sale notice filing W.P.(C) No.28391/2021. This Court passed Ext.P5 interim order dated 20.12.2021 directing to defer the confirmation of sale.

4. Thereafter, the Bank issued Ext.P6 sale notice dated 04.01.2022. In IA No.4/2022 in W.P.(C) No.28391/2021, this Court passed an interim order on OP(DRT).278/2023 & WP(C).31632/2023 : 7 :

28.01.2022 permitting the respondent to proceed with and confirm the sale and registration. Finally, this Court dismissed W.P.(C) No.28391/2021 and RP No.149/2022 filed therein holding that this Court does not have the jurisdiction to consider the matter, as per Ext.P7 judgment dated

11.10.2022. W.A. Nos.1596/2022 and 1706/2022 filed by the petitioners were also dismissed. However, in Ext.P8 judgment in the writ appeals, this Court directed that registration of the property shall be kept in abeyance for a period of one week from the date of receipt of the judgment so as to enable the petitioners to approach the Debts Recovery Tribunal.

5. Certified copy of judgment was delivered on

18.12.2022 and the petitioners filed SA before the Debts Recovery Tribunal on 20.12.2022. The DRT did not accept the SA alleging that the application is time barred. Though the petitioners filed MA to condone delay, the DRT was not inclined to condone the delay. In IA No.1/2023 filed by the petitioners in W.A. No.1596/2022, Division bench of this Court OP(DRT).278/2023 & WP(C).31632/2023 : 8 : had directed that if an application for condonation of time is filed, the Tribunal shall consider the same. The petitioners accordingly preferred IA No.546/2023. The Tribunal dismissed the application for condonation of delay on

04.07.2023 as per Ext.P13 order. The petitioners challenge Ext.P13 order.

6. The counsel for the petitioners submitted that the finding of the Tribunal that Section 14 of the Limitation Act is not applicable to the Debts Recovery Tribunal formed under special statute is erroneous. A Division Bench of this Court had directed the Debts Recovery Tribunal to consider the application submitted under Section 14 as per law in Ext.P10 order. The Tribunal erred in observing that the petitioners have not acted in good faith as the petitioners filed writ appeal against Ext.P7 judgment. The Tribunal omitted to take note of the fact that the petitioners had no other forum than the High Court in the absence of regular sitting of the Tribunal.

7. Respondents 1 and 2 filed counter affidavit and resisted the writ petition. The respondents submitted that OP(DRT).278/2023 & WP(C).31632/2023 : 9 : pursuant to the third sale notice (Ext.P6) dated 04.01.2022 three items of property were put to sale on 27.01.2022. As there were no bidders, a further notice was issued on

07.05.2022 and sale was scheduled to 08.06.2022 in respect of one item of property in Pattom Village. The said sale also did not materialise.

8. Respondents 1 and 2 pointed out that by judgment dated 11.10.2022 in W.P.(C) No.28391/2021, this Court dismissed the writ petition. However, the Court directed the Bank to defer registration of item No.2 property in the second sale notice dated 26.11.2021 for a period of three weeks. The said interim order was extended for a period of one week as per judgment dated 08.12.2022 in W.A. No.1596/2022. Therefore, the Bank has not registered the property in favour of the purchaser till date.

9. Respondents 1 and 2 submitted that the petitioners cannot re-agitate the very same contentions which have already been adjudicated in SA No.144/2019. Only correctness of the sale notice issued by the Bank can be OP(DRT).278/2023 & WP(C).31632/2023 : 10 : adjudicated.

10. Respondents 1 and 2 submitted that the DRT and DRAT exercising jurisdiction under the Securitisation Act are not “Courts”. The Tribunals are merely Administrative Tribunals. Therefore, Section 14 of the Limitation Act would not apply. Ext.P13 order passed by the Debts Recovery Tribunal is therefore legally correct.

11. The purchaser of one of the items of properties of the petitioners in OP(DRT) No.278/2023 has filed W.P.(C) No.31632/2023. The petitioner in W.P.(C) No.31632/2023 (hereinafter referred to as 'purchaser', for clarity) states that in the sale conducted by respondents 1 and 2 on 24.12.2021 pursuant to Ext.P1(e) auction sale notice, he purchased item No.2 property for an amount of ₹6,13,00,000/-. Ext.P4 sale certificate was issued in favour of the purchaser. The physical possession of the property was already taken over by the Bank. In Ext.P4, it was specifically stated that possession of the property is handed over on receipt of ₹6,13,00,000/- and that there is no encumbrance over the property known to OP(DRT).278/2023 & WP(C).31632/2023 : 11 : the Bank. However, physical possession of the property was not with the Bank. The respondents assured the purchaser that the property will be handed over shortly. However, possession has not been given to the purchaser so far.

12. The purchaser therefore seeks to direct respondents 1 and 2 to take over possession of the property covered by Ext.P4 Sale Certificate and hand it over to the purchaser after registering the sale deed. The purchaser also seeks to direct respondents 1 and 2 to pay 18% interest on ₹6,13,00,000/- from the date of remittance by the purchaser till the date of executing the sale deed and putting the purchaser in possession of the property. In the alternative, the purchaser seeks to direct the respondents to refund ₹6,13,00,000/- remitted by the purchaser with 18% interest.

13. I have heard the learned counsel for the petitioner in W.P.(C) No.31632/2023 and in OP(DRT) No.278/2023, the learned Standing Counsel for the Bank and the learned counsel appearing for the additional 4th respondent in W.P.(C) No.31632/2023. OP(DRT).278/2023 & WP(C).31632/2023 : 12 :

14. The petitioner in W.P.(C) No.31632/2023 is the auction purchaser of a property sold in auction pursuant to the proceedings taken by Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioner seeks to direct the Bank either to take over possession of the property covered by the Sale Certificate in his favour and handover the property to the petitioner after registering a sale deed, or to direct the Bank to refund ₹6,13,00,000/- remitted by the purchaser with 18% interest.

15. The petitioner in OP(DRT) No.278/2023, who is the owner of the property so auctioned, challenges Ext.P13 order in MA No.25/2022 in URSA(Diary) No.1804/2022 of the Debts Recovery Tribunal-II, Ernakulam. In the URSA, the petitioner has challenged the very sale notice which resulted in auction and sale of the property in question. The DRT dismissed MA No.250/2022 in which the petitioner prayed to exclude the period from 09.12.2021 to 11.10.2022 and from 01.11.2022 to

19.12.2022 for the purpose of computing the period of OP(DRT).278/2023 & WP(C).31632/2023 : 13 : limitation in filing the SA.

16. The Tribunal considered the question as to whether the period spent by the petitioner before the High Court in prosecuting the writ petition and the writ appeal can be excluded for the purpose of limitation as prescribed in the special statute. The Tribunal noted that in order to attract Section 14 of the Limitation Act, it is required to establish that the petitioners were prosecuting another civil proceedings with due diligence and in good faith. The Tribunal observed that to exclude the period spent before the High Court, it is to be further established that due to defect of jurisdiction or other cause of a like nature, the application was not entertained.

17. The DRT held that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is a special statute which prescribes specific period for presenting application under Section 17 of the Act. The DRT held that it is debatable whether the provisions of the Limitation Act can be applied to OP(DRT).278/2023 & WP(C).31632/2023 : 14 : the special statute prescribing different period of limitation. The DRT relied on the judgment of this Court in Authorised Officer, Indian Bank v. K.J. George and others [2020 (6) KLT 289] wherein it was held that the Tribunal has no jurisdiction to condone the delay nor it has power to extend the period of limitation for entertaining an application under Section 17 of the Securitisation Act. Relying on the said judgment of this Court, the DRT held that the petitioners are not entitled to exclude the period spent by them before the High Court filing writ petition and writ appeal. On these premises, MA No.250/2022 and IA No.546/2022 filed under Section 14 of the Limitation Act were dismissed and the SA was refused to be admitted.

18. It is to be noted that W.P.(C) No.12035/2020 was filed by the petitioner. The writ petition was dismissed on

15.10.2020. W.A. No.267/2021 filed was also dismissed as per judgment dated 15.03.2021. The petitioner filed SLP(C) No.18813/2021 before the Apex Court. The SLP was also dismissed. OP(DRT).278/2023 & WP(C).31632/2023 : 15 :

19. The petitioner had filed the writ petition at a time when the DRT was not sitting at Kochi. In such circumstances, in view of the order passed by the Hon’ble Apex Court in SLP(C) No.10911/2021, the writ petition ought to have been entertained by this Court on its merits.

20. In the judgment dated 08.12.2022 in W.A. Nos.1596 and 1706 of 2022, the Division Bench considered the impact of the order passed by the Apex Court in SLP(C) No.10911/2021 and held that even though the High Courts were directed to entertain the matters falling within the jurisdiction of the DRTs and DRATs under Article 226 of the Constitution of India, it was made clear that once a Tribunal is constituted, the matters shall be relegated to the Tribunal by the High Court. It is in accordance with the directives of the Hon’ble Apex Court, the learned Single Judge dismissed the writ petition leaving open liberty to the petitioner to approach the Tribunal.

21. The Division Bench further found that the sale notice is under challenge on various grounds. Under Section OP(DRT).278/2023 & WP(C).31632/2023 : 16 : 17 of the Act, 2002, the Tribunal is conferred with sufficient power and jurisdiction to consider such aspects. The Division Bench therefore held that the learned Single Judge was right in dismissing the writ petition and relegating the appellant to the Tribunal constituted for the purpose. It was for this specific reason that the Division Bench extended the validity of interim order passed by the Court on 08.11.2022 and directed that the registration shall not be done and the interim order will stand extended for a further period of one week from the date of receipt of a copy of the judgment so as to enable the appellant to approach the competent forum.

22. When the Hon’ble Apex Court has held that when the DRT is not sitting, the High Court has jurisdiction to entertain the matters falling within the jurisdiction of DRT on merits and since the Apex Court has ordered that once Tribunal is constituted, the matters shall be relegated to the Tribunals by the High Courts, the time taken by the petitioners for prosecuting the writ petitions / writ appeals before the High Courts, should necessarily be excluded by the DRT OP(DRT).278/2023 & WP(C).31632/2023 : 17 : concerned.

23. As held by the Division Bench of this Court in the judgment in W.A. Nos.1596 and 1706 of 2022, it is clear from Section 17 of the Act, 2022 that DRT is conferred with sufficient power and jurisdiction to consider such aspects. In the facts and circumstances of the case, it is to be held that the Tribunal committed a grave error in rejecting MA No.250/2022 filed by the petitioners seeking to exclude the periods during which they were prosecuting the matter before the High Court. Ext.P13 order goes against the decision taken by the Division Bench of this Court in W.A. No.s1596 and 1706 of 2022. Ext.P13 order in OP(DRT) No.278/2023 is therefore set aside. The Tribunal is liable to be directed to reconsider the interlocutory applications.

24. It is to be kept in mind that the purchaser has remitted huge amount for the purchase of auctioned property and is claiming refund of ₹6,13,00,000/-. A decision to take over the possession of auctioned property or for the refund of the amount to the purchaser, will depend upon the decision to OP(DRT).278/2023 & WP(C).31632/2023 : 18 : be taken by the DRT on the SA filed by the petitioner in OP(DRT) No.278/2023. Therefore, no relief can be granted to the petitioner/purchaser in W.P.(C) No.31632/2023 at this stage. However, taking into consideration the stakes involved in the matter, the DRT has to finally decide the issue in an expeditious manner. The OP(DRT) and the writ petition are therefore disposed of directing the Debts Recovery Tribunal-II, Ernakulam to reconsider MA No.25/2022 forthwith and to finally dispose of URSA (Diary) No.1804/2022 as expeditiously as possible and at any rate within a period of two months from the date of receipt of a copy of this judgment. aks/12.01.2024 Sd/- N. NAGARESH, JUDGE OP(DRT).278/2023 & WP(C).31632/2023 : 19 : APPENDIX OF OP (DRT) 278/2023 PETITIONER'SEXHIBITS Exhibit P1 Exhibit P2 Exhibit P3 Exhibit P4 Exhibit P5 Exhibit P6 Exhibit P7 Exhibit P8 Exhibit P9 Exhibit P10 Exhibit P11 REF. BEARING TRUE COPY OF THE JUDGMENT OF THE HON'BLE APEX COURT IN S.L.P NO. 18813 OF 2021 DATED 18.11.2021 TRUE COPY OF THE SALE NOTICE DATED 11.10.2021 NO BEARING SARB/TVM/SUN/1126/2021-22 TRUE COPY OF THE SALE NOTICE DATED 26.11.2021 NO. SARB/TVM/SUN/1776/2021-22 TRUE COPY ORDER OF THE HON'BLE APEX COURT IN S.L.P NO. 10911 OF 2021 DATED 16.12.2021 TRUE COPY OF THE INTERIM ORDER OF THIS HON'BLE COURT IN WP(C) NO. 28391 OF 2021 DATED 20.12.2021 THE TRUE COPY OF THE SALE NOTICE DATED 04.01.2022 NO. SARB/TVM/SUN/2146/2021-22 TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT IN WP(C) 28391 OF 2021 AND R.P NO. 149 OF 2022 DATED 11.10.2022 TRUE COPY OF THE JUDGMENT OF THE DIVISION BENCH OF THIS HON'BLE HIGH COURT IN W.A 1596 OF 2022 AND W.A 1706 OF 2022 DATED 08.12.2022 THE TRUE COPY OF THE IA NO.1 OF 2023 IN WA NO. 1596 OF 2022. TRUE COPY OF THE ORDER DATED 09.02.2023 IN IA NO. 1 OF 2023 IN WA 1596 OF 2022 AND I.A NO. 1 OF 2023 IN WA 1706 OF 2022 OF THE DIVISION BENCH OF THIS HON'BLE COURT TRUE COPY OF I.A 546 OF 2023 IN M.A NO. 250 OF 2022 BEARING OP(DRT).278/2023 & WP(C).31632/2023 : 20 : Exhibit P12 Exhibit P13 TRUE COPY OF I.A 545 OF 2023 IN M.A NO. 250 OF 2022 TRUE COPY OF THE ORDER OF THE LEARNED DEBT RECOVERY TRIBUNAL II, ERNAKULAM IN MA 250 OF 2022 DATED 04.07.2023 IS PRODUCED HEREWITH AND MARKED AS EXHIBIT P13. OP(DRT).278/2023 & WP(C).31632/2023 : 21 : APPENDIX OF WP(C) 31632/2023 PETITIONER'S EXHIBITS Exhibit-P1 Exhibit-P2 Exhibit-P3 Exhibit-P4 Exhibit-P5 Exhibit-P6 Exhibit-P7 Exhibit-P8 Exhibit-P9 Exhibit-P10 A TRUE COPY OF THE E-AUCTION SALE NOTICE, DATED 26-11-2021 A TRUE COPY OF THE INTERIM ORDER, DATED 20-12-2021 IN W.P(C) NO.28391 OF 2021 A TRUE COPY OF THE INTERIM ORDER, DATED 28-01-2022 IN I.A NO.04 OF 2022 IN W.P(C) NO.28391 OF 2021 A TRUE COPY OF THE CERTIFICATE OF SALE UNDER RULE 9(6) DATED 10-02-2022 A TRUE COPY OF THE INTERIM ORDER, DATED 14-02-2022 IN R.P NO.149 OF 2022 AGAINST THE ORDER IN I.A NO.4 OF 2022 IN W.P(C) NO.28391 OF 2021 A TRUE COPY OF THE COMMON JUDGMENT DATED 11-10-2022 IN W.P(C) NO.28391 OF 2021 AND R.P NO.149 OF 2022 A TRUE COPY OF THE COMMON JUDGMENT, DATED 08-12-2022 IN W.A NO.1596 OF 2022 AND W.A NO.1706 OF 2022 A TRUE COPY OF THE REPRESENTATION, DATED 12-12-2022 SUBMITTED BY THE PETITIONER TO RESPONDENT NO.3 A TRUE COPY OF THE REPLY, DATED 20-12- 2022 GIVEN BY RESPONDENT NO.3 A TRUE COPY OF THE ORDER, DATED 08-03- 2021 IN M.C NO.119/2021 ON THE FILE OF THE CHIEF JUDICIAL MAGISTRATE COURT, THIRUVANANTHAPURAM RESPONDENT'S EXHIBITS Exhibit-R(1)(a) True copy of the photographs (2 numbers) of the mortgage property OP(DRT).278/2023 & WP(C).31632/2023 : 22 : RESPONDENT'S EXHIBITS Exhibit R4(a) THE TRUE COPY OF THE JUDGMENT OF THE HON'BLE APEX COURT IN SLP NO. 18813 OF 2021 DATED 18.11.2022 RESPONDENT'S EXHIBITS Exhibit-R(1)(b) The particulars of the property purchased by the writ petitioner which is shown in the Web Portal of IBAPI.