Orissa High Court
Bm vs Registrar on 12 May, 2021
Author: K.R. Mohapatra
Bench: K.R. Mohapatra
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.8100 of 2019
BM, The Urban Co-operative Bank .... Petitioner
Ltd., Cuttack
Mr. Milan Kanungo, Senior Advocate
along with Mr. Sidhartha Das, Advocate
-versus-
Registrar, Debts Recovery Tribunal .... Opposite Parties
and Another
None
CORAM:
THE CHIEF JUSTICE
JUSTICE K.R. MOHAPATRA
ORDER
Order No. 12.05.2021
Dr. S. Muralidhar, CJ
08. 1. This matter is taken up by video conferencing mode, in the Vacation Court.
2. The Urban Co-operative Bank Ltd., Cuttack has filed this writ petition challenging the order dated 9th April, 2019 passed by the Debts Recovery Tribunal, Cuttack (DRT) in M.A. No.705 of 2019.
3. The background facts are that the Petitioner Bank is stated to be a "Primary Co-operative Society" registered under the Orissa Co-
Page 1 of 13operative Societies Act, 1962, which carries on the business of banking.
4. It is stated that one Sri Rajesh Das, Proprietor of M/s. Shree Shree Shree Jagannath Udyog had availed a cash credit limit of Rs.7,00,000/- from the Petitioner Bank through its Link Road Branch on 20th March, 2001. The said borrower provided security and mortgaged the land of his mother Smt. Bimala Kumari Mohanty. The said property was appertaining Sabik Revenue Village : Kusunpur, Sabik Khata No.926, Sabik Plot No.2580, Area : Ac 0.012 decimals, Sabik Plot No.2575, Area : Ac 0.028 decimals corresponding to Hal Revenue Village : Cuttack Town, Unit No.35 (Jhanirimangala), Hal Khata No.995, Hal Plot No.1633/2069, Area: Ac 0.036 decimals (hereafter 'the property in question'). The parents of the borrower Sri Prasanna Kumar Das and Smt. Bimala Kumari Mohanty also stood as sureties for the credit facility.
5. The account turned into a Non Performing Asset (NPA) from 31st March, 2004 onwards. On 12th August, 2004 the authorized Officer of the Bank issued a demand notice under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) calling upon the borrower to deposit a sum of Rs. 9,94,731/- due as on 31st July, 2004. The borrower filed W.P.(C) No.11142 of 2004 before this Court. There was an interim stay granted by this Court on 14th March, 2011 against the impugned demand notice.
Page 2 of 13Ultimately, on 14th March, 2011 the writ petition was disposed of by this Court by directing the borrower to file a representation before the Bank by 21st March, 2011 on which the Committee of Management would take a decision and that till then no coercive action would be taken against the borrower.
6. Separately, the borrower's wife Smt. Urbasi Das nee Behera filed a civil suit i.e. C.S.(III) No.63 of 2006 along with an injunction application i.e. I.A. No.238 of 2006 before the Civil Judge (Senior Division), 1st Court, Cuttack in connection with the same property in question to subvert the demand notice dated 12th August, 2004. However, the suit was dismissed for non- prosecution on 24th January, 2007.
7. On the borrower's representation, the Bank by letter dated 22nd July, 2011 advised him to make an One Time Settlement (OTS) application by the last date for that purpose i.e. 30th July, 2011. In the meantime, the borrower had made such application on 12th July, 2011.
8. While the above application was pending, the borrower filed a second writ petition i.e. W.P.(C) No.27316 of 2011 before this Court i.e. for a direction to the Bank to dispose of the OTS application. This Court disposed of the writ petition on 25th October, 2011 directing the Registrar of the Co-operative Societies (RCS) to consider the borrower's application under the OTS scheme and take a decision on or before 31st October, 2011.
Page 3 of 139. The borrower then filed a third writ petition i.e. W.P.(C) No.3955 of 2012 on 1st March, 2012 resisting the recovery action. Meanwhile the RCS passed an order dated 12th March, 2012 holding that there is no bar to settle the loan account under the OTS Scheme.
10. The OTS application was rejected and the decision was communicated to the borrower by letter dated 3rd January, 2013. A fresh demand notice dated 16th January, 2013 was issued to the borrower to deposit Rs.35,36,111/- till the amount due as on 31st December, 2012.
11. The borrower then filed a fourth writ petition i.e. W.P.(C) No.1601 of 2013 challenging the above rejection of the OTS proposal. An interim order was passed by this Court in the said writ petition on 8th February, 2013 directing that no coercive action shall be taken against the borrower subject to his depositing Rs.2,00,000/- within one month before the Registrar (Judicial) of this Court. Subsequently, the writ petition was dismissed for non- prosecution on 16th October, 2017.
12. The borrower made another OTS application on 26th October, 2017 to the Bank. This was disposed of by letter dated 21st December, 2017 issued by the Bank to the borrower offering to settle the dues at Rs.48,50,000/- which was equal to distress value of the mortgaged property. When the borrower did not respond, the Page 4 of 13 Bank issued a possession notice dated 26th November, 2018. Subsequently, after publication of the sale notice the property in question was put to public auction on 28th December, 2018. The Bank fetched the highest bid of Rs.50,60,000/- and the successful bidder deposited 25% of the bid price on 28th December, 2018 itself.
13. The borrower filed a fifth writ petition i.e. W.P.(C) No.19135 of 2018 before this Court in which the Court passed an order on 6th December, 2018 directing the borrower to deposit Rs.24,00,000/- by 28th December, 2018 and make an application for settlement of the loan amount which the Bank would consider within six weeks. It was further directed that the Bank will proceed with the auction but should not finalize it the till a decision is taken on the application of the borrower. It was made clear that if the borrower failed to comply with the above directions, the Bank would be free proceed further in accordance with law. The writ petition was disposed of in the above terms.
14. It is stated that the borrower deposited Rs.10,00,000/- but failed to comply with the remaining conditions of the order dated 6th December, 2018. On 19th December, 2018 this Court granted the borrower time up to end of January 2019 to deposit the balance amount. This was not complied with. This Court on 30th January, 2019 granted the borrower a further extension of time to comply with the conditions of the order dated 6th December 2018 up to the end of February 2019. This too was not complied with.
Page 5 of 1315. The borrower then filed an application for revival of the earlier writ petition i.e. W.P. (C) No.1601 of 2013. However the application was dismissed on 12th March, 2019. The borrower further filed a sixth writ petition i.e. W.P.(C) No.22610 of 2018. This too was dismissed as withdrawn on 13th May, 2019.
16. Separately, Smt. Bimala Kumari Mohanty the surety for the loan filed W.P. (C) No.1069 of 2019 which was dismissed by this Court on 24th January, 2019. Therefore, the borrower's spouse Smt. Urbasi Das filed W.P. (C) No.3980 of 2019 challenging the sale of the secured assets.
17. Despite the above numerous failed attempts at stalling the recovery proceedings, Smt. Bimala Kumari Mohanty Opposite Party No.2 herein, decided to approach the DRT with an appeal under Section 17 (1) of the SARFAESI Act along with an application for condonation of delay viz., M.A. No. 705 of 2019 stating, inter alia, that on account of her illness she could not file the appeal in time. By an order dated 9th April, 2019, the DRT condoned the delay by allowing M.A. No. 705 of 2019. Assailing the said order dated 9th April, 2019 the present writ petition has been filed by the Bank.
18. On 19th April, 2019 while directing the notice to issue in the present petition, this Court directed status quo to be maintained in Page 6 of 13 respect of the property in question. That interim order has continued since then.
19. When this petition was listed on 10th March 2021, Mr. H.K. Mohanty learned counsel for the Opposite Party No.2 had sought time to make submissions. At his request, the case was adjourned to 12th April, 2021. On the adjourned date i.e. 12th April, 2021 Mr. Mohanty informed this Court that he is no longer appearing for her. Accordingly, this Court directed fresh notice to be issued to the Opposite Party No.2 by Speed Post with A.D. returnable today i.e. 12th May 2021 for her to make alternative arrangements. The tracking report was also directed to be placed on record.
20. Today the Court notes that in terms of the tracking report, Opposite Party No.2 had been served. However, on first call, none appeared on behalf of the Opposite Party No.2. On the second call too, none appeared on her behalf. The Court then decided to proceed with the hearing of the writ petition.
21. The Court has heard the submissions of Mr. Milan Kanungo, learned Senior Counsel appearing for the Petitioner and has examined the documents placed on record.
22. What is evident from the above narration of facts is that, over a period of nearly seventeen years since the recovery notice was first issued by the Bank on 12th August, 2004 under the SARFAESI Act, numerous attempts have been made by the borrower, his Page 7 of 13 spouse and his mother/guarantor (Opposite Party No.2 herein) to stall the recovery proceedings. The borrower alone has filed six writ petitions and numerous applications. Despite indulgence shown to the borrower from time to time by this Court he was unable to adhere to any of the assurances and deadlines and continuously defaulted in making payments within the time granted.
23. When all of these numerous attempts proved unsuccessful, Opposite Party No.2 made yet another desperate attempt to approach the DRT with an appeal under Section 17 (1) of the SARFAESI Act accompanied by an application, M.A. No.705 of 2019, for condonation of the inordinate delay in filing such appeal. She sought to claim that the limitation period of 45 days for filing such appeal would begin to run 28th December, 2008 i.e. the date of the public auction. She also invoked Section 14 of the Limitation Act to explain the delay on account of the pendency of W.P.(C) No.1069 of 2019. By this curious method, it was projected that there was a delay of only 41 days in filing the appeal.
24. Strangely, the DRT referred to the decisions of the Supreme Court in Sunil Poddar v. Union Bank of India AIR 2008 SC 1066; Manoharan v. Sivarajan (2014) 4 SCC 163; Nand Kishore v. State of Punjab (1995) 6 SCC 614 and N Balakrishnan v. M Krishnamurthy 1998 (7) SCC 123 to condone the delay. The decision in Sunil Poddar v. Union Bank of India (supra) was in Page 8 of 13 the context of Section 22 (2) (g) of the RDB Act and not Section 30 (1) thereof. No question of condonation of delay arose in that case. Therefore, the said decision had no application to the case on hand. Each of the other decisions i.e. Manoharan v. Sivarajan (supra) Nand Kishore v. State of Punjab (supra) and the decision in N Balakrishnan v. M Krishnamurthy (supra) was in the context of delays in civil proceedings involving the applicability of Section 5 of the Limitation Act. None of the said decisions had any relevance whatsoever to proceedings in the DRT either under Section 17 (1) of the SARFAESI Act or Section 30 (1) of the RDB Act.
25. However, what was overlooked by the DRT was the applicable and binding decision of a three-Judge Bench of the Supreme Court of India in International Asset Reconstruction Company of India Ld. v. Official Liquidator of Aldrich Pharmaceuticals Ltd. AIR 2017 SC 5013. There the Supreme Court has examined in a great detail the provisions of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), which applies ipso facto to the proceedings under Section 17 (1) of the SARFAESI Act in terms of Section 17 (7) thereof.
26. At this stage it is necessary to refer to the relevant provisions viz., Section 17 (1) and 17 (7) of the SARFAESI Act and Section 20 of the RDB Act. The said provisions read thus: Section 17 (1) and 17 (7) of the SARFAESI Act read as under:
Page 9 of 13"17. Application against measures to recover secured debts.--
(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.
Explanation.--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.
.........
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.
27. Section 30 (1) of the RDB Act reads thus:
"30. Appeal against the order of Recovery Officer.--
(1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days Page 10 of 13 from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.
28. It was explained by the Supreme Court in the above decision in International Asset Reconstruction Company of India Ld. v. Official Liquidator of Aldrich Pharmaceuticals Ltd. (supra) that Section 5 of the Limitation Act applies only to original applications under Section 19 of the RDB Act and not to an appeal under Section 30 thereof. In para 14 of the said judgment, the Supreme Court has observed as under:
"14. The RDB Act is a special law. The proceedings are before a statutory Tribunal. The scheme of the Act manifestly provides that the Legislature has provided for application of the Limitation Act to original proceedings before the Tribunal under Section 19 only. The appellate tribunal has been conferred the power to condone delay beyond 45 days under Section 20 (3) of the Act. The proceedings before the Recovery officer are not before a Tribunal. Section 24 is limited in its application to proceedings before the Tribunal originating under Section 19 only. The exclusion of any provision for extension of time by the Tribunal in preferring an appeal under Section 30 of the Act makes it manifest that the legislative intent for exclusion was express. The application of Section 5 of the Limitation Act by resort to Section 29(2) of the Limitation Act, 1963 therefore does not arise. The prescribed period of 30 days under Section 30(1) of the RDB Act for preferring an appeal against the order of the Recovery officer therefore cannot be condoned by application of Section 5 of the Limitation Act."
29. Consequently, the Supreme Court distinguished the decision in A.R. Venugopal @ R. Venugopal v. Jotheeswaran (decided on 1st Page 11 of 13 July, 2015 in Civil Appeal No.4926 of 2015) which had held that an appeal filed under Section 30 (1) beyond the prescribed 30 days was condonable under Section 20 read with 24 of the RDB Act. The said decision was, therefore, impliedly overruled. The resultant legal position is that the DRT has no power to condone the delay in filing an appeal before it either under Section 17 (1) of the SARFAESI Act or Section 30 (1) of the RDB Act.
30. As can be seen Section 17 (7) of the SARFAESI Act expressly states that the DRT shall dispose of an application under Section 17 (1) thereof in accordance with the provisions of the RDB Act. Neither Section 17 (1) SARFAESI Act nor Section 30 (1) of the RDB Act permits the DRT to condone the delay in filing an appeal beyond the prescribed period. In that view of the matter, in the present case the DRT was in error in condoning the delay and allowing Opposite Party No.2 to proceed with the appeal filed by her before it.
31. For the aforementioned reasons, the impugned order dated 9th April, 2019 passed by the DRT in M.A. No.705 of 2019 is hereby set aside. M.A. No. 705 of 2019 before the DRT shall stand dismissed. Consequently, the appeal filed by the Opposite Party No.2 before the DRT also stands dismissed.
32. The writ petition is allowed in the above terms, but in the circumstances, with no order as to costs.
Page 12 of 1333. 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.
(S. Muralidhar) Chief Justice (K.R.Mohapatra) Judge S.K. Jena/P.A. Page 13 of 13