Supreme Court To Examine Whether DRT Empowered to Condone Delay In Filing Application u/s 17 SARFAESI Act?

Supreme Court To Examine Whether DRT Empowered to Condone Delay In Filing Application u/s 17 SARFAESI Act?

The Supreme Court (SC) in the case titled K.J. George & Anr. (Petitioners) v. The Authorized Officer, Indian Bank & Ors. (Respondents), has issued notice on a special leave petition (SLP).

The SC bench consisting of Justices AM Khanwilkar and Dinesh Maheshwari has issued notice on the petition returnable within four weeks.

The petitioner filed the SLP before the Top Court against the order of the HC, wherein a division bench of the Bombay High Court (Nagpur Bench) (HC) has delivered a judgment on the issue of the jurisdiction of the Civil Courts vis-a-vis the DRT regarding the security interest under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).

Issue before the SC

Whether the Debts Recovery Tribunal (DRT) is empowered to condone the delay in filing an application under Section 17 of the SARFAESI Act?

The petitioner moved to the SC and it relied on the decision of the Top Court in the case titled Baleshwar Dayal Jaiswal v. Bank of India& Ors. in which the Apex Court that the Debts Recovery Appellate Tribunal(DRAT) is empowered to condone the delay in filing an appeal under Section 18 of the SARFAESI Act.

The contention of the petitioners was that Sections 17 and 18 of the Act are similarly worded and hence the dictum in Baleshwar Dayal Jaiswal's decision apply to the instant proceeding.

It was held by the division bench that the bar under Section 34 of the SARFAESI Act, is not absolute and it is restricted to examination by the DRT of the actions of the secured creditor under Section 13 of the SARFAESI Act and the rights available under Section 17 of the SARFAESI Act.

The Court has put reliance on the judgment of the Apex Court in the case titled International Asset Reconstruction Company and Standard Chartered Bank wherein the SC held that the DRT cannot condone the delay. Referring to the said judgment the HC concluded that in a special law when the statute does not prescribe for condonation of delay, the application of Section 5 of the Limitation Act does not arise.

The HC stated in its order that the DRT is barred to embark on adjudication of the civil rights claimed by the security interest, in cases like- the right of partition, specific performance, reliefs under Sections 31 and 34 of the Specific Relief Act, preemption, redemption, declaration regarding a property.

It added that the availability of the alternate remedy of preferring an appeal, as the impugned order of the DRT is totally in defiance of the fundamental principles of judicial procedure and causing violation of the provisions of the SARFAESI Act.

It concluded, "In the absence of a provision in the statute for enlarging the time, no court even the High Court can extend the period of limitation. In the SARFAESI Act, there is no provision for extension of the period of limitation of 45 days prescribed by Section 17 of the Act by condoning the delay."

The HC further held that "The Debts Recovery Tribunal has committed an error of law in entertaining time-barred application under Section 17 of the SARFAESI Act by assuming jurisdiction and has further gone into the merits of the case despite lack of jurisdiction to entertain a time-barred claim, the impugned order of the Debts Recovery Tribunal needs to be quashed and set aside."