2010 Supreme(Cal) 452

AIR 2010 Cal 138
IN THE HIGH COURT OF CALCUTTA
Bhaskar Bhattacharya and Prasenjit Mandal, JJ.
Akshat Commercial Pvt. Ltd. and Anr. – Appellant
Vs.
Kalpana Chakraborty and Ors. – Respondent
G.A. No. 2729 of 2008, A.P.O.T. No. 315 of 2008 and W.P. No. 131 of 2008
Decided On: 30.04.2010

Headnote:

LIMITATION ACT - SARFAESI ACT - SECTION 5 - APPLICABILITY - ORIGINAL PROCEEDINGS - Section 5 of the Limitation Act does not apply to original proceedings under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Fact of the Case:

The Appellant had purchased the property through auction under Section 13(4) of the SARFAESI Act, 2002. The Respondent, who was the original owner of the property, challenged the legality of the sale notice and filed a writ application under Article 226 of the Constitution of India. The High Court disposed of the writ application by permitting the Respondent to move the Debts Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act. The Respondent filed an application under Section 17(1) of the SARFAESI Act along with an application under Section 5 of the Limitation Act, 1963 for condonation of delay. The DRT dismissed the application for condonation of delay, holding that Section 5 of the Limitation Act had no application to the proceeding under Section 17(1) of the SARFAESI Act. The Respondent challenged the order of the DRT before the High Court, which set aside the order and directed the DRT to dispose of the application for condonation of delay on merit. The Appellant filed the present writ appeal against the order of the High Court.

Finding of the Court:

The Court held that Section 5 of the Limitation Act does not apply to original proceedings under Section 17(1) of the SARFAESI Act. The Court relied on the following reasons: 1. Section 17(7) of the SARFAESI Act provides that the DRT 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 (RDDBFI Act) and the rules made thereunder. 2. Section 24 of the RDDBFI Act provides that the provisions of the Limitation Act, 1963 shall, as far as may be, apply to an application made to a Tribunal. 3. The conjoint effect of Section 17(7) of the SARFAESI Act and Section 24 of the RDDBFI Act is that in a proceeding under Section 17(1) of the SARFAESI Act which is entertained by a DRT, the provisions of the Limitation Act, 1963 shall, as far as may be, apply. 4. Although Section 17 of the SARFAESI Act has been described in the said Act as the one conferring right of appeal, as held by the Supreme Court in the case of Mardia Chemicals Ltd. and Anr. v. Union of India and Ors. reported in 2004 (4) SCC 311 and also in the case of Transcore v. Union of India and Anr. reported in AIR 2007 SC 712, the proceedings under Section 17 of the SARFAESI Act in fact are not appellate proceedings and it seems to be a misnomer. 5. According to the Supreme Court, in fact, it is the initial action which is brought before a forum as prescribed under the Act, raising grievance against the action or measures taken by one of the parties to the contract. Therefore, according to the Supreme Court, it is the stage of initial proceeding like filing a suit in Civil Court. It has further been pointed out by Supreme Court that as a matter of fact the proceedings under Section 17 of the Act are in lieu of a civil suit which remedy is ordinarily available but for the bar created under Section 34 of the Act. 6. In view of the decision of the Supreme Court in the aforesaid two matters there is no controversy that a proceeding under Section 17(1) is in the nature of original proceeding and in such a case, even though the other relevant provisions of the Limitation Act applies, Section 5 thereof at least has no application in view of the fact that the said section is not applicable to the original proceeding like suit.

Issues: Whether Section 5 of the Limitation Act, 1963 applies to original proceedings under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Ratio Decidendi: The provisions of the Limitation Act, 1963, including Section 5 thereof, apply to proceedings under Section 17(1) of the SARFAESI Act, 2002, as far as may be. However, Section 5 of the Limitation Act, 1963 does not apply to original proceedings like a suit before a tribunal.

Final Decision: The writ appeal was allowed. The order of the High Court was set aside. The order of the DRT was restored.