The main legal point established in the judgment is the interpretation and application of the provisions of SARFAESI Act, particularly Section 13 (4) and Section 13 (7), in determining the maintainability of the petitioner's application before the DRT.

JUDGMENT :

S. Muralidhar, J.

This petition has been filed by the original borrower challenging the impugned order dated 7th September, 2015 passed by the Debt Recovery Appellate Tribunal ("DRAT") in IA No.649 of 2015 (new No.4037 of 2015) filed in SA No.65 of 2012 (Delhi-2), holding that the Petitioner's aforementioned application (SA) before the Debt Recovery Tribunal ("DRT") was not maintainable.

2. The background facts are that the Petitioner, which is a company engaged in the business of development and construction, undertook the project of constructing a five-star hotel at Gurgaon, Haryana for which it was sanctioned a loan of Rs.180.00 crores by a consortium of banks i.e., Respondent Nos.1 to 7, at various points in time. The project was unable to be completed and the consortium declared the debt owed by the Petitioner as a Non-Performing Asset (NPA). This led to initiation of proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ("SARFAESI") culminating in a public auction of the hotel project. As a result of the auction, a sum of Rs.406.50 crores was collected by the consortium on 5th September, 2011.

3. The admitted position is that after a series of meetings between the consortium and the Petitioner, the money recovered by the auction has been utilised for liquidating the debts owed to the members of the consortium, leaving a residue amount, which was made over to the Petitioner on 28th September 2011.

4. After 249 days, the Petitioner filed the aforementioned SA against the consortium banks before the DRT, along with an application for condonation of delay, claiming that an excess amount had been recovered from it and that, therefore, a further sum ought to be returned to it as residue of auction proceeds. Initially, the application for condonation of delay was rejected by the DRT by an order dated 6th March, 2014 holding that the DRT had no power to condone the delay in filing the SA. The said order dated 6th March, 2014 was assailed by the Petitioner in appeal before the DRAT. By an order dated 30th December, 2014 the DRAT remanded the matter to the DRT to again consider the application for condonation of delay in filing the SA.

5. On remand, the DRT for a second time on 18th June, 2015 held that sufficient reason had not been shown by the Petitioner for the delay in filing the application. Accordingly, it was held that the SA 65/2012 was barred by limitation. Against the said order, the Petitioner once again approached the DRAT. By the impugned order dated 7th September, 2015 the DRAT has, while dismissing the appeal, held that the SA itself was not maintainable before the DRT.

6. This Court has heard the submission of Mr. Darpan Wadhwa, learned Senior Counsel for the Petitioner and Mr. Karan Khanna, learned counsel for the Respondents.

7. The relevant provisions of the SARFAESI Act in the context of the residue of auction proceeds are Section 13 (4) read with Section 13 (7), which read as under:

"13. Enforcement of Security Interest-

.....

(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:

Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower