IMPORTANT POINT
SARFAESI – Dismissal in Default – Application filed under Section 17(1) of the Act can be dismissed in default and the Tribunal is also vested with the power to set aside the order of dismissal.

Rajesh Bindal, J.

The petitioner has filed the present petition praying for setting aside order dated 12.5.2017, vide which SA No. 243 of 2017 filed by the petitioner was dismissed by Debts Recovery Tribunal-III, Chandigarh (for short, 'the Tribunal') on account of non-appearance of counsel for the applicant (petitioner herein). Further prayer has been made for setting aside order dated 24.6.2017 passed by the Tribunal, vide which the application for restoration of the SA, which was dismissed in default, was dismissed as not maintainable opining that the applicant, if so desires, can file appeal against the order dated 12.5.2017. Challenge in the SA filed by the petitioner before the Tribunal was to the action taken by respondent No. 1 under Section 13(4) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (hereinafter described as 'the SARFAESI Act').

2. Learned counsel for the petitioner submitted that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter described as 'the DRT Act') was enacted in the year 1993, which came into force on 27.8.1993. The SARFAESI Act was enacted in the year 2002, which came into force w.e.f. 17.12.2002. Prior to that, there was Ordinance, which was promulgated on 21.6.2002. Section 17 of the SARFAESI Act initially used the words "Right to Appeal" giving liberty to any person aggrieved by any action taken under Section 13(4) of the SARFAESI Act to file appeal before the Tribunal. The aforesaid provision came up for consideration before Hon'ble the Supreme Court in Mardia Chemicals Ltd. and others v. Union of India and others, (2004) 4 SCC 311, where it was opined that the proceedings being original in nature, these cannot be termed as appeal. The judgment was delivered on 8.4.2004. Immediately thereafter, amendment was carried out in Section 17(1) of the SARFAESI Act, vide Act No. 30 of 2004 on 11.11.2004, however, with retrospective effect from 21.6.2002, whereby the words "may prefer an appeal" were replaced with words "may make an application". As the title of the Section was not amended at that time, which still used the words "Right to Appeal", amendment was carried out vide Act No. 44 of 2016, w.e.f. 1.9.2016. The word "application" was substituted in Section 17 of the SARFAESI Act only vide amendment carried out by Act No. 30 of 2004 and Act No. 44 of 2016.

3. The Debts Recovery Tribunal (Procedure) Rules, 1993 (for short, 'the 1993 Rules'), which define "application", initially meant an application filed under Section 19 of the DRT Act, but with amendment carried out vide notification dated 21.1.2003, it was made inclusive of application filed under Section 31-A and an appeal filed under Section 30 (1) of the DRT Act. Section 30-A was added in the DRT Act vide Amendment Act No. 1 of 2000 w.e.f. 17.1.2000 providing for an appeal to the Tribunal against any order passed by the Recovery Officer under Section 30 of the DRT Act. Section 31-A of the DRT Act was also added vide same amendment. Replacement of the word "application" from "appeal" in Section 17 of the SARFAESI Act is later in time. As procedure provided for under the DRT Act is to be followed for decision of application under Section 17 of the SARFAESI Act, that would necessarily mean that any application filed under Section 17 of the SARFAESI Act is also to be read as an application, which can be dismissed in default and restored.

4. While referring to Section 22(2)(f) of the DRT Act, it was submitted that even power to dismiss in default any application is also drawn from that section. If power to dismiss an application in default can be exercised, then consequently the power for restoration, as contained in Section 22(2)(g) of the DRT Act shall also be available with the Tribunal, otherwise even an application cannot be dismissed in default.

5. Section 37 of the SARFAESI Act was referred to argue that the provisions of the SARFAESI Act or th