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0225 Supreme(Online)(All) 1
IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Pankaj Bhatia, J
Vimla Kashyap – Appellant
Versus
Union of India – Respondent
MATTERS UNDER ARTICLE 227 No.3953 of 2025
For the Appellants/Petitioners: Alok Saxena, Paras Pradhan
For the Respondents: A.S.G.I., C.S.C., Abhishek Khare
Actions under Section 14 of the SARFAESI Act are a continuation of proceedings under Section 13(4), providing a continuous cause of action for a borrower to approach the Debts Recovery Tribunal under Section 17, with limitation calculated from the date of the last action.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4), 14, 17 and 18 - The Security Interest (Enforcement) Rules, 2002 - Rules 8(1) and 8(2) - Limitation for filing Securitisation Application (S.A.) - Limitation calculated from the date of service of notice under Section 13(4) by the Debts Recovery Tribunal (DRT) held to be erroneous - Action under Section 14 is a continuation of proceedings under Section 13(4) and constitutes a separate/continuous cause of action enabling the borrower to approach the DRT under Section 17 - Limitation must be calculated from the date of the last action against which the aggrieved person approached the DRT. (Paras 8, 12, 14)
(B) Jurisdiction of Debts Recovery Tribunal - DRT cannot hold that an application is hopelessly barred by limitation while simultaneously reviewing the merits of the action and compliance of rules by the secured creditor - Such a finding is contradictory and bad in law. (Para 15)
Facts of the case:
The borrowers challenged an order passed by the Debts Recovery Tribunal, Lucknow, which dismissed an application for interim benefits on the grounds that the Securitisation Application (S.A.) was barred by limitation. The borrowers contended that they were not served notices under Section 13(2) and 13(4) of the SARFAESI Act and only became aware of the proceedings when a notice based on an order under Section 14 was affixed to the property. The DRT had held that limitation started from the date of the possession notice under Section 13(4) issued in 2023, whereas the borrowers argued that the subsequent action under Section 14 provided a fresh cause of action.
Findings of Court:
The finding of the DRT that the S.A. was hopelessly barred by limitation is utterly erroneous. Section 14 is a continuation of the proceedings under Section 13(4) and provides a continuous cause of action for filing an S.A. under Section 17.
Issues: Whether the limitation for filing an application under Section 17 of the SARFAESI Act begins solely from the Section 13(4) notice or whether subsequent actions under Section 14 provide a continuing cause of action.
Ratio Decidendi: All steps contemplated under Section 13(4), including subsequent actions under Section 14, give a cause of action to the person aggrieved to approach the DRT. Limitation is to be calculated from the date of the last action against which the person aggrieved approached the DRT under Section 17.
Result: Petition allowed and matter remanded to DRT.
J U D G M E N T
06.08.2025
1. Heard Sri Alok Saxena, learned Counsel for the petitioner and Sri Abhishek Khare, learned Counsel for the respondent no.3.
2. The present petition under Article 227 of the Constitution of India has been filed challenging an order dated 17.06.2025 passed by the Debts Recovery Tribunal, Lucknow whereby, the application of the petitioners for grant of interim benefits was dismissed observing that S.A. filed by the petitioners is hopelessly barred by limitation.
3. The facts in brief that emerge are that the petitioner had availed a credit facility from the assignor of respondent no.3. Subsequently, the loan amount was assigned to the respondent no.3 and the respondent no.3 initiated proceedings for realization of the dues by taking recourse to The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act).
4. The contention of the Counsel for the petitioners is that no notice under Section 13(2) and Section 13(4) of the SARFAESI Act was ever served upon the petitioners in terms of the stipulations contained in The Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as “the 2002 Rules”). It is argued that the petitioners came to know of the proceedings being initiated on 15.04.2025 when the information notice was affixed on the property owned by the petitioner no.1-Vimla Kashyap indicating that the physical possession of the property will be taken on or after 02.05.2025 in terms of an order dated 10.03.2025 passed by the Additional District Magistrate, Lucknow under Section 14 of the SARFAESI Act. It is claimed that the petitioners obtained a copy of the order passed by the ADM, Lucknow along with the other proceedings, which were contained in the application under Section 14, and thereafter approached the Debts Recovery Tribunal, Lucknow (in short “the DRT”) by filing an application under Section 17 of the SARFAESI Act on 21.04.2025 along with an application for condonation of delay, which was registered as S.A. No.405 of 2025. The said delay condonation application was filed as an abundant caution, although, the S.A. was within the limitation from the date of the order passed under Section 14 of the SARFAESI Act. Several grounds were pleaded in the S.A. with regard to the irregularities in terms of the provisions contained in the 2002 Rules. Along with the said S.A., the petitioners had also filed an application for grant of interim relief, which was rejected vide order dated 02.05.2025.
5. It is also stated that the petitioners had approached this Court by filing a petition under Article 227 of the Constitution of India being Matters Under Article 227 No.2946 of 2025 and the order dated 02.05.2025 came to be quashed vide order dated 16.05.2025 mainly on the ground that the said rejection was without any application of mind. Considering the manner in which the applications were being disposed of, this Court had directed to send a copy of this order to the Ministry of Finance, Government of India, New Delhi for taking appropriate steps for imparting training to the officer concerned in view of the series of orders being passed, which are bereft of any reasoning. The said judgment is on record as Annexure-10. It is stated that in compliance of the said order, the matter was heard again and vide impugned order dated 17.05.2025, the application for interim relief was once again dismissed. The said order is again under challenge. The DRT dismissed the delay condonation application holding that the possession notice dated 18.05.2023 under Section 13(4) was found to be duly served and observed that the limitation would start from the said limitation date and not from any date subsequent thereto as was pleaded by the petitioners. In regard to an order passed under Section 14 of the SARFAESI Act, the DRT also commented on the validity of the order passed under Section 14 and ultimately, held that the S.A
