Does Debts Recovery Tribunal have power to condone delay under Section 17 of SARFAESI Act! Supreme Court to consider:
The Supreme Court will hear a petition challenging a Kerala High Court ruling that the Debts Recovery Tribunal (DRT) lacks the authority to grant a stay under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI) Act, 2002 [KJ George v. Authorised Officer, Indian Bank].
The petitioners are guarantors on a loan that a corporation has taken out. The loan was secured by their house, which was said to be worth more than Rs. 2 crore. The suspected delay and mishandling of the loan enhancement project by the Indian Bank circle office resulted in interest payments being skipped. As a result, the account was listed as a Non-Performing Asset by the bank (NPA). Despite the petitioners' arguments that the property was agricultural land, the Bank ultimately took possession of it under the SARFAESI Act. They then filed a petition in the Kerala High Court to have the decision reversed. During the pendency of this event, the Bank released notices of sale and auction for the land. Meanwhile, the High Court dismissed the petition in December 2011, allowing the petitioners to seek relief from the DRT in Ernakulam. The petitioners learned in January 2012 that the Bank had sold the properties in breach of a previous DRT order. The DRT set aside the Bank's notice and selling of the property in April 2018 on the grounds that the SARFAESI Act did not provide for a valid 30 day notice. The Bank then went to the High Court, which on November 2, 2020, overturned the DRT order, claiming that the Tribunal lacked the authority to excuse the delay. As a result, the petitioners filed an appeal with the Supreme Court. According to the Supreme Court petition filed by Advocate G Prakash, the High Court failed to recognise the relief provided to the petitioners by the High Court in its 2011 order thus reversing the judgement.
*OBSERVATION MADE BY THE COURT*
It was argued that the High Court failed to consider the underlying principle in the Supreme Court's decision in Baleshwar Dayal Jaiswal v. Bank of India, which held that the Debts Recovery Appellate Tribunal (DRAT) has the power to excuse a delay in filing an appeal under Section 18 of the SARFAESI Act, and that the High Court failed to do so.
The Supreme Court was asked to issue an authoritative statement that Section 17 of the SARFAESI Act, which prohibits the application of Section 5 of the Limitation Act, is in violation of the Indian Constitution. The right to appeal against a bank's decision to take possession of property or any other action related to the protection of a security interest is addressed in Section 17 of the Act. Sections 17 and 18 are said to be identical in wording, so the decision in Baleshwar Dayal Jaiswal must refer to Section 17 proceedings as well. The Court has given a notice that must be returned within four weeks.