Is Limitation Act, 1963 Applicable to Condone Delay for an Application Filed Under 17(1) of the SARFAESI 2002?
[By Aryaditya Chatterjee] The author is a student of School of Law (Christ Deemed to be University). INTRODUCTION On 3rd of January, 2024 the High Court of Madhya Pradesh (HC) in the case of Aniruddh Singh v Authorized Officer ICICI BANK LTD[1], held that Debt Recovery Tribunal has the power to condone delay for an application filed under Section 17(1) of the SARFAESI Act2002 through the application of Section 5 of the Limitation Act 1963 (Limitation Act). It is pertinent to mention that this particular judgment is not binding on all high courts as several high courts have passed judgments contrary to the same. This article will attempt to provide an answer to whether the DRT has the power to condone the delay for an application filed under Section 17 of SARFAESI Act 2002 by analysing various judgments pronounced by the High Courts and the Supreme Court. The first step towards answering the above question, is to decode the judgment given by the Madhya Pradesh High Court (HC). DECODING THE JUDGMENT The Madhya Pradesh High Court (HC) in its judgment held that Section 5 of the Limitation Act 1963 (Limitation Act) will be applicable to condone the delay for an application filed under section 17(1) SARFAESI Act 2002. The court relied on the decision of the Supreme court (SC) in the case of Baleshwar Dayal Jaiswal vs. Bank of India and others[2]wherein an ‘appeal’ under section 18(1) can be condoned by the Appellate Tribunal through the application of the Limitation Act 1963 (Limitation Act). However, when the judgments of other High courts (HC) are taken into consideration then they are on a different pedestal than that of the Madhya Pradesh High Court (HC). The Calcutta High Court (HC) in the judgment of the Akshat Commercials Pvt. Ltd v Kalpana Chakraborty[3] held that Section 5 of the Limitation Act 1963 (Limitation Act) will not be applicable to condone the delay for an application filed under section 17(1) of the SARFAESI Act 2002 because an application filed under this section is that of a civil suit in nature. The Orissa High Court (HC) in the Judgment of Bm, Urban Co-operative Bank Ltd v Debt Recovery Tribunal[4] held that delay in filing of an application under section 17(1) of the SARFAESI Act 2002 cannot be condoned by the DRT by applying Section 5 of the Limitation Act since an application may be disposed in accordance with the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (RDB) as per section 17(7) of the SARFAESI Act 2002 and RDB has not given any special power to the DRT to dispose an application filed under Section 17(1) .The Orissa High court also placed a special reliance on the judgment of the Supreme Court (SC) in International Asset Reconstruction Company of India Ld. v. Official Liquidator of Aldrich Pharmaceuticals Ltd[5]wherein it was held that Section 5 of the Limitation Act 1963 (Limitation Act) is only applicable to an original proceeding filed under Section 19 of the RDB Act. After a detailed analysis of the three High Court judgments, it is clear that there is a Question of Law as to whether Section 5 of the Limitation Act 1963 (Limitation Act) is applicable to an application filed under Section 17(1) of the SARFAESI Act 2002. The first step towards answering the above question, is to understand the nature of an application filed under section 17 of the SARFAESI Act 2002. NATURE OF AN APPLICATION FILED UNDER SECTION 17 OF SARFAESI ACT 2002 A remedial application under section 17 of the SARFAESI Act 2002 is filed in the DRT by an aggrieved borrower against any measures taken by the Secured Creditor under Section 13(4) of the SARFAESI Act 2002 and such an application shall be filed within 45 days of such measure taken against the borrower. Even though the statute considers an application under section 17 of SARFAESI Act 2002 to be an “Application” in nature, the Supreme Court (SC) has taken a contrary view in this regard through various judgments. In the case of Mardia Chemicals v Union of India[6], the Supreme Court (SC) observed that proceedings under an application filed under section 17 of SARFAESI Act 2002 are not an appellate-proceeding but a misnomer. The proceeding is an 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. The Supreme Court in this case decided that an application under Section 17 of the SARFAESI Act 2002 falls within the lieu of a civil suit. Later in the judgment of M/s Transcore v Union of India[7],the Supreme Court relied on Mardia Chemicals[8] and were of the opinion that an application filed under section 17 of the SARFAESI is that of a “civil suit” in nature. It is clear from both the judgments of the Supreme Court (SC) that an Application filed under section 17 of the SARFAESI is a ‘civil suit’ in nature. APPLICABILITY OF LIMITATION ACT FOR AN APPLICATION FILED UNDER SECTION 17 OF THE SARFEASI The Supreme court (SC) in the case of Baleshwar Dayal Jaiswal vs. Bank of India[9] held that delay in filing an ‘appeal’ under section 18(1) of the SARFAESI Act 2002 can be condoned by the Appellate Tribunal by applying the Limitation Act 1963 (Limitation Act). However, it is pertinent to mention that the nature of an appeal under section 18(1) of the SARFAESI Act 2002 is that of an “Appeal” to an Appellate Tribunal. In such a scenario, delay in filing an ‘appeal’ can be condoned by the limitation act because it is an appeal in nature. It is pertinent to mention that an application under section 17(1) of the SARFAESI Act 2002 is that of a “Civil Suit” in nature as decided by the Hon’ble Supreme Court (SC) in the various of its judgments. The Limitation Act 1963 (Limitation Act) has defined both suit and an
