“Landmark Judgment: Madhya Pradesh High Court Upholds Applicability of Limitation Act in SARFAESI Cases”
Case Title:Aniruddh Singh v. Authorized Officer, ICICI Bank Ltd.
Case No: M.P. No.5324 OF 2023
Decided on:3rd January, 2024
CORAM: Hon’ble Sheel Nagu, J. & Vivek Jain, J.
Facts of the Case
The final order dated 02.09.2023 passed by the Debt Recovery Tribunal (DRT), Jabalpur, in S.A. No. 806/2022 under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is being challenged in this petition filed under Article 227 of the Indian Constitution. The DRT cited a 45-day statute of limitations and rejected the application as time-barred. The petitioner maintains that petitions under Section 17(1) of the SARFAESI Act are subject to the requirements of the Limitation Act, notably Section 5, and claims that the DRT incorrectly relied on a Supreme Court case (Bank of Baroda vs. M/s Parasaadilal Tursiram Sheetgrah Pvt. Ltd.). The petitioner had asked for forgiveness for the application’s 46-day filing delay. The court points out that the question of whether the Limitation Act applies to Section 17(1) petitions was not addressed in the Supreme Court’s Bank of Baroda ruling. Examining Sections 17 of the SARFAESI Act and 29 of the Limitation Act, the court emphasises that the SARFAESI Act does not specifically forbid the Limitation Act from operating. It decides that applications filed after the 45-day period are subject to Section 5 of the Limitation Act. The DRT’s order is set aside by the court, who also directs the DRT to take the petitioner’s request for a delay forgiveness into account. No remarks about the merits of the delay claim are made, and the interim order will remain in effect until the Tribunal rules on the delay application. There are no expenses given.
Legal Provisions
The petition challenges the Debt Recovery Tribunal (DRT), Jabalpur’s final order dated 02.09.2023, which dismissed S.A. No. 806/2022 under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It does this by invoking Article 227 of the Indian Constitution. The application of the Limitation Act, namely Section 5, to the filing of petitions under SARFAESI Act Section 17(1) is at the centre of the dispute. In its application, the petitioner asked for forgiveness for the 46-day delay in filing. The DRT decided that Section 5 of the Limitation Act is not relevant to such applications, citing a ruling from the Supreme Court. However, the particular problem was not addressed in the Supreme Court’s Bank of Baroda ruling. The petitioner argues that while the SARFAESI Act does not specifically exclude Section 5 of the Limitation Act, Section 29(2) of the Act retains its application unless expressly prohibited by special legislation. In agreement, the Court grants the petition, vacates the DRT ruling, and instructs the DRT to take the application for a delay forgiveness into consideration.
Issues
The (SARFAESI Act 2002) and the application of the Limitation Act, 1963 are the two main legal issues at stake in this case. The main concern is whether petitions made under Section 17(1) of the SARFAESI Act—which deals with contesting actions taken by secured creditors—can benefit from provisions, in particular Section 5 of the Limitation Act. Relying on the basis that the SARFAESI Act does not specifically preclude the use of the Limitation Act, the petitioner challenges the Debt Recovery Tribunal’s (DRT) denial of their case on the grounds that it is time-barred. The court overrides the DRT’s ruling and instructs the tribunal to take into account the request for a delay forgiveness, emphasising that the special law’s silence on the subject suggests the availability of the Limitation Act’s provisions.
Courts analysis and decision
The Debt Recovery Tribunal (DRT) final order dismissing the petitioner’s application under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) as time-barred was challenged in a petition filed under Article 227 of the Indian Constitution. The DRT concluded that petitions under Section 17 are not subject to the provisions of Section 5 of the Limitation Act, which deals with the condonation of delay, based on a prior ruling in Bank of Baroda v. M/s Parasaadilal Tursiram Sheetgrah Pvt. Ltd. However, the Supreme Court stated that the question was not addressed in the Bank of Baroda case and found that Section 5 of the Limitation Act is relevant to petitions under Section 17 of the SARFAESI Act. The DRT’s ruling was overturned by the court, which also instructed it to take the petitioner’s request for a delay forgiveness into account. Without making any remarks about the viability of the delay claim, the interim order was to stay in effect until the Tribunal made a ruling. There were no expenses given.
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Written by- Aastha Ganesh Tiwari