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Section 17 of the SARFAESI Act provides the right to appeal of any person (including borrower) against any of the measures taken by the secured creditor or his authorized officer before the Debts Recovery Tribunal within 45 days from the date on which such measures had been taken.
The reason for providing a time limit of 45 days for filing an application under Section 17 can be inferred from the purpose and object of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) which is quick enforcement of the security, the Supreme Court has held.
According to Section 17(1), the period of 45 days is mandated to commence from the date on which a measure under Section 13(4) has been adopted.
A division bench of the top court has made these observations while allowing an appeal filed by Bank of Baroda challenging an order of stay passed by the High Court.
Before the Allahabad High Court, one M/S Parasaadilal had filed a writ petition against the order in appeal by the Debt Recovery Appellate Tribunal wherein the challenge laid to the Sale Certificate issued in favour of the Auction Purchaser under Section 17 SARFAESI Act was dismissed on the ground of limitation.
The company availed certain credit facilities for which the directors of the company gave personal guarantees along with an equitable mortgage of immovable property. On default, the bank issued notice under Section 13(2) demanding the amount.
For non-payment, a notice under Section 13(4) demanding actual physical possession was also issued.
When the company challenged such notices, the High Court disposed of the petition with the only direction that the entire dues will be paid back in four equal installments, and if the company fails to pay up the dues within the time prescribed, the bank shall be at liberty to proceed in accordance with law.
On the company's failure to pay up, the bank issued a sale proclamation. This sale was challenged under Section 17 by the company and the directors which also came to be dismissed by DRT on the ground that it was filed beyond the statutory period of limitation of 45 days.
This order came to be challenged in multiple litigations, where single ground was taken that one of the directors had expired and that his legal representatives were not given notice before the secured asset was brought to sale.
"This is a case where the Company, with its own independent identity, is contesting the proceedings. It is apparent that the Directors were also contesting the matter by filing the Section 17 application. Even the legal representatives of one of the deceased Directors were party to the application under Section 17", noted a bench of Justice BR Gavai and Justice PS Narasimha.
Accordingly, Supreme Court held that High Court was not justified in staying the operation of the order of the DRAT which came to the conclusion that there was no error apparent on the face of record for the DRT to invoke the review jurisdiction and recall its order dismissing the application under Section 17 of the Act.
Case Title: BANK OF BARODA & ANR. vs. M/S PARASAADILAL TURSIRAM SHEETGRAH PVT. LTD. & ORS.
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