Indian Overseas Bank vs G.S. Rajshekaran

S.J. Mukhopadhaya, J.—This Writ Appeal has been preferred by the appellant-Indian Overseas Bank against the order of this Court dated

30.1.2008 in Writ Petition No. 1069 of 2008.

In the said case, while the learned single Judge refused to interfere with the notice issued u/s 13(4) of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act) and taking into consideration the order passed by

the appellant-Bank, the learned single Judge allowed the respondent-Writ Petitioner to approach the Debts Recovery Tribunal within two weeks

from the date of the order and till such time the appellant-Bank was directed to maintain the position as on the date of the order passed in the Writ

Petition. It was also made clear by the learned single Judge that the respondent-Writ Petitioner shall not take advantage of the order in any of the

proceedings and shall strictly adhere to the time stipulated by the Court.

The Writ Appeal has been preferred by the Bank on the ground that the High Court, in exercise of its powers under Article 226 of the

Constitution of India, has no power to extend the period of limitation.

Learned Counsel appearing for the appellant-Bank submitted that the possession of the secured asset was taken on 13.11.2007 and u/s 17 of

the SARFAESI Act, the said measure has to be challenged within a period of 45 days from the date of such measure. As such, the period of

limitation for filing the application expired on 28.12.2007. The Writ Petition in question was in fact filed on 8.1.2008, i.e. beyond the period of

limitation. Therefore, the Writ Petition itself was filed after the expiry of the period of limitation provided under the SARFAESI Act and hence,

exclusion of the period spent before the wrong forum does not arise in this case. Further argument was also made with regard to the stand as was

taken by the respondent/Writ Petitioner and it was submitted that the mortgage over the secured asset was created on 18.11.1991, which was

periodically extended. The action initiated by the secured creditor by demand notice dated 21.8.2007 is well within the period of limitation.

Learned Counsel appearing for the appellant-Bank also relied on the decision of the Supreme Court reported in Mardia Chemicals Ltd. Vs.

Union of India (UOI) and Others Etc. Etc., , wherein the Supreme Court observed as follows:

We may like to observe that proceedings u/s 17 of the Act, in fact are not appellate proceedings. It seems to be a misnomer. In fact that it is

the 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. It is the stage of initial proceeding like filing a suit in Civil Court. As a matter of fact proceedings u/s 17 of the Act are in lieu

of a civil suit which remedy is ordinarily available but for the bar u/s 34 of the Act in the present case....

Reliance was also placed on a decision of the Division Bench of this Court reported in Smt. Muthammal Transports Vs. P. Swathanthirarajan and

Regional Transport Authority, , wherein, the Division Bench of this Court held that the High Court exercising jurisdiction under Article 226 of the

Constitution of India, has no power to extend the period of limitation and could not direct the authority concerned to consider the matter on merits

without applying the limitation period.

We have heard the learned Counsel appearing for the appellant-Bank at the stage of the admission of the Writ Appeal and perused the

impugned order of the learned single Judge and other records.

It is not in dispute that the respondent-Writ Petitioner has challenged the possession notice dated 13.11.2007, as communicated, vide letter

dated 14.11.2007, bearing Reference No. ARMB/254/2007-08 of the appellant-Bank. He also prayed for an order of interim injunction

restraining the respondent therein (the appellant in this Writ Appeal) from proceeding further with the proposed auction-sale of the Writ

Petitioner''s property in terms of the notice dated 26.12.2007. The Writ Petition was preferred on 8.1.2008.

From the aforesaid facts, it would be evident that the respondent-Writ Petitioner had not challenged the notice issued u/s 13(2) of the

SARFAESI Act, but challenged the action of the appellant-Bank in taking possession of the secured asset for realising the same and such action of

taking the possession of the secured asset though started on 13.11.2007, the cause of action continued till the notice dated 26.12.2007 was issued

for auction-sale of the secured asset u/s 13(4) of the SARFAESI Act.

Section 13(4) of the SARFAESI Act enables the secured creditor to take recourse to one or more of the measures to recover the secured debt

as shown under Clauses (a), (b), (c) and (d) of Section 13(4). The cause of action takes place as and when one or other such measure to recover

the secured debt is taken by the secured creditor.

In the present case, the first cause of action started when the possession was taken, vide notice dated 13.11.2007, followed by the subsequent

cause of action taken place on 26.12.2007 when the auction-sale notice u/s 13(4)(a) of the SARFAESI Act was published by the secured

creditor-appellant-Bank. There being a continuous cause of action having lastly taken on 26.12.2007, and as the Writ Petition was filed on

8.1.2008, we are of the view that the Writ Petition was filed before this Court well within the period of limitation of 45 days.

Apart from the merits of the case, we have also noticed the attitude and action of the appellant-Bank. The Writ Petition was filed by the

respondent-Writ Petitioner. The High Court under Article 226 of the Constitution of India, could have entertained the said Writ Petition to

determine the case on merits, as the provisions of the SARFAESI Act cannot take away the power of the High Court under Article 226 of the

Constitution of India. It is only because the alternative forum is prescribed under the law, the learned single Judge refused to entertain the Writ

Petition and allowed the respondent-Writ Petitioner to move before the Debts Recovery Tribunal u/s 17 of the SARFAESI Act. After getting the

case dismissed by the learned single Judge, now the appellant-Bank is opposing the respondent-Writ petitioner even to prefer the application

(appeal) u/s 17 of the SARFAESI Act, and thereby, wants to take advantage by making the respondent-Writ Petitioner remediless.

In the aforesaid background, in the absence of merits, while we dismiss this Writ Appeal filed by the appellant-Bank, we impose costs of Rs.

20,000/- (Rupees twenty thousand only) on the appellant-Bank for payment in favour of the Tamil Nadu State Legal Services Authority, High

Court Buildings, Chennai-600 104, within a period of six weeks from today. In case of failure to deposit the amount by the appellant-Bank as

aforesaid within the stipulated time, the Member Secretary of the Tamil Nadu State Legal Services Authority will take appropriate steps to recover

the amount from the appellant-Bank. The Miscellaneous Petition is closed.

Let a copy of this judgment be forwarded to the Member Secretary of the Tamil Nadu State Legal Services Authority, High Court Buildings,

Chennai-600 104.