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Judgment
Ajit Singh, J.—In this petition an important question which calls for determination is whether the Debts Recovery Appellate Tribunal has power to condone the delay in filing of Appeal before it u/s 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short "the SARFAESI Act"). Petitioner No. 1 is a Company registered under the provisions of the Companies Act. Petitioner Nos. 2, 3 and 5 have been the Directors of the Company from time-to-time petitioner No. 5 is alleged to have signed personal guarantee along with petitioner Nos. 2, 3 and 4. Petitioner Nos. 2, 4 and 5 are said to have mortgaged their immovable properties in favour of respondent State Bank of India which provided financial assistance to petitioner No. 1 for establishing an automatic rice milling plant. The respondent Bank initiated recovery proceedings against the petitioner under the provisions of the SARFAESI Act vide demand notice dated 5th May, 2009. On receiving the demand notice the petitioners submitted a detailed representation on 8th July, 2009 to the Bank which was decided vide order dated 16th July, 2009 and demand was modified. On 17th July, 2009, the petitioners submitted another representation which was decided by the Bank vide order dated 21st August, 2009. The Bank then took the possession of the mortgaged properties on 30th April, 2010 by taking recourse to one of the measures enumerated in Section 13(4) of the SARFAESI Act.
Aggrieved with the action taken, the petitioners filed SA No. 87/2010 u/s 17 of the SARFAESI Act before the Debts Recovery Tribunal, Jabalpur (in short "the Tribunal"). They also separately filed an application for staying the auction of the mortgaged properties which was scheduled for 29th July, 2010 but it was dismissed by the Tribunal vide order dated 28th July, 2010.
Against the order dated 28th July, 2010 the petitioners filed an Appeal SR No. 97/2010 on 1st September, 2010 u/s 18 of the SARFAESI Act before the Debts Recovery Appellate Tribunal, Allahabad (in short "the Appellate Tribunal"). They filed an application u/s 5 of the Limitation Act seeking condonation of delay of 2 days because the Appeal was not filed within the prescribed period of 30 days from the date of receipt of the copy of order of the Tribunal. It appears that the auction of the mortgaged properties could not materialize on 29th July, 2010 and a fresh auction was scheduled for 22nd September, 2010. The Appellate Tribunal, after considering the application for stay filed by the petitioners, passed an interim order dated 20th October, 2010 to the effect that auction may go on but the sale shall not be confirmed. The Bank thereupon raised a preliminary objection in the Appeal that the Appellate Tribunal had no jurisdiction to extend the period of limitation by condoning the delay. The appellate Tribunal, relying upon its two earlier decisions in 2008 (72) ALR 746 and State Bank of India v. Sudarshan Doors (P) Ltd., II : (2008) BC 72 (DRAT), by order dated 21st January, 2011 dismissed the Appeal on the ground it had no power to condone the delay. It is against the order dated 21st January, 2011 the petitioners have filed the present petition.
The learned Counsel for petitioners argued that the provisions of the SARFAESI Act do not exclude either expressly or impliedly the application of the provisions of the Limitation Act, 1963 and, therefore, the appellate Tribunal had full powers u/s 29(2) of the Limitation Act to consider on merits the question of condonation of delay in filing Appeal as per Section 5 of the Limitation Act. In support of his argument the learned Counsel relied upon a decision of the Bombay High Court in UCO Bank Vs. Kanji Manji Kothari and Co. and Others, and also a decision dated 9th February, 2009 of the Madras High Court in Punnu Swami v. The Debts Recovery Tribunal, 2009 (3) B.J. 401. In these decisions both Bombay High Court and Madras High Court have taken a view that Section 5 of the Limitation Act applies to the proceedings u/s 17 of the SARFAESI Act. The learned respective Counsel for the Bank and auction purchaser on the other hand have supported the order passed by the Appellate Tribunal by relying upon the decision of Supreme Court in Fairgrowth Investments Ltd. Vs. The Custodian, .
It is to be noted that the Appellate Tribunal in its decisions rendered in Misuki Exports Put. Ltd. v. State Bank of India (supra), while holding that it has no power to condone the delay, has relied upon the decisions of the Supreme Court in Hukumdev Narain Yadav Vs. Lalit Narain Mishra, and Fairgrowth Investments Limited (supra).
Section 13 of the SARFAESI Act contains detailed mechanism for enforcement of security interest. Sub-section (1) thereof empowers the secured creditors to enforce the security interest without the intervention of the Court or Tribunal notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act. Sub-section (2) enables the secured creditor to call upon the borrower by notice in writing to discharge in full his liabilities within sixty days from the date of notice with an indication that if he fails to do so, the secured creditor shall be entitled to exercise all or any of its rights under Sub-section (4). Sub-section (3) lays down that the notice issued u/s 13(2) shall contain details of the amount payable by the borrower as also the details of the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. Sub-section (3-A) provides that if the borrower makes any representation or raises any objection in response to the notice issued u/s 13(2), the secured creditor has to consider such representation or objection and if he comes to the conclusion that such representation or objection is not acceptable, then reasons for non-acceptance are required to be communicated within one week to the borrower. Sub-section (4) of Section 13 enumerates various modes which can be adopted by the secured creditor if the borrower fails to discharge in full his liabilities in response to the notice under Sub-section (2).
Section 17 of the SARFAESI Act speaks of the remedies available to any person, including the borrower, who may have grievance against the action taken by the secured creditor by any of the measures provided under Sub-section (4) of Section 13. Such an aggrieved person can make an application to the Tribunal within 45 days from the date on which action is taken under that sub-section. Section 18 provides for an Appeal to the Appellate Tribunal against any order made by the Tribunal u/s 17 within 30 days from the date of receipt of the order of Tribunal. Section 35 declares that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Section 36, which deals with limitation, clearly provides that no secured creditor shall be entitled to take all or any of the measures under Sub-section (4) of Section 13 unless his claim in respect of the financial asset is made within the period of limitation prescribed in the Limitation Act. Section 37 states that the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.
Section 18 of the SARFAESI Act, with which I am mainly concerned, reads as under:
Appeal to Appellate Tribunal --(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal u/s 17, may prefer an Appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal:
Provided that different fees may be prescribed for filing an Appeal by the borrower or by the person other than the borrower:
Provided further that no Appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent, of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent, of debt referred to in the second proviso.
(2) Save as otherwise provided in this Act, the appellate Tribunal shall, as far as may be, dispose of the Appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.
There is no express provision in the SARFAESI Act empowering the appellate Tribunal to condone the delay in filing the Appeal. A reading of Section 18(1) shows that words used are clear and unambiguous that the Appeal before the Appellate Tribunal is to be filed within 30 days from the date of receipt of the order of the Tribunal passed u/s 17. No scope is left to infer that the Appellate Tribunal has power to extend the period prescribed on the basis of any principle of interpretation of statutory provisions. Thus, the only source of power in this regard could be Section 5 of the Limitation Act, 1963 provided it applies to the SARFAESI Act.
Section 29(2) of the Limitation Act, 1963 reads as follows:
(2) Where any special or local law prescribes for any Suit, Appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any Suit, Appeal or application by any special or local law, the provisions contained in Sections 4 of 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law.
In Fairgrowth Investments Limited (supra) the Supreme Court has held that Section 29(2) of the Limitation Act, 1963 provides for the application of the provisions of Section 4 to Section 24 of the Act, including Section 5, to any special or local law which prescribes the period of limitation in respect of any Suit, Appeal or application different from the period prescribed under the Limitation Act. According to the Supreme Court the general rule, as far as special law and local Acts are concerned, is that the specified provisions, including Section 5 of the Limitation Act, will apply provided the special or local Act provides a period of limitation different from that prescribed under the Limitation Act and that the special/local Act does not expressly exclude the application of the Limitation Act.
The Supreme Court in Hukumdev (supra) has held that the expression "expressly exclude" also includes "exclusion by necessary implication" and even in a case where the special law does not exclude the provisions of Section 4 to Section 24 of the Limitation Act by an express reference, it would nonetheless be open to the Court to examine whether and to what extent nature of those provisions are excluded or the nature of the subject-matter and scheme of the special law exclude their operation.
Section 18(2) of the SARFAESI Act provides that the appellate Tribunal shall, as far as may be, dispose of the Appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short, "the RDDBFI Act") and Rules made thereunder.
RDDBFI Act was enacted earlier in the year 1993 because Banks and Financial Institutions were experiencing considerable difficulties in recovering loans and enforcement of securities charged with them. This Act provided for the establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to Banks and Financial Institutions with provisions to ensure that defaulting borrowers were not able to invoke the jurisdiction of Civil Court for frustrating the proceedings initiated by the Banks and Financial Institutions. Section 20 of the RDDBFI Act also provides for Appeal. Its relevant extract is as under:
Appeal to the Appellate Tribunal.-
(1) Save as provided in Sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an Appeal to an appellate Tribunal having jurisdiction in the matter.
(2) No Appeal shall lie to the Appellate Tribunal from an order made by a Tribunal with the consent of the parties.
(3) Every Appeal under Sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made, or deemed to have been made, by the Tribunal is received by him and it shall be in such form and be accompanied by such fee as may be prescribed:
Provided that the appellate Tribunal may entertain an Appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.
It is clear from the above quoted provisions that though a period of 45 days for filing an Appeal to the appellate Tribunal is provided the appellate Tribunal has power to condone the delay if it is satisfied that there was sufficient cause for not filing it within that period.
For few years the new dispensation under the RDDBFI Act worked well and the officers appointed to man the Tribunals worked with great zeal for ensuring that cases involving recovery of the dues of Banks and Financial Institutions were decided expeditiously. But with the passage of time, the proceedings before the Tribunals became synonymous with those of the regular Civil Courts. The Ministry of Finance, Government of India, conducted a survey which revealed that as in the year 2001, a sum of more than Rs. 1,20,000/- crores was due to the Banks and Financial Institutions and this was adversely affecting the economy of country. A committee was, therefore, constituted to suggest measure for expediting the recovery of debts due to Banks and Financial Institutions. The committee in its report made various suggestions for bringing about radical changes in the existing adjudicatory mechanism for facilitating speedy recovery of the dues of Banks and also for quick resolution of disputes arising out of the action taken for recovery of such dues. The Government of India accepted the suggestions and that led to enactment of the SARFAESI Act in the year 2002 by which for the first time the secured creditors have been empowered to take steps for recovery of their dues, without intervention of the Court or Tribunals [see United Bank of India Vs. Satyawati Tondon and Others, ].
When I compare Section 18 of the SARFAESI Act with Section 20 of the RDDBFI Act, I find that in Section 18 not only the period of limitation for filing an Appeal has been reduced to 30 days from 45 days as provided in Section 20 but the power of the Appellate Tribunal to condone delay has also been excluded which is provided in Section 20 of the RDDBFI Act. This itself leaves no iota of doubt that the Legislature has consciously intended not to confer the power of condonation of delay with the Appellate Tribunal u/s 18 of the SARFAESI Act. Because, it is a well-settled principle of law that just as use of same language in a later statute as was used in an earlier one in pari materia is suggestive of the intention of the Legislature that the language so used in the later statute used in the same sense as in the earlier one, change of language in a later statute in pari materia is suggestive that change of interpretation is intended [see Principles of Statutory Interpretation by Justice G.P. Singh, 12th Edition, 2010 Page 310].
There is also an-identical provision in Sub-section (7) of Section 17 of the SARFAESI Act which states that the Tribunal shall, as far as may be, dispose off the application in accordance with the provisions of RDDBFI Act. Under the RDDBFI Act the Tribunal and the appellate Tribunal are separately established and its Section 24, which deals with limitation, states that the provisions of Limitation Act, 1963 shall, as far as may be, apply to an application made to a Tribunal. As already mentioned above, application u/s 17 can be made by any aggrieved person to the Tribunal within 45 days from the date on which he has suffered an action under any of the measures referred to in Sub-section (4) of Section 13 of the SARFAESI Act. Thereafter any person aggrieved by any order made by the Tribunal u/s 17 can prefer an Appeal to the appellate Tribunal u/s 18 within 30 days from the date of receipt of the order of the Tribunal. Section 24 of the RDDBFI Act has not made the provisions of the Limitation Act applicable to an Appellate Tribunal. This being the position, it is apparent that although the Tribunal can give the benefit of Section 5 of the Limitation Act, while dealing with an application u/s 17 of the SARFAESI Act, the Appellate Tribunal cannot do so while considering the Appeal u/s 18. This view also finds support from the decision of the Supreme Court in Gopal Sardar Vs. Karuna Sardar, , wherein it is held that when in the same statute in respect of various other provisions relating to filing of Appeals and revisions, specific provisions are made so as to give benefit of Section 5 of the Limitation Act and such provision is not made to an application to be made under a particular section of that statute, it obviously and necessarily follows that the Legislature consciously excluded the application of Section 5 of the Limitation Act. This view was also followed by the Supreme Court in Fair-growth Investments Limited (supra).
Having regard to the object of the SARFAESI Act that it intends ensure speedy recovery of dues of Banks and also for quick resolution of dispute arising out of the action taken for recovery of such dues, I have no hesitation in holding that the Legislature has consciously excluded the applicability of the provisions of Section 4 to Section 24 of the Limitation Act insofar as they relate to Section 18 of the SARFAESI Act. The decisions of UCO Bank v. Kanji Manji Kothari and Punnu Swami v. The Debts Recovery Tribunal of Bombay and Madras High Courts, relied upon by the learned Counsel for petitioner are with regard to the applicability of Section 5 of the Limitation Act only to Section 17 of the SARFAESI Act and not Section 18. In both these decisions, Section 18 has not even been referred. The decisions are, therefore, not applicable in the present case.
For these reasons, I conclude that the appellate Tribunal has no power to condone the delay in filing of Appeal before it u/s 18 of the SARFAESI Act and answer the question in negative.
Since, (sic) Appeal before the appellate Tribunal was filed admittedly after the expiry of the prescribed period of 30 days the same has rightly been dismissed.
The Petition has no merit. It fails and is dismissed but without any order as to costs.
Sanjay Yadav, J.
It is not said for nothing in respect of judicial intervention regarding sententia legis, that: "A statute is an edict of the Legislature and the conventional way of interpreting or construing a statute is to seek the intention of its maker. The duty of Judicature is to act upon the true intention of the Legislature. The function of the Courts is only to expound and not legislate. (Principles of Statutory Interpretation: Justice G.P. Singh, 12th Edn., 2010 Ch. I Syn, 2 page 3).
While entirely agreeing with my learned Brother, I take liberty to express on the issue which crops up for consideration.
The question, an important one, as rightly posed by my learned Brother, is whether when the Legislature has chosen not to confer the power to condone the delay in filing an Appeal u/s 18 of the SARFAESI Act, 2002, whether by an inferential interpretation such power can be conferred upon the Appellate Tribunal by a judicial pronouncement.
Conscious of surmounting accumulation of the Non-Performing Assets (NPA) affecting the national economy adversely and a counter productive in a way, and having experienced the failure of the RDDBFI Act, 1993 to achieve the object, the enactment was brought for i.e., speedy recovery of the amount to the Banks in form of NPA, Legislature enacted the SARFAESI Act, 2002 with certain stringent provisions.
These provisions were labelled as draconian and were questioned in Mardia Chemicals Ltd. Vs. Union of India (UOI) and Others Etc. Etc., , wherein the validity of the provisions of the Act of 2002 was upheld except that of Sub-section (2) of Section 17 which was declared ultra vires, Article 14 of the Constitution. The said subsection provided for deposit of seventy-five percent of the amount before entertaining an Appeal by the Debts Recovery Tribunal (DRT) u/s 17. It was further observed that in case where secured creditor has taken action under Sub-section (4) of Section 13 of the Act of 2002, it would be open to borrowers to file Appeals u/s 17 of the Act within the limitation as prescribed therefor. It was further observed that the borrower after service of notice under Sub-section (2) of Section 13 of the Act raised an objection or placed facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for non-accepting the objections, however, brief they may be, must be communicated to the borrowers. The reasons so communicated shall only be for the purpose of the information/knowledge of the borrower without giving rise to any right to approach the Debts Recovery Tribunal u/s 17 of the Act, at that stage.
To ensure effective implementation of the judgment in Mardia Chemicals (supra), and also to discourage the borrowers to postpone the repayment of their dues and also enable the secured creditor to speedily recover their debts, if required, by enforcement of security or other measures specified in Sub-section (4) of Section 13 of the Act of 2002 the Central Government promulgated the enforcement of Security Interest and Recovery of Debts Loans (Amendment) Ordinance, 2004 on 11th November, 2004. The same was later on enacted on 29th December, 2004 after it was passed by Lok Sabha on 7th December, 2004 and Rajya Sabha on 16th December, 2004; whereby besides amending Sections 2, 3, 4, 7, 13, 15, 17, 18, 25, 28, 31 and 38, inserted Sections 5-A, 12-A, 13 (3-A), 17-A, 18-A and 18-B and substituted new section for Section 19. Besides, the amendment in the Act of 2002, corresponding amendments were effected in the RDDBFI Act, 1993 the Companies Act, 1956.
And though in a decision in Transcore Vs. Union of India (UOI) and Another, , the two Acts, i.e., Acts of 2002 and 1993 where held to be complimentary.
Keeping in mind the above circumstances, the SARFAESI Act, 2002 is enacted for quick enforcement of the security. The said Act deals with enforcement of the rights vested in the Bank/FI. The SARFAESI Act, 2002 proceeds on the basis that security interest vests in the Bank/FI. Sections 5 and 9 of SARFAESI Act, 2002 are also important for preservation of the value of the assets of the Banks/FIs. Quick recovery of debt is important. It is the object of RDDBFI Act as well as the SARFAESI Act, 2002. But under SARFAESI Act 2002, authority is given to the Banks/FIs, which is not there in the RDDBFI Act, to assign the secured interest to Securitisation Company/Asset Reconstruction Company. In cases where the borrower has bought an asset with the finance of the Bank/FI, the latter is treated as a lender and on assignment the Securitisation Company/Asset Reconstruction Company steps into the shoes of the lender Bank/FI and it can recover the lent amounts from the borrower.
According to Snell''s Principles of Equity (Thirty-first edition) at Page 777, a dual obligation could arise on the same transaction, namely, A''s obligation to repay sum of a money to B or some other obligation. In such a case, B can sue A for money or for breach of the obligation. However, B will often have some security which covers the obligation of A, say, in the form of an asset over which B can exercise his rights. B may be entitled to this security either by law or by operation of common law principles or under the transaction (contract). In addition, B may acquire a personal right of action against the third party. Security over the asset (property) may be obtained by mortgage, charge, pledge, lien, etc. Security in the form of right of action against a third party is know as guarantee. Broadly, there are three types of security over the asset. One is where the creditor obtains interest in the asset concerned (mortgage). Second is securities in which the rights of the creditor depends on possession of the asset (pledge/lien). The third is charge where the creditor neither obtains ownership nor possession of the asset but the asset is appropriated to the satisfaction of the debt or obligation in question (charge). The dichotomy, which is of importance, is that more than one obligation could arise on the same transaction, namely, to repay the debt or to discharge some other obligation.
Therefore, when Section 13(4) talks about taking possession of the secured assets or management of the business of the borrower, it is because a right is created by the borrower in favour of the Bank/FI when he takes a loan secured by pledge, hypothecation, mortgage or charge. For example, when a company takes a loan and pledges it financial asset, it is the duty of that Company to see that the margin between what the company borrows and the extent to which the loan is covered by the value of the financial asset hypothecated is retained. If the borrower company does not repay, becomes a defaulter and does not keep up the value of the financial asset which depletes then the borrower fails in its obligation which results in a mismatch between the asset and the liability in the books of the Banks/FI. Therefore, Sections 5 and 9 talks of acquisition of the secured interest so that the balance sheet of the Bank/ FI remains clean. Same applies to immovable property charged or mortgaged to the Bank/FI. These are some of the factors which the Authorised Officer of the Bank/FI has to keep in mind when he gives notice u/s 13(2) of the SARFAESI Act, 2002. Hence, equity, exists in the Bank/FI and not in the borrower. Therefore apart from obligation to repay, the borrower undertakes to keep the margin and the value of the securities hypothecated so that there is no mismatch between the asset-liability in the books of the Bank/FI. This obligation is different and distinct from the obligation to repay. It is the former obligation of the borrower which attracts the provisions of SARFAESI Act, 2002 which seeks to enforce it by measures mentioned in Section 13(4) of SARFAESI Act, 2002, which measures are not contemplated by RDDBFI Act and, therefore, it is wrong to say that the two Acts provide parallel remedies as held by the judgment of the High Court in Kalyani Sales Co. As stated, the remedy under RDDBFI Act falls short as compared to SARFAESI Act, 2002 which refers to acquisition and assignment of the receivables to the Asset Reconstruction Company and which authorizes Banks/FIs. to take possession or to take over management which is not there in the RDDBFI Act. It is for this reason that SARFAESI Act, 2002 is treated as an additional remedy (Section 37), which is not inconsistent with the RDDBFI Act).
A combined reading of the provision contained in Sections 35, 36 and 37 of the Act of 2002 does not lend any support to the contention of the petitioners that the powers conferred in the appellate Tribunal u/s 20 of the Act of 1993 to condone the delay in filing an Appeal against the order of the Debts Recovery Tribunal, could be read with the jurisdiction of appellate Tribunal u/s 18 of the Act of 2002. As the provisions contained under Sections 35, 36 and 37 have their own field of operation and have no bearing upon the provisions contained u/s 18 of the Act of 2002.
Act of 1993 was enacted with an object to provide for the establishment of Tribunals and Appellate Tribunals for expeditous adjudication and recovery of debts due to banks and financial institutions. The adjudicatory aspect was because the Tribunal substituted the regular Civil Court (Courts of Original Jurisdiction). Sub-section (1) of Section 17 of the Act of 1993 stipulates that:
(1) Any person (including borrower), aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Sub-section (2) of Section 17 stipulates:
(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.
Thus, the entire machinery to adjudicate matter pertaining to debts due to Banks and Financial Institutions and for matters connected therewith or incidental thereto got shifted to the Tribunal and appellate Tribunal constituted under the Act of 1993, from that of regular Civil Courts and the regular appellate Courts. It that appears in order to maintain parity with the mechanism prevalent before regular Courts/Appellate Court, the Legislature retained the powers regarding condonation of delay with the Appellate Court u/s 20 of the 1993 Act and by virtue of Section 24 made the provisions of the Limitation Act 1963, as far as may be applicable in cases of application made to a Tribunal (in contradistinction to the Appellate Tribunal). Presently since we are concerned with the issue as to whether appellate Court wields the power to condone the delay u/s 18 of the Act, of 2002 we propose to confine to the same.
The object with which the Act of 2002 has been enacted is to "regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto".
It has been observed in Transcore (supra)
There is one more reason for enacting SARFAESI Act, 2002. When the Civil Courts failed to expeditiously decide Suits filed by the Banks/FIs., Parliament enacted the RDDBFI Act, 1993. However, the RDDBFI Act did not provide for assignment of debts to securitization companies. The secured assets also could not be liquidated in time. In order to empower Banks or FIs to liquidate the assets and the secured interest, the SARFAESI Act, 2002 is enacted in 2002. The enactment of SARFAESI Act, 2002 is, therefore, not in derogation of the RDDBFI Act. The SARFAESI Act, 2002 removes the fetters which were in existence on the rights of the secured creditors. The SARFAESI Act, 2002 is inspired by the provisions of the State Financial Corporations Act, 1951 (SFC Act), in particular Sections 29 and 31 thereof. The SARFAESI Act, 2002 proceeds on the basis that the liability of the borrower to repay has crystallised; that the debt had become due and that on account of delay the account of the borrower has become sub-standard and non-performing. The object of the RDDBFI Act as well as the SARFAESI Act, 2002 is recovery of debt by non-adjudicatory process. These two enactments provide for cumulative remedies to the secured creditors. By removing all fetters on the rights of the secured creditor, he is given a right to choose one or more of the cumulative remedies. The object behind Section 13 of the SARFAESI Act, 2002 and Section 17 read with Section 19 of the RDDBFI Act is the same, namely, recovery of debt. Conceptually, there is no inherent or implied inconsistency between the two remedies. Therefore, as stated above, the Object behind the enactment of the SARFAESI Act, 2002 is to accelerate the process of recovery of debt and to remove deficiencies/obstacles in the way of realisation of debt under the RDDBFI Act by the enactment of the SARFAESI Act, 2002.
We have already analysed the scheme of both the Acts. Basically, the SARPAESI Act, 2002 is enacted to enforce the interest in the financial assets which belongs to the Bank/FI by virtue of the contract between the parties or by operation of common law principles or by law. The very object of Section 13 of SARFAESI Act, 2002 is recovery by non-adjudicatory process. A secured asset under SARFAESI Act, 2002 is an asset in which interest is created by the borrower in favour of the Bank/ FI and on that basis alone the SARFAESI Act, 2002 seeks to enforce the security interest by non-adjudicatory process. Essentially, the SARFAESI Act, 2002 deals with the rights of the secured creditor. The SARFAESI Act, 2002 proceeds on the basis that the debtor has failed not only to repay the debt, but he has also failed to maintain the level of margin and to maintain value of the security at a level is the other obligation of the debtor. It is this other obligation which invites applicability of SARFAESI Act, 2002. It is for this reason, that Sections 13(1) and 13(2) of the SARFAESI Act, 2002 proceeds on the basis that security interest in the Bank/FI; needs to be enforced expeditiously without the intervention of the Court/Tribunal; that liability of the borrower had accrued and on account of default in repayment, the account of the borrower in the books of the Bank has become non-performing. For the above reasons, SARFAESI Act, 2002 states that the enforcement could take place by non-adjudicatory process and that the said Act removes all fetters under the above circumstances on the rights of the secured creditor.
Securitisation finds its meaning in Section 2(1)(z), it means "acquisition of financial assets by any Securitisation Company or Reconstruction Company from any originator, whether by raising of funds by such Securitisation Company or Reconstruction Company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise".
"Financial assets" is defined u/s 2(1)(1) as "debt or receivables" and includes--
(i) a claim to any debt or receivables or part thereof, whether secured or unsecured; or
(ii) any debt or receivables secured by, mortgage of, or charge on, immovable property; or
(iii) a mortgage, charge, hypothecation or pledge of movable property; or
(iv) any right or interest in the security, whether full or part underlying such debt or receivables; or
(v) any beneficial interest in property, whether movable or immovable, or in such debt, receivables, whether such interest is existing, future accruing, conditional or contingent; or
(vi) any financial assistance.
"Security interest" u/s 2 (1)(zf) means "security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31.
Chapter III deals with the provisions regarding the manner of enforcement of security interest. Sub-section (4) of Section 13 empowers the secured creditor (Section 2(1)(zd) "to take recourse to one or more of the measures to recover secured debt (Section 2(1)(ze)", in case, borrower, which includes the guarantor as per Section 2(1)(fl), fails to discharge his liability in full within the period specified in Sub-section (2) of Section 13. It is against the measures provided under Sub-section (4) of Section 13 an Appeal is provided u/s 17. u/s 17 the Tribunal is required to decide the Appeal within an outer time limit of four months as provided under Sub-section (5) of Section 17.
It is pertinent to note that Sub-section (1) of Section 17 lays down the period within which an application can be filed against the measures referred under Sub-section (4) of Section 13 taken by the secured creditor or his authorised officer, which is "within forty-five days from the date on which such measures had been taken".
It is to be noted that the law makers have not wielded even the Tribunal with a power to condone the delay if any in case the application is not filed within forty-five days. Though an inference has been drawn on the basis of the Sub-section (7) of Section 17 (which stipulates that "save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the RDDBFI Act, 1993 (51 of 1993) and the Rules made thereunder), that Section 24 of the Act of 1993 would be applicable. In my considered opinion the scheme of Section 17 of the Act of 2002 does not support this proposition. Sub-section (7) of Section 17 starts with a phrase "save as otherwise provided in this Act", which finds its interpretation in following terms in State of Rajasthan and Others Vs. Shri Noor Mohammad, , wherein it is observed:
This power under Clause (b), however, is subject to certain limitations. Sub-section (3) begins with the words ''A State Transport Authority shall give effect to any directions issued u/s 43, and subject to such directions and save as otherwise provided by or under this Act shall exercise and discharge throughout the State the following powers and functions, including those in Sub-clause (b). It is clear, therefore that the functions under Sub-clause (b) could be discharged by the State Transport Authority subject to directions given to it u/s 43 of the Act and save as otherwise provided by or under the Act. In the present case it is urged that directions have been issued by the State Government u/s 43. We shall deal with this point in another place. The other limitation is that the State Transport Authority could perform the duties of the Regional Transport Authority under Sub-clause (b) save as otherwise provided by or under this Act. It was contended that the Regional Transport Authority is a separate authority on which the duties referred to in Clause (b) have been imposed by other provisions in Chapter IV, and since the State Transport Authority is required to act save as otherwise provided by or under the Act'', it would be disentitled to take over the functions under Sub-clause (b). Such an interpretation would obviously lead to grave incongruity. Sub-clause (b), as we have already seen, provides for the exercise of the powers of the Regional Transport Authority by the State Transport Authority in certain contingencies. If the expression ''save as otherwise provided by or under the Act'' is construed in a manner to negative the functions permitted to be performed under Sub-clause (b), the very object with which Sub-clause (b) has been enacted will be frustrated. We, have, therefore, to construe the expression, ''save as otherwise provided by or under the Act'' in a harmonious manner so that Sub-clause (b) is not reduced to a nullity. In our opinion the expression ''save as otherwise provided by or under the Act'' would in the context mean, ''save as otherwise expressly barred by or under the Act''. If there is provisions which expressly debars the exercise of the power under Sub-clause (b) in any case then only the State Transport Authority will not be able to exercise the power and discharge the functions given in Sub-clause (b). Otherwise there would be no such bar. It is not shown to us that there is any express provision which bars the performance by the State Transport Authority of the duties referred to in Sub-clause (b) and, therefore we are of the view that the State Transport Authority in this particular case would not be barred from performing the duties under Sub-clause (b).
What the petitioner wants that the provisions of the Act of 1993 be read for the purpose of construing the limitation aspect. In Transcore, (supra) it is held (Para 34):
Section 35 gives an overriding effect to the SARFAESI Act, 2002 with all other laws if such other laws are inconsistent with the SARFAESI Act, 2002." For a provision being "inconsistent", as per Black''s Legal Dictionary, it means "mutually repugnant or contradictory; contrary, the one to the other so that both cannot stand, but the acceptance or establishment of the one implies the abrogation or abandonment of the other". In Basti Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Another, , regarding inconsistency of the provisions appearing in two different Act it is observed--
23.... If they relate to the same subject-matter, to the same situation, and both substantially overlap and are co-extensive and at the same time so contrary and repugnant in their terms and impact that one must perish wholly if the other were to prevail at all then, only then are they consistent.
Therefore when the Legislature has chosen not to confer powers on the Appellate Tribunal u/s 18 of the Act of 2002 to condone the delay in filing Appeal against the orders passed by the Debts Recovery Tribunal the same cannot be conferred by Judicial Pronouncement having inroad through inferential interpretation. The upshot of above analysis is that the appellate Tribunal is justified in dismissing the Appeal not filed within the time, stipulated u/s 18 of the 2002 Act. In the result petition fails and is hereby dismissed.
Order of the Court.
We, therefore, find no merit in the petition. It is accordingly dismissed but without any order as to costs.