Bank of Baroda and Another vs Parasaadilal Tursiram Sheetgrah Pvt. Ltd. and Others

BANK OF BARODA & ANR. ….APPELLANT(S)

VERSUS

M/S PARASAADILAL TURSIRAM SHEETGRAH PVT. LTD. & ORS. ….RESPONDENT(S)

ORDER

1. Leave granted.

2. This appeal by Bank of Baroda is against an Interlocutory Order of stay

passed by the High Court of Judicature at Allahabad, Lucknow Bench pending

disposal of a Writ Petition. The Writ Petition was filed by the Respondent

Company against the order in appeal by the Debt Recovery Appellate Tribunal1

dated 02.12.2016. By this order the challenge laid to the Sale Certificate issued in

favour of the Auction Purchaser under Section 17 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 2

was dismissed on the ground of limitation. While issuing notice, this Court had

1 hereinafter referred to as ‘DRAT’.

2 hereinafter referred to as ‘the Act’.

Page 1 of 6 stayed the impugned interim order dated 19.12.2016 passed by the High Court of

Judicature at Allahabad, Lucknow Bench and the order of stay continues to hold

the field.

3. The short facts leading to the filing of the appeal are as follows. The first

Respondent Company availed certain credit facilities for which the Directors of the

Company gave personal guarantees along with an equitable mortgage of

immovable property. As the Company defaulted in repayment of the loan, the Bank

issued notice under Section 13(2) of the Act demanding an amount of Rs.

2,34,15,456/- from the Company and its Directors. For non-payment, a notice

under Section 13(4) of the Act demanding actual physical possession was also

issued. It is the case of the Bank that the actual physical possession of the secured

asset was obtained by its authorized officers on 30.08.2010.

4. The Company along with one of its Directors filed a Civil Writ Petition No.

56410/2010 challenging the issuance of the notices under Sections 13(2) and 13(4)

of the Act and sought a writ of mandamus restraining the Bank from taking any

coercive action for the recovery of the amount. The Writ Petition was disposed of

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.

Page 2 of 6

5. As the Company and its Directors failed to comply with the schedule as

determined by the High Court, the Bank proceeded further and issued a sale

proclamation which culminated in Respondent No. 7 being declared the successful

bidder. A sale certificate was also issued in his favour.

6. The present proceedings commence with a challenge to the above referred

sale certificate in an application under Section 17 of the Act by the Respondent

Company and the Directors. It is important to mention at this stage that, the

application under Section 17 was filed by the Company, its three Directors, being

Sri Vinod Kumar, Smt. Gayatri Devi and Sri Rameshwar Prasad. The other

Director Sri Rakesh Sharma, who expired on 18.09.2012 was represented by his

legal representatives.

7. After hearing the Company, its Directors and the legal representatives of the

deceased Director, the DRT dismissed the Section 17 application on the ground

that it was filed beyond the statutory period of limitation of 45 days. 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, which in the facts of the

present case is the date when the secured asset is sold in favour of Respondent

No.7.

8. The above referred order was challenged in review. The DRT by its order

dated 08.08.2016 allowed the review on the ground that Sri Rakesh Sharma had Page 3 of 6 expired before the auction had taken place and that his legal representatives were

not issued notice. It is rather strange that the DRT not only entertained the Review

Petition, but has allowed the same on the aforesaid ground.

9. The order in review was challenged before the DRAT, which found no

difficulty in allowing the appeal on the ground that there has never been an error

apparent on the face of record for exercising the review jurisdiction. It is this order

of DRAT that was challenged before the High Court in the Writ Petition filed by

the Company, its Directors and also the legal representatives of the deceased

Director. This very same ground was raised, that one of the Directors had expired

and that his legal representatives were not given notice before the secured asset

was brought to sale.

10. On the above referred question, the High Court admitted the Writ Petition

and proceeded to grant the following interim order, which is the order impugned

before us.

“In the aforesaid circumstances, it is provided that till further orders of this Court, the operation and implementation of the appellate order dated 02.12.2016 passed in Appeal No.210 of 2016 shall remain stayed and the Debts Recovery Tribunal shall proceed with the Securitization Application.”

11. We are only concerned with the limited question as to whether the High

Court was justified in passing the interim order as extracted herein above. This is a

Page 4 of 6 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. Further, DRAT

came to the conclusion that the original order passed by the DRT has been arrived

at after a detailed consideration and that there is no justifiable ground for invoking

the review jurisdiction. For granting or refusing to grant an interim order, the above

referred facts were more than sufficient.

12. The reason for providing a time limit of 45 days for filing an application

under Section 17 can easily be inferred from the purpose and object of the

enactment. In Transcore v. Union of India and Anr. 3 this Court held that the

SARFAESI Act is enacted for quick enforcement of the security. It is unfortunate

that proceedings where a property that has been brought to sale and third-party

rights created under the provisions of the Act, have remained inconclusive even

after a decade.

13. Though the Special Leave Petition was pending in this Court since the last

five years, this Court at the stage of admission had granted a stay of the impugned

order, the consequence of which would be that the High Court’s interim order has

not come into operation. The effect of the interim order passed by this Court is that

3 (2008) 1 SCC 125.

Page 5 of 6 the order of DRT upholding the dismissal of the application under Section 17 dated

26.11.2015 would continue to operate.

14. For the reasons stated above, we are of the opinion that the 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.

15. In conclusion, we allow the appeal and set aside the impugned interim order

dated 19.12.2016 passed by the High Court of Judicature at Allahabad, Lucknow

Bench pending disposal of the W.P. Misc. Single No. 29911 of 2016 and request

the High Court to dispose of the Writ Petition expeditiously, preferably within a

period of three months from the date of receipt of this order.

16. Needless to say, that we have not expressed any opinion on the merits of the

case.

17. No order as to costs.

……………………………….J. [B.R. GAVAI]

……………………………….J. [PAMIDIGHANTAM SRI NARASIMHA] NEW DELHI;

AUGUST 11, 2022 Page 6 of 6