Can DRT Condone Delay In Filing Application Under Section 17 SARFAESI Act? Supreme Court To Examine

The Supreme Court has issued notice on a special leave petition which raises the issue whether the Debts Recovery Tribunal has the power to condone the delay in filing an application under Section 17 of the Securitization and Reconstruction of Financial Assets and Reinforcement of Security Interest(SARFAESI) Act 2002.

The petition was filed against a judgment of the Kerala High Court which set aside an order passed by the DRT on the ground that the Tribunal had no power to entertain a time-barred application under Section 17 SARFEASI Act( K J George and another vs Authorized Officer, Indian Bank and others).

Before the Supreme Court, the petitioners relied on the 2015 Supreme Court decision in Baleshwar Dayal Jaiswal Vs. Bank of India& Ors in which it was held that the Debts Recovery Appellate Tribunal(DRAT) has the power to condone the delay in filing an appeal under Section 18 of the SARFAESI Act.

The petitioners argued that Sections 17 and 18 are similarly worded, and hence the dictum in Baleshwar Dayal Jaiswal decision must apply to proceedings under Section 17 as well.

A bench comprising Justices AM Khanwilkar and Dinesh Maheshwari has issued notice on the petition returnable within four weeks.

In 2017, a 3-judge bench of the Supreme Court has held that the DRT has no power to condone delay in filing appeal under Section 30 of the RDB Act in the case International Asset Reconstruction Company Of India Ltd vs The Official Liquidator Of Aldrich Pharmaceuticals Ltd And Others.

Last year, a 2-judge bench of the top court held that DRT has no power to condone delay in filing review petitions under the RDB Act in the case Standard Chartered Bank vs MSTC Ltd.

The Kerala High Court had referred the above said decisions in International Asset Reconstruction Company and Standard Chartered Bank while holding that DRT cannot condone delay. Citing these precedents, the HC held that in a special law when the statute does not prescribe for condonation of delay, the application of Section 5 of the Limitation Act does not arise.

"...it can be manifestly concluded that neither the Debts Recovery Tribunal has power to condone the delay while exercising the powers under Section 17 of the SARFAESI Act nor this Court can extend the time of limitation for entertaining an application under Section 17 of the SARFAESI Act. The learned Debts Recovery Tribunal, while passing the impugned order, committed an error of law by overlooking the settled law on the aspect of limitation in entertaining an application under Section 17 of the SARFAESI Act", a single bench of Justice AM Badar of the High Court held while allowing the application of the bank under Article 227 of the Constitution of India.

The High Court had also referred to the decision in Baleshwar Dayal in which the Supreme Court held that delay in filing appeal under Section 18 of SARFAESI can be condoned by the DRAT. The High Court noted that the Supreme Court had said that the delay in filing an appeal under Section 18(1) of the SARFEASI Act can be condoned under the provisions of Section 20(3) of the RDDB Act.

The HC further observed that Section 14(3) of the SARFEASI Act excludes the application of the Limitation Act 1963 and that the statute does not give express power to the DRT to condone delay.

"...in the absence of provision in the statute for enlarging the time, no court even the High Court can extend the period of limitation. In the SARFAESI Act, there is no provision for extension of the period of limitation of 45days prescribed by Section 17 of the Act by condoning the delay", the HC said.

Click here to read/download the SC order

Click here to read/download the HC judgment