Kerala High Court
P. Sathya Soul Raj vs Housing Development Finance ... on 7 January, 2025
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W.A.No.2091 of 2024
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. NITIN JAMDAR
&
THE HONOURABLE MR. JUSTICE S.MANU
TUESDAY, THE 7TH DAY OF JANUARY 2025 / 17TH POUSHA, 1946
WA NO. 2091 OF 2024
AGAINST THE JUDGMENT DATED 29.11.2024 IN WP(C)
NO.6349 OF 2023 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
P. SATHYA SOUL RAJ,
AGED 59 YEARS, S/O. MR. PONNIAN,
PERIYAVILAI VEEDU, VILAVANCODE TALUK,
KANYAKUMARI, PIN - 629 163
BY ADVS.
LAYA MARY JOSEPH
ASHWATHI SHYAM
BOBY M.SEKHAR
C.M.ANDREWS
HARISH ABRAHAM
SHYAM PADMAN (SR.)
RESPONDENTS/RESPONDENTS:
1 HOUSING DEVELOPMENT FINANCE CORPORATION LTD.,
REPRESENTED BY BRANCH MANAGER, H.D.F.C. HOUSE,
VAZHUTHACAUD, THIRUVANANTHAPURAM. PIN - 695 010
2 THE AUTHORISED OFFICER,
HOUSING DEVELOPMENT FINANCE CORPORATION LTD.,
REPRESENTED BY BRANCH MANAGER, H.D.F.C. HOUSE,
VAZHUTHACAUD, THIRUVANANTHAPURAM, PIN - 695 010
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W.A.No.2091 of 2024
2
3 THOMAS BABU,
ATTUVARATHUMELETHIL, PUTHENVEEDU, ODANAVATTOM
P.O., KOTTARAKKARA, KOLLAM, PIN - 691 512
BY ADVS.
Ambily S
K.K.CHANDRAN PILLAI (SR.)(C-41)
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
18.12.2024, THE COURT ON 07.01.2025 DELIVERED THE
FOLLOWING:
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W.A.No.2091 of 2024
3
JUDGMENT
Dated this the 7th day of January, 2025.
Nitin Jamdar, C.J.
The Appellant - Borrower of Respondent No.1- Bank has filed
this Appeal under Section 5 of the Kerala High Court Act, 1958
challenging the judgment of the learned Single Judge dated 29
November 2024 in W.P.(C). No. 6349 of 2023. Respondent No.3 is
the Auction Purchaser of the property. In the writ petition, the
Appellant challenged the order passed by the Debts Recovery
Appellate Tribunal (DRAT) dismissing R.A. (S.A.)No. 75 of 2019.
2. The Appellant had obtained a loan from the Respondent -
Bank on 29 June 2022 to the tune of ₹52 lakhs. An equitable
mortgage was created in respect of the property to the extent of
12.795 cents in Kowdiar Village, Thiruvananthapuram. Since the
Appellant failed to repay the loan, the Respondent - Bank classified
the loan account of the Appellant as a Non-Performing Asset. Notice
under Section 13(2) of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act) was issued on 24 August 2015 calling upon the
Appellant to pay an amount of ₹45,54,375/-. Since the Appellant did
not pay this amount, notice under Section 13(4) of the SARFAESI
Act was issued on 27 October 2015. Thereafter, the Respondent -
Bank moved an application under Section 14 of the SARFAESI Act
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before the Chief Judicial Magistrate. Pursuant to the order passed, the
physical possession of the secured asset was taken on 23 May 2016.
The auction sale notice was issued on 24 June 2016. Respondent
No.3 has purchased the property in the auction. Sale was confirmed
on 29 August 2016. Thereafter, Appellant instituted a series of
proceedings before the DRAT as well as this Court. Ultimately, the
DRAT dismissed the appeal on 13 July 2018, holding that the appeal
was barred by limitation and the benefit of Section 14 of the
Limitation Act, 1963 (Act of 1963) could not be extended. This order
is confirmed by the learned Single Judge. Thereafter, the present
Appeal is filed.
3. We have heard Mr. Shyam Padman, learned Senior Advocate
appearing for the Appellant and Mr. K.K. Chandran Pillai, learned
Senior Advocate appearing for Respondent Nos.1 and 2.
4. The Appellant had filed a securitisation application, S.A. No.
150 of 2016, before the Debts Recovery Tribunal (DRT) challenging
the sale conducted on 25 July 2016 and confirmed on 29 August
2016. Before the DRT, the contention of the Appellant was twofold.
Firstly, there is a fundamental error in holding the auction which
could vitiate the auction and secondly, there is no delay in challenging
the auction sale. The main contention of the Respondent - Bank is
that the securitisation application is barred by limitation.
5. The learned counsel for the Respondent - Bank contends that
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not only there is no fundamental error in conducting the auction sale
and its confirmation, but the securitisation application is time-barred
and even assuming that the Appellant has a case on merits that the
securitisation application is time-barred, no arguments on merits can
be advanced. Therefore, the central issue is whether the application is
filed within time.
6. The sale was conducted on 25 July 2016 and the securitisation
application was filed on 7 December 2016. There was no separate
application before the DRT seeking condonation of delay. All that is
stated in the application is that there were earlier proceedings filed in
this Court and there is no delay in filing the application as per Section
14 of the Act of 1963. Section 14 of the Act of 1963 reads thus:
"14. Exclusion of time of proceeding bona fide in
court without jurisdiction.--
(1) In computing the period of limitation for any
suit the time during which the plaintiff has been
prosecuting with due diligence another civil proceeding,
whether in a court of first instance or of appeal or revision,
against the defendant shall be excluded, where the
proceeding relates to the same matter in issue and is
prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
entertain it.
(2) In computing the period of limitation for any
application, the time during which the applicant has been
prosecuting with due diligence another civil proceeding,
whether in a court of first instance or of appeal or revision,
against the same party for the same relief shall be
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excluded, where such proceeding is prosecuted in good
faith in a court which, from defect of jurisdiction or other
cause of a like nature, is unable to entertain it.
(3) Notwithstanding anything contained in rule 2
of Order XXIII of the Code of Civil Procedure, 1908 (5 of
1908), the provisions of sub-section (1) shall apply in
relation to a fresh suit instituted in permission granted by
the court under rule 1 of that Order, where such
permission is granted on the ground that the first suit
must fail by reason of a defect in the jurisdiction of the
court or other cause of a like nature.
Explanation.--For the purposes of this section,--
(a) in excluding the time during which a former
civil proceeding was pending, the day on which that
proceeding was instituted and the day on which it ended
shall both be counted;
(b) a plaintiff or an applicant resisting an appeal
shall be deemed to be prosecuting a proceeding; and
(c) misjoinder of parties or of causes of action shall
be deemed to be a cause of a like nature with defect of
jurisdiction."
Therefore, first, the Applicant has to accept the position that the
application has been filed beyond the stipulated statutory period and
then make out a case of bona fide prosecuting the proceedings in the
court with jurisdiction. The prosecution of the proceedings should be
bona fide. Merely instituting one proceeding after another and
mentioning the same cannot mean that the benefit of Section 14 has
to be automatically extended. There are no pleadings in the
securitisation application as regards the condonation of delay.
7. The DRT considered the case presented by the Appellant but
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did not accept it, making the following observations:
"22. The records would indicate that the applicant
approached the Hon'ble High Court of Kerala by filing
W.P.(C) No.24459/2016 challenging the sale proceedings
initiated by respondents 1 and 2 and undertook to remit
the overdue amount as well as the monthly installments,
provided some breathing time be granted. Accordingly,
the Hon'ble High Court disposed of the writ petition as
per judgment dated 27.07.2016 as under:
"(i) That the petitioner shall pay the overdue amount in
4 equal monthly installments starting from
23/8/2016.
(ii) In addition to the aforesaid payment, petitioner
shall also pay the regular monthly installments as
per the agreed terms.
(iii) The respondent Bank shall not confirm the sale and
shall inform the purchaser about the pending
proceedings.
(iv) If there is default in payment of any of the aforesaid
amounts, it shall be open for the respondent Bank
to confirm the sale.
(v) On payment of the aforesaid amount within four
months as aforesaid and on payment of the regular
installments during the aforesaid period, the sale
shall stand set aside and the auction purchaser shall
be repaid the amount he had already deposited."
According to respondents 1 and 2, the applicant had not
even paid the 1st installment as directed by the Hon'ble
High Court. Consequently, the sale was confirmed on
29.08.2016 and on receipt of the entire sale consideration
amount, sale certificate was issued to the auction
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purchaser on 06.09.2016.
23. It could be discernible from records that the
applicant again approached the Hon'ble High Court by
filing IA No.15377/2016 in W.P.(C) No.24459/2016
seeking extension of time for complying with the
direction of the Hon'ble High Court in the judgment
dated 27.07.2016 in W.P.(C) No.24459/2016 and the said
IA was dismissed by the Hon'ble High Court as per order
dated 26.10.2016 by observing as under:
"3. In the said circumstances, I do not think that
there is any reason to extend the time. It is
made clear that it shall be open for the
petitioner to challenge the sale in appropriate
proceedings, if so advised.
This application is therefore dismissed."
24. Despite the above direction, the applicant did not
choose to challenge the sale proceedings in appropriate
forum; instead he filed W.A. No.2199/2016 challenging
the judgment dated 27.07.2016 passed by the Hon'ble
High Court in W.P.(C) No.24459/2016. The Hon'ble
High Court while dismissing W.A. No.2199/2016 had
observed that when respondents 1 and 2 initiated
proceedings under the Act, the applicant instead of
approaching the DRT had approached the Hon'ble High
Court in W.P.(C) No.24459/2016. The relevant portion
of the judgment dated 15.11.2016 in W.A.No.2199/2016
is reproduced herein below:
"2. Records reveal that the appellant availed loan
from the 2nd respondent bank in the year 2012.
Since the loan amounts with the accrued interest
were not repaid periodically as stipulated in the
contract, proceedings were initiated by the 1st and
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2nd respondents under the provisions of the
SARFAESI Act and the bank secured possession of
the property. At that stage, the appellant
approached this Court in W.P.(C) No.24459 of
2016 instead of approaching the Debt Recovery
Tribunal. However, this Court, taking a lenient
view in the matter, entertained the writ petition
and disposed of the same on 27.07.2016 (by the
impugned judgment) directing the appellant to pay
the over due amount in four equal monthly
instalments starting from 23.08.2016. The
appellant was further directed to pay regular
monthly instalments as per the agreed terms. It was
made clear by this Court that in case there is
default in payment of any of the aforesaid
amounts, it will be open for the respondent Bank
to confirm the sale.
3. Despite such leniency shown in W.P.(C)
No.24459 of 2016, there was delay in paying the
first instalment of over due amount and hence the
Bank wanted to confirm the sale. Immediately
thereafter, the appellant made an application before
this Court, I.A No.15377 of 2016, praying for
extension of time, but the said application came to
be dismissed on 26.10.2016 with an observation
that it is open for the appellant to challenge the
sale in appropriate proceedings, if so advised.
4. From the aforementioned conduct of the
appellant, it is clear that the appellant somehow
wants to drive out the proceedings. At this stage,
learned advocate for 1st and 2nd respondents
submits that the sale is confirmed in favour of the
auction purchaser and he is put in possession of the
property. Thus, as of now, the secured property is
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possessed by the auction purchaser.
Since the sale is already confirmed and the
auction purchaser is put in possession of the
property and as we do not find any ground to take
any lenient view in the matter in favour of the
appellant, particularly when there is no illegality in
the impugned judgment, the appeal needs to be
dismissed and accordingly the same stands
dismissed. It is open for the appellant to challenge
the sale in appropriate proceedings, if so advised, as
per law." (Underling by this Tribunal)
25. On a reading of the aforementioned judgment dated
15.11.2016 of the Hon'ble High Court in W.A.
No.2199/2016, it could be construed that the applicant
was given liberty to challenge the sale in appropriate
proceedings only as per law and not otherwise. If the
applicant had any grievance against the sale conducted by
respondents 1 and 2 on 25.07.2016, he ought to have
filed the S.A. before this Tribunal by 08.09.2016, but he
filed the same only on 07.12.2016 i.e., with a delay of 90
days which cannot be condoned by this Tribunal."
8. When the matter came up in appeal, the DRAT did not accept
the case of the Appellant and made the following observations:
"14. Hon'ble Supreme Court, in Consolidated Engineering
Enterprises Vs. Principal Secretary, Irrigation Department
and Ors., held that five conditions must be satisfied before
Section 14 of Limitation Act 1963, is pressed into service.
Those five conditions are as follows:
"(1) Both prior and subsequent proceedings are
civil proceedings prosecuted by the same party;
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(2) The prior proceedings had been prosecuted
with due diligence and in good faith;
(3) The failure of the prior proceedings was due to
defect of jurisdiction or other cause of like nature;
(4) The earlier proceedings and the latter
proceedings must relate to the same matter in issue;
and
(5) Both the proceedings are in a court."
According to Advocate for Financial Institution, none of
these conditions are fulfilled by Appellant. As per the
condition No.(2), the prior proceeding had been
prosecuted with due diligence and in good faith; Appellant
nowhere pleaded that he filed Writ Petition and Writ
Appeal and prosecuted them with due diligence and in
good faith, having no knowledge about alternate remedy
available under the provisions of SARFAESI Act, 2002.
According to condition No.(3), there should be failure of
the prior proceeding either due to defect of jurisdiction or
other cause of like nature; on the other hand, Writ is
disposed of giving favourable Order to Appellant. So,
these conditions namely condition Nos.(2) and (3) are not
at all fulfilled. In fact, these two conditions are main
ingredients that are incorporated in Section 14 of
Limitation Act, 1963.
15. Learned Senior Advocate for Appellant contended
that when principles of Section 14 of Limitation Act,
1963, are attracted, the benefit of which has to be given to
Appellant, as held in the Judgment of M.P. Steel
Corporation Vs. Commissioner of Central Excise.
16. As seen from the above said judgment, in that case,
out of five conditions, four conditions are met with, and
only condition No.5 is not met with, in such
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circumstances, it is held that same is not a fatal, in view of
peculiar facts of that case, and in that way, Hon'ble
Supreme Court held that principles of Section 14 of
Limitation Act, 1963, will be attracted to the facts of that
case, but, that cannot help this Appellant, to the case on
hand, because Appellant has failed even to plead the
required conditions, and as already referred to above, main
ingredients of prosecuting proceedings with due diligence
and in good faith and failure of prior proceedings due to
defect of jurisdiction or other cause of like nature, are not
at all attracted, and on the other hand, they are against the
Appellant, therefore, above decision relied on by Appellant
is not applicable to the case on hand.
17. xxxxx
18. xxxxx
19. Tribunal below elaborately dealt with point namely
application of Section 14 of Limitation Act, 1963, to the
case of Appellant, and recorded a finding that it is not an
appropriate case to invoke said benefit, I do not find any
wrong in the findings of Tribunal below in holding that,
the case on hand is not an appropriate case to invoke
Section 14 of Limitation Act, 1963."
9. These elaborate concurrent findings rendered by the DRT and
the DRAT were assailed before the learned Single Judge. The learned
Single Judge again looked into the issue and concluded that the facts
and circumstances would show that the application was barred by
limitation and dismissed the application. As the above quoted
observations will show that the DRT and DRAT have considered the
case of the Appellant in detail to conclude that the application was
barred by limitation and no case under Section 14 of the Act of 1963
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was made out.
10. The sale of the secured asset held on 25 July 2016 was confirmed
on 29 August 2016, the sale certificate was issued on 6 September
2016, the sale certificate was registered in the name of the Auction
Purchaser on 9 September 2016, and possession of the property was
also handed over to the Auction Purchaser. Records would show that
the Appellant was aware of the SARFAESI proceedings initiated by
the Respondent - Bank to recover the debt of around ₹45 lakhs.
Statutory notices issued by the Respondent - Bank are on record. The
Appellant, knowing fully well that the measures initiated by the Bank
under Section 13(4) of the SARFAESI Act can be challenged before
the DRT by filing an application under Section 17 of the Act, chose
not to approach the DRT, but filed W.P.(C) No.24459 of 2016 before
this Court and despite this Court had shown leniency to the
Appellant, the Appellant did not honour his commitment made
before this Court. Even at that juncture, the Appellant could have
approached the appropriate forum challenging the sale proceedings.
Without doing so, the Appellant was repeatedly approaching this
Court and has made several attempts to protract the litigation. This
conduct of the Appellant cannot be equated to a person who has
bona fide filed a case before a Court which has no jurisdiction. None
of the contingencies stated in Section 14 of the Act of 1963 are
established to invoke this provision. The Statute prescribes for speedy
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recovery of the loans. We find no error in the view taken by the two
Authorities, and the learned Single Judge.
11. The Appeal is dismissed.
Sd/-
Nitin Jamdar,
Chief Justice
Sd/-
S. Manu,
Judge
vpv
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PETITIONER EXHIBITS
Exhibit P14 ENGLISH TRANSLATION OF EXHIBIT P14
