R.A(S.A):38/2011
This Appeal impugns order dated 26.2.2009 passed by the Ld. Presiding Officer, DRT-II, Chennai in Review Application 1/2008 in SA No.23/2006.
2. The case of the Appellants may be stated as follows:
One M/s. Sujatha Films had approached the 1stRespondent Bank for credit facilities for its business and was sanctioned a Medium Term Loan for Rs.1.5 crores and the said M/s. Sujatha Films availed the loan after executing the necessary loan documents.
The repayment of the loan was guaranteed by Late Shri Venketeswaran, his wife Ms. Sujatha Venkateswaran, and by both the Appellants who are companies registered under the Indian Companies Act, 1956. Parsn Medicinal Plants Pvt. Ltd came to be renamed as Parsn Holiday Resorts Ltd and Coconut Groves Pvt. Ltd was also renamed as Coconut Holiday Resorts Ltd.
The said two companies had mortgaged their lands measuring 72.06 acres to the Bank and thus the said 72.06 acres had become the secured assets in this case.
M/s. Sujatha Films defaulted in the repayment of the loan availed by it and therefore the 1stRespondent Bank filed an Original Application in OA No.552/2007 in DRT-I, Chennai for the recovery of its dues being Rs.7,95,67,088/- together with the interest @20.75% with quarterly rests against the Appellants and 3 Others and the said OA was transferred to DRT-III, Chennai and renumbered as OA No.89/2007 and the same is pending. Pending disposal of the OA the 1st Respondent Bank being the secured creditor initiated proceedings under the provisions of the SARFAESI Act against the Appellants and issued the Sec. 13(2) Notice on 30.6.2004 and the Appellants replied to the said Notice on 13.9.2004.
Thereafter the 1st Respondent Bank took possession of the property under Sec. 13(4) of the SARFAESI Act and issued the possession Notice to the Appellants on 4.12.2004 and published the same in the Newspapers on 5.12.2004.
The Notice of intended sale dated 23.9.2005 was sent to the Appellants and the said Notice was also published in the Newspapers on 2.10.2005. The Appellants filed IA No.640/2004 in OA No.2018/2001 in DRT-II, Chennai contending therein that the proceedings under the SARFAESI Act are not maintainable when the OA filed under the RDDB&FI Act is pending and the said IA was dismissed by the Ld. Presiding Officer, DRT-II, Chennai on 10.1.2006.
The sale of the secured asset as per the sale Notice dated 2.10.2005 did not take place for want of bidders. A fresh Notice for sale was published on 22.1.2006 and this sale also did not take place. Later the Appellants filed W.P.No.5694 and 5695 of 2006 in the Hon’ble High Court of Madras challenging the simultaneous action of the Bank and the said Writ Petitions were dismissed on 1.3.2006.
The Appellants filed two special leave petitions in SLP No.5177 and 5179 of 2006 in the Hon’ble Supreme Court of India and they were also dismissed on 31.3.2006. Thereafter, the Appellants filed SA No.23 of 2006 in DRT-II, Chennai under Sec. 17 of SARFAESI Act and when the SA was reserved for orders the Appellants filed IA No.374 and 375 of 2006 to raise additional grounds based on the revenue records received by them which indicated that the secured assets are agricultural properties and that they are exempt from the operation of the provisions of SARFAESI Act under Sec. 31(i) of the said Act.
The Ld. Presiding Officer, DRT-II, Chennai dismissed SA No.23 of 2006 and also dismissed IA Nos.374 and 375 of 2006 on 13.12.2006. The Appellants aggrieved by the order of dismissal made in SA No.23 of 2006 filed an Appeal in IN(SA) 505/2006 before this Tribunal and this Tribunal directed the Appellants to deposit Rs.6.5 cores in three instalments and posted the matter to 1.3.2007 and when the matter was called on 1.3.2007 the appeal was dismissed for default. The conditional order for making the pre-deposit was not complied with by the Appellants.
The Appellants filed a petition in RMA 5/2007 for restoring the dismissed Appeal and the said restoration petition was also dismissed by this Tribunal on 24.5.2007. Subsequently the Appellants filed CRP No.2583 of 2007 and the Hon’ble High Court of Madras by its order dated 7.9.2007 set aside the Order of this Tribunal dated 24.5.2007 made in RMA No.5 of 2007 and directed this Tribunal to restore the Appeal with the liberty to the Appellants to withdraw the Appeal.
The Appeal before this Tribunal was restored and the Appellants withdrew the same and subsequently the Appellants filed a Review Application in RA No.1 of 2008 in SA No.23/2006 in DRT-II, Chennai and the said Review Application was dismissed by the Tribunal below leading to the filing of this Appeal before this Tribunal.
3. The Ld. Senior Counsel appearing on behalf of the Appellants drew the attention of this Tribunal to the conclusion of the Ld. Presiding Officer in Point 6(i) of the impugned order and stated that the Ld. Presiding Officer having arrived at a decision that the final order in the SA had indeed been passed without considering the pendency of the IA Nos.374/2006 and 375/2006 ought to have allowed the Review Application and ought to have also posted the SA for hearing afresh. He added that the Ld. Presiding Officer without doing so has proceeded to decide the issue as to whether the secured assets are agricultural lands or not and concluded that they are not agricultural lands on the ground that the Appellants have not adduced any evidence in this regard when in fact the Appellants were never afforded any opportunity to lead in evidence in support of their case.
4. The Ld. Senior Counsel for the Appellants submitted that the Ld. Presiding Officer having accepted that there is an error apparent on the face of the record ought to have reopened the proceedings and allowed the parties to lead in evidence and added that the Ld. Presiding Officer had erred in dismissing the Review on the question of delay especially when he had categorically found that there is an error apparent on the face of record.
The Ld. Senior Counsel stated if the RA was to be dismissed on the ground of limitation it should have been decided as a preliminary issue. The Ld. Senior Counsel stated that the Ld. Presiding Officer has wrongly held that the Review Petition is barred by limitation and added that the period from 13.12.2006 i.e. the date of the final order in SA 13 of 2006 till 14.1.2008 i.e. the date of filing of RA 1 of 2008 was spent bonafide prosecuting the case before other forums and the time spent would stand excluded as per Section 14 of the Limitation Act.
The Ld. Senior Counsel submitted that pursuant to the orders passed by the Hon’ble High Court of Madras and the Hon’ble Supreme Court of India and the liberty granted by this Tribunal to withdraw the appeal filed by the Appellants the RA has been filed within 30 days and thus well within time.
The Ld. Sr. Counsel stated that the finding of the Ld. Presiding Officer that there was no application for the condonation of delay has also no merits in view of Section 14 of the Limitation Act. The Ld. Counsel added that the Ld. Presiding Officer had accepted the explanation given by the Ld. Counsel on Record to the objections raised by the registry of the tribunal below with respect to delay and passed directions to number the RA. The Ld. Counsel relied upon the following decisions in support of the Appellants case:
1.Raizda Sanwal Das Vs. Kanhya Lal (1966) 11 DLT 421
2. Nand Singh Vs. Estate Officer and Another AIR 1993Delhi 38
3. Rattan Singh Vs. Estate Officer and Anr 1992(23) DRJ 419
4. Universal Builders & Contractors Vs. Shiela Singh Uppal and others
(CR.Petition No.321/2004dt.17.10.08, Hon’ble High Court of Delhi)
and added that the courts have time and again held that a written application for condonation of delay is not essential and in a fit case, it is open to the court to condone the delay even without a written application. The Ld. Senior Counsel stated that the Ld. Presiding Officer having come to the conclusion that the contentions of the Appellants in so far as the issue relating to Section 31(i) of the Act needs a review and that the entire order is to be reviewed could never have proceeded to hold that the Review Application is time barred.
5. The Ld. Senior Counsel stated that the withdrawal of the appeal filed against the final order in the SA was only pursuant to the order of the Hon’ble High Court of Madras dated 7.9.2007 and only with an intention to pursue an alternate remedy of a review. The Ld. Senior Counsel stated that it is a well settled position of law that once a final order is passed all interim orders merge into the said final order and the interim orders do not have any independent existence and in support of this contention relied upon the judgment of the Hon’ble Supreme Court of India dated 19.7.2010 in “Kunhayammed & Others Vs. State of Kerala and Anr.
6. The Ld. Senior Counsel for the Appellants stated that the Ld. Presiding Officer has held in the impugned order that the secured assets are being used for horticulture and not for agricultural purposes. The Ld. Senior Counsel stated that the courts have consistently held that agriculture subsumes horticulture and other similar activities and relied upon the following citations in support of his contentions:
(i) K.P. Muhammed Basheer Vs. The Deputy General Manager and Kannur District Co-op Bank Limited
(W.A. No.155 of 2010 dt. 11.2.2010 Hon’ble High Court of Kerala).
(ii) Commissioner of Income TaxWest Bengal,Calcutta Vs. Raja Benoy Kumar Sahas Roy (AIR 1957 SC 768).
(iii) Muruges Chetti Vs. Chinnathambi Goundan and Ors. (1901) ILR 24 Mad 421.
(iv) S.P. Watel and Others Vs. State of U.P.(1973) 2 SCC 238.
(v) Officer in charge (Court of Wards) Paigah Vs. The Commissioner of Wealth Tax, A.P. Hyderabad AIR 1969 A.P. 345.
7. The Ld. Senior Counsel submitted that Ld Presiding Officer having accepted that the secured assets are used for “horticulture” could not have held that the secured assets are not agricultural lands.
8. The Ld. Senior Counsel for the Appellants submitted that the Ld. Presiding Officer having accepted that there was an error apparent on the face of the record ought to have reopened the proceedings and allowed the parties to lead in evidence. The Ld. Senior Counsel stated that the finding of the Ld. Presiding Officer that “The word “Resorts” indicates a place for entertaining public on holidays. Therefore the secured assets cannot be viewed as agricultural lands” is unfounded and added that whatever the names of the companies are they can in no way alter the nature and character of the lands and prayed that this appeal be allowed.
9. The Ld. Senior Counsel for the respondent Bank stated that in order to maintain the review application the Appellants should establish the error apparent on the face of record and that in the present case there is no error apparent on the face of the record in as much as the Tribunal below by order dated 13.12.2006 in SA No.23/2006 dismissed IA Nos. 374/2006 and 375/2006 as they were devoid of merits. The Ld. Senior Counsel added that though the order dated 26.2.2009 made in RA No.1/2008 it is observed that there is an error apparent on the face of the record in dismissing IA Nos. 374 and 375/2006 without passing a speaking order in the SA, the said observation could not be challenged in an appeal by the Bank as the Review Application itself had ultimately been dismissed with costs. The Ld. Senior Counsel stated that in an appeal filed against the said order it is always open to the Bank to question the validity of the said observation made by the Ld. Presiding Officer of the Tribunal below.
10. The Ld. Senior Counsel for the respondent Bank stated that as per Section 17(7) of the SARFAESI Act the Debts Recovery Tribunal shall dispose of the appeal in accordance with RDDB & FI Act and as per Section 5A (2) of the Debt Recovery Tribunal (Procedure) Rules, 1993 the Review Application should be filed within 60 days from the date of the order.
The Ld. Senior Counsel stated that it has been admitted by the Appellant in paragraph IV of RA No.1/2008 that the Appellants received the copy of the order passed in SA 24/2006 on 18.12.2006 and the Review Application has been filed on 14.1.2008 and that after deducting a period of 60 days provided for filing the Review there is a delay of 332 days in filing the RA. The Ld. Senior Counsel also stated that in paragraph IV of the RA it has been stated that there is a delay of 68 days in filing the RA and for which a separate petition is filed and admittedly no such application has been filed by the Appellants.
The Ld. Senior Counsel stated that since the Review Application was filed after the delay of 332 days as stated above and no application to the condone the said delay was filed by the Appellants the RA was barred by limitation. The Ld. Senior Counsel stated that as per Section 3 of the Limitation Act the court is bound to dismiss the application which is filed after the period of limitation, even though the limitation was not set up as a defence.
The Ld. Senior Counsel stated that the Appellants had relied upon the endorsement made by the Ld. Presiding Officer and stated that the said contention is without any merits and added that the Ld. Presiding Officer has only ordered the numbering of the petition and has not condoned the delay that had occurred in filing the RA. The Ld. Senior Counsel stated that the delay in filing an application can be condoned only after ordering notice in the petition filed for the condonation of delay and as no such application has been filed in this case the question of condoning the delay does not at all arise and the Ld. Presiding Officer has rightly dismissed the RA.
The Ld. Senior Counsel relied upon the judgment of the Hon’ble Supreme Court of India in “Office of the Chief Post Master General Vs. Living Media India Ltd., 2012(2) CTC 240 and stated that in the absence of a plausible and acceptable explanation there is no need to accept the usual explanation and condone the delay and in fact the Appellants ought to have explained each day’s delay more accurately. The Ld. Senior Counsel stated that in the absence of a proper explanation for the delay of 332 days the review application is liable to be dismissed.
11. The Ld. Senior Counsel for the Respondent Bank stated that as per Section 18(2) of the SARFAESI Act this Tribunal shall dispose of the appeal in accordance with RDDB & FI Act and as per Section 22(2) of the RDDB & FI Act the appellate tribunal shall have for the purposes of discharging its functions the same powers as vested in a civil court under the provisions CPC. The Ld. Senior Counsel stated that in the present case the Ld. Presiding Officer has dismissed the Review Application and therefore as per Order 47 Rule 7 of CPC no appeal is maintainable against the order rejecting the review application and hence the present appeal is not at all maintainable and that it is liable to be dismissed in limini.
12. The Ld. Senior Counsel for the respondent Bank stated that the contention of the Appellants that the secured assets are agricultural lands and are exempted under the provisions of the SARFAESI Act is based on the ‘Adangal’ extract and as per the adangal extract, in 10.430 hectares of land (i.e., 25.77 acres of land) in Survey No.185/2A belonging to Coconut Groves Holiday Resorts Limited there are only 7 (seven) coconut trees and the land was not classified as “Thope” in the village records. The Ld. Senior Counsel stated that as per the said record there is only one coconut tree available in each 3.57 acres of land and the same will not convert the land to a “Thope” and hence the secured assets are not agricultural lands.
13. The Ld. Senior Counsel for the respondent Bank stated that the documents produced by the Ld. Counsel for the Appellants to prove that the secured assets are agricultural lands cannot be accepted in evidence as they were not produced before the Tribunal below and that as per Section 22(2)(b) & (c) of the RDDB & FI Act the CPC would be applicable for production of documents and receiving evidence in affidavits and further that as per Order 41 Rule 27(aa) of CPC the party seeking to produce additional evidence should establish that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the order appealed against was passed.
The Ld. Senior Counsel stated that in the present case the Appellants herein did not satisfy this condition and not even a petition was filed with the documents and therefore the additional documents produced by the Appellants presently should not be looked into and added that the Appellants can rely only upon the Adangal extract filed in RA 1 of 2008. The Ld. Senior Counsel in conclusion reiterated his contention that the appeal warrants only a dismissal and prayed that this appeal be dismissed.
14. Ld. Counsel appearing on behalf of the 2nd Respondent stated that no case has been made out by the Appellants and that they cannot take the advantage of the fact that the money has been realized by the Bank and thus avoid making the pre deposit in this case and also assail the actions of the Authorized Officer and seek an allowing of the appeal. Ld. Counsel stated that the Appellants have not established that the secured assets are agricultural lands and the untested evidence tendered by them cannot be accepted by any Court of Law. The Ld. Counsel for the 2ndRespondent relied upon the following cases in support of his case:
a) R.N. Gosai Vs Yashpal Dhir (1992) 4 SCC 683
b) Kalpesh P.C. Surana Vs Indian Bank 2010(3) CTC 287
15. Heard the Ld. Counsel.
16. The Ld. Presiding Officer has framed the following points for consideration in the Review Application:
(i) Whether the Review Petition is maintainable?
(ii) Whether the secured assets are agricultural lands and are exempted under Section 31(i) of the Act from enforcement of security interest as provided under Chapter III of the Act?
(iii) Whether the claim of the Bank is barred by limitation?
(iv) Whether the Review Petition is filed within limitation?
17. In answer to point No.(i) the Ld. Presiding Officer has come to the conclusion that there is an error apparent on the face of the record in dismissing IA Nos.374 and 375 of 2006 without passing a speaking order even in the SA and he has proceeded to answer the point raised in IA No.375 of 2006 and has discussed in detail about the said IA in answer to point (ii). A perusal of the findings of the Ld. Presiding Officer on this point clearly reveals that he has come to the conclusion that the final order in the SA has to be reviewed and when such a conclusion has been arrived at the Ld. Presiding Officer ought to have set aside the final order passed in the SA and ought to have afforded the Review Petitioners to put forth their case in the IA Nos.374 and 375 of 2006 which in this case has not been done.
18. In answer to point No.(iii) the Ld. Presiding Officer has stated that the proceedings taken up by the Authorized Officer is well within time. A reading of the averments made in the SA does not depict any challenge on the question of limitation and therefore the conclusions arrived at in this point are clearly out of the scope of the review.
19. In answer to point No.(iv) it is seen that the Presiding Officer has issued orders for numbering the Review Application based on the endorsement made by the Ld. Counsel for the Petitioner and after taking up the Review Application for hearing has proceeded to answer this point against the Review Petitioners to the effect that the Review Application is time barred.
20. Therefore from the fact that the Ld. Presiding Officer has come to the conclusion that the matter has to be reviewed, from the fact that the Presiding Officer has come to the conclusion that no speaking orders have been passed in IA Nos.374 and 375 of 2006, from the fact that the Ld. Presiding Officer has decided that the land is used for horticultural purposes, from the fact that the Ld. Presiding Officer has come to the conclusion that the word agriculture does not include horticulture, from the fact that the Petitioners have to be afforded an opportunity to put forth their case in the said IA Nos.374 and 375 of 2006, from the fact that the Ld. Presiding Officer cannot dismiss the Review Petition when in fact he has allowed the Review Petition while answering Point No(i) this Tribunal is driven to conclude that the order passed in the Review Petition is liable to be set aside and the matter remitted back to the Tribunal below for a fresh consideration.
21. Accordingly the order of the Ld. Presiding Officer dated 26.2.2009 in RA 1/2008 on the file of DRT-II, Chennai is hereby set aside. The Ld. Presiding Officer, DRT-II, Chennai is directed to take up RA 1/2008 afresh and dispose of the same in accordance with law. The Ld. Presiding Officer is further directed to afford an opportunity to both sides to put forth their case and dispose of the RA 1/2008 as expeditiously as possible.
22. This appeal is disposed of accordingly.
This order was delivered by THE HON'BLE CHAIRPERSON OF DRAT ,Chennai ON 20/07/2012
Posts
