Indian Overseas Bank, Represented By Its Authorised Officer/chief Manager, Arm Branch, Central Office Buildings (annexe), 763, Anna Salai, Chennai-2 v. G.s. Rajshekaran

(Writ Appeal against the order of this Court dated 30.1.2008 in Writ Petition No.1069 of 2008.)

S.J. Mukhopadhaya, J.

This Writ Appeal has been preferred by the appellant-Indian Overseas Bank against the order of this Court dated 30.1.2008 in Writ Petition No.1069 of 2008.

2. In the said case, while the learned single Judge refused to interfere with the notice issued under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act) and taking into consideration the order passed by the appellant-Bank, the learned single Judge allowed the respondent-Writ Petitioner to approach the Debts Recovery Tribunal within two weeks from the date of the order and till such time the appellant-Bank was directed to maintain the position as on the date of the order passed in the Writ Petition. It was also made clear by the learned single Judge that the respondent-Writ Petitioner shall not take advantage of the order in any of the proceedings and shall strictly adhere to the time stipulated by the Court.

3. The Writ Appeal has been preferred by the Bank on the ground that the High Court, in exercise of its powers under Article 226 of the Constitution of India, has no power to extend the period of limitation.

4. Learned counsel appearing for the appellant-Bank submitted that the possession of the secured asset was taken on 13.11.2007 and under Section 17 of the SARFAESI Act, the said measure has to be challenged within a period of 45 days from the date of such measure. As such, the period of limitation for filing the application expired on 28.12.2007. The Writ Petition in question was in fact filed on 8.1.2008, i.e. beyond the period of limitation. Therefore, the Writ Petition itself was filed after the expiry of the period of limitation provided under the SARFAESI Act and hence, exclusion of the period spent before the wrong forum does not arise in this case. Further argument was also made with regard to the stand as was taken by the respondent/Writ Petitioner and it was submitted that the mortgage over the secured asset was created on 18.11.1991, which was periodically extended. The action initiated by the secured creditor by demand notice dated 21.8.2007 is well within the period of limitation.

5. Learned counsel appearing for the appellant-Bank also relied on the decision of the Supreme Court reported in AIR 2004 SC 2371 [LQ/SC/2004/496] (Mardia Chemicals Ltd. vs. Union of India), wherein the Supreme Court observed as follows:

"59. We may like to observe that proceedings under Section 17 of the Act, in fact are not appellate proceedings. It seems to be a misnomer. In fact that it is the initial action which is brought before a Forum as prescribed under the Act, raising grievance against the action or measures taken by one of the parties to the contract. It is the stage of initial proceeding like filing a suit in Civil Court. As a matter of fact proceedings under Section 17 of the Act are in lieu of a civil suit which remedy is ordinarily available but for the bar under Section 34 of the Act in the present case. ...."

Reliance was also placed on a decision of the Division Bench of this Court reported in 2007 (3)CTC 389 (Muthammal Transports vs. P. Swathanthirarajan), wherein, the Division Bench of this Court held that the High Court exercising jurisdiction under Article 226 of the Constitution of India, has no power to extend the period of limitation and could not direct the authority concerned to consider the matter on merits without applying the limitation period.

6. We have heard the learned counsel appearing for the appellant-Bank at the stage of the admission of the Writ Appeal and perused the impugned order of the learned single Judge and other records.

7. It is not in dispute that the respondent-Writ Petitioner has challenged the possession notice dated 13.11.2007, as communicated, vide letter dated 14.11.2007, bearing Reference No.ARMB/254/2007-08 of the appellant-Bank. He also prayed for an order of interim injunction restraining the respondent therein (the appellant in this Writ Appeal) from proceeding further with the proposed auction-sale of the Writ Petitioners property in terms of the notice dated 26.12.2007. The Writ Petition was preferred on 8.1.2008.

8. From the aforesaid facts, it would be evident that the respondent-Writ Petitioner had not challenged the notice issued under Section 13(2) of the SARFAESI Act, but challenged the action of the appellant-Bank in taking possession of the secured asset for realising the same and such action of taking the possession of the secured asset though started on 13.11.2007, the cause of action continued till the notice dated 26.12.2007 was issued for auction-sale of the secured asset under Section 13(4) of the SARFAESI Act.

9. Section 13(4) of the SARFAESI Act enables the secured creditor to take recourse to one or more of the measures to recover the secured debt as shown under Clauses (a), (b), (c) and (d) of Section 13(4). The cause of action takes place as and when one or other such measure to recover the secured debt is taken by the secured creditor.

10. In the present case, the first cause of action started when the possession was taken, vide notice dated 13.11.2007, followed by the subsequent cause of action taken place on 26.12.2007 when the auction-sale notice under Section 13(4)(a) of the SARFAESI Act was published by the secured creditor-appellant-Bank. There being a continuous cause of action having lastly taken on 26.12.2007, and as the Writ Petition was filed on 8.1.2008, we are of the view that the Writ Petition was filed before this Court well within the period of limitation of 45 days.

11. Apart from the merits of the case, we have also noticed the attitude and action of the appellant-Bank. The Writ Petition was filed by the respondent-Writ Petitioner. The High Court under Article 226 of the Constitution of India, could have entertained the said Writ Petition to determine the case on merits, as the provisions of the SARFAESI Act cannot take away the power of the High Court under Article 226 of the Constitution of India. It is only because the alternative forum is prescribed under the law, the learned single Judge refused to entertain the Writ Petition and allowed the respondent-Writ Petitioner to move before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. After getting the case dismissed by the learned single Judge, now the appellant-Bank is opposing the respondent-Writ petitioner even to prefer the application (appeal) under Section 17 of the SARFAESI Act, and thereby, wants to take advantage by making the respondent-Writ Petitioner remediless.

12. In the aforesaid background, in the absence of merits, while we dismiss this Writ Appeal filed by the appellant-Bank, we impose costs of Rs.20,000/- (Rupees twenty thousand only) on the appellant-Bank for payment in favour of the Tamil Nadu State Legal Services Authority, High Court Buildings, Chennai-600 104, within a period of six weeks from today. In case of failure to deposit the amount by the appellant-Bank as aforesaid within the stipulated time, the Member Secretary of the Tamil Nadu State Legal Services Authority will take appropriate steps to recover the amount from the appellant-Bank. The Miscellaneous Petition is closed.

Let a copy of this judgment be forwarded to the Member Secretary of the Tamil Nadu State Legal Services Authority, High Court Buildings, Chennai-600 104.