Mathew Cyriac and Tessy Mathew v. India Bulls Housing Finance Limited and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 18TH DAY OF DECEMBER 2019 / 27TH AGRAHAYANA, 1941 ## WP(C).No.3678 OF 2019(H) ## PETITIONER/S: 1 MATHEW CYRIAC, AGED 55 YEARS S/O MATHEW KURIAN, KULAMACKAL HOUSE, MUNDUPALAM, KAROOR P.O, PALA, KOTTAYAM, NOW RESIDING AT FIRST FLOOR, SANTHA MARIYA APARTMENT, ST. THOMAS PRESS ROAD, PALA - 686 575. 2 TESSY MATHEW, AGED 50 YEARS W/O MATHEW CYRIAC, KULAMACKAL HOUSE, MUNDUPALAM, KAROOR P.O, PALA, KOTTYAM, NOW RESIDING AT FIRST FLOOR, SANTHA MARIYA APARTMENT, ST. THOMAS PRESS ROAD, PALA - 686 575. BY ADVS. SRI.K.P.DANDAPANI (SR.) SRI.MILLU DANDAPANI ## RESPONDENT/S: 1 INDIA BULLS HOUSING FINANCE LIMITED., HAVING ITS REGISTERED OFFICE AT M-62 AND 63, FIRST FLOOR, CANNOUGHT PLACE, AND CORPORATE OFFICE AT INDIA BULLS HOUSE, 448 - 451 PHASE - V, GURGAON - 122-1, REPRESENTED BY ITS CHIEF MANAGER. **W.P.(C) No. 3678/2019** **-2-** 2 THE AUTHORISED OFFICER, INDIA BULLS HOUSING FINANCE LTD., HAVING ITS REGISTERED OFFICE AT M-62 AND 63, FIRST FLOOR, CANNOUGHT PLACE, AND CORPORATE OFFICE AT INDIA BULLS HOUSE, 448 - 451 PHASE - V, GURGAON - 122-1, 3 HOTEL MERIYA, VIII 519, T.B.ROAD, PALA, MEENACHIL, KOTTAYAM, PIN CODE - 686 575, REPRESENTED BY ITS MANAGING PARTNER, DEVASSYA.D, AGED 76 YEARS, S/O. DEVASSIA, KULAMAKAL HOUSE, MARYLAND P.O., MELUKAVU, PIN CODE - 686 652. 4 DEVASSYA.D, AGED 76 YEARS S/O DEVASSIA, MANAGING PARTNER, HOTEL MERIYA, NOW RESIDING AT KULAMAKAL HOUSE, MARYLAND P.O., MELUKAVU, PIN CODE - 686 652. 5 V.J. THOMAS, AGED 60 YEARS S/O JOSEPH, VETTIKKADU HOUSE, MUTHOLI P.O., PULIYANNUR VILLAGE, NEYYOORKKARA, KOTTAYAM, PIN CODE - 686 573. 6 SUNNY MATHEW, RESIDING AT 174, VETTATH ARUNAPURAM P.O., PULIYANNOOR, KOTTAYAM, PIN CODE - 686 574. R1-2 BY ADV. SRI.MADHU RADHAKRISHNAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD AND RESERVED ON 05.12.2019, THE COURT ON 18.12.2019 DELIVERED THE FOLLOWING: **W.P.(C) No. 3678/2019** **-3-** ## **J U D G M E N T** Dated this the 18th day of December 2019 ## Heard Advocates Millu Dandapani and Madhu ## Radhakrishnan for parties. ## 2. The petitioners pray for the following reliefs: “(i) Call for the records pertains to Ext.P6 order passed by DRAT, Chennai and quash the same by issuing a writ of certiorari. (ii) Issue a writ of mandamus or any other appropriate writ, order or direction directing the dRAT, Chennai to reconsider and pass appropriate orders in Ext.P4 (AIR (SA) 489 of 2018) filed by the petitioners. (iii) Call for the records pertains to Ext.P3 order in A.O.R.G. No.10/2018 of DRT-II, Ernakulam and quash the same by issuance of a writ of certiorari. (iv) grant such other or further reliefs as this Hon'ble Court deems fit to grant in the particular facts and circumstances of this case, (v) Award costs.” **W.P.(C) No. 3678/2019** **-4-** 3. The circumstances relevant for disposing of the writ petition are briefly stated thus: The petitioners are the guarantors for the loan transaction between 1[st] and 3[rd] respondents. The third respondent committed default and by treating the loan account as Non Performing Asset, the 1[st] respondent intiated procedings under Section 13(2) and (4) of the SARFAESI Act. The petitioners being guarantors and aggrieved by the measures taken by 1[st] respondent, on 20.06.2018, filed S.A. before the DRT-2, Ernakulam. The application is numbered as AORG No. 10 of 2018. Section 17(1) under which application is filed reads as follows: “ **17. Right to appeal** (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure **W.P.(C) No. 3678/2019** **-5-** had been taken: PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation : For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.” Therefore, the period of limitation for maintaining an application by an aggrieved person before the DRT is 45 days. The Office of DRT-2 objected to the maintainability of application for according to the objection noted by office, application is filed beyond 45 days, from the date on which cause of action had arisen. The objection as could be culled out from Ext.P3 order reads as follows: “3. It is submitted by the applicants that they were served with a letter dated 02.06.2015 issued by the 2[nd] respondent on **W.P.(C) No. 3678/2019** **-6-** behalf of the 1[st] respondent alleging that the borrowers had defaulted the repayment of the loan amount and the account was classified as a non performing asset on 02.06.2015. As per the notice dated 02.06.2015, respondent bankhas demanded an amount of Rs.2,75,76,770/- is due along with interest and directed to repay the said amount within 60 days of the receipt of the said notice.” 4. The office objection, reply of petitioners and note of office were posted before DRT for hearing on office objections. The Presiding Officer, DRT-2 heard the counsel for petitioners herein on the defects noted by the Office. The Presiding Officer through Ext.P3 order dated 19.07.2018 sustained or upheld the objections raised by the Office. For the view this Court is proposing to take in this writ petition the findings recorded therein are necessary and excerpted hereunder: “7. Aggrieved by the order passed by the Registrar, the present appeal is filed on the ground that the declining to register the SA is against the law and is liable to be set aside. The Registrar ought to have found that no documents can be **W.P.(C) No. 3678/2019** **-7-** produced to substantiate that no notice were served on the appellants after the issuance of possession notice. Further it is contended that the Registrar ought to have found that it is the bounden duty of the respondents 1 and 2 to show that the notices were duly served on the appellants before the alleged sale. The Registrar ought to have numbered the SA and should have posted the same before the Tribunal as the same was filed within the period of limitation. Hence the present appeal. 8. On perusal of the records, it reveals that the applicants being the guarantors, had created the mortgage of properties towards the credit facility availed by the 3[rd] respodnent. It is admitted by the applicants that they received the Annexure A1 S.13(2) ntoce dated 02.06.2015 and Annexure A3 S.13(4) notice dated 08.01.2016 issued by the 2[nd] respondent. After the receipt of Annexure A1 13(2) notice, applicants filed WP(C) No.32617/2015 before the Hon'ble High Court of Kerala, seeking for instalments for remitting the overdue instalments. The said writ petition came to be disposed vide Annexure A2 judgment dated 09.11.2015 allowing the applicants to remit amounts in 6 instalments. As the applicants failed to comply with the direction of the Hon'ble High Court, the respondents 1 and 2 proceeded further under the SARFAESI Act and issued Annexure A3 **W.P.(C) No. 3678/2019** **-8-** ## Section 13(4) possession. 9. It is also admitted by the applicant that Annexure A3 notice was issued to the present address and as they were not available there, the same was not served on them and on enquire it came to the knowledge that the 2[nd] respodnent had issued the said letter requesting for removal of the goods from the schedule properties. However, the applicants are silent as to how they came to know about the letter not being served and the contents in the letter which they have not received. There is no justifiable reason or cogent evidence produced to consider the said contention of the applicant's knowledge of the letter and its contents. On the other hand, the applicants being fully aware of the proceedings initiated by the bank admittedly have received the statutory notices and had invoked the writ jurisdiction seeking instalments facility. That being so, the applicants have failed to establish the knowledge of the cause of action to prefer the present SA within the period of 45 days as prescribed under the Act. The SA is filed on 20.06.2018 challenging the sale of the property held on 09.08.2017. hence, the contention that the applicants came to know about the sale of the secured asset only on 10.05.2018 is hopelessly barred by limitation as stipulated under S.17(1) of the Act and the same is unsustainable. **W.P.(C) No. 3678/2019** **-9-** 10. S.17(1) of the Act lays down that any person (including borrower) aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his Authorised Officer may make an application along with such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measures had been taken and **not within 45 days from the date of knowledge** of the measures taken by the secured creditor. Section 17(1) applications being original applications laid before the Tribunal, have to be necessarily filed within 45 days' time limit provided therein from the date of initiation of action or measures by the secured creditor under S.13(4) of the Act. There is no enabling provision in the Act to condone the delay in filing Securitisation Application under S.17(1). 11. As per the provisions of the Limitation Act, 1963 itself, any suit or application filed before a court or authority exercising 'original jurisdiction' is not vested with any powers to condone the delay in filing in such suit or application. Int he present case, applicant has filed the SA on 20.06.2018 chgallenging the sale of the property held on 09.08.2017 which is much beyond the period of the limitation prescribed under the Act. Further the applicant has not produced any documentary evidence to substantiate his **-10-** ## **W.P.(C) No. 3678/2019** contentions both in the Unregistered SA and in the AORG, the reason for inordinate delay in filing the SA,” 5. The petitioners aggrieved by Ext.P3 order of DRT filed appeal in Ext.P4 and in I.A. No.878 of 2018 requested for waiver of pre-deposit of 50% of debt due and claimed by secured creditor. The DRAT in Ext.P6 directed deposit of Rs.70 lakh with the Registrar of DRAT to register and hear the appeal on merits. Hence the writ petition filed challenging Exts.P6 and P3. 6. Advocate Millu Dandapani contends that directing pre-deposit of Rs.70 lakh in the circumstances of the present case, is illegal, unsustainable and beyond the requirement of law in Section 18 of SARFAESI Act. Ext.P4 appeal is filed against the order dated 19.07.2018, the said appeal does not deal with the substantive contentions on challenge to measures taken under Section 13(2) of the Act, but DRT rejected A.O.R.G. as beyond limitation. The application filed in A.O.R.G. challenging **-11-** ## **W.P.(C) No. 3678/2019** measures taken under Section 13 stands dismissed or rejected on the ground of limitation. He contends that pre-deposit condition could not be imposed as application filed challenging measures is an unregistered application vide I.D. No.6829 of 2018 and that a bare perusal of Ext.P3 demonstrates that DRT-2 while considering the legality or otherwise of Office objections, pronounced a judgment on the aspect of limitation denying the remedy under Section 17 of SARFAESI Act, 2002. In the case on hand, limitation is not an abstract application from the date of alleged sale dated 09.08.2017, but matter of examination of record of respondent/Bank on the measures taken by 1[st] respondent in enforcing the rights against secured assets of borrower/guarantor and these measures are in compliant with the procedural safegruard. To point out a patent illegality in appreciation of dates and events, he refers to paragraph 6 of order in Ext.P3 and submits that the DRT is insisting upon ## **W.P.(C) No. 3678/2019** **-12-** producing negative while observing that no documents are produced by the applicants in support of their contention that on 10.05.2018 the petitioners came to know about the alleged sale of the property conducted on 09.08.2017. According to him this objection is not entertained at a threshold stage for the Bank, in the manner the circumstances permit, will plead its case and prove by documentary evidence on the legality of measures taken in this behalf. 7. The petitioners being aggrieved persons are required to file application as prescribed by Rule 12 of Security Interest (Enforcement) Rules 2002 ('Rules 2002' for short) read with Appendix VI. Sl. No.4 deals with limitation. The application is filed in prescribed format. The starting point for filing any case is the date on which measures had been taken. The petitioners have choice to plead the case available in the measures taken by the Bank. The mode, manner etc of communicaiton of ## **W.P.(C) No. 3678/2019** **-13-** measures are dealt with by Section 13(3) read with Rule 3 of Rules 2002. The aggrieved person in a given case can plead complete ignorance and challenge the measures initiated by the Bank. Such applications are not summarily rejected by DRT at unnumbered stage. 8. Rule 2 deals with the procedure followed by the secured creditor while enforcing the measures under Section 13(4). The applicant can assert that the applicant is unaware of or is kept in dark of the measures initiated under Section 13 of SARFAESI Act, 2002 including under sub-section (4) and therefore such stand is akin to a case coming under 'no knowledge of measures taken by Bank'. For the purpose of Section 13(4) of the Act, the secured creditor demonstrates before the DRT that the measures initiated for realisation of debt due are in accordance with the provisions of SARFAESI Act. The rejection of application with the reasons stated in Ext.P3 ## **W.P.(C) No. 3678/2019** **-14-** amounts to refusal to exercise the jurisdiction and this Honourable Court in exercise of its jurisdiction under Article 226 can certainly set aside Ext.P3 order and direct DRT-2 to number S.A. vide I.D. No. 6829 of 2018, consider and dispose of the case on merit. He submits that subject to a view being taken on this priliminary ground of challenge to Ext.P3, further necessity to examine whether the order appealed is an Interlocutory Order or not, if so whether the deposit under Section 18(1) second proviso is applicable etc, need not be addressed by this Court. The order in Ext.P6 becomes redundant for Ext.P3 suffers from patent illegal jurisdiciton by DRT. He draws the attention of this Court to distinct challenge laid to Ext.P3 and consideration of challenge too becomes unnecessary if the grounds argued against Ext.P3 are considered/decided by this Court. ## **W.P.(C) No. 3678/2019** **-15-** 9. Advocate Madhu Radhakrishnan replying to the argument of petitioner on Section 18(1) second proviso, contends that the law is fairly well established on the applicability of pre-deposit condition to all the appeals filed i.e., against final or Interlocutory orders, before DRAT. The petitioners as per extant procedure are required to file an application in the manner provided for in Rules. The applicaiton now filed _prima facie_ discloses that the application is filed within the period of limitation. The application does not disclose that the application is filed within the period of limitation, then DRT is justified in passing the order in Ext.P3 and legality of order in Ext.P3 is examined by DRAT upon complying with the pre-deposit condition. Therefore, the condition imposed is commensurate to the totality of circumstances and according to him in a case where the gurantors and pre-borrowers are chronic defaulters, deposit **W.P.(C) No. 3678/2019** **-16-** ought to have been 50% instead of Rs.70 lakh. He refers to the judgment of Supreme Court in _M/s.Tecnimont Pvt. Ltd v. State of Punjab_[1] to contend that the condition of pre-deposit has been accepted as a reasonable condition to avoid frivolous appeals. This judgment, if is examined, has arisen under Punjab Value Added Tax Act 2005, where imposition of 25% as pre-deposit is held to be justified. On the findings recorded in Ext.P3 he submits that the DRT-2 has examined the material, recorded findings and no exception to any of the conclusions recorded in Ext.P3 is available in present writ petition. He prays for dismissing the writ petition. 10. I have taken note of the rival submissions and perused the record. 11. After perusing the orders in Exts.P3 and P6, this Court is of the view that the consideration of objections raised against pre-deposit of Rs.70 lakh in Ext.P6 need not be 1 Judgment dated 18.09.2019 in Civil Appeal No.7358 of 2019 ## **W.P.(C) No. 3678/2019** **-17-** considered, if the procedure followed in Ext.P3 is first considered and grounds warranting issue of certiorari by this Court are made out in final analysis of the case. This Court issues a writ of certiorari and quashes the order impugned if the record presents a patent illegality in the exercise of jurisdiction by a Tribunal established under a Statute. 12. For the purpose of appreciating the scope of writ of certiorari the judgment need not be burdened by more citations. While exercising the jurisdiction of writ of certiorari this Court ensures that the Tribunals working within its jurisdiction act judicially, do not commit error of jurisdiction or law, or do not permeate illegality through its decisons. Appreciated in this background this Court examines whether the details given in column 4 of Appendic VI are adjudicatory facts or not, if so whether without evidence a finding on these circumstances could be recorded by DRT at unnumbered stage, **-18-** ## **W.P.(C) No. 3678/2019** are the points for consideration. As already noted the objection raised by the Office of DRT-2 is that documents are not produced by applicants/petitioners herein in support of the contention that the applicants/petitioners have come to know about the alleged sale of the property conducted on 09.08.2017 only on 10.05.2018. The said office objection viz. insisting upon proving a negative fact, i.e., no knowledge of sale dated 09.08.2017 for first forty five days and no documentary proof of actual knowledge on 10.05.2018 is annexed by the petitioners, the tenor or text of this objection is impermissible in law. It is noted that the DRT by referring to W.P.(C) No.32617/2015 assumes that the petitioners have knowledge of all the measures initiated by respondent Bank and these measures finally resulted in sale dated 09.08.2017. In the considered view of this Court this approach is unsustainable, just short of a perverse finding recorded at unnumbered stage of an ## **W.P.(C) No. 3678/2019** **-19-** application. The judgment in the W.P.(C) No.32617 of 2015 is dated 09.11.2015. Section 13(4) notice is alleged as 08.01.2016. Now the sale challenged in S.A. vide ID No.6829 of 2018 was held allegedly on 09.08.2017. These are adjudicatory facts either accepted or refused on evidence on record, but they are assumed as false from the details given by petitioner on limitation and therefore deny the statutory remedy of adjudication under Section 17. The measure of sale held on 09.08.2017 is called in question and the Bank to sustain the measures taken for sale places on record documents evidencing knowledge to petitioners not only of all steps but the outcome. In such an event, along with limitation issue, legality on merits are adverted and decided. But adjudication of limitation in the manner already noted is certainly a case of illegal exercise of jurisdiction by DRT resulting in prejudice to the case of petitioners at unnumbered stage. The DRT would have done **-20-** ## **W.P.(C) No. 3678/2019** well by preserving all the objections in this behalf, admitted the S.A., heard the matter and decided on merits. Then, justice is not only done but seen to have been done in accordance with law. 13. Another prejudice the petitioners suffer by the finding in Ext.P3 is that limitation is considered as a question of fact and applicable Section/Act is applied to the case established. The petitioners have come to Court that they do not have knowledge of sale allegedly conducted on 09.08.2017 till 10.05.2018. Therefore it is a case of 'no knowledge till 10.05.2018', calling upon them to prove that they did not have knowledge of sale held on 09.08.2017, within the period of limitation, and that knowledge thereof on 10.05.2018 is impermissible. The above observation while deciding the legality of Ext.P3 shall not be understood as this Court expressing a view that the present application is within the ## **W.P.(C) No. 3678/2019** **-21-** period of limitation under Section 17 of SARFAESI Act, 2002. The observations are made for the limited purpose of recording a finding that the rejection of S.A. vide ID No. 6829 of 2018 by holding that the application is completely illegal, suffers from the errors apparent on the face of record and amounts to deciding adjudicatory facts at the stage of hearing on defects noted by the Office of DRT. 14. Ext.P3 therefore is set aside. Consequently the appeal filed and pending in Ext.P4 need not be considered and therefore the order in Ext.P6 is rendered unnecessary and set aside accordingly. The petitioners by enclosing a copy of the judgment are given liberty to file memo on or before 31.05.2020 before DRT-2. If the application is otherwise in order, DRT numbers the S.A., issues notice to respondent Bank, verifies the record as is required by Section 17 read with Section 13(4) of SARFAESI Act 2002 and decides the matter. The respondent **-22-** ## **W.P.(C) No. 3678/2019** Bank is given liberty to raise all objections available in this behalf and these are treated as issues for consideration in the S.A. and decided along with the main application. The writ petition is ordered as indicated above. Sd/S.V.BHATTI JUDGE jjj **-23-** ## **W.P.(C) No. 3678/2019** ## APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE NOTICE DTD, NIL U/S 13(2) OF SARFAESI ACT. EXHIBIT P2 TRUE COPY OF THE NOTICE DTD. 8.1.2016 U/S 13(4) OF SARFAESI ACT BY THE 2ND RESPONDENT. EXHIBIT P3 TRUE COPY OF THE ORDER DTD. 19.07.2018 DISMISSING A.O.R.G. NO. 10/2018 PASSED BY DEBT RECOVERY TRIBUNAL - II, KERALA. EXHIBIT P4 TRUE COPY OF THE APPEAL MEMORANDUM IN AIR NO.489 OF 2018 DTD. 27.08.2018. EXHIBIT P5 TRUE COPY OF THE PROCEEDINGS DTD.14.11.2018 IN A.I.R.(SA)489 OF 2018. EXHIBIT P6 TRUE COPY OF THE ORDER DTD. 12.12.2018 IN I.A.NO.1190 OF 2018 IN AIR (SA) NO.489 OF 2018.