QUBE CINEMA TECHNOLOGIES (P) LTD. and Digital Film Technologies Pvt. Ltd. v Union Bank of India and Others

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH`** ``` MONDAY, THE 8[TH] DAY OF JULY 2024 / 17TH ASHADHA, 1946 ``` ## **`WP(C) NO. 12942 OF 2024`** ## **`PETITIONERS:`** - **`1 QUBE CINEMA TECHNOLOGIES (P) LTD., 42, DR. RANGA ROAD, MYLAPORE, CHENNAI, REPRESENTED BY ITS AUTHORIZED SIGNATORY, MR. PRANAV PRAKASH, PIN - 600004`** - **`2 DIGITAL FILM TECHNOLOGIES PVT. LTD., 6/58, NANESH VILLA, SUNDARAM PILLAI STREET, PURASAWALKAM, CHENNAI,REPRESENTED BY ITS AUTHORIZED SIGNATORY, PRATHIMA S.V, PIN - 600007`** - **`BY ADVS. G.MINI(1748) P.J.ANILKUMAR P.S.SREE PRASAD A.KUMAR (SR.)`** ## **`RESPONDENTS:`** - **`1 UNION BANK OF INDIA, TRIVANDRUM MAIN BRANCH, UNION BANK BUILDING, P. BOX NO.307, M.G. ROAD, STATUE, PALAYAM,TRIVANDRUM, REPRESENTED BY ITS AUTHORIZED OFFICER, PIN - 695001`** - **`2 SOJA B.V., SREEMURUGA BUILDING, KANCHIYOORKONAM ROAD,KATTAKADE P.O, TRIVANDRUM, PIN - 695572`** - **`3 THE AUTHORIZED OFFICER, UNION BANK OF INDIA, TRIVANDRUM MAIN BRANCH, UNION BANK BUILDING, P. BOX NO.307, M.G. ROAD, STATUE, PALAYAM, TRIVANDRUM, PIN - 695001`** - **`4 ADDL. R4. GAVASKAR, S/O. SULAIMAN, VALAVIL PUTHENVEEDU, PUNNAMKARIKKAKOM, VEERANAKAVU, POOVACHAL POST, THIRUVANANTHAPURAM- 695 576 IS IMPLEADED AS ADDL. R4 AS PER ORDER DATED 11.04.2024 IN I.A.1/2024 OF WP(C) 12942/2024.`** - **`BY ADVS. ASP.KURUP SADCHITH.P.KURUP C.P.ANIL RAJ SIVA SURESH B.SREEDEVI`** ``` W.P.(C.) No.12942 of 2024 ``` ``` 2 ``` ``` ATHIRA VIJAYAN PEER MOHAMED KHAN V.K GIRISH KUMAR V.C(K/1187/2020) ASNA M.B.(K/001696/2023) ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.07.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` W.P.(C.) No.12942 of 2024 ``` ``` 3 ``` ## **JUDGMENT** ## **Dated this the 8[th] day of July, 2024** The present Writ Petition has been filed impugning Ext.P11 order dated 03.11.2023 in Appeal No.16/2023 passed by the Debt Recovery Tribunal-II, Ernakulam. 2. The petitioner claims that he has given the various equipments to the 2[nd] respondent. The 2[nd] respondent had availed business loan from the 1[st] respondent bank. The 2[nd] respondent defaulted in repayment of the business loan. Under the provisions of the SARFEASI Act and Rules made thereunder, the secured asset of the 2[nd] respondent were put to auction. In auction sale proceedings, the sale was confirmed in favour of the petitioner 4[th] respondent. 3. The learned counsel for the petitioner submits that equipments given on lease to the 2[nd] respondent were not his property and loan was secured for the commercial building of M/s.”Jaya Vinayaka” Theatre. The 2[nd] respondent did not have any right, title or ``` W.P.(C.) No.12942 of 2024 ``` ``` 4 ``` interest over the equipments given to them on lease, as per the terms and conditions of the agreement entered between the petitioner and the 2[nd] respondent. Only lease hold rights were created in favour of the 2[nd] respondent. The 2[nd] respondent had no right to mortgage the equipments of the petitioner given to him on lease for securing the loan. 4. It is further submitted that the secured assets were sold of for Rs.5,60,10,000/- against the bank's total outstanding amount of Rs.3,93,00,059/- and there is a balance of Rs. 3,07,90,945.07 which has been credited to the account of M/s.”Jaya Vinayaka” Theatre. 5. It is therefore, submitted that the cost of petitioner's equipments, around Rs.28,00,000/- should be directed to be reimbursed to him by the respondent bank. 6. The petitioner challenged the auction proceedings before the DRT by filing SA (Diary No.112/2023). The Registrar decline to register the SA ``` W.P.(C.) No.12942 of 2024 ``` ``` 5 ``` vide order dated 12.09.2023, on the ground that the SA was presented beyond the limitation prescribed. The DRT in impugned order Ext.P11 had dismissed the appeal against the said order of the Registrar, the respondent 2, on the ground that the petitioner had presented the SA on 24.08.2023 challenging the sale of the secured asset. The auction proceedings were conducted by the respondent bank on 25.05.2023 pursuant to the sale notice dated 13.04.2023. Under Sub Section 1 of Section 17, the proceedings to challenge the action/steps taken under Sub Section 4 of Section 13 can be undertaken within 45 days from the date of sale ie, 25.05.2023 as held in judgment of the Supreme Court in the case of **International Asset Reconstruction Company of India Limited vs.Official Liquidator of Aldrich Pharmaceuticals Limited and others** [(2017) 16 SCC 137] and judgment of this Court in the case of **Authorized Officer, Indian Bank vs. K.J George & Others** [2020(6) KLT 289]. It was also held that the DRT does ``` W.P.(C.) No.12942 of 2024 ``` ``` 6 ``` not have the power to condone the delay while exercising the power under Section 17 of the SARFEASI Act, 2002. Delay in filing the application under Section 17(1) cannot be condoned by the Tribunal in view of the specific and unambiguous provisions contained in Section 17(1) of the SARFEASI Act. 7. Sri.A.Kumar, learned senior counsel assisted by Sri.P.J Anil Kumar, submits that the petitioner was not the party to the loan agreement, and therefore, no notice was issued to the petitioner. The petitioner could come to know of the sale of the secured asset only on 10.07.2023 and filed the S.A. on 24.08.2023 well within the period of 45 days from the date of knowledge of the auction proceedings. He therefore, submitted that the Tribunal has wrongly calculated 45 days from the date of the auction proceedings ie, on 25.05.2023 for the purposes of computing the limitation of 45 days, 10.07.2023 is the relevant date on which the petitioner could come to know the ``` W.P.(C.) No.12942 of 2024 ``` ``` 7 ``` auction proceedings. He has therefore submitted that if the date of knowledge of the auction proceedings to the petitioner ie, on 10.07.2023 is taken as the date to begin the limitation, the SA filed on 24.08.2023 would be well within 45 days and therefore, the impugned orders in Exts.P10 and P11 are liable to be set aside. 8. The learned counsel for the bank has submitted that the respondent had obtained loan against the Theatre building along with plants and machinery. The bank would not know whether the plants and machinery installed in the Theatre belonged to the petitioner or some other person. If the petitioner has any other right in respect of plants and machinery allegedly supplied to the 2[nd] respondent for running the Theatre, the petitioner should approach the appropriate forum in appropriate proceedings against the 2[nd] respondent. The learned counsel for the bank therefore, submits that when the Theatre building along with the plant and machinery where mortgaged as secured assets for obtaining loan, the bank was well ``` W.P.(C.) No.12942 of 2024 ``` ``` 8 ``` within it's right to auction the building of the Theatre along with plant and machinery. It is further submitted that the date of knowledge is not relevant factor under Section 17(1) for reckoning the limitation of 45 days to challenge the auction proceeding. Section 17(1) provides that within 45 days of the date of auction, a person can challenge the proceedings before the DRT. What is not provided in the provision of the Act cannot be provided by the judicial interpretation. 9. No one has put in appearance on behalf of the 2[nd] respondent, the principle borrower. 10. The question which is involved for consideration before this Court is the interpretation of Section 17(1) of the SARFEASI Act which reads as under: ## **“17. [Application against measures to recover** **secured debts** ].—(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,1 [may make an application along with such ``` W.P.(C.) No.12942 of 2024 ``` ``` 9 ``` fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within fortyfive days from the date on which such measure had been taken: [Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.]” 11.Thus, an auction taken under Section 13(4) of the SARFEASI Act can be challenged before the DRT within 45 days from the date on which the action/measure has been taken. The provision of Section 17(1) does not contemplate reckoning of the limitation of 45 days from the date of the knowledge of the auction. But the language of provision is plain and explicit that the limitation of 45 days is to be reckoned from the date of the action/measure taken under Section 13(4) of the Act. In view thereof, I do not find that that the DRT has committed any error of law or jurisdiction rejecting the application of the petitioner on the ground of limitation. 12. Thus, the writ petition is dismissed. However, ``` W.P.(C.) No.12942 of 2024 ``` ``` 10 ``` it is open to the petitioner to take appropriate measure/proceedings against the 2[nd] respondent for the claims/damages suffered by the petitioner if any, under the agreement entered into between the petitioner and the 2[nd] respondent for giving the instruments /equipments on lease. For a period of six weeks, the interim order dated 11.04.2024 shall remain in operation. Sd/- **DINESH KUMAR SINGH** **JUDGE** AP ``` W.P.(C.) No.12942 of 2024 ``` ``` 11 ``` ## **`APPENDIX OF WP(C) 12942/2024`** ``` PETITIONER EXHIBITS Exhibit P1TRUE COPY OF COMMERCIAL ARRANGEMENT MUTUALLY AGREED BETWEEN 1ST PETITIONER AND 2ND PETITIONER DATED 01.07.2016. Exhibit P2TRUE COPY OF PURCHASE ORDER DATED 13.5.2016 WITH RESPECT TO THE DCE. Exhibit P3TRUE COPY OF PURCHASE ORDER DATED 24.5.2017 WITH RESPECT TO THE DCE. Exhibit P4TRUE COPY OF THE INTERNATIONAL CUSTOMS DOCUMENT DATED 21.6.2016. Exhibit P5TRUE COPY OF THE INTERNATIONAL CUSTOMS DOCUMENT 24.7.2017. Exhibit P6TRUECOPYOFTHEMEMORANDUMOF UNDERSTANDING (MOU) DATED 2.8.2017. Exhibit P7TRUE PHOTO OF THE BANNER ERECTED OUTSIDE THE THEATRE PREMISES. Exhibit P8TRUE COPY OF THE NOTICE PUBLISHED IN NEWSPAPER UNDER SECTION 13(2) OF THE SARFAESI ACT BY THE 1ST RESPONDENT. Exhibit P9TRUE COPY OF SECURITIZATION APPLICATION HAVING DIARY NO.1118/2023 FILED BEFORE THE DEBT RECOVERY TRIBUNAL-II, ERNAKULAM. Exhibit P10TRUE COPY OF ORDER DATED 12.09.2023 PASSED BY THE REGISTRAR IN THE CASE HAVING DIARY NO.1118/2023. Exhibit P11TRUE COPY OF ORDER DATED 3.11.2023 PASSED BY DEBT RECOVERY TRIBUNAL-II, ERNAKULUM IN APPEAL NO.16/2023. Exhibit P12TRUE COPY OF THE LAWYER NOTICE DATED 14.12.2023 ISSUED TO THE 1ST RESPONDENT. Exhibit P13TRUE COPY OF THE LAWYER NOTICE DATED 14.12.2023 ISSUED TO THE 2ND RESPONDENT. RESPONDENT EXHIBITS Exhibit R1AA true copy of the sale certificate dated 7.6.2023 relating to the immovable property Exhibit R1BA true copy of the sale certificate dated 7.6.2023 relating to the movable property ```