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2015 (4) TMI 921 - SC - Indian LawsSale of the mortgaged property - Condonation of delay in filing the Misc. Application - Rectification of recovery certificate - Contravention of the provisions of the DRT Act and the relevant rules applicable for sale of the property - Rejection of misc. application by DRT & DRAT both - Held that - We are of the view that the High Court has rightly found fault with the DRT and DRAT in rejecting the Misc. Application filed by the respondent, who has sought for rectification of the recovery certificate filed by him. Therefore, the High Court has rightly rejected the same after adverting to the judgments in the cases of State Bank of Bikaner & Jaipur 1999 (9) TMI 769 - SUPREME COURT OF INDIA and Punjab National Bank and ors 2006 (12) TMI 479 - Supreme Court of India . The exercise of jurisdiction by the High Court for giving the direction to the Court Receiver to sell the mortgaged property even after the DRT was established at Mumbai and in view of the fact that the proceedings before the High Court were automatically transferred to it in view of Section 31 of the DRT Act and therefore it was impermissible in law for the High Court to direct the Court Receiver to sell the property of the respondent in public auction by executing the Court decree, which action of the Court Receiver is void ab initio in law. The provisions of the Limitation Act are applicable to the proceedings of the DRT in view of Section 24 of the Act of 1993 and therefore, the provisions of Section 5 of the Limitation Act are applicable to the provisions of the said Act. The same has not been examined and considered by the DRT-II and the DRAT at the time of passing the impugned orders in the writ petitions. In view of the foregoing reasons, the legal contentions urged on behalf of the appellant-Bank have no substance in the matter for the reason that the recovery certificate issued on 29.11.2004, was sought to be modified by the appellant-Bank itself by filing an application before the DRT-II and the same has not been modified, which is another strong ground for the respondent to file Misc. application for the cancellation of the sale of the property in favour of the appellant-Bank, along with condonation of delay application urging tenable grounds. - Decided against the appellant.
Issues Involved:
1. Condonation of delay in filing Misc. Application. 2. Jurisdiction of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT). 3. Validity of the sale of mortgaged property by the Court Receiver. 4. Applicability of the Limitation Act to DRT proceedings. 5. Authority of the High Court in permitting the sale of mortgaged property post-DRT establishment. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing Misc. Application: The primary issue before the Supreme Court was the condonation of delay in filing Misc. Application (L) No. 34 of 2012 by the respondent before the DRT-II, Mumbai. The respondent's application was delayed by 23 days, leading to the filing of Misc. Application No. 7 of 2012 for condonation of delay. Both the DRT and DRAT dismissed the application, citing the lack of a satisfactory explanation for the delay. However, the High Court, upon hearing the parties, set aside the orders of the DRT and DRAT, condoned the delay, and restored the Misc. application for fresh consideration. 2. Jurisdiction of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT): The Supreme Court examined whether the High Court's direction to the Court Receiver to sell the mortgaged property was valid after the establishment of the DRT. The DRT Act, which came into effect on 16.07.1999, transferred jurisdiction over debt recovery matters from civil courts to the DRT. The High Court's order dated 03.12.1999, directing the sale of the property, was challenged on the grounds that the execution proceedings should have been transferred to the DRT automatically. 3. Validity of the Sale of Mortgaged Property by the Court Receiver: The sale of the respondent's mortgaged property by the Court Receiver was a significant point of contention. The respondent argued that the sale conducted by the Court Receiver was void ab initio, as it was done after the DRT was established and had jurisdiction over such matters. The Supreme Court upheld this argument, stating that the sale was invalid as the execution proceedings should have been transferred to the DRT. 4. Applicability of the Limitation Act to DRT Proceedings: The applicability of the Limitation Act to DRT proceedings was another critical issue. The learned Solicitor General argued that the Limitation Act's provisions, specifically Articles 127 and 99, applied to the DRT proceedings, making the respondent's application time-barred. However, the Supreme Court noted that Section 24 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, made the Limitation Act applicable to DRT proceedings, allowing for the condonation of delay under Section 5 of the Limitation Act. 5. Authority of the High Court in Permitting the Sale of Mortgaged Property Post-DRT Establishment: The Supreme Court scrutinized the High Court's authority to direct the Court Receiver to sell the mortgaged property after the DRT was established. The Court concluded that the High Court's order was void, as the execution proceedings should have been transferred to the DRT automatically. The Court emphasized that a decree passed without jurisdiction is a nullity and cannot be enforced. Conclusion: The Supreme Court upheld the High Court's decision to set aside the orders of the DRT and DRAT, condone the delay in filing the Misc. Application, and remand the matter to the DRT-II for reconsideration. The Court directed the parties to maintain the status quo of the property until the DRT-II disposed of the Misc. Application. The appeal was dismissed with costs of Rs. 1,00,000 payable to the respondent.
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