Excelsior Correspondent
Srinagar, Dec 20: High Court today held that a loan defaulter cannot challenge the bank proceedings against him at his own will at any time as time limit under law is prescribed for it.
The Division Bench of Justice Ramalingam Sukhakar and Justice M K Hanjura on the issue whether the loan defaulter is at liberty to challenge the bank proceedings against him at any time or not, said there is a time limit to challenge the same before appropriate forum.
Petitioner firm had approached the court challenging the Tribunal’s order whereby it had dismissed the application of the firm challenging bank proceedings.
Respondent-bank stated that an application under Section 17 read with Section 17-A of the SARFAESI Act has the lineage and strips of a suit and therefore, Section 5 of the Limitation Act has no application to the facts and circumstances of the case and as a sequel thereto the application had to be filed by the petitioner within a period of 45 days as provided under Section 17 read with Section 17-A of the SARFAESI Act, and since this has not been done, the petition challenging the Tribunal’s order, is liable to be dismissed on that score alone.
“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 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 for which remedy is ordinarily available but there is bar under Section 34 of the Act in the present case”, DB said.
DB while dismissing the plea of petitioner firm made it clear that issue of a notice to the debtor by the creditor does not attract the application of principles of natural justice. It is always open to tell the debtor what he owes to repay. “No hearing can be demanded from the creditor at this stage. So far the provision of appeal is concerned, the proceedings under Section 17 of the Act have been wrongly described as appeal before the Debt Recovery Tribunal”, DB added.
Underscoring the certain Sections of Act and rulings of Apex Court also, Court has recorded that the District Judge (Debt Recovery Tribunal) appears to have rightly concluded that the proceedings under Section 17 of the SARFAESI Act are of the nature of original proceedings and in such a case although some provisions of the Limitations Act may apply, yet Section 5 has no application.
In the instant petition, the petitioner-firm assailed the order dated 13th November, 2017 of the Principal District Judge, Srinagar, in which he has dismissed the application for condonation of delay, filed along with the application under Section 17 read with Section 17-A of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
The petitioner firm was awarded two separate and different contracts by the Food Corporation of India (FCI) for construction of two godowns under the Private Entrepreneur Guarantee Scheme, 2008 (PEG Scheme), one with the capacity of 20,000 MTs and the other with a capacity of 15,000 MTs.
The petitioner-firm applied for an institutional credit facility under the PEG Scheme from the Jammu and Kashmir Bank, for the purpose of the construction of the godowns to be taken over by the FCI under the PEG Scheme.
Later, the account of the applicant firm was classified as non-performing asset (NPA) and accordingly bank initiated proceedings under SARFAESI Act.
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