Appellate Tribunal has the jurisdiction to condone the delay in filing an appeal under Section 18 (1) of the SARFAESI Act#indianlaws

The Supreme Court held that delay in filing an appeal under Section 18 (1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI Act. The contrary view taken by the Madhya Pradesh High Court was overruled.

Whether the Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) has the power to condone delay in filing an appeal under Section 18(1) of the said Act was the question before Court.

Views contended in favour of Appellate Tribunal’s power to condone delay were following:

  1. Section 18(2) of the SARFAESI Act provides that the Appellate Tribunal shall follow the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“the RDB Act”) in disposing of the appeal unless otherwise provided under the SARFAESI Act or the rules made thereunder. The proviso to Section 20(3) of the RDB Act empowers the Appellate Tribunal to entertain an appeal after expiry of period of limitation, if sufficient cause for not filing the appeal within the period of limitation was shown. Thus, the proviso to Section 20(3) of the RDB Act is incorporated in Section 18(2) of the SARFAESI Act;
  2. Section 29(2) of the Limitation Act, 1963 makes the said Act’s Sections 4 to 24 applicable to a special or local law prescribing a different period of limitation for a suit, appeal or application unless expressly excluded. There being no provision in the SARFAESI Act excluding the applicability of Sections 4 to 24 of the Limitation Act, delay can be condoned under Section 5 of the Limitation Act, and time can be excluded under Section 14 of the Limitation Act wherever applicable; and
  3. Section 24 of the RDB Act makes the Limitation Act applicable to an application made to a Tribunal. Section 36 of the SARFAESI Act makes period of limitation prescribed under the Limitation Act applicable to measures taken under Section 13(4). Thus, there is be no exclusion of the Limitation Act.

On the other hand, it was argued that:

  1. Section 18(2) of the SARFAESI Act cannot be read as extending provisions of proviso to Section 20(3) of the RDB Act to an appeal filed under Section 18(1) of the SARFAESI Act;
  2. Section 29(2) of the Limitation Act is not attracted to proceedings before a Tribunal as the period of limitation prescribed under the Limitation Act is applicable only to proceedings before a Court and not before a Tribunal; and
  3. Provisions of Limitation Act can stand excluded not only by an express provision of a local or special law but also by necessary implication from the scheme of such local or special law.

The scheme of the SARFAESI Act by making the Limitation Act expressly applicable to measures under section 13(4) of the Act impliedly excludes the said Act from appeals or other proceedings. It was observed that as per Section 18(2) the Appellate Tribunal under the SARFAESI Act has to dispose of an appeal in accordance with the provisions of the RDB Act. In this respect, the provisions of the RDB Act stand incorporated in the SARFAESI Act for disposal of an appeal. In such circumstances it is incurred to hold that SARFAESI Appellate Tribunal cannot entertain an appeal beyond the prescribed period even on being satisfied that there is sufficient cause for not filing such appeal within that period. Even if power of condonation of delay by virtue of Section 29(2) of the Limitation Act is applicable, the proviso to Section 20(3) of the RDB Act is applicable by virtue of Section 18(2) of the SARFAESI Act. Unless the scheme of the statute expressly excludes the power of condonation, such power cannot be denied to an Appellate Tribunal when the statutory scheme so warrants.  In such circumstances, the Appellate Tribunal under the SARFAESI Act has the power to condone the delay in filing an appeal before it by virtue of Section 18(2) SARFAESI Act and proviso to Section 20(3) of the RDB Act.

Supreme Court then in the instant matter also settled the conflicting views amongst different High Courts.

The view taken by Madhya Pradesh High Court in the case of Seth Banshidhar Media Rice Mills Pvt. Ltd. that the power of condonation of delay stood excluded by principle of interpretation that if a later statute has provided for shorter period of limitation without express provision for condonation, it could be implied that there was no power of condonation, was disapproved. Views taken by the High Courts of Madras, Andhra Pradesh (Sajida Begum vs. State Bank of India, AIR 2013 AP 24) and Bombay High Courts were upheld.

The Supreme Court observed that Section 29(2) of the Limitation Act has no absolute application, as the statute in question impliedly excludes applicability of provisions of Limitation Act to the extent a different scheme is adopted. If no provision of Limitation Act was expressly adopted, it may have been possible to hold that by virtue of Section 29(2) power of condonation of delay was available, as also settled in Union of India vs. Popular Construction Co., (1995) 5 SCC 5; Chhattisgarh State Electricity Board vs. Central Electricity Regulatory Commission, (2010) 5 SCC 23; Commissioner of Customs and Central Excise vs. Hongo India Private Limited, (2009) 5 SCC 791 and Gopal Sardar vs. Karuna Sardar, (2004) 4 SCC 252, that exclusion of power of condonation of delay can be implied.

The Court further observed that in view of the holding that the power of condonation of delay was expressly applicable by virtue of Section 18(2) of the SARFAESI Act read with proviso to Section 20(3) of the RDB Act and to that extent, the provisions of Limitation Act having been expressly incorporated under the special statutes in question, Section 29(2) stands impliedly excluded. To this extent, the view taken by the Andhra Pradesh High Court as well as Madras and Bombay High Courts was distinguished. The Court was in agreement with the principle that even though Section 5 of the Limitation Act may be impliedly inapplicable, principle of Section 14 of the Limitation Act can be held to be applicable even if Section 29(2) of the Limitation Act does not apply.

Apex Court accordingly answered the question in the affirmative by holding that delay in filing an appeal under Section 18 (1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI Act. The contrary view taken by the Madhya Pradesh High Court in Seth Banshidhar Media Rice Mills Pvt. Ltd. case was overruled.

[Baleshwar Dayal Jaiswal vs. Bank of India & Ors.]

SC, 05.08.2015

Civil Appeal No. 5925 – 5927 of 2015