In a recent judgment, Supreme Court has held that that 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.

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

Case Details:
Civil Appeal No. 5924 of 2015 with Civil Appeal No. 5925-5926-5927/2013
Baleshwar Dayal Jaiswal (Appellant) vs Bank of India & Ors. (Respondent)
Date of Order : 05-08-2015
Coram: Adarsh Kumar Goel and Justice Jagdish Singh Khehar

Vews of High Courts:
The issue in question had been examined by the High Courts of Madhya Pradesh, Andhra Pradesh, Bombay and Madras. While Madhya Pradesh High Court in M/s. Seth Banshidhar Media Rice Mills Pvt. Ltd. vs. State Bank of India held that delay cannot be condoned by the Tribunal, the Andhra Pradesh High Court in Sajida Begum vs. State Bank of India , the Bombay High Court in UCO Bank, Mumbai vs. M/s. Kanji Manji Kothari and Co., Mumbai and the Madras High Court in Punnu Swami vs. The Debts Recovery Tribunal had taken a contrary view

Appellant’s Contentions:
(i) 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;

(ii) 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

(iii) 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.

Respondent Bank’s Contentions:
(i) 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;

(ii) 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  

(iii) 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.

Excerpts from the Judgment:

The first point for consideration is the applicability of proviso to Section 20(3) of the RDB Act to the disposal of an appeal by the Appellate Tribunal under Section 18(2) of the SARFAESI Act. A bare perusal of the said Section 18(2) makes it clear that 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. Once it is so, we are unable to discern any reason as to why the 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 were held not to be applicable, the proviso to Section 20(3) of the RDB Act is applicable by virtue of Section 18(2) of the SARFAESI Act. This interpretation is clearly borne out from the provisions of the two statutes and also advances the cause of justice. Unless the scheme of the statute expressly excludes the power of condonation, there is no reason to deny such power to a Appellate Tribunal when the statutory scheme so warrants. Principle of legislation by incorporation is well known and has been applied inter alia in Ram Kirpal Bhagat vs. The State of Bihar , Bolani Ores Ltd. vs. State of Orissa, Mahindra and Mahindra Ltd. vs. Union of India and Onkarlal Nandlal vs. State of Rajasthan relied upon on behalf of the appellants. We have thus no hesitation in holding that 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.

The fact that RDB Act and the SARFAESI Act are complimentary to each other, as held by this Court in Transcore vs. Union of India, also supports this view

The Madhya Pradesh High Court has held 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. Reliance has been placed on principles of statutory interpretation by Justice G.P. Singh, 12th Edition, 2010, page 310. It was further observed that the Limitation Act was made applicable to a Tribunal under Section 24 of the RDB Act, but there was no similar provision with respect to the Appellate Tribunal. To justify such an inference, reliance has also been placed on Gopal Sardar case and Fairgrowth Investments Ltd. vs. The Custodian10 . It was further observed that the object of SARFAESI Act was to ensure speedy recovery of the dues and quicker resolution of disputes arising out of action taken for recovery of such dues. We find the approach to be erroneous and incorrect understanding of the principle of interpretation which has been relied upon. The principle discussed in the celebrated Treatise in question is as follows:

“When an amending Act alters the language of the principal statue, the alteration must be taken to have been made deliberately.”

It is difficult to appreciate how the above principle justifies the view of the High Court. The change intended in SARFAESI Act has to be seen from the statute and not from beyond it. No doubt the period of limitation for filing appeal under Section 18 of the SARFAESI Act is 30 days as against 45 days under Section 20 of the RDB Act. To this extent, legislative intent may be deliberate. The absence of an express provision for condonation, when Section 18(2) expressly adopts and incorporates the provisions of the RDB Act which contains provision for condonation of delay in filing of an appeal, cannot be read as excluding the power of condonation. As already observed, the proviso to Section 20(3) which provides for condonation of delay (45 days under RDB Act) stands extended to disposal of appeal under the SARFAESI Act (to the extent that condonation is of delay beyond 30 days). There is no reason to exclude the proviso to Section 20(3) in dealing with an appeal under the SARFAESI Act. Taking such a view will be nullifying Section 18(2) of the SARFAESI Act. We are thus, unable to uphold the view taken by the Madhya Pradesh High Court.

It is well settled that exclusion of power of condonation of delay can be implied as laid down in Union of India vs. Popular Construction Co., Chhattisgarh State Electricity Board vs. Central Electricity Regulatory Commission, Commissioner of Customs and Central Excise vs. Hongo India Private Limited and Gopal Sardar vs. Karuna Sardar relied upon on behalf of the Banks.

In Nahar Industrial Enterprises Ltd. vs. Hong Kong and Shanghai Banking Corpn.16 , this Court examined the scheme of the two Acts in question and held that the Tribunal was a court but not a civil court for purposes of Section 24 of the CPC. We are of the view that for purposes of decision of these appeals, it is not necessary to decide the question whether the Tribunal under the Banking statutes in question was court for purposes of Section 29(2) of the Limitation Act. We have already held 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.

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