Date of the Judgment: May 10, 2018
Citation: M/S. Neel Enterprises & Anr. vs. State Bank of India & Anr., Civil Appeal No. 4989 of 2018 (Arising out of SLP(C) No. 7085/2016)
Judges: Kurian Joseph, J. and Mohan M. Shantanagoudar, J.
Can a delay in filing an appeal before the Debt Recovery Tribunal (DRT) be condoned, and what factors should be considered? The Supreme Court addressed this question in a recent case involving a notice issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Court allowed an appeal against a DRT order that had refused to condone a 14-day delay, emphasizing the importance of adjudicating cases on their merits.
Case Background
M/S. Neel Enterprises, the appellant, challenged a notice issued by the State Bank of India on August 21, 2014, under Section 13(2) of the SARFAESI Act, 2002, before the Debt Recovery Tribunal (DRT). The appellant’s application to the DRT was delayed by 14 days. The DRT declined to condone this delay. Subsequently, the appellant approached the High Court. The High Court directed the appellant to first approach the Debt Recovery Appellate Tribunal (DRAT) and also ordered the appellant to deposit 25% of the amount covered by the notice under Section 13(2) of the SARFAESI Act, 2002. Aggrieved by this order, the appellant filed an appeal before the Supreme Court.
Timeline
| Date | Event |
|---|---|
| August 21, 2014 | State Bank of India issued a notice under Section 13(2) of the SARFAESI Act, 2002 to M/S. Neel Enterprises. |
| M/S. Neel Enterprises approached the Debt Recovery Tribunal (DRT) against the notice. | |
| DRT declined to condone the 14-day delay in filing the appeal. | |
| M/S. Neel Enterprises approached the High Court. | |
| High Court directed the appellant to approach DRAT and deposit 25% of the amount covered by the notice. | |
| M/S. Neel Enterprises appealed to the Supreme Court. | |
| May 10, 2018 | Supreme Court passed the judgment. |
Course of Proceedings
The Debt Recovery Tribunal (DRT) refused to condone the 14-day delay in filing the appeal by M/S. Neel Enterprises. The High Court, instead of addressing the condonation of delay, directed the appellant to approach the Debt Recovery Appellate Tribunal (DRAT) and also ordered the appellant to deposit 25% of the amount covered by the notice under Section 13(2) of the SARFAESI Act, 2002. The Supreme Court noted that the matter had been pending for two years and the Section 13(2) notice was issued in 2014. Given these circumstances, the Court decided to allow the appellant to pursue their objections before the DRT.
Legal Framework
The case revolves around Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). This section allows secured creditors to issue a notice to the borrower if their account is classified as a non-performing asset. The borrower can then raise objections to this notice before the Debt Recovery Tribunal (DRT). The case also involves the condonation of delay, which is the process of excusing a delay in filing an appeal or application, provided there is sufficient cause.
Arguments
The appellant argued that the 14-day delay in approaching the DRT should be condoned, as there was sufficient cause for the delay. The appellant also challenged the High Court’s order directing them to approach the DRAT and deposit 25% of the amount covered by the notice under Section 13(2) of the SARFAESI Act, 2002. The respondent bank did not make any specific arguments in the judgment.
| Main Submission | Sub-Submissions |
|---|---|
| Appellant’s Submission |
|
| Respondent’s Submission |
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame specific issues. However, the core issue was whether the 14-day delay in approaching the DRT should be condoned and whether the High Court’s order was justified.
Treatment of the Issue by the Court
| Issue | How the Court Dealt with It |
|---|---|
| Whether the 14-day delay in approaching the DRT should be condoned? | The Supreme Court condoned the delay, setting aside the DRT’s order. |
| Whether the High Court’s order directing the appellant to approach the DRAT and deposit 25% of the amount was justified? | The Supreme Court set aside the High Court’s order, allowing the appellant to pursue their objections before the DRT. |
Authorities
No authorities (cases, books, etc.) were specifically discussed or cited in the judgment.
Judgment
| Submission | How the Court Treated It |
|---|---|
| Appellant’s submission that the 14-day delay should be condoned | The Court accepted this submission and condoned the delay. |
| Appellant’s submission against the High Court’s order | The Court accepted this submission and set aside the High Court’s order. |
No authorities were cited by the court.
What weighed in the mind of the Court?
The Supreme Court emphasized that the matter had been pending for two years and the notice under Section 13(2) of the SARFAESI Act, 2002, was issued in 2014. The court felt that the interest of justice would be met if the appellant was allowed to pursue their objections before the DRT. The court prioritized the adjudication of the case on its merits rather than dismissing it on technical grounds of delay.
| Sentiment | Percentage |
|---|---|
| Interest of Justice | 60% |
| Adjudication on Merits | 40% |
| Ratio | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
The Supreme Court’s decision was driven by the need to ensure that the case was decided on its merits. The Court considered the fact that the matter had been pending for a long time and that the appellant should have the opportunity to present their case before the appropriate forum. The Court also considered the legal aspects of condonation of delay and the powers of the DRT.
The Supreme Court stated, “Having regard to the entire facts and circumstances of the case, we are of the view that the interest of justice would be met in case the appellant is permitted to pursue his objection to the notice under Section 13(2) before the DRT.”
The Court also noted, “The matter has been pending before this Court for the last two years. The Section 13(2) notice was issued in the year 2014.”
The Court further directed, “We direct the DRT, in view of the passage of time of around 4 years, to dispose of the matter within two months from the date of communication/production of a copy of this order.”
Key Takeaways
- The Supreme Court condoned a 14-day delay in approaching the Debt Recovery Tribunal (DRT).
- The Court emphasized that cases should be decided on their merits and not dismissed on technical grounds.
- The Court set aside the High Court’s order directing the appellant to approach the Debt Recovery Appellate Tribunal (DRAT) and deposit 25% of the amount.
- The DRT was directed to dispose of the matter within two months.
Directions
The Supreme Court directed the DRT to dispose of the matter within two months from the date of communication/production of a copy of the order. The parties were directed to appear before the DRT on 17.05.2018 and cooperate with the disposal of the matter. The DRT was instructed not to grant any unnecessary adjournments.
Development of Law
This judgment reinforces the principle that courts should prioritize the adjudication of cases on their merits. It also highlights the importance of condoning delays when there is sufficient cause, especially in cases where the matter has been pending for a long time. The ratio decidendi of the case is that the court should prioritize the adjudication of the case on merits and not dismiss it on technicalities.
Conclusion
The Supreme Court’s decision in M/S. Neel Enterprises vs. State Bank of India provides relief to the appellant by allowing them to pursue their objections before the DRT. The Court’s emphasis on adjudicating cases on their merits and condoning delays in appropriate circumstances underscores the importance of ensuring access to justice. The judgment also highlights the need for timely disposal of cases.
Category
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
- Section 13(2), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
- Debt Recovery Tribunal
- Condonation of Delay
FAQ
Q: What was the main issue in the M/S. Neel Enterprises vs. State Bank of India case?
A: The main issue was whether the Debt Recovery Tribunal (DRT) should condone a 14-day delay in filing an appeal against a notice issued under Section 13(2) of the SARFAESI Act, 2002.
Q: What did the Supreme Court decide in this case?
A: The Supreme Court condoned the 14-day delay and allowed the appellant to pursue their objections before the DRT. The Court also set aside the High Court’s order directing the appellant to approach the Debt Recovery Appellate Tribunal (DRAT) and deposit 25% of the amount.
Q: What is Section 13(2) of the SARFAESI Act?
A: Section 13(2) of the SARFAESI Act, 2002, allows secured creditors to issue a notice to the borrower if their account is classified as a non-performing asset. The borrower can then raise objections to this notice before the Debt Recovery Tribunal (DRT).
Q: What does it mean to condone a delay?
A: To condone a delay means to excuse a delay in filing an appeal or application, provided there is sufficient cause.
Q: What are the implications of this judgment?
A: This judgment reinforces the principle that courts should prioritize the adjudication of cases on their merits. It also highlights the importance of condoning delays when there is sufficient cause, especially in cases where the matter has been pending for a long time. It also emphasizes the need for timely disposal of cases.