DRT Cannot Condone Delay Under Section 5 of Limitation Act for Section 17 SARFAESI Applications

The petitioners challenged a sale notice dated August 17, 2024, issued by respondent No. 1 under the SARFAESI Act.

They filed an application (SA No. 597/2024) before the Debts Recovery Tribunal (DRT-1) on November 19, 2024, accompanied by an interlocutory application (IA No. 2576/2024) under Section 5 of the Limitation Act to condone a 49-day delay in filing the challenge under Section 17(1).

On March 28, 2025, the DRT dismissed the application, holding it was barred by limitation and maintainability.

The petitioners approached the High Court arguing that the DRT possesses the power to condone delay and requested the court to defer the matter as the legal question is currently pending before the Supreme Court in SLP(C) No. 4754/2021.

The court primarily interpreted Section 17(1) of the SARFAESI Act, which mandates that an application against measures taken by a secured creditor must be made within 45 days.

It relied on the principle of expressio unius est exclusio alterius, noting that while Section 18 of the SARFAESI Act expressly provides for condonation of delay in appeals, Section 17 remains silent, implying a deliberate legislative exclusion of Section 5 of the Limitation Act.

The court further applied Section 29(2) of the Limitation Act, determining that the rigid 45-day limit in Section 17 constitutes an "implied exclusion" of the Limitation Act’s general provisions.

Precedentially, the court was bound by the Division Bench ruling in Kailasam P. v. Karnataka Bank Limited, which held that Section 17 proceedings are original in nature (akin to a suit) and thus cannot benefit from Section 5 condonation.

It also followed Ashok Sadarangani v. UOI, establishing that the mere pendency of a reference before a larger bench or the Supreme Court does not stay proceedings in lower courts unless an express stay is granted.

The court reasoned that the SARFAESI Act is a complete code intended for the "speedy recovery" of non-performing assets.

It observed a critical distinction between Section 17 and Section 18 of the Act; the legislature specifically granted the power to condone delay for appellate proceedings under Section 18 but chose not to do so for Section 17, which the court characterized as an "original proceeding".

The court rejected the petitioners' reliance on Baleshwar Dayal Jaiswal v. Bank of India, clarifying that the Supreme Court's findings in that case applied to appellate powers under Section 18 and could not be extended to Section 17 original applications.

Regarding judicial discipline, the court noted that although the Supreme Court had issued notice in a similar SLP, it had not granted an interim stay or overruled existing precedents.

Consequently, the court held it was bound to follow the Karnataka High Court’s Division Bench precedent in Kailasam P., which categorically denies the DRT's power to condone delay under Section 17.

It held that Section 5 of the Limitation Act has no application to Section 17 of the SARFAESI Act, and the DRT lacks the statutory authority to condone delay beyond the prescribed 45-day period.

Furthermore, the court held that the mere pendency of an issue before the Supreme Court, without an accompanying stay order, does not bar the High Court from deciding the matter based on existing binding precedents.

All pending interlocutory applications were closed.