DRAT set aside the DRT order and emphasized substantive justice over procedural technicalities in SARFAESI applications.
The Debts Recovery Appellate Tribunal (DRAT), Allahabad Bench headed by Justice R.D. Khare (Chairperson) addressed an appeal and held that the dismissal of a securitization application solely for lack of a separate condonation application is against the law when the limitation explanation is provided within the application itself, as statutory proformas under the SARFAESI Act allow such inclusion. It emphasized that procedural technicalities must not defeat substantive justice.
The Debts Recovery Appellate Tribunal (DRAT) addressed an appeal under Section 18 of the SARFAESI Act, 2002, challenging the dismissal of a securitization application by the DRT, Lucknow, on grounds of limitation. The appellant had availed a cash credit facility secured by an equitable mortgage but defaulted, leading to the account being classified as NPA. Following statutory notices under the SARFAESI Act, the mortgaged property was auctioned on October 20, 2018, and a sale certificate was issued on October 30, 2018. The appellant filed a securitization application on November 29, 2018, seeking to quash the entire proceedings, including the auction and sale certificate. The DRT dismissed the application, citing the absence of a separate condonation application for delay.
The appellant argued that the details regarding limitation were provided in the securitization application itself, explaining that the delay occurred due to a lack of prior knowledge about the auction. It was further contended that the DRT erred by ignoring the explanation provided in the limitation clause of the application. DRAT observed that statutory proformas under the SARFAESI Act permit the inclusion of limitation explanations within the application itself, and a separate condonation application is not mandatory. It held that the DRT’s decision to dismiss the application solely on technical grounds without evaluating the explanation for the delay was against the principles of justice.
The DRAT set aside the impugned order dated January 27, 2020, and allowed the appeal. The matter was remanded to the DRT for reconsideration on the issue of limitation, with directions to decide the matter on merits after affording an opportunity of hearing to the parties. It clarified that procedural technicalities should not obstruct substantive justice. The Tribunal directed the parties to appear before the DRT on October 9, 2024, for further proceedings. No costs were awarded, and the judgment was ordered to be uploaded on the e-DRT portal.
Mr. Sanjeev Singh, Advocate represented the Appellant.
None of them were present for the Respondent.
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