Standard Chartered Bank vs. MSTC Limited - (Supreme Court) (21 Jan 2020)

Debt Recovery Tribunal has no power to condone delay in filing Review Application under RDB Act

MANU/SC/0073/2020

Banking

In the present case, the Respondent had filed a review petition before the Debt Recovery Tribunal with the application for condonation of delay which was dismissed on the grounds that Section 5 of the Limitation Act, 1963 does not apply to review petitions. The Respondent then filed a Writ Petition before the Bombay High Court which was disposed off by the impugned judgment holding that that where an alternative remedy was not available, writ petition was maintainable.

The Court noted that Section 24 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) states that the provisions of the Limitation Act, 1963 apply to “an application made to a Tribunal”. Section 2 (b) of the Act define application as one made under Section 19 of the RDB Act. The application for review is filed not under Section 19 but as per Section 22 (2) (e) read with Rule 5A of the Debt Recovery Tribunal (Procedure) Rules, 1993. On this basis, the Bench observed that an application for review cannot possibly be said to be an application filed under Section 19 even on a cursory reading of the provisions of the Act, as it traces its origin to Section 22(2)(e) read with Rule 5A of the Rules. Such applications filed under Rule 5A are not for recovery of debts but are only applications to correct errors apparent on the face of the record n a judgment that has been delivered in an application filed under Section 19.

The Bench upheld the Supreme Court’s Decision in International Asset Reconstruction Company Of India Ltd v. The Official Liquidator of Aldrich Pharmaceuticals Ltd and Others, which had held that the Debt Recovery Tribunal cannot condone delay in filings appeals.

The only application that is referred to by Section 24 of the RDB Act is an application filed under Section 19 and no other. This being the case, an application for review not being an application under Section 19, but an application under Section 22(2)(e) read with Rule 5A of the Rules, this judgment (International Asset Reconstruction Company of India Ltd case) would apply on all fours to exclude applications which are review applications from the purview of Section 24 of the RDB Act. Thereby, the Supreme Court held that the Apex Court’s decision was erroneous.

Tags : DELAY DEBT RECOVERY TRIBUNAL