Special Appeal Against Order Of Single Judge Dealing With Order Of DRAT Maintainable: Allahabad High Court

The Allahabad High Court has upheld the maintainability of a special appeal filed under Chapter VIII Rule 5 of the Allahabad High Court Rules, 1952 (Special Appeals) against an order of single judge dealing the order of the Debt Recovery Appellate Tribunal.

The primary issue for consideration before the Court was whether the bar on filing special appeal lay only if the order under challenge before the writ court was passed by a Tribunal in respect of any matters enumerated in the State List or the Concurrent List. The bar on filing special appeals did not extend to Tribunals constituted in exercise of power under an entry in the Union List.

Observing that the Debt Recovery Tribunal was constituted in exercise of powers under Entry 45 of the Union List, the bench comprising Justice Ashwani Kumar Mishra and Justice Syed Qamar Hasan Rizvi held

“Once the tribunal has been constituted in exercise of powers under the Union list, the exclusion clause curtailing entertainment of appeal arising out of orders passed by tribunals constituted under List II or List III would not apply.”

Factual Background

The Debt Recovery Appellate Tribunal had quashed the order of the Debt Recovery Tribunal and set aside the auction sale held by the respondent bank. The DRAT directed the respondent bank to refund the auction money to the auction purchaser after restoring possession of immovable and movable property from the auction purchaser to the borrower. The bank was granted liberty to proceed afresh from the stage of issuance of sale notice since no notice was actually served upon the appellant borrower.

The single judge, in writ jurisdiction, set aside the order of the DRAT on grounds that on the appellant (borrower) was aware of the date of the auction and had knowledge of the auction notice. The order of the single judge was challenged by the appellant in special appeal under Chapter VIII Rule 5 of the Allahabad High Court Rules, 1952 (Special Appeals).

A preliminary objection was raised by the counsel for respondent bank regarding maintainability of special appeal against order of the single judge sitting in appeal. It was argued that the appellate forum was constituted in exercise of powers under Entry 9 (Bankruptcy and Insolvency) of List III i.e. concurrent list. Reliance was placed on the decision of full bench of the Allahabad High Court in Sheet Gupta v. State of U.P. & Ors. in support of the arguments.

Per contra, counsel for appellant argued that the Tribunal was constituted in exercise of power by the Parliament under Entry 45 of List I and the decision of the tribunal would not fall in any of the exclusionary clauses indicated in the judgment of Sheet Gupta.

High Court Verdict

The Court observed that Rule 5 of Chapter VIII of the Rules of 1952 clearly provides the exigencies in which an appeal can be filed before a Division Bench against the judgment of a Single Judge. Order of a single judge exercising writ jurisdiction over judgments, orders or award by the Government or any officer or authority or a tribunal, court or statutory arbitrator in respect of a Central Act with respect to a matter enumerated in the Union List were not excluded from the ambit of special appeals.

However the Court observed that according to the decision of the full bench of the Allahabad High Court in Sheet Gupta v. State of U.P. & Ors., an appeal would not be maintainable if jurisdiction has been exercised by the Court under Article 226 and Article 227 of the Constitution of India “in respect of any judgment, order or award passed by the tribunal or Court or statutory arbitrator made or purported to be made in exercise or purported exercise of jurisdiction under any Uttar Pradesh Act or under any Central Act, with respect to any of the matters enumerated in the State List or the Concurrent List in the 7^th Schedule to the Constitution of India.”

Reliance was placed on Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Ltd., wherein considering an earlier judgment of the Supreme Court in Union of India & Anr. v. Delhi High Court Bar Association & Ors., a constitution bench of the Supreme Court had held

“73. In view of the aforesaid discussion, we are of the opinion that recovery of dues would be an essential function of any banking institution and Parliament can enact a law under List I Entry 45 as the activity of banking done by cooperative banks is within the purview of List I Entry 45. Obviously, it is open to Parliament to provide the remedy for recovery under Section 13 of the SARFAESI Act. Cooperative bank's entire operation and activity of banking are governed by a law enacted under List I Entry 45 i.e. the BR Act, 1949, and the RBI Act under Entry 38 of List I.”

The Court held that the Debt Recovery Tribunal was constituted in exercise of powers by the Parliament under Entry 45 of List I (Union List) and the bar on appeals from tribunal constituted under the State List and Concurrent List would not apply.

Case Title: Sharp Industries v. Bank Of Maharashtra And 3 Others [SPECIAL APPEAL No. - 220 of 2023]

Case Citation: 2024 LiveLaw (AB) 21 

Counsel for Appellant: Kumar Kartikeya, Vinayak Mithal

Counsel for Respondent: Shruti Malviya, Vivek Yadav

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