DRT Has No Power To Condone Delay In Filing Review Application Under RDB Act : SC [Read Judgment]

The Supreme Court has held that the Debts Recovery Tribunal has no power to condone the delay in filing application for review under the Recovery of Debts and Bankruptcy Act 1993(RDB Act)

The Court held that the provisions of Limitation Act, including the provision to condone delay under Section 5 of it, apply only to original applications filed under Section 19 of the RDB Act and not to review applications.

A bench comprising Justices R F Nariman and V Ramasubramanian held so in the case Standard Chartered Bank vs MSTC Ltd.

The Court in this case noted that Section 24 of the RDB Act states that the provisions of Limitation Act apply to "an application made to a Tribunal".

Section 2(b) of the Act defines an "application" as an application made under Section 19 of the Act, which is an original application. 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 :

"What is clear is 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 in a judgment that has been delivered in an application filed under Section 19".

The bench also applied the dictum in the 2017 SC decision in International Asset Reconstruction Company Of India Ltd vs The Official Liquidator Of Aldrich Pharmaceuticals Ltd And Others, which had held that DRT cannot condone delay in filings appeals.

"The judgment of this Court makes it plain, though in a slightly different context, that 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".

The peremptory language of Rule 5A would also make it clear that beyond 30 days there is no power to condone delay, the bench further noted.

The SC was considering an appeal against an order passed by the Bombay High Court  in a writ petition whereby it set aside the order of the DRT rejecting a review application on the ground of delay. The HC held that the SC decision in International Asset Reconstruction Company of India Ltd case was confined only to appeals, and that the DRT had power to condone delay in filing review.

The SC held the HC view to be erroneous.

Case Details
Title : Standard Chartered Bank vs MSTC Ltd
Case No : Civil Appeal No.521 of 2020
Coram    : Justices R F Nariman and V Ramasubramanian
Appearances : Senior Adv Neeraj Kishen Kaul (for appellant), Advocate Amar Dave (for respondent).

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