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Application for review not an "application" under Section 19 of Recovery of Debts Act: Supreme Court

Shruti Mahajan

The Supreme Court recently held that a review application cannot be said to be an "application" under Section 19 of the Recovery of Debts and Bankruptcy Act (RDB Act).

The judgment was rendered by the Bench of Justices Rohinton Nariman and V Ramasubramanian.

The Court ruled that the provisions of the Limitation Act, including those concerning condonation of delay, are applicable only to original applications made before the Tribunal under Section 19 of the RDB Act. Therefore, an application for review is left out of the scope of this provision.

Section 19 of the Recovery of Debts Act
Section 19 of the Recovery of Debts Act

Review applications are filed under Section 22(2)(e) of the Act read with Rule 5A of the Debt Recovery Tribunal (Procedures) Rules of 1993 and therefore, these applications cannot be said to be "applications to a Tribunal", the Court held.

Rule 5A of the 1993 Rules provides for review of orders passed by the Debts Recovery Tribunals. It lays down that no application for review shall be made after the expiry of a period of sixty days from the date of the order.

Section 24 of the Act deals with the aspect of limitation and makes the provisions of the Limitation Act applicable to "an application made to a Tribunal". Therefore, the provisions of Limitation Act will apply only to applications as under Section 19, the Court held.

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.
Supreme Court in Standard Chartered vs MSTC

The Court, in fact, also goes to point out that the Rules of 1993 make it clear that all the applications, including review applications, are treated differently and separately given that the fees payable for all the applications is on different footing.

Referring to the Supreme Court's ruling in the case of International Asset Reconstruction Company of India Limited, the Bench held that this case makes it abundantly clear that the law of limitation as under the Limitation Act will be applicable only to applications filed under Section 19 of the RDB Act, since the RDB Act is a special law and a complete code in itself.

In the instant case, the Court was hearing a challenge to the decision of the Bombay High Court, which set aside the order of the Debts Recovery Tribunal dismissing the application for condonation of delay.

The Supreme Court found that the High Court had wrongly applied Order XLVII Rule 7 of the Code of Civil Procedure. It thus held,

"Section 22(1) of the Act makes it clear that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, making it clear thereby that Order XLVII Rule 7 would not apply to the Tribunal."

Finding the view taken by the High Court to be unsustainable, the Apex Court set aside the decision of the High Court and allowed the appeal.

The appellant, Standard Chartered Bank, was represented by Senior Advocate Neeraj Kishan Kaul. Advocate Amar Dave appeared for the respondent company.

[Read Judgment]

Standard Chartered vs MSTC.pdf
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