India: Delay In Filing Appeal Against An Order Of The Recovery Officer Cannot Be Condoned

Last Updated: 17 November 2017
Article by Chakrapani Misra, Ravitej Chilumuri and Shobhana Narayan

Most Read Contributor in India, December 2017

The Supreme Court, which is the Apex Court of India, recently ruled on whether Section 5 of the Limitation Act, 1963 could be invoked to seek a condonation of delay in filing an appeal before the Debt Recovery Tribunal (Tribunal) against an order of the Recovery Officer under Section 28 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act). In International Asset Reconstruction Company of India Ltd v The Official Liquidator of Aldrich Pharmaceuticals Ltd and Ors, while noting that the Act was a special law and a complete Code by itself, the Supreme Court observed that the proceedings before the 'Recovery Officer' were not before 'a Tribunal' and that Section 24 of the Act (on applicability of the Limitation Act, 1963 to 'an application made to a Tribunal'), applied only to proceedings before the Tribunal arising out of section 19 of the Act.

Arguments raised on behalf of the Appellant

  • The Act was not a complete code and was incorporated to expedite the recovery procedures. Therefore, one cannot infer express or implied exclusion of the Limitation Act, 1963;
  • There was no express exclusion of applicability of the Limitation Act, 1963 on Section 30 of the Act;
  • By virtue of Section 29 (2) of the Limitation Act, 1963, any implied exclusion was ruled out and Section 5 of the Limitation Act, 1963 would apply to Section 30 of the Act;
  • The Tribunal is required to be guided by the principles of natural justice which would also include the power to condone delay under Section 30 of the Act;
  • Section 19(25) of the Act specifically requires the Tribunal to pass necessary actions to secure the ends of justice, which would also include an order of condonation of delay; and
  • The definition of 'application' under Section 2(b) of the Act and the definition of 'application' under Rule 2 (c) of the Debts Recovery Tribunal Rules, 1993 ("Rule") were to be read conjointly. From such reading, it becomes apparent that any delay in filing an appeal under Section 30, could be condoned.

Arguments raised on behalf of the Respondent

  • The Act was a complete Code in itself and Section 24 of the Act applied only to an application under Section 19 of the Act;
  • The legislature expressly excluded any provision for grant of an extension of time beyond 30 days for filing an appeal under Section 30 of the Act; and
  • The definition of application under Section 2 (b) of the Act was restricted only to the applications filed under Section 19 of the Act. Its meaning could not be extended beyond that by reading it along with Rule 2 (c) of the Rules, as such rule had to be read with Rule 4.

Decision of the court

The Supreme Court made the following observations:

  • The Act, being a special law and a code in itself, provides the complete procedure for institution of recovery proceedings, method of enforcement and the right to appeal. While the Tribunal may be vested with certain powers of a civil court, it is not vested with the status of 'court'. Thus, the Tribunal regulates its own procedures in accordance with natural justice.
  • The pre-requisite for applicability of Section 5 of the Limitation Act, 1963 was the requirement that the proceedings must be pending before a court. The proceedings under the Act were before a statutory tribunal and not before a 'court'. Thus, unless otherwise expressly provided for in the Act, the Tribunal could not be said to have the powers to condone delay.
  • An 'application' is defined under Section 2(b) of the Act to mean an application made to the Tribunal under Section 19. Therefore, from a joint reading of both Section 2(b) and Section 24, it was clear that provisions of the Limitation Act, 1963 would be applicable only to applications made under Section 19 of the Act.
  • To extend the definition of application under Rule 2 (c) to read it along with Section 2 (b), to make the Limitation Act, 1963 applicable to an appeal under Section 30(1) would be contrary to the intention of the legislature. Further, post the 2000 amendment to Section 30 of the Act, proceedings before the Recovery Officer are no longer deemed to be proceedings before the Tribunal.
  • The absence of any specific provisions for extension of time by the Tribunal to prefer an appeal from an order of a Recovery Officer, made it apparent that the intention of the legislature was in fact to exclude the same.

Thus, the Supreme Court ruled that the Tribunal did not have the power to condone delay in preferring an appeal from an order of the Recovery Officer and the person aggrieved may challenge the order of the Recovery Officer only within 30 days from the date of issue of receipt of the order of the Recovery Office.

Comment

This Judgment clears doubts regarding limitation in cases of an appeal to the Tribunal from the order of a Recovery Officer. Further, the judgment is significant to the extent that it clarifies that though tribunals have certain powers of a civil court, they do not have the same status as that of a 'court' and are bound by the provisions of the statutes that create them. Further, the Supreme Court rightly looked into the intent of the legislature in ruling that Section 24 of the Act applied only to proceedings before the Tribunal arising out of section 19 of the Act and not proceedings arising out of the order of the Recovery Officer.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com

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