State Bank of India vs M/s. Indhumathi Refineries Private Ltd

S. Ravi Kumar, Chairperson

This Appeal is against Order dated 31.03.2022 of DRT-II, Chennai, in MA 128/2021 in Appeal (MDN) 1447/2021 in DRC No.09/2014 in OA 154/2011.

Brief facts leading to this Appeal are as follows:-

Appellant herein filed Appeal under Section 30 of Recovery of Debts and Bankruptcy Act, 1993 (hereinafter called as RDB Act, 1993) challenging Order of Recovery Officer dated 23.08.2018 in DRC No.09/2014 in OA 154/2011. As the Appeal is not within time by the date of filing, Appellant filed Application in MA 128/2021, to condone delay of 901 days in filing the said Appeal. Tribunal below, dismissed said Application, holding that Section 5 of Limitation Act, is not applicable, by relying on judgement of Hon’ble Supreme Court in International Asset Reconstruction Company of India Ltd. Vs. The Official Liquidator  of Aldrich  Pharmaceuticals  Limited &  Ors., reported in 2017 (16) SCC 137. Aggrieved by Order of Tribunal below, present Appeal is preferred.

Respondents remained ex parte in this Appeal. Heard Learned Advocate for Appellant.

Advocate for Appellant submitted that delay in filing the Appeal was due to internal and external audit work of Bank besides focusing on investigation of properties owned by Respondents and lodging complaint before CBI. He submitted, the delay is not intentional. He further submitted while Bank involved in the above referred investigation, pandemic situation intervened in the meantime, and that is also one of the cause for delay, and further submitted that, DRAT can condone delay under Section 20 (3) of RDB Act, 1993, therefore, present Appeal is filed. When such an argument is made, a request is made to Advocate for Appellant to show any judgement in support of said argument. He represented that, this Tribunal, about two or three years back, passed such Oder, and took time to produce Order copy. But, finally, he concluded his arguments on 02.05.2023, without producing any such Order, and only producing Order copy of judgement of Hon’ble Supreme Court which was relied by lower Tribunal. It is submitted that as per Hon’ble Supreme Court decision, DRAT has power under Section 20(3) of RDB, Act, 1993.

I have perused the material papers, impugned Order dated 31.03.2022 and judgement of Hon’ble Supreme Court in International Asset Reconstruction Company of India Ltd. Vs. The Official Liquidator of Aldrich Pharmaceuticals Limited & Ors., reported in 2017 (16) SCC 137.

It is not in dispute that Appeal filed before Tribunal below is by invoking Section 30 of RDB Act, 1993, challenging Order of Recovery Officer. It is also not in dispute that no provision is made to Section 30 of RDB Act, 1993, for condonation of delay, unlike for an Appeal filed under Section 20 of RDB Act, 1993. Here, Appellant is an Institution and a leading Bank. It is not in dispute that there is a separate legal department for Appellant. All legal proceedings have to be monitored by that department, and to my understanding, even for filing Appeals also, the legal department will first scrutinize, and on its advice, Appeals have to be filed. When Tribunal below came to the conclusion that Section 5 of Limitation Act, has no application based on judgement of Hon’ble Supreme Court, as referred to above, minimum expected from legal department is to study judgement of Hon’ble Supreme Court, then only, should come to a conclusion about filing of the Appeal.

Hon’ble Supreme Court, in the above decision, clearly held that the period of 30 days under Section 30(1) of RDB Act, 1993, for preferring the Appeal against Order of Recovery Officer, cannot be condoned by Application under Section 5 of Limitation Act. The relevant part of judgement is as follows:-

“14. The RDB Act is a special law. The proceedings are before a statutory Tribunal. The scheme of the Act manifestly provides that the Legislature has provided for application of the Limitation Act to original proceedings before the Tribunal under Section 19 only. The appellate tribunal has been conferred the power to condone delay beyond 45 days under Section 20(3) of the Act. The proceedings before the Recovery Officer are not before a Tribunal. Section 24 is limited in its application to proceedings before the Tribunal originating under Section 19 only. The exclusion of any provision for extension of time by the Tribunal in preferring an appeal under Section 30 of the Act makes it manifest that the legislative intent for exclusion was express. The application of Section 5 of the Limitation Act by resort to Section 29(2) of the Limitation Act, 1963 therefore does not arise. The prescribed period of 30 days under Section 30(1) of the RDB Act for preferring an appeal against the order of the Recovery officer therefore cannot be condoned by application of Section 5 of the Limitation Act.

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It is clear from a reading of judgement of Hon’ble Supreme Court, a distinction is made between an Appeal under Section 20 of RDB Act, 1993 and an Appeal under Section 30 of RDB Act, 1993, while holding that, delay for filing an Appeal under Section 30 of RDB Act, 1993, cannot be condoned. When such is the verdict of Hon’ble Supreme Court, filing an Appeal by Institution like State Bank of India, in my view, is nothing but pure abuse of law. Added to this, Advocate, who argued on behalf of Bank, justifies the action of Bank, and contends that Tribunal below committed wrong. In my view, such an argument is nothing but a fallacious argument. When Act does not provide power to condone delay, harping on reasons for delay, is absolutely unwarranted. Unfortunately, Advocate appearing for Appellant, who is expected to assist the Tribunal, being officer of Court, justifies the action of Appellant, and tried to convince that this Tribunal can condone delay for the Appeals filed under Section 30 of RDB Act, 1993. As per the judgement of Hon’ble Supreme Court, for the Appeals filed under Section 20 of RDB Act, 1993, delay can be condoned. If this Appeal i.e., MA 21/2022 is filed with delay, this Tribunal is vested with power to condone delay, but not to the Appeals filed under Section 30 of RDB Act, 1993, before Tribunal below.

On a scrutiny of entire material, I am of the considered view that present Appeal is a complete abuse of process of law, for which, Appellant has to be penalized with exemplary costs, with a view to caution the Appellant Institution, not to venture for this kind of litigation in future. Here, as Respondents remained ex parte, I am of the view that exemplary costs to be imposed on Appellant are to be ordered to pay to State Legal Services Authority. It is made clear that Appellant has to bear these costs by itself, and cannot tax this amount to borrowers, which means that Appellant is not entitled to debit this amount to the account of borrowers.

In view of forgoing observations and findings, it is held that Appeal is completely devoid of merits and there are no grounds, whatsoever, to interfere with the Order of Tribunal below, which is completely in conformity with decision of Hon’ble Apex Court. Therefore, Appeal is liable to be dismissed with exemplary costs quantified at Rs.25,000/-.

In the result: Appeal MA 21/2022 is dismissed with exemplary costs of Rs.25,000/- to be paid to State Legal Services Authority. All pending IAs, if any, stand closed.