Case: STANDARD CHARTERED BANK Vs. MSTC LIMITED

The brief facts necessary to appreciate the questions raised are as follows:-(i) On 29.08.2008, a Receivables Purchase Agreement was executed between Standard Chartered Bank, which is the appellant before us and MSTC Limited, which is a Government Companyrespondent herein, whereunder receivables from overseas buyers in respect of invoices raised by the respondent against foreign buyers were purchased by the appellant. 95% of the amount raised by the invoices was remitted to the respondent(ii) An Export Insurance Policy was obtained by these parties from ICICI Lombard General Insurance Company under which the Insurance Company agreed to indemnify the respondent and the appellant in the event of default in payment of foreign buyers(iii) The appellant had lodged a claim with the said Insurance Company which, however, was repudiated on 03.03.2011. In this background, on 13.03.2012, the appellant filed an application under Section 19 of the RDB Act being O.A. No. 43 of 2012 before the DRT, Mumbai for recovery of a sum of Rs.191,03,54,070.96(iv) An I.A was then filed by the respondent before the DRT Mumbai, challenging its jurisdiction, which was ultimately disposed of on 26.09.2013 and an appeal therefrom was dismissed on 03.02.2017, holding that the DRT Mumbai did have territorial jurisdiction to go ahead with the case(v) At this point, an I.A was filed by the appellant stating that given the admissions contained in the balance sheet of the relevant years of the respondent-Company, a sum of Rs. 222,51,00,000/- was owed by the respondent to the appellant. This I.A. was allowed by the DRT Mumbai on 26.10.2017(vi) An appeal was filed by the respondent-Company against the said order before the DRAT on 14.11.2017. While the appeal was pending, Review Application No. 1 of 2018 was filed on 18.12.2017 before the DRT by the respondent-Company after the appeal that was lodged earlier in point of time was withdrawn by the respondent-Company on 02.01.2018(vii) In the meanwhile, an application dated 16.02.2018 was made to condone a 28 day delay in filing the review petition before the DRT, the period of limitation under Rule 5A of the Debt Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as the Rules) being 30 days. This review petition was dismissed by the DRT on 21.04.2018, in which this Courts judgment reported in International Asset Reconstruction Company of India Limited vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Others, (2017) 16 SCC 137 was followed, and Section 5 of the Limitation Act, 1963 was held not to be applicable to review petitions that were filed under Rule 5A of the Rules. A further plea to exclude time taken under Section 14 of the Limitation Act, 1963 was also dismissed by the DRT stating that a filing of the review petition after the appeal would show that the appeal provision, which requires a minimum 25% deposit, was sought to be circumvented, and, therefore, this being the case, time taken under Section 14 cannot be excluded as the respondent-Company did not move bona fide in the matter(viii) From the order dated 21.4.2018, a writ petition was filed before the Bombay High Court on 26.04.2018, which was then disposed of by the impugned judgment on 03.05.2019, holding that the alternative remedy of filing an appeal not being available, the writ petition would be maintainable. In any case, the judgment of this Court in International Asset Reconstruction Company of India Limited (supra) was confined to consideration of Section 30 of the RDB Act, and paragraph 14 of the said judgment would make it clear that it would apply to the facts of this case inasmuch as an original application made under Section 19 of the RDB Act, (which by the definition clause under Section 2(b) applies only to applications made under Section 19 and to no others) would subsume an application for review as a review application would originate from an order passed under Section 19 of the RDB Act, as per procedure prescribed under Section 22 of the RDB Act, and would therefore not be an application which could be said to be independent of Section 19 of the RDB Act. This being the case, the High Court set aside the judgment of the DRT, condoned the delay in filing of the review application itself, and restored the review application to the file.

Court's reasoning:
6. A reading of the aforesaid provisions of the Act and Rules would show that review petitions are dealt with in Section 22(2)(e) read with Rule 5A of the Rules. Section 24, which applies the provisions of the Limitation Act to applications made to a Tribunal, would, as per the definition section contained in Section 2(b), apply only to applications that are made under Section 19, which are original applications to recover debts that are made by banks and financial institutions. 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 Rules10. 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 would apply on all fours to exclude applications which are review applications from the purview of Section 24 of the RDB Act12. We are afraid we are unable to agree with the aforesaid submission. The clear ratio decidendi of this judgment makes it abundantly clear that the only application referred to in Section 24 is an application filed under Section 19 and to no other. The sentence that is extracted and relied upon by Mr. Dave only makes sense in the context of Section 30 unamended, when read juxtaposed with Section 30 as amended. Under the unamended section, when the recovery officers order was deemed as an order of the Tribunal, appeals would lie to the Appellate Tribunal. This would mean that Section 20 of the RDB Act would apply, as a result of which Section 20(3) would kick in and would permit condonation of delay. After the amendment, it is important to note that the recovery officer is no longer considered a Tribunal, as result of which an appeal from a recovery officers order is made not to the Appellate Tribunal, but to the Tribunal of first instance. It is in this context that the aforesaid sentence in paragraph 12 of the Courts judgment is to be read, making it clear that if the unamended Section 30 were to apply, the provision contained in Section 20(3) would be attracted, permitting condonation of delay13. Mr. Daves second contention that, in any case, a review petition is only a correction of the order made in the original proceeding, and therefore part and parcel of the original proceeding, cannot be countenanced in view of this Courts judgment in Kamlesh Verma vs. Mayawati and Others (supra)14. The peremptory language of Rule 5A would also make it clear that beyond 30 days there is no power to condone delay. We may also note that Rule 5A was added in 1997 with a longer period within which to file a review petition, namely, 60 days. This period was cut down, by amendment, with effect from 04.11.2016, to 30 days. From this two things are clear: one, whether in the original or unamended provision, there is no separate power to condone delay, as is contained in Section 20(3) of the Act; and second, that the period of 60 days was considered too long and cut down to 30 days thereby evincing an intention that review petitions, if they are to be filed, should be within a shorter period of limitation – otherwise they would not be maintainable15. We are also of the view that the High Court wrongly applied Order XLVII Rule 7 of the Code of Civil Procedure16. 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. Also, in view of Section 20, which applies to all applications that may be made, including applications for review, and orders being made therein being subject to appeal, it is a little difficult to appreciate how Order XLVII Rule 7 could apply at all, given that Section 20 of the RDB Act is part of a complete and exhaustive code. Section 34 of the Act makes it clear that the 1993 Act, (and, therefore, Section 20), will have overriding effect over any other law for the time being in force, which includes the Code of Civil Procedure. The High Court, in holding that no appeal would be maintainable against the dismissal of the review petition, and that therefore a writ petition would be maintainable, was clearly in error on this count also17. Shri Daves contention that as to the appellants conduct, as in an application filed in 2012 an I.A praying that a judgment should be given on admission, was filed unconscionably late i.e. only in 2017, five years later, also has no legs to stand. In 2013, the respondent challenged the jurisdiction of the DRT Mumbai which challenge was repelled finally in appeal only in 2017 after which the said I.A was filed. In any event, this is not an argument which would, by itself, lead to a dismissal of the SLP filed by the appellant under Article 136 of the Constitution of India.