STANDARD CHARTERED BANK Vs. MSTC LIMITED
LAWS(SC)-2020-1-126
SUPREME COURT OF INDIA
Decided on January 21,2020

STANDARD CHARTERED BANK Appellant
VERSUS
MSTC LIMITED Respondents


Referred Judgements :-

INTERNATIONAL ASSET RECONSTRUCTION COMPANY OF INDIA LIMITED V. OFFICIAL LIQUIDATOR OF ALDRICH PHARMACEUTICALS LIMITED [REFERRED TO]
KAMLESH VERMA VS. MAYAWATI [REFERRED TO]


JUDGEMENT

R.F.NARIMAN, J. - (1.)Leave granted.
(2.)The present appeal raises interesting questions which arise under the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as "the RDB Act" or "the Act"). 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 Company-respondent 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 v. 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.

(3.)Mr. Neeraj Kishan Kaul, learned Senior Advocate appearing on behalf of the appellant, has contended that the High Court is wrong on all counts. First and foremost, the High Court could not have looked at Order XLVII Rule 7 of the CPC in order to hold that an appeal from an order dismissing a review petition would not be maintainable before the DRAT both for the reason that Order 47 Rule 7 itself is inapplicable under Section 22(1) of the RDB Act and for the reason that Section 20 of the RDB Act makes it clear that appeals lie to the DRAT from all applications that may have been disposed of by the Tribunal under the RDB Act. He further argued that the judgment in International Asset Reconstruction Company of India Limited (supra) ought to have been applied correctly in that the ratio decidendi of the judgment made it clear that it is only applications under Section 19 that are referred to in Section 24 of the RDB Act, and this being the case, a review application, being an independent proceeding, could not be subsumed within the expression "application" contained in Section 24 of the RDB Act. He also cited the judgment reported in Kamlesh Verma v. Mayawati and Others, (2013) 8 SCC 320 to buttress the submission that a review petition cannot be equated with the original proceeding. Further, contrasting Rule 5A of the Rules with Section 20 of the RDB Act, since peremptory language has been used in the said rule, making it clear that a review petition filed beyond 30 days would have to be dismissed, coupled with the fact that no provision for condonation of delay, as in Section 20, is contained in Rule 5A would also make it clear that the impugned judgment has to be faulted on this ground as well.
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