Date of the Judgment: 24 November 2021
Judges: M.R. Shah, J. and Sanjiv Khanna, J.
Citation: Avneesh Chandan Gadgil & Anr. vs. Oriental Bank of Commerce & Ors., Civil Appeal No. 6898 of 2021, decided on 24 November 2021

Can the delay in filing an appeal against a Recovery Officer’s order under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 be condoned by applying Section 5 of the Limitation Act, 1963? The Supreme Court of India addressed this crucial question, clarifying the legal position on the applicability of the Limitation Act in such appeals. The Court held that Section 5 of the Limitation Act does not apply to appeals filed under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This decision overturns a previous ruling by the High Court of Delhi.

Case Background

The case originated from an appeal filed by Oriental Bank of Commerce (Respondent No. 1) against an order of the Recovery Officer. There was a delay of 31 days in filing this appeal. The Debts Recovery Tribunal (DRT) condoned this delay by applying Section 5 of the Limitation Act, 1963. However, the Debts Recovery Appellate Tribunal (DRAT) overturned this decision, stating that Section 5 of the Limitation Act does not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The High Court of Delhi then set aside the DRAT’s order, relying on an earlier Supreme Court judgment. This led to the present appeal before the Supreme Court.

Timeline

Date Event
N/A Recovery Officer issues an order.
N/A Oriental Bank of Commerce files an appeal against the Recovery Officer’s order with a delay of 31 days.
N/A Debts Recovery Tribunal (DRT) condones the delay using Section 5 of the Limitation Act, 1963.
N/A Debts Recovery Appellate Tribunal (DRAT) sets aside the DRT’s order, stating Section 5 of the Limitation Act does not apply.
16.02.2016 High Court of Delhi sets aside DRAT’s order, relying on an earlier Supreme Court judgment.
24.11.2021 Supreme Court of India hears the appeal.

Course of Proceedings

The Debts Recovery Tribunal (DRT) initially condoned the 31-day delay in the appeal filed by Oriental Bank of Commerce, applying Section 5 of the Limitation Act. The Debts Recovery Appellate Tribunal (DRAT) reversed this decision, holding that Section 5 of the Limitation Act does not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The High Court of Delhi then overturned the DRAT’s order, relying on the Supreme Court’s decision in *A.R. Venugopal Alias R. Venugopal Vs. Jotheeswaran and Ors.*, (2016) 16 SCC 588. This High Court decision was appealed to the Supreme Court.

Legal Framework

The core legal issue revolves around the interpretation of Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and its interaction with the Limitation Act, 1963. Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, provides for an appeal against the order of the Recovery Officer. The question is whether the delay in filing such an appeal can be condoned by applying Section 5 of the Limitation Act, 1963.

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Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 states:
“30. Appeal against the order of Recovery Officer.—(1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.”

The Supreme Court also considered the following:
✓ Section 5 of the Limitation Act, 1963, which allows for the condonation of delay in filing appeals if sufficient cause is shown.
✓ Section 29(2) of the Limitation Act, 1963, which states that where a special or local law prescribes a different period of limitation, the provisions of the Limitation Act shall apply only insofar as they are not expressly excluded by such special or local law.

Arguments

The primary contention was whether Section 5 of the Limitation Act, 1963, could be applied to appeals filed under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

The Appellant argued that Section 5 of the Limitation Act should not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, because the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a special law, and it does not provide for the application of Section 5 of the Limitation Act to appeals under Section 30.

The Respondent argued that Section 5 of the Limitation Act should apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, because the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not expressly exclude the application of Section 5 of the Limitation Act.

Submissions Appellant’s Arguments Respondent’s Arguments
Applicability of Section 5 of the Limitation Act ✓ The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a special law.
✓ The Act does not provide for the application of Section 5 of the Limitation Act to appeals under Section 30.		 ✓ The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not expressly exclude the application of Section 5 of the Limitation Act.
✓ Section 5 of the Limitation Act should apply to appeals under Section 30.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

  1. Whether Section 5 of the Limitation Act shall be applicable to the appeal against the order of Recovery Officer under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993?

Treatment of the Issue by the Court

Issue Court’s Decision Reason
Whether Section 5 of the Limitation Act applies to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993? No The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a special law that specifically excludes the application of Section 5 of the Limitation Act to appeals under Section 30.

Authorities

The Supreme Court considered the following authorities:

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Authority Court How it was considered Legal Point
International Asset Reconstruction Company of India Limited Vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Ors., (2017) 16 SCC 137 Supreme Court of India Followed Section 5 of the Limitation Act is specifically excluded for appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
A.R. Venugopal Alias R. Venugopal Vs. Jotheeswaran and Ors., (2016) 16 SCC 588 Supreme Court of India Overruled This case had held that Section 5 of the Limitation Act could be applied to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Judgment

Submission Court’s Treatment
Applicability of Section 5 of the Limitation Act to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Court held that Section 5 of the Limitation Act does not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, as the Act is a special law that excludes such application.

The Supreme Court relied on the decision in *International Asset Reconstruction Company of India Limited Vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Ors.*, (2017) 16 SCC 137, which had already settled the issue. The Court also explicitly overruled the decision in *A.R. Venugopal Alias R. Venugopal Vs. Jotheeswaran and Ors.*, (2016) 16 SCC 588, which had been relied upon by the High Court.

Authority Court’s View
International Asset Reconstruction Company of India Limited Vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Ors., (2017) 16 SCC 137 The Court followed this authority, which held that Section 5 of the Limitation Act is specifically excluded for appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
A.R. Venugopal Alias R. Venugopal Vs. Jotheeswaran and Ors., (2016) 16 SCC 588 The Court expressly overruled this authority, which had held that Section 5 of the Limitation Act could be applied to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that special laws take precedence over general laws. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, being a special law, has its own specific provisions regarding limitation, and the absence of a provision for condonation of delay in Section 30 indicates a clear legislative intent to exclude the application of Section 5 of the Limitation Act. The Court emphasized the need for a strict interpretation of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, to ensure the expeditious recovery of debts.

Sentiment Percentage
Legislative Intent 40%
Precedence of Special Laws 30%
Expeditious Recovery of Debts 30%
Ratio Percentage
Fact 20%
Law 80%
Issue: Applicability of Section 5 of the Limitation Act to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
↓
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a special law
↓
The Act does not provide for condonation of delay under Section 30
↓
Legislative intent is to exclude Section 5 of the Limitation Act
↓
Section 5 of the Limitation Act does not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993

The Court’s reasoning was based on the following points:
✓ The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is a special law.
✓ The Act does not explicitly provide for the application of Section 5 of the Limitation Act to appeals under Section 30.
✓ The legislative intent was to exclude the application of Section 5 of the Limitation Act in such cases.

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The Court stated:
“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 Court further emphasized:
“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 Court also noted:
“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.”

Key Takeaways

  • ✓ Section 5 of the Limitation Act, 1963, does not apply to appeals filed under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
  • ✓ The 30-day period for filing an appeal against a Recovery Officer’s order is strict and cannot be extended by condoning the delay.
  • ✓ This decision reinforces the principle that special laws take precedence over general laws in matters of limitation.
  • ✓ Banks and financial institutions must adhere strictly to the 30-day limitation period when appealing against orders of the Recovery Officer.

Directions

The Supreme Court quashed and set aside the order of the High Court and the Debts Recovery Tribunal, and restored the order of the Debts Recovery Appellate Tribunal.

Development of Law

The Supreme Court’s decision clarifies that Section 5 of the Limitation Act, 1963, does not apply to appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This settles the legal position and overrules the previous conflicting view taken in *A.R. Venugopal Alias R. Venugopal Vs. Jotheeswaran and Ors.*, (2016) 16 SCC 588. The ratio decidendi of the case is that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, is a special law and the absence of a provision for condonation of delay in Section 30 indicates a clear legislative intent to exclude the application of Section 5 of the Limitation Act.

Conclusion

The Supreme Court’s judgment in *Avneesh Chandan Gadgil vs. Oriental Bank of Commerce* definitively settles that Section 5 of the Limitation Act does not apply to appeals against orders of the Recovery Officer under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This decision emphasizes the strict adherence to the limitation period prescribed under the special law and ensures the expeditious recovery of debts. The Supreme Court has overruled the High Court of Delhi and the Debts Recovery Tribunal’s decision, and restored the order of the Debts Recovery Appellate Tribunal.

Source: Avneesh Chandan Gadgil vs. Oriental Bank of Commerce