Supreme Court settles Limitation Act applicability on appeals under Section 30 of Recovery of Debts and Bankruptcy Act: International Asset Reconstruction Company vs. The Official Liquidator (24 October 2017)

Date of the Judgment: 24 October 2017
Citation: (2017) INSC 942
Judges: Ranjan Gogoi, J., Abhay Manohar Sapre, J., Navin Sinha, J.

Can the delay in filing an appeal against a Recovery Officer’s order under the Recovery of Debts and Bankruptcy Act, 1993 be condoned by applying Section 5 of the Limitation Act, 1963? This was the core question before the Supreme Court in a recent judgment. The Court clarified that the provisions of the Limitation Act do not apply to such appeals, setting a strict 30-day deadline. The bench comprised Justices Ranjan Gogoi, Abhay Manohar Sapre, and Navin Sinha, with the majority opinion authored by Justice Navin Sinha.

Case Background

The case arose from appeals against orders passed by the Recovery Officer under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). The Recovery Officer issued orders under Section 28 of the RDB Act, following a recovery certificate issued by the Debt Recovery Tribunal (DRT) under Section 19(22) of the same Act. Appeals were filed before the DRT against the Recovery Officer’s orders, but they were filed beyond the 30-day period prescribed under Section 30(1) of the RDB Act. The DRT held that Section 5 of the Limitation Act, which allows for condonation of delay, did not apply to appeals under Section 30 of the RDB Act, and therefore, the delay could not be excused.

Timeline

Course of Proceedings

The appeals before the Supreme Court were against the orders of the Debt Recovery Tribunal (DRT) which had held that the delay in filing appeals against the Recovery Officer’s order could not be condoned. The DRT had ruled that Section 5 of the Limitation Act, 1963, which allows for the condonation of delay, did not apply to proceedings under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993.

Legal Framework

The core legal issue revolves around the interpretation of Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993, and its interplay with Section 5 of the Limitation Act, 1963.

✓ Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993: This section provides for an appeal to the Tribunal against an order of the Recovery Officer. It stipulates a limitation period of 30 days from the date a copy of the order is issued.
“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.”

✓ Section 5 of the Limitation Act, 1963: This section allows a court to admit an appeal or application after the prescribed period if the appellant or applicant shows sufficient cause for not filing it within the stipulated time.

✓ Section 2(b) of the Recovery of Debts and Bankruptcy Act, 1993: Defines “application” as an application made to a Tribunal under Section 19 of the Act.

✓ Section 24 of the Recovery of Debts and Bankruptcy Act, 1993: States that the provisions of the Limitation Act, 1963, shall apply to an application made to a Tribunal.

✓ Section 20(3) of the Recovery of Debts and Bankruptcy Act, 1993: Provides for condonation of delay beyond 45 days in preferring an appeal before the appellate tribunal.

✓ Rule 2(c) of the Debt Recovery Tribunal (Procedure) Rules, 1993: Defines “application” to include a memo of appeal under Section 30(1) of the RDB Act.

The Supreme Court examined whether the general provisions of the Limitation Act, specifically Section 5, could be applied to the specific time limit for appeals under Section 30(1) of the RDB Act. The court also considered the nature of the Debt Recovery Tribunal as a statutory body and not a court, and the implications of this distinction on the applicability of the Limitation Act.

Arguments

The appellants argued that the RDB Act is not a complete code and does not expressly exclude the application of the Limitation Act. They contended that the principles of natural justice and fairness require that the delay in filing appeals under Section 30(1) of the RDB Act should be condonable. The appellants further argued that Section 29(2) of the Limitation Act allows for the application of Section 5 unless there is an express exclusion. They also argued that the definition of “application” under Section 2(b) of the RDB Act, read with Rule 2(c) of the Debt Recovery Tribunal (Procedure) Rules, 1993, should include appeals under Section 30(1), thus making Section 24 of the RDB Act applicable, which in turn allows for condonation of delay.

The respondents, on the other hand, argued that the RDB Act is a complete code for the recovery of debts due to banks and financial institutions. They contended that Section 24 of the RDB Act applies only to original applications made under Section 19 of the Act and not to appeals under Section 30(1). They also argued that the legislature intended to exclude any extension of the prescribed period of 30 days under Section 30(1), which is further supported by the 2000 amendment that removed the deemed status of the Recovery Officer as a Tribunal.

The innovativeness of the appellant’s argument lies in their attempt to use a combined reading of Section 2(b) of the RDB Act and Rule 2(c) of the Debt Recovery Tribunal (Procedure) Rules, 1993 to bring appeals under Section 30(1) within the ambit of Section 24 of the RDB Act, thereby allowing for the condonation of delay under the Limitation Act.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether Section 5 of the Limitation Act, 1963, can be invoked to condone the prescribed period of 30 days under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993, for preferring an appeal before the Tribunal against an order of the Recovery Officer.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the provisions of Section 5 of the Limitation Act, 1963, cannot be applied to condone delays in filing appeals under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993. The court reasoned that the RDB Act is a special law and a complete code in itself for the recovery of debts due to banks and financial institutions. The court also noted that the Debt Recovery Tribunal is a statutory body and not a court, and therefore, the general provisions of the Limitation Act do not automatically apply to its proceedings.

The following authorities were viewed by the Court in the following manner:

✓ Sakuru vs. Tanaji, (1985) 3 SCC 590*: The Supreme Court followed this case, reiterating that the Limitation Act applies only to proceedings in ‘courts’ and not to quasi-judicial bodies.

✓ A.R. Venugopal @ R.Venugopal vs. Jotheeswaran & ors. Civil Appeal No. 4926 of 2015*: This case was distinguished because the entire statutory scheme of the RDB Act was not considered.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the legislative intent behind the Recovery of Debts and Bankruptcy Act, 1993, which is to provide a speedy mechanism for the recovery of debts due to banks and financial institutions. The Court emphasized that the RDB Act is a special law and a complete code in itself, with specific provisions for the limitation periods for appeals. The court also highlighted that the Debt Recovery Tribunal is a statutory body and not a court, thus limiting the applicability of the Limitation Act.

The court’s reasoning was based on a strict interpretation of the statutory provisions, giving precedence to the specific provisions of the RDB Act over the general provisions of the Limitation Act. The court also considered the implications of the 2000 amendment to Section 30 of the RDB Act, which removed the deemed status of the Recovery Officer as a Tribunal, further reinforcing the legislative intent to exclude the application of the Limitation Act to appeals against the Recovery Officer’s orders.

The Court considered the argument that Section 2(b) of the RDB Act read with Rule 2(c) of the Debt Recovery Tribunal (Procedure) Rules, 1993, could extend the meaning of “application” to include appeals under Section 30(1). However, the Court rejected this interpretation, stating that it would be contrary to the legislative intent and would extend the Rules beyond what the Act provides.

The Court emphasized the importance of adhering to the specific time limits prescribed in the RDB Act for the expeditious recovery of debts. The Court stated that the legislative intent was to exclude any extension of the 30-day period under Section 30(1), and any other interpretation would be contrary to this intent.

The Supreme Court’s decision was unanimous, with all three judges concurring. The majority opinion was authored by Justice Navin Sinha.

“The RDB Act is undoubtedly a special law and a complete code by itself with regard to expeditious recovery of dues to banks and financial institutions.”

“The Tribunal shall therefore have no powers to condone delay, unless expressly conferred by the Statute creating it.”

“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.”

Key Takeaways

• ✓ The provisions of Section 5 of the Limitation Act, 1963, do not apply to appeals filed under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993.
• ✓ Appeals against orders of the Recovery Officer must be filed within 30 days, and no delay can be condoned.
• ✓ The Recovery of Debts and Bankruptcy Act, 1993, is a special law and a complete code in itself, with specific provisions for limitation periods.
• ✓ The Debt Recovery Tribunal is a statutory body and not a court, limiting the applicability of the general provisions of the Limitation Act.

Directions

No specific directions were given by the Supreme Court other than dismissing the appeals.

Development of Law

The ratio decidendi of this case is that Section 5 of the Limitation Act, 1963, cannot be invoked to condone the delay in filing an appeal under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993. This judgment clarifies the position of law and overrules any previous interpretation that allowed for condonation of delay in such cases.

Conclusion

The Supreme Court’s judgment in International Asset Reconstruction Company of India Ltd. vs. The Official Liquidator of Aldrich Pharmaceuticals Ltd. and Others clarifies that the 30-day limit for filing appeals against orders of the Recovery Officer under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993, is strict and cannot be extended by invoking Section 5 of the Limitation Act, 1963. This ruling reinforces the legislative intent for expeditious recovery of debts and emphasizes the special nature of the RDB Act as a complete code.