Case Note & Summary
The petitioner, Yes Bank Limited, a bank governed by the Banking Regulation Act, 1949, had advanced a loan to a borrower who defaulted. The bank filed Original Application No. 410 of 2018 before the Debt Recovery Tribunal-II, Mumbai, for recovery. Subsequently, the parties settled the dispute, and the bank received the settlement amount. The bank then filed Interlocutory Application No. 272 of 2019 seeking permission to withdraw the original application. On 7 March 2019, the DRT allowed the withdrawal and directed the bank to follow the procedure for refund of court fees as per the rules. The bank filed an application for refund of court fees. On 18 June 2022, the DRT passed an order stating that the applicant and the defendant should file a joint application for refund of court fees as per Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013. Aggrieved by this requirement, the bank filed a writ petition under Articles 226 and 227 of the Constitution of India, challenging the validity of the words 'and Defendant shall file joint Application' in Rule 5, and seeking a direction to the DRT to release the refund without insisting on a joint application. The High Court examined the rule-making power under Section 36 of the Recovery of Debts and Bankruptcy Act, 1993, and found that the refund of court fees is a matter between the applicant and the tribunal, and the defendant has no role in it. The court held that the requirement of a joint application is arbitrary, unreasonable, and beyond the scope of the rule-making power, as it imposes an impossible condition when the defendant is not a party to the refund application or is not traceable. The court struck down the words 'and Defendant shall file joint Application' from Rule 5 and directed the DRT to process the refund application without insisting on a joint application. The writ petition was allowed with no order as to costs.
Headnote
A) Constitutional Law - Ultra Vires - Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013 - The requirement of a joint application by the applicant and defendant for refund of court fees is beyond the rule-making power under Section 36 of the Recovery of Debts and Bankruptcy Act, 1993, and is arbitrary, violating Article 14 of the Constitution. The Court held that the rule imposes an impossible condition as the defendant is not a party to the refund application and may not be traceable, and thus struck down the words 'and Defendant shall file joint Application' from Rule 5. (Paras 6-10) B) Banking Law - Refund of Court Fees - Settlement of Dispute - The petitioner bank, after settling the dispute with the borrower, sought refund of court fees paid in the original application. The DRT directed a joint application under Rule 5. The High Court held that the refund of court fees is a matter between the applicant and the tribunal, and the defendant's involvement is unnecessary. The Court directed the DRT to process the refund application without insisting on a joint application. (Paras 2-5, 10)
Issue of Consideration
Whether the requirement under Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013, that the applicant and defendant shall file a joint application for refund of court fees, is ultra vires the Recovery of Debts and Bankruptcy Act, 1993, and violative of Article 14 of the Constitution of India.
Final Decision
The High Court allowed the writ petition. It struck down the words 'and Defendant shall file joint Application' from Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013, as ultra vires the Recovery of Debts and Bankruptcy Act, 1993, and arbitrary under Article 14 of the Constitution. The Court directed Respondent No.3 (Registrar, DRT-II, Mumbai) to process the petitioner's refund application without insisting on a joint application and to release the refund amount within four weeks. No order as to costs.
Law Points
- Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules
- 2013
- requiring a joint application by applicant and defendant for refund of court fees
- is ultra vires the Recovery of Debts and Bankruptcy Act
- 1993
- and arbitrary under Article 14 of the Constitution of India
- as it imposes an impossible condition when the defendant is not a party to the refund application or is not traceable.
