Case Note & Summary
The petitioners, M/s. Deluxe Cotton Corporation and others, challenged an order dated 14 July 2014 of the Debt Recovery Appellate Tribunal (DRAT), Mumbai, which refused to condone a delay of 1009 days in filing an appeal against an order dated 19 November 2013 of the Debt Recovery Tribunal (DRT) in O.A. No. 2494 of 1999. The core legal issue was whether the pre-deposit requirement under section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 applies at the stage of considering an application for condonation of delay. The petitioners argued that the bar under section 21 applies only to the 'entertainment of the appeal', and that condonation of delay is a preliminary step before entertainment. They relied on decisions of the Madhya Pradesh High Court in Chhitu v. Mathuralal, the Madras High Court in Kasturi & Company v. Tamil Nadu Mercantile Bank, and the Bombay High Court in Dwarkadish Sakhar Karkhana v. Commissioner of Central Excise. The respondent bank contended that the pre-deposit requirement is mandatory and must be complied with before the appeal can be considered. The court analyzed the language of sections 20 and 21, noting that section 21 imposes a bar on 'entertainment of the appeal' without pre-deposit. It held that the term 'entertainment' refers to the stage after the appeal is admitted and delay is condoned. The court reasoned that an order on condonation of delay is not an order in the appeal itself, and therefore, the pre-deposit requirement does not arise at that stage. The court allowed the petition, set aside the DRAT order, and remanded the matter for fresh consideration of the condonation application without insisting on pre-deposit.
Headnote
A) Debt Recovery - Pre-deposit - Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - The question was whether the pre-deposit requirement under section 21 applies at the stage of considering an application for condonation of delay in filing an appeal under section 20. The court held that the bar under section 21 is to the 'entertainment of the appeal' and only after the delay is condoned does the stage for entertainment arise. Therefore, section 21 is not attracted at the stage of deciding the condonation application. (Paras 1, 3, 5)
Issue of Consideration
Whether the provisions relating to pre-deposit contained in section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are attracted at the stage of consideration of an application for condonation of delay in the institution of an appeal under section 20 of the said Act?
Final Decision
Petition allowed. Order dated 14 July 2014 of DRAT set aside. DRAT directed to consider the application for condonation of delay afresh without insisting on compliance with section 21 pre-deposit requirement at that stage.
Law Points
- Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act
- 1993 applies only at the stage of entertainment of appeal
- not at the stage of considering an application for condonation of delay
