Case Note & Summary
The petitioners, M/s. Deluxe Cotton Corporation and others, challenged an order dated 14 July 2014 passed by 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 (RDB Act) applies at the stage of considering an application for condonation of delay in filing an appeal under Section 20 of the Act. The petitioners argued that the bar under Section 21 applies only to the 'entertainment of the appeal' and not to the preliminary stage of condonation of delay, relying 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 Ltd. v. Commr. of Central Excise. The respondent bank contended that the pre-deposit is a condition precedent for filing an appeal. The High Court analyzed the language of Sections 20 and 21, noting that Section 21 states that no appeal shall be 'entertained' unless the pre-deposit is made. The court held that 'entertainment' refers to the stage after the appeal is admitted and taken up for hearing on merits, not the preliminary stage of considering delay condonation. The court distinguished the Supreme Court decision in Vijay Prakash D. Mehta v. Collector of Customs, which dealt with a different statutory scheme. The court also noted that the DRAT had not considered the merits of the delay condonation application and had erroneously insisted on pre-deposit. Consequently, the High Court set aside the DRAT order and remanded the matter to DRAT for fresh consideration of the condonation of delay application without insisting on pre-deposit. The court clarified that it had not expressed any opinion on the merits of the delay or the appeal.
Headnote
A) Debt Recovery - Pre-deposit - Condonation of Delay - Section 21, 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 not to the consideration of a delay condonation application, which is a preliminary stage. The DRAT erred in refusing to condone the delay on the ground that the pre-deposit was not made. (Paras 1-16) B) Debt Recovery - Condonation of Delay - Limitation - Section 20, Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - The court examined whether the delay of 1009 days in filing the appeal was correctly computed. The petitioners contended that the delay was only 26 days, but the DRAT had computed it from the date of the DRT order. The High Court did not finally decide the delay issue but remanded the matter to DRAT for fresh consideration on the question of condonation of delay, without insisting on pre-deposit. (Paras 2-16)
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
The High Court allowed the writ petition, set aside the DRAT order dated 14 July 2014, and remanded the matter to DRAT for fresh consideration of the application for condonation of delay, without insisting on pre-deposit under Section 21 of the RDB Act. The court clarified that it had not expressed any opinion on the merits of the delay or the appeal.
Law Points
- Pre-deposit under Section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act
- 1993 is not a condition precedent for considering an application for condonation of delay in filing an appeal under Section 20 of the said Act
- Condonation of delay is a preliminary stage distinct from the entertainment of the appeal
- The expression 'entertainment of the appeal' in Section 21 refers to the stage after the appeal is admitted and taken up for hearing on merits
