The bench comprising of Justice Rohinton Fali Nariman and Justice V. Ramasubramanian passed judgement in a case titled as Standard Chartered Bank v. MSTC Ltd.
Facts of the case are that a Receivables Purchase Agreement was executed between Standard Chartered Bank, which is the appellant and MSTC Limited, which is a Government Company. 95% of the amount raised by the invoices was remitted to the respondent. An Export Insurance Policy was obtained by these parties from ICICI Lombard General Insurance Company under which the Insurance Company agreed to indemnify the respondent and the appellant in the event of default in payment of foreign buyers.
As per the definition, provision contained in Section 2(b) of the Recovery of Debts and Bankruptcy Act, 1993, (RDB Act) apply only to applications that are made under Section 19, which are original applications to recover debts that are made by banks and financial institutions.
The Supreme Court observed that what is clear is that an application for review cannot possibly be said to be an application filed under Section 19 even on a cursory reading of the provisions of the Act, as it traces its origin to Section 22(2)(e) read with Rule 5A of the Rules.
The Supreme Court stated that,
“The judgment of this Court makes it plain, though in a slightly different context, that the only application that is referred to by Section 24 of the RDB Act is an application filed under Section 19 and no other. This being the case, an application for review, not being an application under Section 19, but an application under Section 22(2)(e) read with Rule 5A of the Rules, this judgment would apply on all fours to exclude applications which are review applications from the purview of Section 24 of the RDB Act.”
The Supreme Court held that the peremptory language of Rule 5A of the Debt Recovery Tribunal (Procedure) Rules, 1993 would also make it clear that beyond 30 days there is no power to condone delay. SC also noted that Rule 5A was added in 1997 with a longer period within which to file a review petition, namely, 60 days. This period was cut down, by amendment, with effect from 04.11.2016, to 30 days. From this two things are clear: one, whether in the original or unamended provision, there is no separate power to condone delay, as is contained in Section 20(3) of the Act; and second, that the period of 60 days was considered too long and cut down to 30 days thereby evincing an intention that review petitions, if they are to be filed, should be within a shorter period of limitation – otherwise they would not be maintainable.
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