The Supreme Court in Standard Chartered Bank vs MSTC Limited allowed the appeal on 21.01.2020. The Court held that DRT cannot condone delay in filing review petitions under Rule 5A of DRT Rules. Bombay High Court had restored review petition filed with 28-day delay. Supreme Court said RDDBFI Act provides complete code and excludes Limitation Act for reviews. Section 24 applies only to Section 19 recovery applications. Review under Section 22(2)(e) is separate proceeding. This judgment strengthens banks’ position in DRT litigation. It ensures that orders become final if not challenged within 30 days. The ruling is important for all Banks and Financial Institutions using DRT for recovery.
Facts: Bank Purchased Receivables; DRT Decreed; Review Filed Late By MSTC
In 2008 Standard Chartered Bank purchased receivables from MSTC, a Govt Company. 95% payment was made upfront against foreign buyer invoices. Insurance cover was also obtained. After insurance repudiation, Bank filed OA in DRT Mumbai in 2012 for Rs 191 crore. In 2017 Bank got order on admission for Rs 222 crore. MSTC challenged this by appeal to DRAT and also filed review before DRT. Review was filed 28 days late. DRT dismissed it citing no power to condone delay. High Court in writ petition condoned delay saying review is part of Section 19 application. Bank challenged this before Supreme Court.
The Supreme Court analyzed structure of RDB Act. Section 2(b) defines application as one under Section 19. Section 19 deals with recovery of debt by banks. Section 22(2)(e) gives power to review, and Rule 5A prescribes 30-day limit. Unlike Section 20(3) for appeals, Rule 5A has no condonation clause. Rule 7 prescribes Rs 125 fee for review vs Rs 12,000 for OA, showing separate nature. Court in International Asset Reconstruction already held Section 5 Limitation Act not applicable to Section 30 appeals. Same logic applies to reviews. High Court wrongly applied CPC Order 47 Rule 7 despite Section 22(1) excluding CPC.
Practical Impact: What Banks And Borrowers Must Note Post This Judgment
After Standard Chartered v MSTC, Banks should object to any belated review in DRT immediately. Legal teams must track 30-day deadline from order date strictly. Borrowers cannot rely on Section 5 Limitation Act to file delayed review. If review is dismissed, remedy is appeal under Section 20, not writ. Banks should also ensure separate fee is paid for review as per Rule 7. This judgment prevents misuse of review to bypass Section 21 deposit requirement. It promotes finality and speed in DRT proceedings. Documentation of service of order becomes crucial to calculate 30 days.
Conclusion:
Review Petitions Under RDDBFI Act Have Strict Timeline
Standard Chartered Bank vs MSTC Limited establishes that standard chartered bank vs mstc supreme court 2020 bars delay condonation. Supreme Court 21.01.2020 held Section 24 does not cover Rule 5A reviews. As the law stands, 30 days is mandatory and peremptory. No appeal lies against rejection of review, but appeal under Section 20 is available against final order. The judgment protects banks from prolonged litigation. It reinforces RDDBFI Act as special recovery mechanism. This is must-know law for DRT practitioners.
