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2013 DIGILAW 359 (GUJ)

MADHUKANT PRANLAL SHAH v. BANK OF INDIA

2013-07-02

A.G.URAIZEE, VIJAY MANOHAR SAHAI

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JUDGMENT VIJAY MANOHAR SAHAI, J. Whether an appeal filed against an interlocutory order, fee should be paid as per item 4 or item 5 of the Schedule under Rule 7 of the Debt Recovery Tribunal (Procedure) Rules, 1993 (for short, ‘the Rules’) is the question which arises for determination in this appeal filed by the appellant against order dated 22nd June 2006 passed by the learned Single Judge in Special Civil Application No.8375 of 2006 vide which he declared that Section 30 of the Recovery of Debts to Banks and Financial Institutions Act, 1993 (for short, ‘the Act’) does not make any distinction between final order and interim order and that if an appeal is filed under Section 30 of the Act, item 5 of the table under sub-rule (2) of Rule 7 comes into play and amount of court fee becomes payable. 2. The appellant – original petitioner stood as a guarantor to various loan facilities granted by the respondent-bank in favour of one M/s Sukan Chemicals, a partnership firm, which, failed to repay its dues due to severe financial crisis. Therefore, the respondent-bank preferred Civil Suit No.6645 of 1989 in the City Civil Court at Ahmedabad against the petitioner and others for recovery of its dues. The said suit came to be transferred to Debt Recovery Tribunal, Ahmedabad on coming into force of the Act. The aforesaid Civil Suit came to be allowed by the Tribunal by passing a decree on 9.10.2002 in favour of the respondent – bank. Thereafter, the respondent-bank filed Recovery Proceeding No.1388 in the Civil Suit. 3. The petitioner along with others filed an application, Exhibit D/24 before the Tribunal seeking stay of the recovery proceedings on the ground that one of the creditors, viz. M/s Alchemi Pharma Private Limited filed Insolvency Petition No.2 of 1990 in the City Civil Court at Ahmedabad against the petitioner and partners of the firm wherein Interim Official Receiver was appointed to manage and administer the properties of the firm and the petitioner and the insolvency petition was pending. The said application was rejected by the Recovery Officer vide order dated 22nd November 2004 by holding that unless the insolvency petition has been finally adjudicated holding the debtors as insolvents, the recovery proceedings cannot be deferred. 4. The said application was rejected by the Recovery Officer vide order dated 22nd November 2004 by holding that unless the insolvency petition has been finally adjudicated holding the debtors as insolvents, the recovery proceedings cannot be deferred. 4. Being aggrieved by the said order, the appellant – original petitioner preferred an appeal under Section 30 of the Act challenging the order dated 22nd November 2004 passed by the Recovery Officer. As there was some delay, an application seeking condonation of delay was also filed. The appellant has also preferred an application for determination of court fee as the appellant was not filing the appeal demanding quashing or dismissal of the recovery proceedings and the appeal was incapable of valuation and fee structure as prescribed under Rule 7(2) of the Rules are not applicable to the case of the appellant. The application for condonation of delay was granted, but the application for determination of court fee was dismissed by the Tribunal on 8th March 2006 on the ground that the appellant was required to deposit court fee as per Rule 7(2) of the Rules and the Presiding Officer gave one month’s time to the petitioner to deposit the fee. 5. The appellant has challenged the order of the Tribunal by way of filing Special Civil Application No.8375 of 2006, which has summarily been dismissed by the learned Single Judge by his judgment and order dated 22nd June 2006 on the ground that there is no distinction between a final order and an interim order and if an appeal is filed under Section 30 of the Act, Item No.5 of the table under Sub Rule (2) of Rule 7 comes into play and under that an amount of Court Fee becomes payable. The same question has arisen before the Delhi High Court in the case of Shri Bal Kishan Bansal v. The Jammu and Kashmir Bank Ltd. And Ors., reported in (2010) ILR 1 Delhi 256 as to whether in an appeal preferred against an interlocutory order passed by the Recovery Officer whether the Court Fee is liable to be paid at the time of filing of an appeal under Section 30 of the Act. The Delhi High Court, after considering the provisions of the Act and the Rules, has held as under: “7. The Delhi High Court, after considering the provisions of the Act and the Rules, has held as under: “7. … Rule 7 refers to an application under Section 30(1) of the Act, when, Section 30(1) speaks of an appeal to the Tribunal from an order passed by the Recovery Officer. Apart from this anomaly, there are other problems with Rule 7 insofar as fees for appeals under Section 30(1) of the said Act are concerned. Even if we read application to read as appeal in Rule 7(1), the ad valorem fees on slab basis that is sought to be charged under serial No.5 of the table of fees under Rule 7(2) is beyond the power of the Central Government. Rule 7 of the DRT Rules, insofar as it prescribes a fee for appeals under Section 30(1) of the said Act, must be supported by a power for prescribing such a fee under the present Act, i.e., the said Act. If no such fee is prescribed under the said Act and no power has been given to the Central Government, by the said Act, to frame a rule prescribing a fee for appeals under Section 30(1) of the said Act, must be supported by a power for prescribing such a fee under the parent Act, i.e. the said Act. If no such fee is prescribed under the said Act and no power has been given to the Central Government, by the said Act, to frame a rule prescribing such a fee, the, Rule 7, to the extant that it prescribes such a fee, would be ultra vires the said Act.” Thus, since the Act does not prescribe payment of any fee so far as appeal filed under Section 30(1) of the Act wherein interlocutory orders are challenged, no fee would be charged from the appellant since no power has been given to the Central Government to frame a rule prescribing such a fee. Therefore, unless the Rules are framed by the State Government or the Central Government amends the Act, no fee would be charged from the appellant. Therefore, fee demanded by the Tribunal on an appeal filed under Section 30(1) of the Act against an interlocutory order was illegal. Therefore, the order dated 8th March 2006 cannot be upheld. In the result, this Letters Patent Appeal succeeds and is allowed. Therefore, fee demanded by the Tribunal on an appeal filed under Section 30(1) of the Act against an interlocutory order was illegal. Therefore, the order dated 8th March 2006 cannot be upheld. In the result, this Letters Patent Appeal succeeds and is allowed. The order dated 22nd June 2006 passed by the learned Single Judge in Special Civil Application No.8375 of 2006 and that of the Tribunal dated 8th March 2006 are set aside. The Tribunal shall entertain the appeal filed by the appellant and decide the same on merits. Parties shall bear their own costs.