2004 (8) TMI 728 - HC - Companies Law

Summary

Issues:
1. Interpretation of section 20(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1973.
2. Maintainability of appeal before the Debts Recovery Appellate Tribunal.
3. Applicability of procedural orders in appeal under sec. 20(1) of the Act.

Analysis:

Issue 1: Interpretation of section 20(1) of the Act
The case involved a question of construction of section 20(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1973. The petitioner, a nationalized Bank, filed a writ petition under Articles 226 and 227 of the constitution challenging the order of the Debts Recovery Appellate Tribunal. The main question was whether an appeal lay to the Appellate Tribunal under sec. 20(1) from the order of the Debts Recovery Tribunal. The Act aims to provide expeditious adjudication and recovery of debts due to Banks and Financial Institutions. Section 20(1) grants the right of appeal to the Appellate Tribunal from the order made by the Debts Recovery Tribunal.

Issue 2: Maintainability of appeal before the Appellate Tribunal
The petitioner contended that the order of the Debts Recovery Tribunal was on procedural matters and did not affect the rights of the parties, making the appeal before the Appellate Tribunal not maintainable. The Court analyzed the scope of appeal under sec. 20(1) and held that not every order made by the Debts Recovery Tribunal is subject to appeal. Only orders that formally adjudicate and affect the rights of the parties are appealable under sec. 20(1). The Court referred to precedents to support its interpretation, emphasizing that purely procedural orders that do not impact substantive rights are not appealable.

Issue 3: Applicability of procedural orders in appeal
The Court cited judgments such as Central Bank of India Ltd. Vs. Gokal Chand and Shankarlal Aggarmal Vs. Shankarlal Poddar to establish that interlocutory orders and purely procedural orders are not appealable unless they affect the rights or liabilities of the parties. The Court highlighted the importance of expediting trials and limiting the scope of appellate jurisdiction to avoid delays in litigation. It concluded that the appeal filed by the respondents before the Appellate Tribunal was not maintainable as the order of the Debts Recovery Tribunal was merely procedural and did not impact the rights and liabilities of the parties. Therefore, the impugned order of the Appellate Tribunal was quashed and set aside.

In summary, the judgment clarified the scope of appeal under sec. 20(1) of the Act, emphasizing that only orders affecting substantive rights are appealable. Procedural orders that do not impact parties' rights are not subject to appeal, ensuring the expeditious resolution of disputes in recovery of debts cases.