DRT Can Impose Cost But Not Other Stringent Conditions While Restoring Application U/S 22(2)(g) RDB Act: Madhya Pradesh HC

Facts

The Tribunal dismissed the Petitioners' Securitization Application for lack of prosecution. The Petitioners then filed a request to have the same restored. While considering the petitioners' case, the Tribunal placed demands on them, if met, would result in the reinstatement of their application. The list goes as follows:

1. Deposit Rs. 2 crores in 4 instalments within 2 months.
2. Paying the first instalment shall revive the interim relief granted prior to dismissal of the application
3. After payment of final instalment, the application shall be restored for hearing.

Arguments made

The petitioners argued before the court that, despite the Tribunal's authority to impose costs, the aforementioned requirements were not warranted. Furthermore, it was asserted that the aforementioned requirements were burdensome and illegal.

Instead, the Bank argued that the Tribunal has the authority to issue any instructions or directives that may be required or practical to carry out its decisions, halt misuse of its system, or uphold the interests of justice. It was argued as a result that the contested order was legal.

Judgement

Madhya Pradesh High Court overturned a decision made by the Debt Recovery Tribunal that allowed applications for restoration under Section 22(2)(g) of the Recovery of Debts and Bankruptcy Act if certain requirements were met.

No enabling clause in the Act gave the Tribunal the authority to apply the conditions it did while reinstating the application under Section 22(2), according to the division bench made up of Justice Sujoy Paul and Justice P.C. Gupta (g)