2003 (2) TMI 534 - HC - Companies Law

Interim Orders Appealable if Substantial Impact on Rights: Court Upholds DRT Regulations

The court held that interim orders passed by the Debts Recovery Tribunal are appealable before the Appellate Tribunal if they substantially affect the ... - Issues Involved:1. Whether interim orders passed by the Debts Recovery Tribunal are appealable before the Appellate Tribunal.2. Validity of Regulations 31 & 32 of the Debts Recovery Tribunal Regulation of Practice, 1998.3. Whether the impugned order deserves interference under Articles 226 and 227 of the Constitution of India.Issue-wise Detailed Analysis:1. Appealability of Interim Orders:The primary contention was whether an appeal lies against interim orders of the Debts Recovery Tribunal (DRT). The petitioners argued that under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, only final orders are appealable. They emphasized that Sections 17 and 20 should be read in conjunction, suggesting that interim orders are not covered. Conversely, the respondents contended that every order, including interim ones, is appealable, citing various High Court rulings and the Act's language.The court examined the legislative intent and the statutory framework, concluding that the terms 'any order' in Section 17(2) and 'an order' in Section 20(1) encompass interim orders that substantially affect the rights or liabilities of the parties. The court referenced several precedents, including the Supreme Court's interpretation in The Central Bank of India Ltd. Vs. Gokal Chand, which supported a broader interpretation of appealable orders. Therefore, the court held that interim orders are indeed appealable before the Appellate Tribunal.2. Validity of Regulations 31 & 32:The petitioners challenged the validity of Regulations 31 and 32, arguing that they contravene the principles of natural justice by limiting the right to cross-examine witnesses. The court referred to the Supreme Court's decision in Union of India Vs. Delhi High Court Bar Association, which upheld the validity of similar provisions, emphasizing the need for expeditious adjudication in debt recovery matters.The court noted that the Regulations do not entirely eliminate the right to cross-examine but subject it to the Tribunal's discretion based on the necessity and relevance of such cross-examination. The court found that the Regulations are consistent with the Act's objectives and the principles of natural justice, thereby declaring them intra vires.3. Interference under Articles 226 and 227:The petitioners sought the High Court's intervention under Articles 226 and 227, despite the availability of an appellate remedy. The court acknowledged its discretionary power to entertain writ petitions even when an alternative remedy exists, particularly in cases involving jurisdictional errors or violations of natural justice.However, the court emphasized that such discretion should be exercised sparingly and only in exceptional circumstances. Given that the petitioners had an adequate alternative remedy through the appellate process, the court deemed it inappropriate to exercise its extraordinary jurisdiction. The court allowed the petitioners to file appeals before the Appellate Tribunal within six weeks, ensuring that the appeals would not be dismissed on the grounds of limitation.Conclusion:(a) An appeal against an order substantially affecting the rights or liabilities of a party lies to the Appellate Tribunal.(b) Regulations 31 and 32 of the Debts Recovery Tribunal Regulation of Practice, 1998, are intra vires.(c) The High Court can exercise its jurisdiction under Articles 226 and 227 in exceptional circumstances, depending on the case facts.(d) The Tribunal may entertain a prayer for cross-examination if warranted by the circumstances.(e) The impugned orders do not warrant interference under Articles 226 and 227.(f) Petitioners may file appeals before the Appellate Tribunal within six weeks, and these appeals shall not be dismissed on limitation grounds.(g) Petitioners can argue that the impugned orders substantially affected their rights or liabilities before the Tribunal.(h) Any contrary decisions by this Court are overruled.The writ petitions were disposed of without any order as to costs.