2025 Supreme(Online)(DRAT) 300

DEBT RECOVERY APPELLATE TRIBUNAL
Anil Kumar Srivastava, J
Canara Bank – Appellant
Versus
M/s Mansarovar Pearls (India) Private Limited – Respondent
Appeal No. 20 of 2024 | Arising out of Review Petition 03 of 2023 in S.A. 87 of 2021 of DRT-II, Hyderabad | Appeal No. 35 of 2024 | Arising out of Review Petition 03 of 2023 in S.A. 87 of 2021 of DRT-II, Hyderabad | Appeal No. 41 of 2024 | Arising out of Review Petition 03 of 2023 in S.A. 87 of 2021 of DRT-II, Hyderabad

Rule 5-A permits review only for a mistake or error apparent on the face of the record; it is not an appellate merits-review mechanism; merits challenges must be brought by appeal under SARFAESI Act.

Headnote:(A) Statutes, Rules and Provisions Cited: Debts Recovery Tribunal (Procedure) Rules, 1993 - Rule 5-A (1)-(3); Recovery of Debts and Bankruptcy Act, 1993 - Section 22(2)(e); Code of Civil Procedure, 1908 - Order XLVII, Rule 1; Section 114; SARFAESI Act, 2002 - Section 17; Section 18. (13) It is noted that CPC is not fully applicable in SARFAESI proceedings; and the Tribunal may regulate its own procedure under the Act.

(B) Key legal principles and points of law discussed: (i) The scope of review under Rule 5-A is confined to mistakes or errors apparent on the face of the record and cannot serve as an appellate or merits-review mechanism. “Rule 5-A … provides the provisions for Review … (1) Any party … by an order made by the Tribunal on account of some mistake of error apparent on the face of the record … may apply for a review.” (Paras 9-13) (ii) A review is limited and cannot be used to re-argue merits; a judgment is final and may be reviewed only under narrow grounds. “A Review Petition has a limited purpose and cannot be allowed to be ‘an appeal in disguise.’” (Paras 16-23) (iii) Where law or subsequent decisions change, such grounds are not automatically valid for review; review cannot be used to reconsider merits already decided. “the change in law or subsequent decision/ judgment of co-ordinate Bench or larger Bench by itself cannot be regarded as a ground for review.” (Paras 18, 19, 23, 24, 28-29) (iv) Where a party seeks to challenge valuation or other merits, the proper remedy is appeal under the SARFAESI Act (Section 18); if there is a grievance against a DRT order, an appeal lies, not a review. (Paras 26-27)

(C) Important facts of the case (non-identifying summary): The three appeals arise from a common judgment and a subsequent review petition challenging the conduct and outcome of an auction sale of scheduled assets. The Review Petition argued under-valuation of the secured assets; the reviewing tribunal partially allowed the review, purportedly overturning aspects of the merits; ultimately, the appellate tribunal set aside the review order and allowed the appeals, holding that the review petition was not legally maintainable. (Paras 1-9, 25-30)

(D) Main issues addressed by the court (how framed): (i) Whether the Review Petition is legally maintainable in the given SARFAESI context; (ii) Whether Rule 5-A of the Debts Recovery Tribunal (Procedure) Rules, 1993 governs the field for review; (iii) Whether the Learned DRT-II, Hyderabad had jurisdiction to overturn the merits of the underlying case in review. (Paras 8-9) (E) Findings of Court (ratio decidendi, key reasoning): The Tribunal held that: (i) Rule 5-A confines review to mistake or error apparent on the face of the record and excludes merits-based re-consideration; (ii) Insofar as the record did not show a mistake or error apparent on the face of the record, the grounds for review were not made out; (iii) Since no valid ground for review existed, the review petition could not sustain, and the reviewing authority cannot overturn a merits-based judgment through review; (iv) Even if the merits were argued as under-valuation, the remedy would have been an appeal under Section 18 of the SARFAESI Act, not a review. “on the basis of the discussion made above, I am of the considered view that no mistake or error apparent on the face of the record and the view taken by the DRT-II, Hyderabad is apparently erroneous. The judgment and order passed by the Learned DRT-II, Hyderabad could not be sustained and liable to be set aside with the observations made in the body of the judgment. Accordingly, Appeals deserve to be allowed.” (Paras 29-30) (F)

Issues: (1) Maintainability of the Review Petition; (2) Whether Rule 5-A of the DRT (Procedure) Rules, 1993 is the complete field for review; (3) Whether the DRT-II had jurisdiction to overturn merits of the underlying case in review. (Para 8-9) (G) Ratio Decidendi (court’s reasoning): (i) The statute-based review regime is restricted to mistakes or errors apparent on the face of the record; (ii) Review cannot function as an appellate rehearing of merits; (iii) Grounds relating to valuation or merits must be challenged via an appeal under the SARFAESI Act; (iv) CPC provisions and traditional review standards have limited applicability here, with Rule 5-A controlling the scope. “From the above, Rule 5-A … for Review … (1) … (2) No application for review shall be made after the expiry of thirty days … (3) Where it appears to the Tribunal that there is no sufficient ground for a review, it shall reject the application.”; “a review is not an appellate power and has to be strictly confined to the scope and ambit of Order XLVII CPC.”; “a judgment may be open to review inter alia if there is a mistake or error apparent on the face of the record … a review petition has a limited purpose and cannot be allowed to be ‘an appeal in disguise.’” (Paras 9-23, 24-25, 26-27, 42-45 in cited authorities) (H)

Result: Appeals allowed; setting aside the impugned review-order; Review Petition No. 3 of 2023 stands dismissed; no order as to costs. Copy of the judgment to be forwarded to the concerned authorities. (Paras 29-30) Parties involved (non-identifying): a secured creditor; auction purchasers; respondents; proforma respondents. (General description only)