Case Background
The dispute began when a bank sanctioned a term loan to a private company and its directors. When the borrowers failed to repay, the loan account was treated as a Non-Performing Asset (NPA). The bank then moved the Debts Recovery Tribunal (DRT), Patna, through Original Application (O.A.) No. 283 of 2011 for recovery of its dues.
On 17.09.2012, the DRT allowed the bank’s claim. A recovery certificate for Rs. 1,53,38,333/- was issued in favour of the bank. At the same time, the DRT rejected the counterclaim filed by the borrowers.
The borrowers tried to challenge this by filing two miscellaneous applications, M.A. No. 406 of 2012 and M.A. No. 482 of 2012, before the DRT. Both applications were dismissed.
The borrowers then filed Appeal No. R-99/2014 before the Debts Recovery Appellate Tribunal (DRAT), Allahabad against the order passed in M.A. No. 482 of 2012. On 13.02.2015, the DRAT directed them to deposit 50% of the decretal amount under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 as a pre-condition to “entertain” the appeal.
Even after the DRAT granted more time by order dated 23.03.2015, the borrowers failed to make this pre-deposit. As a result, the DRAT dismissed Appeal No. R-99/2014 as not maintainable for want of pre-deposit.
The borrowers then approached the Patna High Court in CWJC No. 4678 of 2015 challenging the pre-deposit orders dated 13.02.2015 and 23.03.2015. That writ petition was dismissed on 27.06.2023.
Parallel to this, the borrowers had filed another miscellaneous application, M.A. No. 150 of 2014, before the DRT, Patna seeking settlement of the loan account. On 05.05.2014, the DRT allowed settlement.
The bank challenged this settlement order before the DRAT, Allahabad in Appeal No. R-79 of 2014. By judgment dated 13.02.2018, the DRAT set aside the DRT’s settlement order. The borrowers’ review application (M.A. No. 37 of 2018) was dismissed on 14.10.2019.
The borrowers again approached the Patna High Court in CWJC No. 1178 of 2020 challenging these DRAT orders. That writ petition was dismissed on 09.08.2021 with costs. A Letters Patent Appeal against that dismissal was later withdrawn on 05.04.2022, confirming the DRAT’s orders.
After this, in June 2023, the borrowers claim to have deposited approximately Rs. 76 lakhs, which was more than 50% of the decretal amount. On that basis, they filed a restoration application before the DRAT, Allahabad for reviving the earlier Appeal No. R-99/2014. On 29.09.2023, the DRAT allowed the restoration and revived the appeal.
The bank then filed CWJC No. 1388 of 2024 before the Patna High Court, challenging this restoration order. On 04.09.2024, the learned Single Judge allowed the bank’s writ petition. The Single Judge held that the DRAT had no jurisdiction to recall or restore its earlier order after such a long lapse of time and after the High Court had already dismissed the earlier writ petition regarding the pre-deposit.
Aggrieved by this, the borrowers filed the present Letters Patent Appeal No. 1093 of 2024 before a Division Bench of the Patna High Court.
What the Court Examined and Decided
The Division Bench, comprising Hon’ble Mr. Justice Sudhir Singh and Hon’ble Mr. Justice Sunil Dutta Mishra, heard both sides and focused on two core issues.
First, whether the DRAT, Allahabad had the legal power to recall or restore its earlier order dismissing the appeal for non-compliance of pre-deposit, especially when several years had passed and earlier writ proceedings had been dismissed.
Second, how to properly understand Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, which requires a borrower to deposit a part of the debt amount before the DRAT “entertains” an appeal. The court had to decide whether non-payment of this amount automatically leads to final dismissal of the appeal, beyond recall.
On behalf of the borrowers, it was argued that they had already complied with the pre-deposit requirement by depositing more than 50% of the decretal amount on 07.06.2023. This was before CWJC No. 4678 of 2015 was dismissed on 27.06.2023. They said that proof of this deposit had been filed and therefore, the finding that the DRAT’s orders dated 13.02.2015 and 23.03.2015 had attained finality or merged with the High Court’s judgment was wrong.
They also argued that Section 21 does not fix any time limit for making the deposit and does not itself say that an appeal must be dismissed if the deposit is not made in time. Further, they relied on Section 22(2)(e) and (g) of the Act to say that the DRAT has express power to review its decisions and to set aside orders dismissing any application for default. According to them, the order dated 29.09.2023 restoring the appeal was fully within the DRAT’s jurisdiction.
On the other hand, the bank argued that the DRT’s order dated 17.09.2012 had already attained finality. Recovery had been completed, the secured asset had been auctioned, and possession was handed over. They submitted that the borrowers could not be allowed to reopen settled issues by reviving an appeal dismissed more than eight years ago.
The bank further contended that the DRAT’s orders dated 13.02.2015 and 23.03.2015, having been upheld when CWJC No. 4678 of 2015 was dismissed on 27.06.2023, had become final. Therefore, after that, the DRAT had no power to restore the appeal. They supported the Single Judge’s view that the restoration order dated 29.09.2023 was without jurisdiction.
The Division Bench first examined Section 22(2) of the Act. This provision says that the Tribunal and the Appellate Tribunal shall have the same powers as a Civil Court under the Code of Civil Procedure in respect of certain matters, including “reviewing its decisions” and “setting aside any order of dismissal of any application for default or any order passed by it ex parte”.
The Bench read this provision to mean that the DRAT is not a weak body with narrow powers. Instead, it has substantive powers similar to a civil court, including the power to review and to set aside dismissal orders passed for procedural lapses. The court emphasised that the law intends that cases should, as far as possible, be decided on merits rather than be thrown out on technicalities.
To support this understanding, the Bench referred to the Supreme Court judgment in Grindlays Bank Ltd. v. Central Government Industrial Tribunal, 1980 Supp SCC 420. In that case, the Supreme Court held that when an order is passed due to a procedural defect or inadvertent error, a tribunal has the power to recall it ex debito justitiae, meaning “as a matter of justice”, to prevent abuse of its process.
The Bench also relied on Kapra Mazdoor Ekta Union v. Birla Cotton Spinning and Weaving Mills Ltd., (2005) 13 SCC 777. The Supreme Court there distinguished between review on merits and procedural recall. It held that where a proceeding is vitiated by a procedural illegality going to the root—such as lack of proper notice or hearing—the tribunal can recall the order and re-hear the matter without entering into the merits of the earlier decision.
Applying these principles, the Patna High Court observed that the DRAT’s dismissal of the appeal on 23.03.2015 was not a decision on the merits of the case. It was only because the borrowers did not comply with the pre-deposit requirement. Therefore, this dismissal was in the nature of an order for default or non-compliance with a procedural condition.
Once the dismissal is treated as an order for default, it clearly falls within Section 22(2)(g), which allows the Tribunal to set aside any order of dismissal for default. The Division Bench held that the Single Judge, by saying that there was no power of recall and that the DRAT had become functus officio, had overlooked this express statutory power.
The court then turned to Section 21 of the Act. Section 21 states that an appeal “shall not be entertained” unless the person has deposited the prescribed portion of the debt. The court noted that Section 21 does not fix any time limit for making the deposit, and it does not say that failure to deposit within any particular time will automatically result in final dismissal of the appeal.
To understand the expression “shall not be entertained”, the court cited the Supreme Court’s decision in Lakshmi Rattan Engineering Works Ltd. v. Assistant Commissioner Sales Tax, 1968 AIR 488. There, the Supreme Court held that the word “entertain” means “admit to consideration”, that is, the stage when the court takes up the matter on merits, not merely when the appeal is filed.
The Bench also referred to Hindusthan Commercial Bank Ltd. v. Punnu Sahu, (1971) 3 SCC 124, where the Supreme Court approved earlier decisions interpreting “entertain” as “adjudicate upon” or “proceed to consider on merits”.
Based on this, the Division Bench held that Section 21 only puts a bar on the DRAT proceeding to hear and decide the appeal until the deposit is made. Non-payment may justify the DRAT in refusing to proceed at that time, but it does not permanently destroy the statutory right of appeal. The dismissal dated 23.03.2015 was therefore a procedural order, which could later be recalled if the deposit requirement was satisfied.
In the present case, the borrowers had, though belatedly, deposited more than 50% of the decretal amount and then applied for restoration. The DRAT exercised its jurisdiction under Section 22(2)(e) and (g) and restored the appeal on 29.09.2023. The Division Bench held that even if the DRAT’s order did not give very detailed reasons, that alone could not make the order without jurisdiction, because the legal power to pass such an order clearly existed.
The Bench also stressed that the powers under Section 22(2) are aimed at advancing justice. The law tries to balance strict procedure with substantive justice. Interpreting the Act in a way that makes the DRAT helpless to recall its own dismissal order, despite explicit statutory power, would defeat the purpose of the Act.
In conclusion, the Division Bench set aside the Single Judge’s judgment dated 04.09.2024 in CWJC No. 1388 of 2024. It affirmed the DRAT’s order dated 29.09.2023 restoring Appeal No. R-99/2014. The Letters Patent Appeal was allowed, and all pending applications were disposed of.
Why This Judgment Matters
This judgment is important for borrowers and banks alike. It makes clear that dismissal of an appeal before the DRAT for non-payment of the pre-deposit is not the end of the road if the law itself gives the Tribunal power to recall such an order.
For borrowers who could not arrange money within the original time but later manage to deposit the required amount, this decision shows that their appeal can still be revived, subject to the Tribunal’s satisfaction. The Patna High Court has clarified that the focus should be on deciding cases on merits, not closing the doors for purely technical reasons.
For banks, the judgment signals that while recovery and auction steps can proceed, they may still face a revived appeal if borrowers later comply with the statutory pre-deposit. However, the Tribunal’s power is confined to what the Act allows; it is not open-ended and must operate within Section 22(2).
Overall, the ruling strengthens the idea that tribunals like the DRAT are meant to deliver substantial justice and have real powers to correct procedural defaults, especially when the statutory text itself supports such powers.
Legal Issues and Answers
- Issue: Did the DRAT, Allahabad have jurisdiction to recall and restore an appeal earlier dismissed for non-compliance with the pre-deposit requirement?
Answer: Yes. The Patna High Court held that under Section 22(2)(e) and (g) of the Recovery of Debts and Bankruptcy Act, 1993, the DRAT has power to review its decisions and to set aside dismissal orders passed for default, and the Single Judge erred in holding otherwise. - Issue: Does non-compliance with the pre-deposit requirement under Section 21 lead to automatic, final dismissal of an appeal, beyond recall after later compliance?
Answer: No. The court held that Section 21 only bars the DRAT from “entertaining” or considering the appeal on merits until the deposit is made. A dismissal for non-deposit is procedural and can be recalled once the statutory deposit is later complied with.
Cases Cited by the Court
- Grindlays Bank Ltd. v. Central Government Industrial Tribunal & Ors, 1980 Supp SCC 420.
- Kapra Mazdoor Ekta Union v. Birla Cotton Spinning and Weaving Mills Ltd. & Ors, (2005) 13 SCC 777.
- Lakshmi Rattan Engineering Works Ltd. v. Assistant Commissioner Sales Tax, Kanpur & Ors, 1968 AIR 488.
- Hindusthan Commercial Bank Ltd. v. Punnu Sahu, (1971) 3 SCC 124.
Case Details
Case Number: Letters Patent Appeal No. 1093 of 2024 in Civil Writ Jurisdiction Case No. 1388 of 2024
Case Title: M/s Tirupati Storage and Allied Pvt. Ltd. & Ors v. UCO Bank Frazer Road Branch, Patna & Ors
Citation: 2026 (3) PLJR 411
Coram: Hon’ble Mr. Justice Sudhir Singh and Hon’ble Mr. Justice Sunil Dutta Mishra
Advocates:
- For the appellants: Mr. Deo Prakash Singh, Advocate; Mr. Pankaj Kumar, Advocate; Ms. Nishu Kumari, Advocate
- For the bank: Mr. Ranjeet Kumar Pandey, Advocate
- For the Union of India: Mrs. Radhika Kumari, Central Government Counsel
Nature of the case: Letters Patent Appeal (intra-court appeal) arising out of a writ petition challenging an order of the Debts Recovery Appellate Tribunal regarding restoration of an appeal in loan recovery proceedings.
Date of Judgment (LPA): 16.04.2026
Link to Judgment: Click here to read the full Patna High Court judgment
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