Debt Recovery Tribunal cannot grant certificate of recovery under Section 31A, when decree against the borrower had become barred from execution by the passage of time. Article 137 of the Limitation Act is applicable.

The Hon'ble Patna High Court in Kailash Art International vs Central Bank of India had to deal with an interesting question as to whether DRT can grant certificate of recovery under Section 31A of the Act which execution of decree is itself barred by Limitation. The Hon'ble High Court has answered this question in negative. The reasoning is extracted herein under;

"In my view even a preliminary decree, if capable of quantification and still subsisting on the date of the application, can give rise to a right to file an application under Section 31A (1) of the Act. The proposition that a preliminary decree must become final before it can be executed as laid down in the decisions cited above by learned counsel for the petitioners, would apply in its full rigour only if such a decree is sought to be executed in terms of the provisions of the Code of Civil Procedure before the Civil Court. Since the rights of the parties are basically decided by the preliminary decree subject to the details being worked out in the final decree, therefore, the preliminary decree would also come within the ambit of the words “decree or order” as stated in Section 31A of the Act.

I have already held that the decree dated 21.4.1995 is not a composite decree but a preliminary mortgage decree under Order 34 Rule 4 of the Code of Civil Procedure. That being the position, the decree itself could not have been executed in the Civil Court without a final decree having been applied for and prepared in terms of the Order 34 Rule 5 of the Code of Civil Procedure providing for selling out of the mortgaged properties. In terms of the reliefs sought by the plaintiff and granted by the decree dated 21.4.1995, the decree could not have been further executed as a money decree against the defendants without first getting an order under Order 34 Rule 6 in case the sale of the mortgaged properties could not satisfy the decretal amount with interest and cost etc. Thus, according to me, the Execution Case No. 05/1996 was non est and invalid in law and could not have been carried into the effect as an execution because it was only for the execution of the preliminary mortgage decree without getting a final decree passed.

The preliminary decree dated 21.4.1995 directed the defendants to pay the entire decretal amount within 30 days from the date of passing of the order. Thus an application for final decree ought to have been filed within a period of three years from the expiry of 30 days from the date of the order in terms of the settled position of law that Article 137 of the Limitation Act and apply to such an application for preparation of final decree. No such application having admittedly been filed within the period prescribed, it is evident that the right to apply for a final decree and get the same executed became barred after 21.5.1998. Thus on 17.1.2000 when Section 31A was introduced in the Act, there was no subsisting decree or order of the Court which could be executed under the law by the respondent-Bank. That being the position no right could accrue to the Bank merely because of enactment of Section 31A since the decree had become barred from execution by the passage of time and therefore could not form the basis for filing an application for an order of recovery under Section 31A (1). It was thus not open to the Debts Recovery Tribunal to have entertained the application filed by the respondent-Bank on 6.3.2006 and to have passed any valid legal order for recovery on the basis of such application.

The matter can be looked at from another angle also. When Section 31A was enforced on 17.1.2000, there was no execution proceeding praying for more than Rs. 10/- lacs pending in the Court below as the prayer made by the Bank in its execution case was only for an amount of Rs. 5,40,634/-. In such cases, Section 31A merely provides a right to the decree-holder in case of unexecuted decrees or orders to apply to the Tribunal to pass an order for recovery of the amount, provided the amount under the decree exceeds Rs. 10/- lacs on the date of the application. It is not mandatory under the provisions of Section 31A in case of such execution cases to stand transferred to automatically and proceeded with only by the Tribunal, it is rather a liberty granted to the decree-holder to apply to the Tribunal for recovery of the amount. Such a right accrued to the decree holder-Bank on 17.1.2000 and in the absence of any other specific provision, the residuary Article 137 of the Limitation Act would apply and such an application could only be filed within three years from the date when the right to file an application under Section 31A accrued. Thus, the Bank could have filed for a certificate for recovery of debt in the present matter with respect to the decree dated 21.4.1995, if the same was subsisting and recoverable on 17.1.2000, within a period of three years from the said date, i.e., on or before 17.1.2003. Thus the filing of the application in the year 2006 was obviously barred by limitation and could not have been entertained by the Debts Recovery Tribunal."