The Supreme Court has observed that the Debt Recovery Appellate Tribunal cannot entertain an appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, without insisting on pre-deposit.
The bench of Justice Deepak Gupta and Justice Aniruddha Bose set aside the judgment of the Bombay High Court that held that no pre-deposit was required to entertain an appeal by DRAT.
It referred to Narayan Chandra Ghosh vs. UCO Bank & Ors. and observed thus:
"Keeping in view the language of the Section even if the amount or debt due had not been determined by the DRT, the appeal could not be entertained by the DRAT without insisting on pre-deposit. The DRAT, at best could, after recording the reasons, have reduced the amount to 25% but could not have totally waived the deposit. This Court also held that the right of appeal conferred under Section 18(1) is subject to the conditions laid down in the second proviso therein which postulates that no appeal shall be entertained unless the borrower has deposited 50% of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less. The third proviso enables the DRAT, for reasons to be recorded in writing, to reduce the amount of deposit to not less than 25%."
The bench also, while setting side the HC judgment, observed that a guarantor or a mortgagor, who has mortgaged its property to secure the repayment of the loan, stands on the same footing as a borrower and if he wants to file an appeal, he must comply with the terms of Section 18 of the SARFAESI Act.
Case name: UNION BANK OF INDIA vs. RAJAT INFRASTRUCTURE PVT. LTD. Case no. : CIVIL APPEAL NO. 1902 OF 2020Coram: Justices Deepak Gupta and Aniruddha BoseCounsel: Adv O.P. Gaggar and Sr. Adv Vikram Chaudhri
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