SARFAESI Act | Appeal Against Every DRT Order Doesn't Require Pre-Deposit : Supreme Court

The Supreme Court recently expressed a prima facie view that appeals filed against procedural orders of the Debts Recovery Tribunal (DRT) do not require pre-deposit as per Section 18 (appeal to the appellate tribunal) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).The present appeal arises from the Bombay High Court's order dated March 19, 2024, whereby it affirmed an order of the Debts Recovery Appellate Tribunal (DRAT). The matter arises from two interim applications filed by the Appellants, auction purchasers, to be impleaded in the securitization application pending before DRT. The DRT rejected their application for impleaded, against which they approached the DRAT under Section 18, and they were asked to pre-deposit Rs. 125 crores.A bench of Justices J.B. Pardiwala and K.V. Viswanathan stated that the moot question before the High Court was whether the aspect of pre-deposit under Section 18 should apply in "such orders" which are more procedural in nature, as the present one.Holding that it should not, the Court observed: "The plain reading of Section 18 of the SARFAESI Act, referred to above, would indicate that if any person which should also include a borrower is aggrieved by any order made by the DRT under Section 17 of the SARFAESI, he may prefer an appeal subject to the pre-deposit. We are of the view, of course prima facie that the expression “any order” should be given some meaningful interpretation. Should any and every order that may be passed by DRT, if sought to be challenged, be made subject to pre-deposit?"It added: "One can understand that if any final order is passed by the DRT, determining the liability of the borrower or any other liability of any person, and an appeal is preferred under Section 18 of the SARFAESI Act to the appellate tribunal, the provision of pre-deposit would come into play. However, what would be the position if an order like the one passed in the present litigation, i.e., declining to implead the auction purchaser in the pending proceedings before DRT is concerned?We are of the view that we should remand the matter to the High Court for the purpose of reconsidering the aforesaid aspects of the matter."The Court set aside the Bombay High Court's order and remanded the matter to be heard afresh.Appearance: Senior Advocate CU Singh, Radhika Gautam AOR for AppellantCase Details: M/S SUNSHINE BUILDERS AND DEVELOPERS v. HDFC BANK LIMITED THROUGH THE BRANCH MANAGER & ORS. |CIVIL APPEAL NO.5290/2025 Citation : 2025 LiveLaw (SC) 459Click Here To Read Order

SARFAESI Act | Appeal Against Every DRT Order Doesn't Require Pre-Deposit : Supreme Court

Gursimran Kaur Bakshi

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