Pre-deposit conditions for statutory appeals under SARFAESI are valid and do not violate Article 14.

The second proviso to Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, requires a pre-deposit as a condition for entertaining an appeal. The stated legal position is that a statutory right of appeal can be regulated by reasonable conditions, and a deposit of fifty per cent of the amount due, reducible to not less than twenty-five per cent for recorded reasons, is not discriminatory or violative of Article 14. The condition is presented as a measure to deter frivolous appeals and does not make the appellate remedy illusory, especially since the deposited amount remains refundable to the appellant.

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Issues: Whether the second proviso to Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, requiring pre-deposit as a condition for entertaining an appeal, is discriminatory or violative of Article 14 of the Constitution of India.

Analysis: The right of appeal is statutory in nature, and the legislature is competent to regulate its exercise by imposing conditions it considers reasonable. The impugned proviso does not require deposit of the entire debt, but only fifty per cent of the amount due, with discretion to reduce it to not less than twenty-five per cent for recorded reasons. Such a condition is intended to prevent frivolous appeals and does not render the appellate remedy illusory. No statutory provision was shown that permits the secured creditor to appropriate the deposited amount on dismissal of the appeal, and the amount is refundable to the appellant. The reasoning adopted by the Delhi High Court upholding the provision was concurred with.

Conclusion: The second proviso to Section 18(1) is not discriminatory and does not violate Article 14.

Final Conclusion: The constitutional challenge to the pre-deposit condition failed, and the petitions were dismissed.

Ratio Decidendi: A statutory right of appeal may validly be conditioned by a reasonable pre-deposit requirement, and such a condition is not unconstitutional merely because it regulates access to the appellate forum.

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