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Issues: (i) Whether the pre-deposit made under Section 18 of the SARFAESI Act is liable to be refunded when the appeal is withdrawn, disposed of on merits, or rendered infructuous. (ii) Whether the secured creditor can claim a lien or appropriating right over such pre-deposit under Section 171 of the Indian Contract Act, 1872.
Issue (i): Whether the pre-deposit made under Section 18 of the SARFAESI Act is liable to be refunded when the appeal is withdrawn, disposed of on merits, or rendered infructuous.
Analysis: The deposit required by the second proviso to Section 18 is only a condition for entertaining the appeal and is not itself a secured asset or secured debt. The statutory scheme of the SARFAESI Act permits enforcement only against secured assets, while the pre-deposit lies with the Appellate Tribunal and is not created as security in favour of the creditor. In the absence of appropriation by consent, adjustment with consent, or an attachment in lawful proceedings, the amount cannot be retained by the secured creditor.
Conclusion: The pre-deposit is refundable to the depositor on disposal of the appeal, including withdrawal or infructuous disposal, unless lawfully appropriated or attached.
Issue (ii): Whether the secured creditor can claim a lien or appropriating right over such pre-deposit under Section 171 of the Indian Contract Act, 1872.
Analysis: Section 171 applies to goods bailed to a banker as security for a general balance of account. A deposit made before the Tribunal under Section 18 is not a bailment with the bank and remains with the Tribunal, not with the creditor. The statutory prerequisites for a banker's lien are therefore absent, and the provision cannot be used to retain the appeal deposit.
Conclusion: The secured creditor has no lien under Section 171 over the pre-deposit.
Final Conclusion: The appeal failed, and the respondent was entitled to refund of the pre-deposit, while the creditor retained liberty to take recourse to the statutory recovery mechanism under the SARFAESI Act.
Ratio Decidendi: A pre-deposit made for entertaining an appeal under Section 18 of the SARFAESI Act is refundable on disposal of the appeal and cannot be appropriated by the secured creditor absent lawful consent or attachment, because it is neither a secured asset nor subject to a banker's lien.
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