Pre-deposit waiver requires consideration of prima facie merits, not financial hardship alone, under debt recovery appeal procedure.

The appellate pre-deposit power under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 permits the Tribunal to waive or reduce the statutory deposit for recorded reasons, and that discretion is not limited to financial hardship alone. In deciding waiver, the Tribunal must consider both the prima facie merits of the appeal and the hardship caused by deposit, including the likelihood of success on challenge. A mechanical insistence on deposit based only on closure of business or financial difficulty is inadequate where the appeal raises arguable issues. On that reasoning, an order directing deposit of 50% of the debt without considering prima facie merits was described as unsustainable.

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Issues: Whether the Debt Recovery Appellate Tribunal was justified in directing deposit of 50% of the debt without considering the prima facie merits of the appeal while exercising power under section 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The appellate pre-deposit provision empowers the Tribunal to waive or reduce the statutory deposit for recorded reasons. That discretion is not confined to financial hardship alone. While considering waiver, the Tribunal must apply its mind to the merits of the challenge and the likelihood of success, along with the hardship caused by deposit. A mechanical refusal based only on closure of business or financial difficulty does not satisfy the statutory requirement where the appeal raises arguable issues on merits.

Conclusion: The order directing deposit of 50% of the debt without considering prima facie merits was unsustainable and liable to be set aside.

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