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of <h1>Challenge to DRAT's Order Dismissing SARFAESI Appeal Due to Non-Compliance</h1> <h3>CHUNNU FASHIONS AND ORS. Versus EDELWEISS ASSET RECONSTRUCTION CO. LTD.</h3> The writ petition challenged the DRAT's order dismissing an appeal against the DRT under the SARFAESI Act due to non-compliance with a deposit direction. ... Enforcement of security interest - pre deposit - Held that:- Under Section 21 of the 1993 Debt Recovery Act, an appeal is not to be entertained by the Appellate Tribunal, unless the person preferring the appeal has deposited 75% of the amount of the debt due from him as determined by the Tribunal under Section 19. In terms of the proviso, the Appellate Tribunal may for reasons to be recorded in writing waive or reduce the amount to be deposited under the said section. Unlike Section 18 of the 1993 Debt Recovery Act, Section 18 of the SARFAESI Act does not permit full waiver. In Narain Chandra Ghose Vs. UCO Bank and Ors. [2011 (3) TMI 1478 - SUPREME COURT OF INDIA] held that the condition of pre-deposit for entertainment of an appeal being mandatory under Section 18 of the SARFAESI Act, an appeal cannot be entertained, unless the condition precedent of deposit is fulfilled. The Court also held that the condition of pre-deposit being mandatory, complete waiver of pre-deposit is beyond the provisions of the Act. DRAT has reduced the required pre-deposit of 25%, which is the minimum amount required to be deposited in view of the third proviso to Section 18 of the SARFAESI Act.In view of the verdict of the Supreme Court in Narain Chandra Ghose (supra) and the mandatory requirement of the third proviso to Section 18 of the SARFAESI Act, the writ petition cannot be entertained and the same is dismissed. Issues:- Challenge against the order of the Debt Recovery Appellate Tribunal (DRAT) for non-compliance with a direction.- Details of the petitioner and the credit facilities availed.- Mortgage of property as security for credit facilities.- Enforcement of security interest under the SARFAESI Act.- Notice issued by Indian Bank under Section 13(2) of the SARFAESI Act.- Objection raised by the petitioner under Section 13(3A) and subsequent actions by Indian Bank.- Provisions of Section 17 of the SARFAESI Act regarding appeals to the DRT.- Provisions of Section 18 and 21 of the SARFAESI Act and the 1993 Debt Recovery Act.- Pre-deposit requirement for entertaining appeals under the SARFAESI Act.- Application of the Supreme Court verdict in Narain Chandra Ghose case.- Decision of the DRAT regarding the required pre-deposit.Analysis:The writ petition challenged an order of the DRAT dismissing an appeal against an order of the DRT under the SARFAESI Act due to non-compliance with a deposit direction. The petitioner, a proprietorship concern, availed credit facilities from Indian Bank, mortgaging a property for security. Indian Bank issued a notice under Section 13(2) of the SARFAESI Act, followed by objections by the petitioner under Section 13(3A), which were rejected. The bank took symbolic possession of the property under Section 13(4) of the Act.Under Section 17 of the SARFAESI Act, any aggrieved person can appeal to the DRT against measures taken by a secured creditor. Section 18 outlines the appeal process to the Appellate Tribunal, requiring a pre-deposit of the debt amount. The Supreme Court's ruling in Narain Chandra Ghose case emphasized the mandatory nature of the pre-deposit condition for entertaining appeals under the SARFAESI Act.The DRAT reduced the pre-deposit requirement to 25%, citing the third proviso to Section 18 of the SARFAESI Act. In line with the Supreme Court's decision and the statutory provisions, the writ petition was dismissed, upholding the mandatory pre-deposit requirement. The dismissal extended to all pending applications, emphasizing compliance with legal provisions and court precedents.
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