SARFAESI pre-deposit under appeal provisions includes claimed interest, and disputed sale proceeds cannot reduce the deposit.

Under Section 18(1) of the SARFAESI Act, the borrower's appeal remained subject to the statutory pre-deposit because the borrower could not disown the secured creditor's status after having earlier challenged the assignment. The debt shown in the Section 13(2) notice remained the basis for computing the deposit where no contrary determination had been made by the DRT. Sale proceeds of the secured assets could not be adjusted towards the appeal deposit when the borrower itself disputed the sale. The expression "debt due" was treated as broad enough to include accrued and future interest where claimed in the notice.

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Issues: (i) whether the borrower could avoid the pre-deposit requirement under Section 18(1) of the SARFAESI Act on the ground that the secured creditor had assigned the debt and had allegedly ceased to be a secured creditor; (ii) whether the amount realised from sale of the secured assets could be treated as satisfying or reducing the statutory pre-deposit, and whether the amount of debt due could include future interest.

Issue (i): whether the borrower could avoid the pre-deposit requirement under Section 18(1) of the SARFAESI Act on the ground that the secured creditor had assigned the debt and had allegedly ceased to be a secured creditor.

Analysis: The statutory scheme treated the right of appeal under Section 18(1) as conditional upon deposit of 50% of the amount of debt due, as claimed by the secured creditor or determined by the DRT, whichever was less, with only a limited power to reduce the amount to not less than 25%. The Court found that the borrower had itself challenged the assignment in earlier proceedings and could not later take an inconsistent stand that the creditor had ceased to be a secured creditor. The debt reflected in the Section 13(2) notice remained the relevant starting point for computing the pre-deposit where no contrary determination had been made by the DRT.

Conclusion: The objection based on alleged cessation of secured creditor status was rejected, and the pre-deposit requirement remained applicable.

Issue (ii): whether the amount realised from sale of the secured assets could be treated as satisfying or reducing the statutory pre-deposit, and whether the amount of debt due could include future interest.

Analysis: The Court held that where the borrower itself had challenged the sale of the secured assets, the sale proceeds could not be appropriated for the purpose of the appeal pre-deposit. The Court also accepted that the expression "debt due" is broad enough to include interest and future interest where the statutory notice itself made such a claim. In the facts, the amount shown as due in the notice, together with accrued interest up to the relevant date, formed the basis for computing the deposit requirement, and the Tribunal was justified in insisting on the balance deposit.

Conclusion: The sale proceeds were not available for adjustment towards pre-deposit, and the debt due could include accrued and future interest for computing the statutory deposit.

Final Conclusion: The challenge to the waiver order failed, and the statutory pre-deposit condition under the SARFAESI appeal provisions was upheld.

Ratio Decidendi: For an appeal under Section 18(1) of the SARFAESI Act, the borrower must deposit the prescribed percentage of the debt due as claimed in the statutory notice, including accrued interest where claimed, and sale proceeds of secured assets cannot be used to satisfy that condition when the borrower itself disputes the sale.

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