Pre-deposit under SARFAESI includes interest, and disputed auction-sale proceeds cannot satisfy the borrower's statutory deposit requirement.

Under Section 18 of the SARFAESI Act, the borrower must make the prescribed pre-deposit personally, and auction-sale proceeds cannot be appropriated towards that deposit when the borrower is also challenging the sale. The statutory condition is not satisfied by treating the auction purchaser's payment as if it were a deposit made by the borrower. The expression "debt due" for this purpose includes interest, because the Act adopts the wider definition of debt from the Recovery of Debts and Bankruptcy Act, 1993. The stated ratio is that the pre-deposit must be computed on the full debt due as claimed, including interest, and not reduced by proceeds of a disputed auction sale.

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Issues: (i) Whether, for the purpose of the pre-deposit under Section 18 of the SARFAESI Act, the amount realised from sale of the secured asset by auction purchaser can be adjusted or appropriated towards the deposit required from the borrower. (ii) Whether the expression "debt due" for Section 18 includes interest.

Issue (i): Whether, for the purpose of the pre-deposit under Section 18 of the SARFAESI Act, the amount realised from sale of the secured asset by auction purchaser can be adjusted or appropriated towards the deposit required from the borrower.

Analysis: The second proviso to Section 18 places the obligation on the borrower to deposit fifty per cent of the amount of debt due from him as claimed by the secured creditor or determined by the DRT, whichever is less. The statutory language does not permit treating the auction purchaser's payment as a deposit made by the borrower. Where the borrower challenges the auction sale as well as the measures taken against the secured asset, he cannot at the same time claim credit for the sale proceeds realised from that very sale. Adjustment of the auction proceeds is possible only where the borrower accepts the sale; it is impermissible when the sale itself is under challenge.

Conclusion: The amount realised by auction sale cannot be adjusted or appropriated towards the borrower's pre-deposit under Section 18 when the auction sale is also under challenge.

Issue (ii): Whether the expression "debt due" for Section 18 includes interest.

Analysis: Section 2(ha) of the SARFAESI Act adopts the meaning of "debt" from Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993, where debt means any liability inclusive of interest. Therefore, for the purpose of the pre-deposit under Section 18, the amount due is not confined to principal alone and includes interest claimed by the secured creditor.

Conclusion: The expression "debt due" includes interest.

Final Conclusion: The secured creditor and auction purchaser succeeded on the central questions of law, and the borrower's challenge to the pre-deposit computation failed.

Ratio Decidendi: Under Section 18 of the SARFAESI Act, the borrower must personally deposit the prescribed pre-deposit on the full debt due as claimed, including interest, and sale proceeds from an auction sale under challenge cannot be treated as satisfying that statutory condition.

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