Pre-deposit under SARFAESI includes accrued interest, while reduction below the statutory minimum requires shown hardship and a prima facie case.

Under SARFAESI Section 18(1), pre-deposit for an appeal is ordinarily 50% of the debt due, reducible to not less than 25% only on recorded reasons showing a prima facie case and financial hardship. Sparse hardship pleadings and weak material on the account classification did not justify waiver or reduction to 25%. The expression "debt due" for pre-deposit purposes includes interest accrued up to the date of filing the appeal, because the statutory definition of debt is broad enough to cover liability inclusive of interest. On that basis, accrued interest forms part of the appellate pre-deposit base.

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Issues: (i) Whether the borrower had made out a case for waiver of pre-deposit under the third proviso to Section 18(1) of the SARFAESI Act, 2002 so as to prosecute the appeal by depositing only 25% of the debt due; (ii) Whether the expression "debt due from him" for the purpose of pre-deposit under Section 18(1) includes interest accrued up to the date of institution of the appeal before the DRAT.

Issue (i): Whether the borrower had made out a case for waiver of pre-deposit under the third proviso to Section 18(1) of the SARFAESI Act, 2002 so as to prosecute the appeal by depositing only 25% of the debt due?

Analysis: The statutory scheme under Section 18(1) requires a borrower to deposit 50% of the debt due as a condition for entertainment of the appeal, with discretion in the DRAT to reduce the amount to not less than 25% for recorded reasons. That discretion is judicial in nature and must be exercised by considering both a prima facie case and financial hardship. On the material placed before the DRAT, the pleadings on hardship were sparse and did not meaningfully establish such hardship. The borrower also failed to produce credible material to show that the account could not have been classified as NPA on 4 May 2021, and the discrepancy in the assignment schedule did not, by itself, create a prima facie case. The alleged post-notice payments likewise did not establish any serious error in the secured creditor's accounting.

Conclusion: The borrower did not make out a case for waiver or reduction of the pre-deposit to 25%.

Issue (ii): Whether the expression "debt due from him" for the purpose of pre-deposit under Section 18(1) includes interest accrued up to the date of institution of the appeal before the DRAT?

Analysis: The definition of "debt" in Section 2(ha) of the SARFAESI Act, 2002 read with Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993 is wide enough to include liability inclusive of interest. Applying the statutory text and the prior decisions relied on, the amount required to be deposited under the second proviso to Section 18(1) must be determined with reference to the debt due on the date of filing of the appeal, which includes accrued interest. The DRAT's determination, to the extent it ignored this position, was legally unsound.

Conclusion: Yes. Interest accrued up to the date of filing of the appeal is included in the debt due for pre-deposit purposes.

Final Conclusion: The borrower's challenge to the waiver refusal failed, while the legal position on inclusion of accrued interest in the pre-deposit base was affirmed, though no practical modification followed because the appeal had already been dismissed for non-compliance.

Ratio Decidendi: For entertainment of an appeal under Section 18(1) of the SARFAESI Act, 2002, the "debt due" includes interest accrued up to the date of filing of the appeal, and waiver below the statutory minimum requires a prima facie case and financial hardship to be shown on the record.

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