Withdrawal of mortgaged property sale proceeds may be allowed pending appeal when restitution is secured by bank guarantee and undertaking.

Where sale proceeds of mortgaged property sold under the SARFAESI framework were lying in court pending a first appeal, withdrawal could be permitted if adequate restitution safeguards were in place. The court considered that retaining the funds in court served no practical benefit and allowed release of the deposited amount on protective terms. Those terms required a nationalised bank guarantee to remain alive until disposal of the appeal and a written undertaking, backed by board resolution, to repay the amount with interest if the appeal failed.

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Issues: Whether the applicant should be permitted, pending the first appeal, to withdraw the sale proceeds deposited in court from the sale of the mortgaged property, subject to safeguards.

Analysis: The property in question had been mortgaged, sold under the SARFAESI regime, and the sale proceeds had already been deposited in court. The Court held that keeping the amount in court would not serve any practical benefit to either side. It therefore found it appropriate to permit withdrawal, but only on protective terms ensuring that the amount could be restored if the appeal failed. The safeguards imposed were a nationalised bank guarantee to be kept alive till disposal of the appeal and a written board-resolution-backed undertaking to return the amount with interest at a rate to be determined later.

Conclusion: The applicant was allowed to withdraw the deposited sale proceeds subject to furnishing a bank guarantee and filing the required undertaking.

Ratio Decidendi: Where sale proceeds of mortgaged property are lying in court pending appeal, withdrawal may be permitted if adequate security is provided to ensure restitution of the amount with interest in the event the appeal fails.

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