TaxTMI 
TaxTMI 
2010 (9) TMI 216
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....etitioner No. 3, PRK Exports Private Limited, and the proprietor of the petitioner No. 4, Premier Overseas. A loan was granted to the petitioner No. 1 by the respondent No. 2, the HDFC Bank, under the LAP scheme to the tune of Rs. 25 lakhs for which he had mortgaged certain properties. 3. On 13 April, 2007, the respondent bank enhanced the loan granted after reviewing all the parameters of performance and timely repayment of the dues towards the loan from the earlier amount. On 22 December, 2007, the bank accepted a request for fresh loan to the petitioner No. 1 based upon the need of fund on account of business expansion. A security agreement was entered into on 1 January, 2008, between the petitioner No. 1 and the respondent No. 2 bank whereby an equitable mortgage was created in respect of secured asset by depositing the sale deed dated 14 October, 2005, of the secured asset. 4. Be it noted, various averments have been made about the marital status between the petitioner No. 1 and his wife, the respondent No. 3, and the litigations that were initiated against each other Which, we are disposed to think, are totally irrelevant for the present petition. As set forth, the resp....
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.... directed the petitioner-appellant to deposit a sum of 25% of the total principal amount within four weeks failing which the appeal would stand dismissed. The said order, as put forth, has been passed in terms of the third proviso to section 18 of the SARFAESI Act. It is contended that under these circumstances, the petitioners are compelled to challenge the constitutional validity of the aforesaid provision. 6. It is propounded in the petition that the provisions are unconstitutional as the Parliament has not taken into consideration the diverse kinds of appeals to be filed by the borrowers. The conditions of pre-deposit in all kinds of appeals are onerous and oppressive and, further, the same being arbitrary hits at the root of Article 14 of the Constitution of India. It is also urged that such kind of stipulations for pre-deposit in all kinds of appeals does not achieve the desired objectives of the SARFAESI Act. 7. It is contended that unless there is determination, the provisions of section 18 of the SARFAESI Act would not reasonably be attracted and such rigorous and onerous provisions tantamount to failure of justice. It is averred that such stringent conditions would ....
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....ct, 1993 (51 of 1993) and rules made thereunder." 10. The 3rd and 4th provisos to sub-section (1) were brought into the statute book by the Act of 30 of 2004 with effect from 11 November, 2004. On a perusal of the said provisions, it is luminescent that the appellate tribunal has been conferred with the power to reduce the amount not less than 25%. The submission of Mr. Bara, learned counsel for the petitioners, is that the aforesaid provision is unconstitutional as an onerous condition is imposed while providing a remedy for appeal and, secondly, the legislature has not visualised the various categories of appeals which could be preferred before the tribunal but has only provided that the borrower is required to deposit the amount. 11. To appreciate the controversy, it is apposite to refer to section 17 of the SARFAESI Act. Section 17 provides for an appeal to be preferred by any person including a borrower aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer. Subsection (2) of section 17 initially provided that such appeals shall not be entertained by the DRT unless the borrower has deposited w....
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....eal is a creature of the statute and while granting the right, the legislature can impose conditions for the exercise of such right so long as the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory. Their Lordships treated the appeal to the DRT, as provided under section 17, as an approach to the adjudicating authority in the first instance and not in appeal and, accordingly, held the imposition of conditions to be invalid and all other provisions of the SARFAESI Act were declared to be valid. 14. In view of the aforesaid enunciation of law, there can be no trace of doubt that section 18 which provides for appeal to the Debts Appellate Recovery Tribunal and is hedged by reasonable conditions cannot be treated to be ultra vires. 15. The learned counsel for the petitioners suggested that the second proviso to section 18 should be substituted and for the sake of completeness, we reproduce the said suggestion: "Provided further that no appeal shall be entertained unless the borrower who wants to save the secured asset from sale by the secured creditor, has deposited with the appellate tribunal fifty per cent of the amoun....