2018 (11) TMI 1897

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....ich was also mortgaged with the Bank). The project could not be completed as per schedule for various reasons. The petitioner applied for enhancement in loan, which was not responded by the Bank. The total repayment of Rs. 2.45 crore was made as on March 31, 2015. It appears that a notice under Section 13(2) was issued on April 13, 2013 to which the petitioner had filed objections on June 06, 2013. The Bank had taken possession of the property. The petitioner approached the Bank after knowing that the property has been put to sale. 3. It is the case of the petitioner that the Bank had not published proper publication for sale of property. According to the petitioner, the same was in violation of Rule 8 of the SARFAESI Rules, as the respondent No.1 Bank has failed to give prior 30 days notice to the petitioner before fixing sale. The Bank hurriedly sold the property to a third party (respondent No.2, herein) at throw away price of Rs. 11.77 crores. The OTS proposal submitted by the petitioner was rejected. Suffice it to state that the petitioner filed an application under Section 17 of the SARFAESI Act challenging the sale of the property by the respondent No.1 Bank. The said SA ....

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....e of the fact whether the appeal is allowed or rejected. When no deposit has been made with the DRAT then nothing would be there to be returned to the appealing borrower and the borrower would have succeeded in getting entertained his appeal and disposal of appeal on merits also without making a pre-deposit. It was held that in case the borrower challenges the auction sale in legal proceedings the sale remains in a nebulous stage and the sale will get finality / confirmed only when the legal proceedings come to an end. In other words, there is no confirmation of the sale of its property so far. The DRAT was of the view the aforesaid aspects were not considered in the judgments relied upon on behalf of the petitioner. 7. The DRAT relied upon the judgment of the Bombay High Court in W.P. No. 1315/2014 dated November 31, 2016, Eskays Construction Pvt. Ltd. vs. Sona Papers & Industries Ltd., wherein it was held that the auction money cannot be considered while calculating the amount of pre-deposit, when the auction sale itself is under challenge at the instance of the borrower. 8. That apart, the DRAT rejected the plea made on behalf of the petitioner that excess amount recovered....

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.... the property taken as security has been sold and amount realized therefrom credited in the loan account of the petitioner. It would be highly unfair and unreasonable not to take this amount for the purpose of pre-deposit 7. M/s Akash Ganga Airlines Ltd. vs. Debt Recovery Appellate Tribunal, (2016) 1 BC 306 In a given situation where an amount more than the amount due from the borrower had already been realized by auction sale, insistence on the deposit referred to under proviso to section 18 would be contrary to the legislative intent as also the express provision as is evident from the use of the words "50% of the amount of debt due from him" 8. Smt. Sarla Devi Mishra vs. Debts Recovery Appellate Tribunal, Allahabad in WP No.45995/2015 decided on August 20, 2015 Sum recovered by the Bank is more than 100% of the debt claimed from the petitioner, therefore, the petitioner is not required to deposit any sum under section 18 of the Act to maintain the appeal 9. Nathi Lal Rathore vs. DRAT, Allahabad, WP No. 32026/2016 decided on October 05, 2016 Amount deposited post 13(2) notice should be adjusted at the time of deciding the issue of pre- deposit under Sec....

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....d is very less. The ground for seeking waiver of pre-deposit is that the Bank has recovered the debt due and in fact excess money is lying with it and the amount received / recovered can be considered towards the requirement of pre-deposit envisaged under Section 18 of the SARFAESI Act. The issue that needs to be decided in the facts of this case is whether for entertaining the appeal by the Appellate Tribunal, the petitioner is required to deposit 50% of the amount of debt due from the petitioner as claimed by the secured creditors or determined by the Recovery Tribunal, in terms of second proviso to Section 18 of the SARFAESI Act. 15. To answer the question, it is necessary to reproduce hereunder Section 18 of the SARFAESI Act: "18. Appeal to Appellate Tribunal.-(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal [under section17, may prefer an appeal along with such fee, as may be prescribed] to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal. [Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:] [Provided....

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....ality / confirmed only when the legal proceedings come to an end. 18. Surely such an apprehension as noted above, cannot govern the interpretation of Section 18 of the SARFAESI Act, 2002. The Section is clear and contemplates a situation stated in the earlier paragraph and the same has to be interpreted in the manner it exist, by giving a plain meaning. 19. We are conscious of the fact that the amount of pre-deposit has to be made in DRAT and not in the Bank. But still when no amount is due from the petitioner whether the pre-deposit can still be insisted upon. The argument can be made that the condition of pre-deposit is to discourage frivolous litigation which if permitted, would defeat the very purpose of the enactment of early settlement of the disputes. The argument is appealing but the same shall not hold good in the facts of the case with which we are concerned. Otherwise, the provision of appeal for persons / entities like the petitioner, shall become otiose / illusory. In fact, the insistence of pre-deposit shall be inequitable in the facts. Nothing precludes DRAT while deciding the appeal, if it finds that the appeal filed by the petitioner is frivolous, to impose s....

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....ndian Bank vs. Blue Jaggers Estates Ltd. (supra) is distinguishable. 24. Mr. Mehra in support of his submission has relied upon the judgment of the Allahabad High Court in the case of M/s Akash Ganga Airlines Ltd. vs. Debt Recovery Appellate Tribunal, Allahabad and Others 2015 SCC OnLine All 8084, wherein the facts are identical to the facts of this case and the Court by noting the position of law as referred to above has allowed the petition and directed the DRAT to reconsider the application of waiver of the petitioner therein by setting aside the earlier order of the DRAT insisting on the pre-deposit. We concur with the view taken by the Allahabad High Court and a similar view as also taken by the Division Bench of Punjab and Haryana High Court in S.R. Forging Limited vs. UCO Bank 2013 SCC OnLine P&H 3902, wherein it was held as under: "Challenge in the present petition is to the orders passed by the Debts Recovery Appellate Tribunal Delhi (for short the 'Tribunal') dated 30.4.2012 (Annexure P-14) and dated 13.7.2012 (Annexure P- 15), whereby the appeal filed by the petitioners- herein was not entertained for failure to comply with the requirement of law i.e.....