This single-judge communication orders the Appellant to deposit 25% of the due amount as a pre-deposit to pursue an appeal under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, relaxations granted due to financial constraints.
Appellant directed to make predeposit of 25% of Rs.12.05 crore within six weeks.
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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA
Diary No. 294 of 2023
THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON
14.07.2023 Mrs. Yasmeen Basheer Vakil
… Appellant -VsKotak Mahindra Bank Limited & 3 Others … Respondents
Mr. Nemani Srinivas, Learned Counsel for the Appellant
Mr. Indradeep Basu with Mr. Mayank Ray, Learned Counsel for Respondent No.1/Kotak Mahindra Bank Limited
THE APPELLATE TRIBUNAL :
I.A. 185 of 2023
An application under Section 21 of the Recovery of Debts And Bankruptcy Act, 1993 for waiver from making pre-deposit.
Heard the Learned Counsel for the parties and perused the record.
An ex parte decree was passed against the Appellant for Rs.3,01,74,955.96 on 22nd July, 2017. An application for setting aside the same was dismissed by the Learned DRT. Feeling aggrieved the appeal was preferred. Learned Counsel for Respondent submits that presently Rs.12.05 crore is due.
Provisions of Section 21 of the Recovery of Debts And Bankruptcy Act, 1993 is mandatory in the nature in making pre deposit, as has been held in by the Hon’ble Apex Court in a recent judgment delivered on 5th January, 2023 in the case of M/s Sidha Neelkanth Paper Industries Private Limited & Another Vs. Prudent ARC Limited & Ors [2022 LiveLaw (SC) 11] has specifically observed and held in paragraph 13 of the judgment that :
“13. As per Section 2(ha) of the SARFAESI Act, “debt” shall have the same meaning assigned to it in clause (g) of Section 2
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of the Act 1993. As per section 2(g) of the Act 1993, “debt” means any liability inclusive of interest which is claimed as due from any person….., by a bank or a 17 financial institution during the course of any business activity undertaken by the bank or the financial institution, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of the application. That the “debt” means any liability inclusive of interest. As per Section 18 of the SARFAESI Act, any person aggrieved, by any order made by the DRT under section 17, may prefer an appeal within thirty days to an appellate Tribunal (DRAT) from the date of receipt of the order of DRT. Second proviso to section 18 provides that no appeal shall be entertained unless the “borrower” has deposited with the Appellate Tribunal fifty percent of the amount of “debt due” from him, as claimed by the secured creditors or determined by the DRT, whichever is less and only and only then, an appeal under Section 18 of the SARFAESI Act is permissible against the order passed by the DRT under Section 17 of the SARFAESI Act. Under Section 17, the scope of enquiry is limited to the steps taken under Section 13(4) against the secured assets. Therefore, whatever amount is mentioned in the notice under Section 13(2) of the SARFAESI Act, in case steps taken under Section 13(2)/13(4) against the secured assets are under challenge 18 before the DRT will be the ‘debt due’ within the meaning of proviso to Section 18 of the SARFAESI Act. In case of challenge to the sale of the secured assets, the amount mentioned in the sale certificate will have to be considered while determining the amount of pre-deposit under Section 18 of the SARFAESI Act. However, in a case where both are under challenge, namely, steps taken under Section 13(4) against the secured assets and also the auction sale of the secured assets, in that case, the “debt due” shall mean any liability (inclusive of interest) which is claimed as due from any person, whichever is higher.”
In the cited judgment Hon’ble Apex Court has also relied on the judgment of Narayan Chandra Ghosh Vs. UCO Bank [(2011) 4 SCC 548] wherein it was held that :
“Thereafter, the Bombay High Court considered in detail Section 18. After considering the decision of this Court in the case of Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548, it was observed and held that provisions of Section 18, more particularly the second and the 21 third proviso thereto are mandatory in nature and that the DRAT has no power to grant full waiver of deposit. In paragraph 16, it is observed as under: “16. Section 18(1) clearly stipulates, any person aggrieved by any order made by the DRT under Section 17, may prefer an appeal to the DRAT within 30 days from the date of receipt of
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the order of the DRT. The 2 nd proviso to Section 18(1) stipulates that no appeal shall be entertained by the DRAT unless the borrower has deposited with it 50% of the amount of debt due from him, as claimed by the secured creditors or as determined by the DRT, whichever is less. The 3rd proviso to Section 18(1) gives a discretion to the DRAT to reduce the aforesaid amount to not less than 25%, provided the DRAT gives reasons for the same which are to be recorded in writing. What becomes clear from the aforesaid provisions is that there is a jurisdictional bar from entertaining an appeal filed by the borrower from an order passed under Section 17, unless the borrower deposits 50% of the amount of debt due from him, as claimed by the secured creditors or as determined by the DRT, whichever is less. There is also a discretion granted to the DRAT to reduce this amount to 25% provided it finds adequate reasons for doing so and gives reasons, that are recorded in writing. If this deposit is not made, then the DRAT has no jurisdiction to entertain the appeal of the borrower. The crucial words “debt due from him” have to be interpreted consistent with the object and purpose sought to be achieved by the SARFAESI Act. Unless the debt due is secured, the borrower cannot be allowed the luxury of litigation. If that is permitted, the secured creditors would be engaged in a continuous and futile litigation. On a plain reading of the section, it is clear that the DRAT has no power or jurisdiction to reduce the deposit amount to less than 25%. This is ex-facie clear from the plain and unambiguous language of Section 18 of the SARFAESI Act.” “That thereafter the Bombay High Court considered the submission on behalf of the borrower that as the bank had already sold the secured assets for a consideration that fully secured their claim and therefore there was no requirement for the borrower to deposit any amount as contemplated under Section 18 of the SARFAESI Act. The Bombay High Court did not accept the said submission by observing that it would 22 be ludicrous to suggest that the money realised by the bank from sale of the secured assets could be used by the borrower to fulfil the condition of pre-deposit under Section 18. The Bombay High Court has observed that it would be a different matter if the sale is accepted and confirmed by the borrower. The Bombay High Court further observed that the borrower cannot be permitted to use the sale proceeds received from the sale of the subject properties to be adjusted/given credit for in the application for waiver of deposit and at the very same time challenge the sale of very same subject properties. The said decision of the Bombay High Court has been confirmed by this Court as the special leave petition preferred impugning the same, has been dismissed. Even otherwise, we are in full agreement with the view taken by the Bombay High Court in the case of Eskays Construction Pvt. Ltd. (supra). We are of the firm opinion and view that in a case where the borrower challenges the auction sale, thereafter it will not be open for the borrower to pray to use the sale proceeds received from the sale of
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the secured properties to be adjusted/given credit in an application for waiver of pre-deposit.”
In view of the law laid down by the Hon’ble Apex Court Appellant should make minimum 50% of Rs.12.05 crore being the amount due, as pre deposit.
Learned Counsel for Appellant submits that two separate appeals have been preferred; one by the mother, being Appeal No. 294 of 2023 and the other, being the present appeal, by the Appellant, who is the principal borrower. Learned Counsel submits that since both the appeals are against the same order, Appellant may be directed to deposit 25% of the due amount. Learned Counsel submits that the Appellant is under financial crunch.
Considering the financial condition of the Appellant, Appellant is directed to make pre deposit of 25% of Rs.12.05 crore, within a period of six weeks.
I.A. 185 of 2023 is disposed of.
List on 4th September, 2023 for further orders.
(Anil Kumar Srivastava,J) Chairperson
Dated 14th June, 2023 04/ac
1 issue framed by the court
Whether the Appellant is eligible for a waiver of the pre-deposit required under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993.
Colour shows how this judgement treated each authority
1 provisions across 1 enactments
Mrs. Yasmeen Basheer Vakil
Kotak Mahindra Bank Limited
Anil Kumar Srivastava
As recorded by the court registry
6 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
Anil Kumar Srivastava
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