Disposed

K Vishnu Murthy v. Central Bank of INdia

DRAT17 Apr 2023

Case brief

AI extract

What is this about?

This order dismissed an application for waiver of the pre-deposit under Section 18 of the SARFAESI Act. The bench held that sale proceeds cannot be adjusted against the pre-deposit when the auction is challenged and fixed the required deposit at 50% of the claimed debt.

What did the court decide?

Direction to deposit 50% of the debt amount as pre-deposit within six weeks; failure to comply shall result in dismissal of the appeal.

K Vishnu Murthy versus Central Bank of INdia — Banking and Recovery | DRAT (2023)

¶19

“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 the order of the DRT. The 2 nd proviso to Section 18(1) stipulates that 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

K Vishnu Murthy v. Central Bank of INdia

Case brief

What is this about?

What did the court decide?

Issues for consideration

Cases cited

Parties & counsel

Coram

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K Vishnu Murthy v. Central Bank of INdia

Case brief

What is this about?

What did the court decide?

Issues for consideration

Cases cited

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Manoj Kumar Jayaswal and Anr. versus Idbi Bank

Ms Tersus Disinfectant Solution Private Limited versus Union Bank of India and Anr.

Ms Sri Abhishek Steel and Power Ltd. versus Asset Reconstruction Company Indai Ltd.

Mr Kurmala Satyanarayana versus Andhra Bank

What the court decided

A compact analysis

Statutes considered

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