Allowed

Ms Merrygold Enterprises through its partner Gaurav Chauhan v. Punjab National Bank

DRAT22 Apr 2026IA/278/2026

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal, Mumbai allowed the waiver of predeposit under Section 18 of the SARFAESI Act, directing the appellants to deposit 40% of the outstanding amount. Simultaneously, it refused an immediate interim stay on asset possession, citing a Bombay High Court judgment emphasizing that such relief awaits appeal registration.

What did the court decide?

Waiver of mandatory predeposit allowed; appellants directed to deposit 40% of outstanding debt before Registrar to register appeal; interim stay on possession refused at this stage.

Ms Merrygold Enterprises through its partner Gaurav Chauhan… — Banking and Recovery | DRAT (2026)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Justice Vivek Bharti Sharma, Chairperson

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I.A. No. 278/2026 (WoD)

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Misc. Appeal Dy. No. 732/2026

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Between

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M/s Merrygold Enterprises through its Partner … Appellant/s Gaurav Chauhan & Anr.

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V/s.

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Punjab National Bank …Respondent/s

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Mr. Anil P. Kale, Advocate for Appellants appeared through VC. Ms Preeti Barde, Advocate for Respondent Bank.

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-: Order dated: 22/04/2026:

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The matter is taken up for hearing by way of a praecipe filed by the Applicants/Appellants for seeking urgent relief.

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The present Appeal is filed against the impugned order dated 17.04.2026 passed by the Learned DRT-Aurangabad in I.A. No. 1026/2026 in S.A. No. 134/2024. In the Appeal, the Applicants/Appellants have filed I.A. No. 278/2026 for waiver of predeposit under section 18 (1) of the SARFAESI Act.

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The Learned Counsel for Applicants/Appellants would submit that pre-deposit amount be reduced to minimum of 25% of the outstanding amount as per the 3^rd proviso to Section 18 of the SARFAESI Act.

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Learned Counsel for the Applicants/Appellants would further submit that the Applicants/Appellants have deposited ₹25.00 lakhs with the Bank as per the directions of the Learned DRT, Aurangabad.

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Therefore, the mandatory deposit be waived.

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Learned Counsel for the Appellant would further submit that they have suffered severe financial distress. As a vendor supplying components to M/s Videocon, the Appellant firm sustained heavy losses following the collapse of Videocon in 2018, which was further compounded by the economic impact of the COVID-19 pandemic. Consequently, the Appellants defaulted on the loan facilities (Cash Credit of ₹3 Crores and Term Loan of ₹30 Lakhs), leading the Respondent Bank to issue a Demand Notice dated 04.10.2022 for a sum of ₹4,83,00,149.76p. The Ld. Counsel for the Appellants has drawn attention to the bona fides of the borrowers, noting that they have already deposited ₹25 Lacs on 07.04.2026 in compliance with an earlier DRT order dated 01.04.2026. Furthermore, the Appellants have submitted OTS (One Time Settlement) proposals and deposited token amounts to show their intent to resolve the dues.

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The Learned Counsel for Applicants/Appellants would submit that the possession of the property is scheduled on 22.04.2026. Hence, prays for an interim stay to the same. 7. Per contra, Learned Counsel for the Respondent Bank would submit at bar that on 17.04.2026, order has been passed by the Leaned DRT-Aurangabad directing the Respondent Bank to defer the possession of secured assets fixed for 22.04.2026 in case the Applicants/Appellants deposit ₹1.49 crores by 22.04.2026 before 12.00 noon and that the same has not been complied with by the Applicants/Appellants; therefore, no ground is made out for waiver of pre-deposit. Learned Counsel for the Respondent Bank would

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further submit that as on 22.04.2026 the outstanding amount is ₹5,86,21,286.88p

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The Learned Counsel for the Respondent Bank would submit that as per Section 18 of SARFAESI Act no appeal can be entertained unless mandatory deposit as per 1^st proviso to Section 18 of the Act is deposited. He would further emphasis that until the mandatory deposit as per Section 18 of the Act is made, no appeal can be registered; that, hence prior to deposit of this pre-deposit there is no appeal in the eyes of law.

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Considered and perused the records. 10. In view of the above, the waiver application is allowed, and the Applicants/Appellants are directed to deposit 40% of ₹5,86,21,286.88p-, which comes to ₹2,34,48,514/-. On deposit of the amount, Registry is directed to register this appeal and interlocutory application and put before the Appellate Tribunal.

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It is pertinent to note that the judgment dated 04.03.2026 in Writ Petition No. 15718/2025 in Anil Kumar Pawar & Anr V/s The Authorised Officer, Union Bank of India & Ors , the Hon’ble High Court of Bombay observed that after depositing the pre-deposit amount under Section 18 of the SARFAESI Act within time, the matter be sent before the Ld. Registrar for registering the Appeal and Interlocutory Application. Only after registration, the I.A. for stay or appeal be heard and decided.

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The relevant part of the judgment of the Hon’ble High Court of Bombay is reproduced here as under.

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“8. We find on perusal of the impugned order that it suffers from a serious procedural infirmity. The Application considered and decided in the impugned

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order dated 14th May 2025 was only the Application seeking waiver of predeposit under Section 18 of the Securitisation Act. The only prayer made on behalf of Respondent Nos. 2 and 3 before the DRAT was for such waiver on the basis of statements made in the said Application. While considering the said Application the DRAT discussed the rival submissions, made certain observations and thereupon found that the Respondent Nos.2 and 3 were required to deposit 40% of the amount due and that complete waiver from predeposit was not warranted. Having reached the said conclusion the DRAT was expected to issue a positive direction to Respondent Nos.2 and 3 to deposit such 40% amount towards pre-deposit so that the Appeal could be registered and then take up the Application for interim relief and the Appeal for further consideration.

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We find that the aforesaid approach adopted by the DRAT suffers from serious procedural irregularity and infirmity. It appears that the DRAT proceeded on an assumption that the moment a pre-deposit direction was issued in an Application seeking waiver thereof, the interim relief would follow as a matter of course upon the amount so directed to be deposited, in fact being deposited by the Appellants (Respondent Nos.2 and 3 herein). We find that the approach of the DRAT is unsustainable.”

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The Hon’ble High Court has castigated the approach of DRAT granting stay or interim relief before the registration of appeal on deposit of mandatory pre-deposit under Section 18 of SARFAESI Act for filing of appeal.

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It would be pertinent to reproduce with 2^nd proviso to Section 18 of the Act.

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It reads:

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“ 18. Appeal to Appellate Tribunal . —(1) Any person aggrieved, by an order made by the Debts Recovery Tribunal [under section 17, may prefer an appeal alongwith such fee, as may be prescribed] to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal:

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Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower

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Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:

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Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twentyfive per cent. of debt referred to in the second proviso .

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(2) --------------------------------------------------------------------------------------"

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In view of the observations of the Hon’ble High Court of Bombay in re “ Anil Kumar Pawar ” ( Supra ), no interim stay can be granted at this stage.

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The amount shall be deposited in the form of a Demand Draft/RTGS/NEFT with the Registrar of this Appellate Tribunal. 16. As and when the said amounts are deposited, the same shall be invested in term deposits in the name of Registrar, DRAT, Mumbai with any nationalised Bank, initially for 13 months, and thereafter to be renewed periodically.

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With this observation, the I.A. is disposed of. The Respondent Bank is at liberty to file a reply to the grounds of the Appeal with an advance copy to other sides.

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List the case on 24.04.2026 before the Ld. Registrar.

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Sd/Chairperson

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mks-02(SB)

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Ms Merrygold Enterprises through its partner Gaurav Chauhan v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Ms Merrygold Enterprises through its partner Gaurav Chauhan v. Punjab National Bank

Case brief

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What did the court decide?

What the court decided

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