Dismissed¶¶38

M/S S. B Valves (India) Private Limited v. the Asst General Manager

SARFAESI – Section 18(1) pre-deposit

Karnataka HC9 Apr 2025WP/34905/2024

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Case brief

AI extract

What is this about?

Pre-deposit Section 18(1) SARFAESI Act 2002; third proviso reduction capped at 25%; waiver of pre-deposit not permissible; appeal maintainability sine qua non; right of appeal creature of law; DRAT order dated 25.11.2024 in AIR No.523/2015, I.A.No.635/2015; Canara Bank Hubli vs S.B. Valves (India) Private Limited; Shalimar Valves; writ petition (GM-DRT) WP No. 34905 of 2024 dismissed by Division Bench (Krishna S Dixit J) on 09.04.2025; Rs.2 crore deposit in two installments.

What did the court decide?

The discretion under the third proviso to Section 18(1) of the 2002 Act to reduce the pre-deposit amount is limited by the statutorily prescribed floor of 25%; the DRAT having exercised that discretion within the bounds of law, its order cannot be faulted. ¶¶33

M/S S. B Valves (India) Private Limited Vs the Asst… — Banking and Recovery | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

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Issue for consideration

Whether the DRAT's order dated 25.11.2024 directing the petitioner-borrower to deposit Rs.2 crore as pre-deposit under Section 18(1) SARFAESI Act is contrary to law and vitiated by non-exercise/mis-exercise of discretion, warranting quashing under Articles 226 and 227. +1 more

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Court's answer

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Ratio / Principle

The right of appeal is a creature of law and the Law Maker can condition its exercise; Parliament has made pre-deposit a sine qua non for maintaining the appeal and has given the Appellate Authority discretion to reduce the quantum of pre-deposit but not to waive it altogether.

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Key takeaways

Absence of a party duly notified of the hearing does not prevent the case from being disposed of in accordance with law; the court therefore took up the main matter for consideration, there being no impediment in law or on facts.ratio¶¶32
The earlier round of litigation (W.P.No.13267/2024 and the resultant Writ Appeal No.100349/2014) was held irrelevant to the adjudication of the present lis, which lies in a very narrow compass of law.obiter¶¶37

Detailed headnote1 paragraphs

SARFAESI – Section 18(1) pre-deposit – Third proviso empowers DRAT to reduce, but not waive, the pre-deposit, subject to the statutory floor of 25% – DRAT's direction to borrower-company to deposit Rs.2 crore in two equalized installments (first by 09.12.2024) upheld as a valid exercise of statutory discretion; right of appeal being a creature of law, Parliament could make pre-deposit a sine qua non for maintaining the appeal – Absence of respondents, though served, is no bar to disposal of the writ petition – Writ petition under Articles 226 and 227 challenging DRAT order dated 25.11.2024 in I.A.No.635/2015 in AIR No.523/2015 dismissed; earlier round (W.P.No.13267/2024 and Writ Appeal No.100349/2014) held irrelevant to the present lis.

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1 - NC: 2025:KHC:15100-DB WP No. 34905 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9^TH DAY OF APRIL, 2025

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PRESENT

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THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND

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THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR WRIT PETITION NO.34905 OF 2024 (GM-DRT)

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BETWEEN:

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M/S. S. B. VALVES (INDIA) PRIVATE LIMITED PLOT NO.120B, IIND PHASE, TARIHAL INDUSTRIAL AREA, HUBLI- 580 026, DHARWAD DISTRICT. KARNATAKA. REP. BY ITS MANAGING DIRECTOR MR. BASAVARAJ N. SARANGI, ALSO AT MR. BASAVARAJ N. SARANGI, HOUSE NO.56, PRIYADARSHINI COLONY, GOKUL ROAD, HUBLI - 580 030. …PETITIONER

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Digitally signed by S NOORUNNISABEGUM Location: HIGH COURT OF KARNATAKA

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(BY SRI. RAJENDRA M. A., ADVOCATE)

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AND:

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THE ASST. GENERAL MANAGER /AUTHORIZED OFFICER, CANARA BANK, TRAFFIC ISLAND , HUBLI- 590 029.

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M/S. SHALIMAR VALVES PRIVATE LTD., 4-846/1, MIDC REBALE, NAVI MUMBAI - 400 701.

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ALSO AT M/S. SHALIMAR VALVES PRIVATE LTD., SURVEY NO.213/2/2, ANCHATGERI VILLAGE, KARWAR ROAD, HUBLI.

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…RESPONDENTS

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(R1 & R2 ARE SERVED AND UNREPRESENTED)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 25.11.2024 ON I.A.NO.635/2015 IN AIR NO.523/2015 (APPLICATION FILED U/S 18(1) WAIVER PETITION), AS NO ORDERS ARE PASSED U/S 17 OF THE SARFAESI ACT,2002 “ANNEXURE-A” AND ETC.,

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THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT AND HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR

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ORAL ORDER

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(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

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Petitioner-company being the borrower of 1^st

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Respondent-bank is knocking at the doors of Writ Court for assailing Debt Recovery Appellate Tribunal’s Order dated 25.11.2024 whereby Petitioner was directed to deposit Rs.2 crore in two equalized installments within four weeks,

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first installment of Rs.1 crore to be remitted within two

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weeks ie., on or before 09.12.2024 and the 2^nd for the remainder within two weeks next following ie., on or before 23.12.2024. It is a peremptory order, in the sense that the non-remittance of the said amount would result into automatic rejection of the appeal itself.

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Learned counsel for the Petitioner-borrower vehemently submits that the impugned order is contrary to law, facts & evidentiary material on record; on the substratum of the facts on which Petitioner’s appeal was structured, the requirement of Sec.18(1) of the SARFAESI Act, 2002 is not attracted; the DRAT even otherwise ought to have waived pre-deposit condition as sought for in the Application filed u/s.18 of the Act; the discretion having not been properly exercised, the impugned order has an error apparent on the face of the record warranting indulgence of this court for setting the injustice at naught.

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The Respondents despite service of notice have

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chosen to remain unrepresented, whatever be the reason

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for that. Absence of a party who is notified of hearing of

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the case would not come in the way of said case being disposed off in accordance with law. Therefore we have taken up the main matter for consideration, there being no impediment in law or on facts.

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Having heard the learned counsel for the Petitioner and having perused the Petition Papers, we decline indulgence in the matter being broadly in agreement with the reasoning of Debt Recovery Appellate Tribunal as has been reflected in the impugned order itself. 3^rd Proviso to section 18(1) of the 2002 Act gives discretion to the DRAT to reduce the pre-deposit amount, is true. However, such reduction has a limitation and the statute prescribes 25%. The DRAT having exercised the said discretion within the bounds of law, its order cannot be faltered.

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It hardly needs to be stated that the right of appeal is a creature of law and the Law Maker can condition the exercise of such a right. The Parliament in its wisdom has made the pre-deposit a sine qua non for maintaining

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the appeal. It has also given discretion inter alia to the Appellate Authority to reduce the quantum of pre-deposit but not to waive it altogether. The Tribunal having employed its accumulated wisdom has exercised the discretion by asking the Petitioner to deposit Rs.2 crore and it has given a reasonable period for remitting it in two equalized installments. Despite vociferous submissions, learned counsel for the Petitioner could not demonstrate legal infirmity in the impugned order.

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Learned counsel for the Petitioner referred to earlier round of litigation in W.P.No.13267/2024 disposed off by a learned Single Judge of this court on 12.07.2024 and also the resultant Writ Appeal No.100349/2014. All they are irrelevant to the adjudication of lis at hand which lies in a very narrow compass of law. Therefore much is not discussed in respect of those, although submissions were made by the learned counsel.

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In the above circumstances, this petition being devoid of merits, is liable to be and accordingly dismissed.

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NC: 2025:KHC:15100-DB WP No. 34905 of 2024

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Registry to send a copy of this order to the

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Respondents by Speed Post immediately.

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Sd/(KRISHNA S DIXIT) JUDGE

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