Partly allowed

Senior Manager v. R.Dhanalakshmi

Kerala HC6 Oct 2022WA/242/2020

Case brief

AI extract

What is this about?

SARFAESI appeal pre-deposit must include claimed interest accruing until the appeal is filed. The court restored the DRAT's deposit direction and upheld waiver of a separate deposit for the interconnected interlocutory appeal. The bank's appeals had different outcomes; the borrowers' appeal was allowed to the stated extent and the auction purchasers' appeal disposed of.

What did the court decide?

The single Judge's direction to deposit 50% of the notice amount was set aside, restoring the DRAT's pre-deposit direction.

Senior Manager Vs R.Dhanalakshmi — Banking and Recovery | Kerala HC (2022)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

¶4

¶5

THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

¶6

THURSDAY, THE 6^TH DAY OF OCTOBER 2022 / 14TH ASWINA, 1944

¶7

WA NO. 233 OF 2020

¶8

[AGAINST THE JUDGMENT DATED 18.12.2019 PASSED BY THIS HON'BLE COURT IN WP(C) NO.11506/2019]

¶9

APPELLANTS/PETITIONERS:

¶10

1 SENIOR MANAGER, UNION BANK OF INDIA, KOLLAM BRANCH, FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691001.

¶11

2 THE AUTHORISED OFFICER, UNION BANK OF INDIA, REGIONAL OFFICE, UNION BANK BHAVAN, POST BOX NO.307, M.G.ROAD, STATUE, THIRUVANANTHAPURAM-695001, REP.BY ITS SENIOR MANAGER, UNION BANK OF INDIA, KOLLAM BRANCH FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691001.

¶12

BY ADV. SRI.A.S.P.KURUP, SC, UBI

¶13

RESPONDENTS/RESPONDENTS 1 & 3 TO 8:

¶14

1 R. DHANALAKSHMI, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POA HOLDER R.ANANTH KUMAR, DHANAMAS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CHITCHERRY P.O., KOLLAM, PIN-691013.

¶15

2 R.VEERESH KUMAR, DHANAMS, CURZON ROAD, KOLLAM NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CHITCHERRY P.O., KOLLAM, PIN-691013.

¶16

3 R.ANANTHAKUMAR,DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CHITCHERRY P.O., KOLLAM, PIN-691013.

¶17

4 DR.MUMTHAS CHANDRALAYAM, MCRA 77, NELLIMUKKU, KOLLAM 12 REPRESENTED BY POA HOLDER M SHAHID AHMED, ADVOCATE CHANDRALAYAM, MCRA 77, KOLLAM, 12 ALSO AT HOUSE NO.99, CRUZON NAGAR, CURZON ROAD, KOLLAM-691013.

¶18

5 M.SHAHID AHMED, CHANDRALAYAM, NELLIMUKKU, KOLLAM 12 ALSO AS HOUSE AT NO.99, CURZON NAGAR, CURZON ROAD, KOLLAM-691013.

¶19

6 RAJAMMAL, CHANDRALAYAM, NELLIMUKKU, KOLLAM-691012.

¶20

7 THE DRAT, CHENNAI REPRESENTED BY ITS REGISTRAR, 4TH FLOOR, INDIAN BANK CIRCLE OFFICE, 55, ETHIRAJ SALAI, CHENNAI-600008.

¶21

R1, R3 & R4 BY ADV. SRI.S.EASWARAN R5 & R6 BY ADV. SRI. MADHU RADHAKRISHNAN

¶22

THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 06.10.2022, ALONG WITH WA.NO.300/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶23

W.As. 233, 242, 300 &

¶24

401 of 2020

¶25

-:2:-

¶26

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶27

PRESENT

¶28

THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

¶29

¶30

THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

¶31

THURSDAY, THE 6^TH DAY OF OCTOBER 2022 / 14TH ASWINA, 1944

¶32

WA NO. 242 OF 2020

¶33

[AGAINST THE JUDGMENT DATED 18.12.2019 PASSED BY THIS HON'BLE COURT IN WP(C) 9331/2019]

¶34

APPELLANTS/RESPONDENTS 1 & 2:

¶35

1 SENIOR MANAGER, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POA HOLDER R ANANTH KUMAR,DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERY.P.O, KOLLAM, PIN-691013.

¶36

2 THE AUTHORIZED OFFICER, UNION BANK OF INDIA, REGIONAL OFFICE, UNION BANK BHAVAN, POST BOX NO.307, M.G.ROAD, STATUE, THIRUVANANTHAPURAM-695001. BY ADV. SRI.A.S.P.KURUP, SC, UBI

¶37

RESPONDENTS/PETITIONERS & RESPONDENTS 3 TO 6:

¶38

1 R. DHANALAKSHMI, AGED 81 YEARS, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POA HOLDER R. ANANTH KUMAR, DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY.P.O, KOLLAM-691013.

¶39

2 R.VEERESH KUMAR, CURZON ROAD, KOLLAM NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY.P.O, KOLLAM,PIN-691013.

¶40

3 R. ANANTHAKUMAR, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY.P.O, KOLLAM, PIN-691013.

¶41

4 DR.MUMTHAS CHANDRALAYAM, MCRA 77,NELLIMUKKU, KOLLAM 12 REPRESENTED BY POA HOLDER M. SHAHID AHMED, AVOCADO CHANDRALAYAM, MCRA 77, KOLLAM,12

¶42

ALSO AT HOUSE NO.99.CURZON NAGAR,CURZON ROAD, KOLLAM-691013.

¶43

5 M.SHAHID AHMED, CHANDRAYALAYAM, NELLIMUKKU, KOLLAM 12, ALSO AT HOUSE AT NO.99,CURZON NAGAR, CURZON ROAD, KOLLAM-691013.

¶44

W.As. 233, 242, 300 & 401 of 2020

¶45

-:3:-

¶46

6 RAJAMMAL, CHANDRALAYAM, NELLIMUKKU, KOLLAM-691013.

¶47

7 DEBTS RECOVERY APPELLATE TRIBUNAL, 4TH FLOOR,INDIAN BANK CIRCLE OFFICE 55, ETHIRAJ SALAI,CHENNAI 600008,REP.BY ITS REGISTRAR.

¶48

R1 & R3 BY ADV. SRI.S.EASWARAN R4 & R5 BY ADV. SRI. MADHU RADHAKRISHNAN R6 BY ADV. SRI. M.R.SARIN

¶49

THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 06.10.2022, ALONG WITH WA.NO.300/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶50

W.As. 233, 242, 300 &

¶51

401 of 2020

¶52

-:4:-

¶53

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶54

PRESENT

¶55

THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

¶56

¶57

THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

¶58

THURSDAY, THE 6^TH DAY OF OCTOBER 2022 / 14TH ASWINA, 1944

¶59

WA NO. 300 OF 2020

¶60

[AGAINST THE JUDGMENT DATED 18.12.2019 IN WP(C) 9331/2019 PASSED BY THIS HON'BLE COURT]

¶61

APPELLANTS/PETITIONERS:

¶62

1 R. DHANALAKSHMI, AGED 55 YEARS, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POWER OF ATTORNEY HOLDER R.ANANTHAKUMAR, DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY P.O., KOLLAM, PIN-691 013.

¶63

2 R. VEERESH KUMAR, DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY P.O., KOLLAM-691 013.

¶64

3 R. ANANTHAKUMAR, DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY P.O., KOLLAM-691 013.

¶65

BY ADV. SRI. S.EASWARAN

¶66

RESPONDENTS/RESPONDENTS IN THE WRIT PETITION:

¶67

1 THE SENIOR MANAGER, UNION BANK OF INDIA, KOLLAM BRANCH, FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691 001.

¶68

2 THE AUTHORIZED OFFICER, UNION BANK OF INDIA, REGIONAL OFFICE, UNION BANK BHAVAN, POST BOX NO.307, M.G.ROAD, STATUE, THIRUVANANTHAPURAM-695 001.

¶69

3 DR.MUMTHAS, CHANDRALAYAM, M.C.R.A.-77, NELLIMUKKU, KOLLAM-12, REPRESENTED BY POWER OF ATTORNEY HOLDER M.SHAHID AHMED, ADVOCATE, CHANDRALAYAM,M.C.R.A.-77, KOLLAM-12 ALSO AT HOUSE NO.99, CURZON NAGAR, CURZON ROAD, KOLLAM-13.

¶70

4 M.SHAHID AHMED, CHANDRALAYAM,NELLIMUKKU,KOLLAM-12 ALSO AT HOUSE NO.99,CURZON NAGAR,CURZON ROAD,KOLLAM-13.

¶71

5 RAJAMMAL, CHANDRALAYAM, NELLIMUKKU, KOLLAM-12, ALSO AT HOUSE NO.99, CURZON NAGAR, CURZON ROAD, KOLLAM-13.

¶72

W.As. 233, 242, 300 & 401 of 2020

¶73

-:5:-

¶74

6 DEBTS RECOVERY APPELLATE TRIBUNAL. 4TH FLOOR,INDIAN BANK,CIRCLE OFFICE NO.55, ETHIRAJ SALAI,CHENNAI-600 008.

¶75

R1 & R2 BY ADVS. SRI.A.S.P.KURUP, SC, UBI SRI.SADCHITH.P.KURUP R3 & R4 BY ADV. MADHU RADHAKRISHNAN R5 BY ADV. SRI. M.R.SARIN BY ADV. SRI. T.K.VIPINDAS

¶76

THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 06.10.2022, ALONG WITH WA.NOS.242/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶77

W.As. 233, 242, 300 &

¶78

401 of 2020

¶79

-:6:-

¶80

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶81

PRESENT

¶82

THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

¶83

¶84

THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

¶85

THURSDAY, THE 6^TH DAY OF OCTOBER 2022 / 14TH ASWINA, 1944

¶86

WA NO. 401 OF 2020

¶87

[AGAINST THE JUDGMENT DATED 18.12.2019 IN WP(C) NO.9331/2019 OF THIS HON'BLE COURT]

¶88

APPELLANTS/RESPONDENTS 3 AND 4:

¶89

1 DR. MUMTHAS, AGED 63 YEARS CHANDRALAYALAM, MCRA 77, NELLIMUKKU, KOLLAM 12, REPRESENTED BY POA HOLDER M.SHAHID AHMED, AVOCADO, CHANDRALAYAM, MCRA 77, KOLLAM-12.

¶90

2 M. SHAHID AHMED, CHANDRALAYAM, NELLIMUKKU, KOLLAM-12, ALSO AS HOUSE AT NO.99, CURZON NAGAR, CURZON ROAD, KOLLAM-691013.

¶91

BY ADV. SRI. MADHU RADHAKRISHNAN

¶92

RESPONDENTS/PETITIONERS/RESPONDENTS 1, 2, 5, & 6:

¶93

1 R. DHANALAKSHMI, AGED 81 YEARS, PROPRIETRIX, M/S.SEEMATTI TEXTILES, REPRESENTED BY POA HOLDER R.ANANTH KUMAR, NOW AT HOUSE NO.19/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY.P.O, KOLLAM PIN-691013

¶94

2 R.VEERESH KUMAR, CURZON ROAD, KOLLAM NOW AT HOUSE NO.49/62, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY.P.O, KOLLAM-691013.

¶95

3 R. ANANTHAKUMAR, DHANAMS, CURZON ROAD, KOLLAM, NOW AT HOUSE NO.49/762, ARAYACHAM VEEDU, KOTTAMUKKU, CUTCHERRY P.O, KOLLAM, PIN-691013.

¶96

4 SENIOR MANAGER, UNION BANK OF INDIA, KOLLAM BRANCH, FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691001.

¶97

5 THE AUTHORISED OFFICER, UNION BANK OF INDIA, REGIONAL OFFICE, UNION BANK BHAVAN, POST BOX NO.307, M.G.ROAD, STATUE, THIRUVANANTHAPURAM-695001

¶98

6 RAJAMMAL, CHANDRALAYAM, NELLIMUKKU, KOLLAM-691013.

¶99

7 DEBT RECOVERY APPELLATE TRIBUNAL, 4TH FLOOR, INDIAN BANK CIRCLE OFFICE 55, ETHIRAJSALAI, CHENNAI-600008.

¶100

R1 TO R3 BY ADV. S.EASWARAN (B/O) R4 & R5 BY ADV. SRI.A.S.P.KURUP, SC, R7 BY ADV. SRI. M.R.SARIN

¶101

THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 06.10.2022, ALONG WITH WA.NO.300/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶102

W.As. 233, 242, 300 & 401 of 2020 -:7:-

¶103

JUDGMENT

¶104

Shaji P. Chaly, J

¶105

Instant writ appeals are preferred by the rival parties against the common judgment of the learned single Judge in W.P.(C) Nos.9331 & 11506 of 2019 dated 18.12.2019.

¶106

The subject issue arises under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002, for short), more particularly, Section 18 dealing with appeal to the Appellate Tribunal and the pre-deposit to be made to entertain the appeal.

¶107

W.A. Nos.233/2020 and 242/2020 are filed by the Senior Manager, Union Bank of India and its Authorized Officer, against the judgment of the learned single Judge in W.P.(C) Nos. 9331/2019 and 11506/2019 dated 18.12.2019, whereas, W.A. Nos.300 & 401 of 2019 are filed by the debtors, as well as the auction purchasers respectively, against the judgment in W.P.(C) No.9331/2019 dated 18.12.2019.

¶108

In W.P.(C) No.9331/2019, challenge made by the petitioners therein is to the order passed by the Debt Recovery Appellate Tribunal dated 21.03.2019 in I.A. No.1218/2019 in AIR No.690/2018, which is filed

¶109

W.As. 233, 242, 300 & 401 of 2020 -:8:-

¶110

against the order of Debt Recovery Tribunal in T.S.A No.10/2016.

¶111

Whereas, in W.P.(C) No.11506/2019, the challenge made is to the order passed by the DRAT in AIR No.691/2018 against the order of the DRT in

¶112

I.A. No.179/2016 in T.S.A No.10/2016 dated 29.09.2018.

¶113

The order passed by the DRAT in AIR No.690/2013 dated

¶114

21.03.2019 is extracted hereunder:

¶115

“Heard IA 1218/2018, which is an application for waiver.

¶116

The appellants have challenged the order dated 29.09.2018 passed by DRT-II, Ernakulam by which TSA 10/2016 was dismissed and SARFAESI steps right from demand notice to sale were affirmed.

¶117

The counsel for appellants submits that bank had issued demand notice on 31.05.2006 under Section 13(2) of SARFAESI Act for recovery of a sum of Rs.1.95 crores.

¶118

It is a fact that no amount has been paid by appellants from their own pocket and the amount of Rs.1.05 crores in the year 2006 have become Rs.6 crores in last 13 years.

¶119

In view of the fact that DRAT cannot entertain any Appeal unless and until the Appellant complies with the formalities on pre-deposit up to 50% of debt amount, which can be reduced to 25%, but not less than 25% in any case and in last thirteen years the amount has increased manifold, I hereby direct the Appellants to make pre-deposit of Rs.2 crores with the Registrar of this Tribunal within a period of four weeks from today.

¶120

In the event of failure in complying with the order on pre-deposit the Appeal shall stand dismissed automatically for want of mandatory compliance. IA is disposed of and closed.

¶121

List for confirmation of pre-deposit on 24.04.2019.”

¶122

W.As. 233, 242, 300 & 401 of 2020

¶123

-:9:-

¶124

The order passed by the DRAT in AIR No.691/2013 dated

¶125

21.03.2019 is extracted hereunder:

¶126

“Mr. S. Easwaran, Advocate appeared for counsel for appellants, Mr. S.S. Rajesh.

¶127

Mr. Sadchith P. Kurup, counsel appeared for R1 and R2 and filed vakalath of counsel Mr. A.S.P.Kurup.

¶128

Ms. Prem Rajakumari, counsel appeared for R3 to R5 and filed vakalath.

¶129

Proof of service filed.

¶130

The counsel for R1 and R2 filed counters in delay, waiver and stay petitions.

¶131

Heard IA 1220/2018, application to condone the delay of 35 days in filing the appeal. Considering the averments made in IA, delay appears to be unintentional, hence delay is condoned and IA is allowed and disposed of.

¶132

In view of the fact that order of pre-deposit has been passed in the connected appeal AIR:690/2018 no need to pass separate orders in this appeal.

¶133

The appellants are directed to supply type set of papers to the counsel for respondents.

¶134

List for analogous hearing with connected appeal AIR 690/2018 on 24.04.2019.”

¶135

From the above orders, it could be deduced that in AIR

¶136

No.690/2018, taking note of the fact that no amount has been paid by the

¶137

appellants/borrowers from their own pocket and the amount of Rs.1.05 Crores in the year 2006, which has become to Rs.6 Crores in last thirteen

¶138

years, and other factors, directed the borrowers to make the pre-deposit of Rs.2 Crores with the Registrar of the Appellate Tribunal, within 4 weeks from the date of the order. According to the debtors, the said order of the

¶139

W.As. 233, 242, 300 & 401 of 2020 -:10:-

¶140

Appellate Tribunal quantifying the amount by including the interest claimed in the notice under Section 13(2) of the SARFAESI Act, 2002, by the secured creditor for payment of pre-deposit, in contemplation of second proviso to Section 18(1) is illegal, arbitrary, and therefore, unsustainable.

¶141

Insofar as AIR No.691/2018 filed against the order passed in I.A. No.179/2016 by the Debt Recovery Tribunal, the Appellate Tribunal stated that since pre-deposit has been directed in the connected appeal, AIR No.690/2018, there is no need to pass a separate order for pre- deposit. It is thus challenging the said order, Bank has preferred W.P.(C) No.11506/2019, basically contending that, by virtue of Section 18 of the SARFAESI Act, 2002, pre-deposit is a mandatory condition for any application filed irrespective of the pre-deposit ordered in any other appeal.

¶142

In fact, the DRT has passed an order dated 29.09.2018 in I.A. No.179/2016 in T.S.A. No.10/2016, by which, the application filed by the auction purchasers was allowed holding that Securitisation Application is not maintainable after the sale of scheduled property held on 05.10.2006, and consequently T.S.A. No.10/2016 was dismissed by a separate order. It was thus challenging the separate orders passed in I.A. No.179/2016 and T.S.A No.10/2016, the appeals were preferred.

¶143

W.As. 233, 242, 300 & 401 of 2020 -:11:-

¶144

Insofar as W.P.(C) No.9331/2019 filed by the borrowers is concerned, it is seeking to quash the proceedings of the DRAT in I.A. No.1218/2019 in AIR No.690/2018 dated 21.03.2019 (Exhibit-P9) directing

¶145

them to deposit a sum of Rs.2 Crores as pre-condition for entertaining the appeal and for a direction to the DRAT, Chennai, to entertain Exhibits-P1 and P2 requests by treating Exhibit-P8 bank guarantee for Rs.3 Crores or the amount of Rs.1.38 Crores recovered by the Union Bank of India from the sale proceeds of the secured asset as sufficient compliance of the condition under Section 18 of the SARFAESI Act, 2002.

¶146

The Senior Manager and Authorized Officer of Union Bank of India have filed W.P.(C) No.11506/2019 being aggrieved by the order passed by the Appellate Tribunal dated 21.03.2019 in AIR No.691/2018, whereby it was held that no separate pre-deposit need be made in AIR No.690/2018, since according to the Bank, in view of the peremptory stipulation for payment of pre- deposit in any appeal filed, the DRAT has no choice than to direct payment in terms of the said provision.

¶147

Learned single Judge, after considering the rival submissions made by the parties, provisions of SARFAESI Act, 2002 and the decisions on the point, rendered by the Hon'ble Supreme Court, as well as various

¶148

W.As. 233, 242, 300 & 401 of 2020

¶149

-:12:-

¶150

High Courts, has passed a common judgment dated 18.12.2019, wherein it

¶151

is held as under:

¶152

26.13 This Court is of the view that by allowing Appellate Tribunal to independently decide what is the debt due, would amount to adding words, viz "debts due, as claimed by bank and payable by the debtor" at the time of filing appeal to second proviso of section 18(1). Such a course of interpretation is impermissible. In between the reported judgments in Sivakumar Textiles and MRB Road Constitutions Pvt.Ltd., I am convinced and persuaded to follow the principles laid down in Sivakumar Textile case. This Court has perused both the judgments and the interpretation by Madras High Court in Sivakumar Textile case as additional reason for holding that debt due as debt due and claimed by secured creditor in Sec.13(2) notice and inclusion of interest post Sec.13(2) notice is unavailable to DRAT. Let me now refer to the principle of law laid down by the Apex Court in Axis Bank v. SBS Organics Pvt. Ltd. [(2016) 12 SCC 18] on how and to whom the pre-deposit is returned after DRAT pronounces judgment. The operative portion reads as follows:

¶153

"The Appeal under Section 18 of the Act is permissible only against the order passed by the DRT under Section 17 of the Act. Under Section 17, the scope of enquiry is limited to the steps taken under Section 13(4) against the secured assets. The partial deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of Section 18 of the Act, is not a secured asset. It is not a secured debt either, since the borrower or the aggrieved person has not created any security interest on such predeposit in favour of the secured creditor. If that be so, on disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, in case, the appellant makes a prayer for refund of the predeposit, the same has to be allowed and the pre-deposit has to be returned to the appellant, unless the Appellate Tribunal, on

¶154

W.As. 233, 242, 300 & 401 of 2020

¶155

-:13:-

¶156

the request of the secured creditor but with the consent of the depositors, had already appropriated the pre-deposit towards the liability of the borrower, or with the consent, had adjusted the amount towards the dues, or if there be any attachment on the pre-deposit in any proceedings under Section 13(10) of the Act read with Rule 11 of The Security Interest (Enforcement) Rules, 2002, or if there be any attachment in any other proceedings known to law. "

¶157

(emphasis applied)

¶158

26.14 The statutory appeal with a concomitant condition of pre-deposit is not interpreted in such a way that the remedies within the four corners of the scheme of SARFAESI Act 2002 are shut out by onerous and burdensome interpretation. The delay, if any, in the proceedings should not be detrimental to a bona fide aggrieved person, pursuing available legal remedies. In the considered view of this Court, second proviso of Section 18(1) can be literally interpreted in the company of the other words i.e. "as claimed by secured creditor" in which the 'debt due' is positioned in the second proviso. Hence this Court holds that,-

¶159

a) The borrower in cases filed before DRT questioning measures issued under Sec.13(2) to (4) and appeal filed from such order, the borrower is required to deposit 50% or 25% of amount claimed as debt by secured creditor and interest post Section 13(2) can't be notionally calculated by DRAT.

¶160

b) In cases where an appeal is filed against a decision under Section 13(10), the pre-deposit condition is stipulated by referring to the amount determined by the Tribunal or debt claimed by secured creditor whichever is less. Thus interpreted, the remedy of appeal though not an absolute right on a borrower, but a statutory right is worked out within the scheme of the Act.”

¶161

Insofar as W.P.(C) No.11506/2019 is concerned, writ court as per

¶162

the impugned judgment, held as under:

¶163

W.As. 233, 242, 300 & 401 of 2020

¶164

-:14:-

¶165

“Before proceeding further, reference to SD Bhoshkar company and another v. Bank of Baroda and another [(2017) 2 SCC 485] is useful and operative portion reads as follows:

¶166

"2. According to the appellants, they had already approached DRAT and had deposited Rs.12.50 lakhs in respect of the same subjectmatter, when proceedings were initiated under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and hence, it will be highly unjust to insist for a pre-deposit before DRAT in proceedings under the SARFAESI Act.

¶167

Though both the sides are prepared to address arguments on the issue, having regard to the fact that the appeals are pending before DRAT, we do not think that we should address the question of law as such.

¶168

Therefore, leaving the question of law open and in the peculiar facts of this case, we dispose of these appeals and direct DRAT, Mumbai to dispose of Appeal Nos.296 of 2006 and 139 of 2011 expeditiously and at any rate, within a period of six months from today. (emphasis applied)

¶169

We direct the parties to cooperate in the expeditious disposal of the appeals. The interim order granted by this Court staying the further deposit under the SARFAESI Act will continue till the disposal of the appeals by DRAT. Further, there shall be no coercive steps for recovery till the appeals are disposed of. No costs."

¶170

27.4 Therefore, in respect of the same recovery when a separate appeal is filed against an interlocutory order the condition of pre-deposit is appreciated with the condition already imposed by DRAT in the main appeal or substantive appeal. This Court is of the view that the insistence of further deposit by bank in WPC No.11506 of 2019 is unsustainable in fact and law. The prayer in

¶171

W.As. 233, 242, 300 & 401 of 2020

¶172

-:15:-

¶173

WP(C) No.11506 of 2019 is unavailable and consequently the writ petition fails and liable to be dismissed.

¶174

As a consequence of the above discussion, after weighing the merits in the arguments of both sides, this Court next considers the relief to which the parties are entitled to.

¶175

28.1 This Court from the statement of facts has noted that the starting point of litigation between the parties is 31.5.2006 and the dispute has been canvassed before this Court as well as the Apex Court both under Articles 226, 227 and also 136 of Constitution of India. Avoiding delay in realisation is one of the objects sought to be achieved by SARFAESI Act, 2002. To what extent, Act 2002 has achieved the said purpose is not considered in this judgment. However, the delay in adjudication of disputes by Tribunal/Court ought not to result in an onerous burden on appellant, shutting out the remedy of appeal before DRAT. This Court, for the purpose of deciding the pre-deposit amount does not prefer to send the appeals back to DRAT for fresh consideration and disposal. However, taking note of the time spent by the parties and putting the petitioner to applicable conditions. Therefore this Court directs petitioners in WP(C) No.9331 of 2019 to deposit 50% of the amount claimed by the respondent bank under section 13(2) notice on or before 31.1.2020. Either partial waiver or reduction in third proviso is dependent on the circumstances of the case. The plea of petitioners to apply third proviso is considered and accepted by this Court, then it would be a case of liberal and lenient application of proviso by this Court. Judiciously the proviso is applied and the petitioners/borrowers therefore deposit 50% on or before 31.1.2020 towards pre deposit in AIR No.690 of 2018. Upon such deposit by petitioners the appeals are numbered and DRAT considers disposing of AIR No.690 & 691 of 2018 within six weeks thereafter. Having regard to above discussion, WP(C) No.9331 of 2019 is ordered and WP(C) No.11506 of 2019 stands dismissed.

¶176

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It is thus challenging the legality and correctness of the above

¶178

said common judgment of the learned single Judge, instant intra court appeals are preferred.

¶179

W.A. No.401/2020 has been filed by the auction purchasers basically contending that the finding of the learned single Judge in the impugned judgment that the debt due under the second proviso to Section 18 of the SARFAESI Act, 2002 does not include interest till the date of filing of the appeal, but can only mean the amount claimed under Section 13(2) notice, is erroneous.

¶180

It is also contended that the writ court failed to note that the language of Section 18 of the SARFAESI Act, 2002 and its proviso are plain and simple and do not call for any interpretation other than literal interpretation or the golden rule of interpretation. Hence, it is contended that the learned single Judge has wrongly interpreted Section 18 of the SARFAESI Act and concluded that the literal construction of the words of section cannot be given and thereby resorted to reading into the section, the meanings which the Legislature has never intended.

¶181

Insofar as W.A No.300/2020 filed by the borrowers is concerned, it is contended that the learned single Judge has erred egregiously in

¶182

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directing the appellants to deposit 50% of the amount claimed under Section 13(2) notice. It is well settled that while ordering a pre-deposit for appeal under Section 18, the Appellate Tribunal has the discretion to reduce the pre-deposit amount upto 25% of the amount claimed by the secured creditor.

¶184

According to the appellants, Exhibit-P9 order of the Appellate Tribunal was challenged on the ground of adding interest to the amount claimed on the demand under Section 13(2) and once the learned single Judge had accepted the contention of the appellants that interest cannot be added on to the amount claimed in the demand notice, then, in the writ petition filed by the appellants, the discretion exercised by the Appellate Tribunal cannot be interfered and the amount ordered to be deposited cannot be increased to 50%.

¶185

It is also contended that there is no challenge made to the said order on the side of the respondent bank or auction purchaser and, therefore, the Appellate Tribunal having fixed the amount at 25%, the writ court could not have increased the same to 50%.

¶186

Heard learned standing counsel Mr.A.S.P. Kurup, and Mr.Sadchith P. Kurup - for Union Bank of India; learned counsel Mr.S.Easwaran, as

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well as Mr.Madhu Radhakrishnan, for the appellants/borrowers; learned counsel Mr.M.R.Sarin and Mr.T.K.Vipindas, for respondents; and also perused the material on record.

¶189

Respective counsel have addressed arguments by the contentions discussed above and the proposition of law laid down by various courts

¶190

referred to hereafter. The question revolves around Section 18 of the SARFAESI Act, 2002. For brevity, the said provision is extracted hereunder:

¶191

“ 18. Appeal to Appellate Tribunal .— (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with 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.

¶192

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

¶193

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:

¶194

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

¶195

(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.”

¶196

Section 18 makes it clear that any person aggrieved by any order

¶197

made by Debt Recovery Tribunal under Section 17 of the Act, may prefer

¶198

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appeal along with 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. The second proviso thereto makes it clear that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty percent of the amount of debts due from him, as claimed by the secured creditors or determined by the Debts Recovery

¶200

Tribunal, whichever is less.

¶201

However, the 3^rd proviso to Section 18 of the SARFAESI Act, 2002 specifies that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five percent of debt due referred to in the second proviso.

¶202

Therefore, the crucial questions arising for consideration in these appeals are, as to whether (i) the learned single Judge was right in holding that the appellants/borrowers are liable to pay the amount claimed under Section 13(2) notice, without the interest claimed thereon; whether (ii) the learned single Judge was right in upholding the order of the Appellate Tribunal, which held that since already a pre-deposit was ordered in the appeal against the dismissal of Securitisation Application, there is no requirement for imposing any condition in the appeal preferred against the order passed in the petition filed by the auction purchasers challenging the

¶203

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maintainability of the Securitisation Application; and whether (iii) the direction issued by the learned single Judge to deposit 50% of the amount, in view of the findings rendered that the borrowers are liable to deposit the amount in Section 13(2) notice, without interest, against the order passed by the DRAT for deposit of a lesser amount than 50%.

¶205

In fact, on a perusal of the second proviso to Section 18, what we could gather is that the pre-condition for entertaining an appeal is the deposit of 50% of the amount of debt due from the borrowers as claimed by the secured creditors or determined by the DRT, whichever is less. Admittedly, there is no determination of the amount by the Debt Recovery Tribunal, and therefore, the scope of consideration is confined to the first limb of the said proviso and as to whether the debt due includes the interest claimed in Section 13(2) notice.

¶206

According to learned standing counsel for the appellant Bank, the claim made by the secured creditor, in Section 13(2) notice, includes the interest, basically for the reason that 'debt' is defined under Section 2(ha), of Act, 2002 to mean, the meaning assigned to it in clause (g) of Section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and includes, -

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“(i) unpaid portion of the purchase price of any tangible asset given on hire or financial lease or conditional sale or under any other contract;

¶210

(ii) any right, title or interest on any intangible asset or licence or assignment of such intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of such intangible asset or an obligation incurred or credit otherwise extended to enable any borrower to acquire the intangible asset or obtain licence of such asset;”

¶211

It is relevant to note that, “debt” is defined under Section 2(g) of Act 51 of 1993 to mean, any liability (inclusive of interest), which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, 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

¶212

under a mortgage and subsisting on, and legally recoverable on, the date of the application.

¶213

Sum and substance of the contention advanced by learned standing counsel for the appellant/Bank is that since the debt defined includes interest, the claim that is raised by the Bank as is spelt out in

¶214

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¶215

second proviso to Section 18 would include the interest due also. On the other hand, learned counsel for the borrowers submitted that the amount as per second proviso to Section 18 of the Act, 2002 includes only the amount due, as shown in Section 13(2) notice issued by the secured creditor and not the interest.

¶216

Learned counsel appearing for the auction purchasers supported the contentions advanced by the learned standing counsel for the Bank and submitted that the learned single Judge was not right in arriving at the conclusion that the claim raised by the Bank would not include the interest specified in the notice.

¶217

In fact, the learned single Judge, in order to arrive at the said conclusion, has taken into account the law laid by the Hon'ble Division Bench of Madras High Court in Sivakumar Textiles v. Debt Recovery Appellate Tribunal, Chennai and others reported in 2012 KHC 2280 ,

¶218

wherein it was held as under:

¶219

“15. S.18 (1) contemplates a provision of appeal to the Debts Recovery Appellate Tribunal by any person aggrieved over the orders of the Debts Recovery Tribunal. Second proviso to the said section contemplates that before an appeal is entertained, the Debts Recovery Appellate Tribunal shall direct the borrower to deposit 50% of the amount due from him as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is

¶220

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¶222

less. While the said proviso employs the words `amount of debt due from the borrower as claimed by the secured creditors', it must necessarily relate back to the claim made by the secured creditor in the notice under S.13(2). Otherwise, the legislature would have restricted the wordings by using 'the amount of debt due from him', without including the further wordings 'as claimed by the secured creditors'. In the event the amount of debt due from the borrower is alone mentioned in the proviso, such claim may be as per S.13(2) notice or an amount that could have been mentioned under S.13(4) or an amount that could have been claimed by the secured creditors while opposing an application for waiver. However, when the legislature had used the words 'the amount of debt due from the borrower as claimed by the secured creditor', it would have no other meaning except the amount claimed in the notice under S.13(2).”

¶223

However, learned standing counsel for the appellant/Bank has

¶224

invited our attention to the decision of the Bombay High Court in MRB

¶225

Roadconst. Pvt. Ltd. v. Rupee Co-Op. Bank Ltd. (05.02.2016 - MANU/MH/0098/2016), wherein, after taking note of the decision of Delhi High Court in Poonam Manshani v. J and K Bank Ltd. and Anr . [AIR 2010 Delhi 28] and that of Hon'ble Apex Court in Narayana Chandra Ghosh v. UCO Bank and Ors. [AIR 2011 SC 1913], it was held as under:

¶226

“12. The short but interesting question posed for our consideration is what sum (claimed by the secured creditor) is to be taken into consideration by the DRAT whilst determining the amount that ought to be deposited by the borrower under section 18 of the SARFAESI Act (before its appeal can be entertained). Would it be (i) on the basis of the amount claimed by the secured creditor in the section 13(2) notice alone or (ii) whether the DRAT also has to take into account the interest accrued on the said sum till the date of filing of the appeal.

¶227

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13. …

¶230

Section 18(1) provides that 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 1st proviso stipulates that different fees may be prescribed for filing an appeal by a borrower and by a person other than the borrower. The 2nd proviso, and which is really germane for our purposes, inter alia stipulates that no appeal shall be entertained unless the borrower has deposited with the DRT fifty per cent of the amount of debt due from him as claimed by the secured creditors, or determined by the DRT, whichever is less. The 3rd proviso gives power to the DRAT to reduce the deposit amount from 50% to 25% provided reasons for the same are recorded in writing by the DRAT. As stipulated in the 3rd proviso, the DRAT has no power to reduce the amount of deposit less than 25% of the debt referred to in the 2nd proviso. Section 18(2) stipulates that save or otherwise provided in the Act, the DRAT shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the "RDDB Act") and the Rules made thereunder.

¶231

Since the 2^nd proviso to section 18 stipulates that the borrower has to deposit 50% of the amount of debt due from him, it would also be apposite to refer to the definition of the word "debt" appearing in section 2(ha) of the SARFAESI Act and which reads as under:-

¶232

"(ha) 'debt' shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (51 of 1993);"

¶233

As can be seen from the definition, the word "debt" shall have the meaning assigned to it in clause (g) of section 2 of the RDDB Act. Section 2(g) of the RDDB Act reads thus:-

¶234

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undertaken by the bank or the financial institution or the consortium under any law for the time being in force, 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;"

¶238

On an ex-facie reading of the said definition, it is clear that the word "debt" has been given an extremely wide meaning and means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by such bank or financial institution under any law for the time being in force, 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.

¶239

On a plain reading of the 2^nd proviso to section 18(1) of the SARFAESI Act read with the definition under the word "debt" as defined in section 2(g) of the RDDB Act, it is clear that before an appeal can be entertained by the DRAT, the borrower has to deposit 50% of the amount of debt due from him as claimed by the secured creditors or as determined by the DRT whichever is less. If there is no determination of the debt by the DRT under the provisions of the RDDB Act, then the borrower would have to deposit 50% of the amount of debt due from him as claimed by the secured creditors. The provision on a plain reading does not in any way exclude taking into consideration the future interest that is accrued on the debt owed by the borrower to the secured creditor. In fact, the definition of the word "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution. Therefore, if the claim made by the secured creditor in the section 13(2) notice includes future interest, the same would certainly be included in the "amount of the debt due" from the borrower to the secured creditor as contemplated under the 2nd proviso to section 18(1) of the SARFAESI Act. There is

¶240

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¶242

therefore no justification to hold that it is only the figure that is mentioned in the section 13(2) notice that is to be taken into consideration and not the future interest accrued on the said sum, whilst determining the deposit amount under the 2^nd proviso to section 18 of the SARFAESI Act. The amount of deposit would have to be determined on the basis of the amount of debt due by the borrower to the secured creditor on the date when the appeal is filed in DRAT. This would not only include the amount mentioned in the section 13(2) notice but also interest accrued thereon till the date of filing of the appeal under section 18 of the SARFAESI Act. To our mind, this is the only interpretation that is possible of the 2^nd proviso to section 18 of the SARFAESI Act. If we were to accept the contention of the Petitioner that the amount to be deposited by the borrower [under the 2nd proviso to section 18(1)] would be only on the basis of the sum/figure as mentioned in the section 13(2) notice and not the interest accrued thereon after the date of the said notice, the same would be violating the plain language of the statute. To interpret the 2^nd proviso to section 18(1) in this fashion, to our mind, would clearly violate the plain and unambiguous language of the said section.

¶243

We must mention here that after the issuance of the notice under section 13(2) and before the appeal is filed in the DRAT under section 18 of the SARFAESI Act, if the borrower has made any part payment of the debt due to the secured creditors, then credit for the same would have to be given to the borrower and for the purposes of deposit under the 2nd proviso to section 18(1), the reduced amount (after giving credit) would have to be taken into consideration for determining the amount required to be deposited by the borrower. This is simply because on the date of filing of the appeal, the debt due to the secured creditor would be reduced after giving credit for the amount already paid.

¶244

In the view that we have taken, we are also supported by a decision of another Division Bench of this court in the case of Godavari Laxmi Co-Op. Bank Ltd. v. Union of India and anothe r [(2012) 4 Mh L J 472]. The facts of the case were that Respondent No. 2 therein was the borrower of the Petitioner - Godavari Laxmi Cooperative Bank Ltd., and had filed proceedings under section 17 of SARFAESI Act

¶245

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consequent to the issuance of a notice under section 13(4) thereof. By judgment and order dated 7-3-2011, the DRT, Aurangabad dismissed the Securitisation Application of Respondent No. 2. Being aggrieved thereby, Respondent No. 2 preferred an appeal under the provisions of section 18 of the SARFAESI Act before the DRAT, Mumbai along with an application seeking waiver of deposit as prescribed under section 18(1) thereof, on 24-3-2011. By an order dated 27-42011 the DRAT allowed the application filed by Respondent No. 2 by observing that Respondent No. 2 cannot be asked to deposit any more amount and no amount is required to be deposited under section 18(1) of SARFAESI Act. In this factual backdrop the Division Bench held as under:-

¶248

"7. The learned counsel appearing for respondent No. 2 submits that proceedings were initiated before the Debt Recovery Tribunal, Aurangabad consequent to the notice issued by the petitioner under section 13(4) of the Act, 2002. Section 13(4) of the Act of 2002 relates to the amount claimed by the bank in notice issued under section 13(2) of the Act of 2002. The counsel further submits that in the possession notice, the petitioner bank had referred to an outstanding amount of Rs. 45,61,459.54 + interest and the present outstanding amount of Rs. 24,61,985.54 + interest + expenses as on 30-112009. It is submitted that even if these two figures of amount claimed are clubbed together, it can be ascertained that the respondent No. 2 having paid 41.50 lakhs in favour of the petitioner bank, the precondition for entertaining Appeal under section 18 by Appellate Tribunal gets satisfied. In other words, the respondent No. 2 claims that having deposited 50% of the amount due from respondent No. 2 his Appeal filed before Appellate Tribunal shall be entertained without calling upon the respondent No. 2 to deposit any further amount.

¶249

We have perused the original record and proceedings, the impugned order, reply filed by respondent, and the relevant notice issued by the petitioner to the respondent No. 2. We have perused the judgment cited supra.

¶250

There is no dispute between the parties that

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the bank had issued notice under section 13(2) of the Act of 2002 on 11-5-2007. The petitionerbank had also resorted to measures as prescribed under section 13(4) of the Act of 2002 by issuing a possession notice on 26-12-2009. The bank is entitled under section 13(4) of the Act of 2002 to take recourse to measures provided under the said provisions to recover the secured debt on failure of borrower to discharge his liability in full within the period specified in sub-section (2) of the Act.

¶254

In the facts of the case and considering the notice issued under section 13(2) of the Act of 2002, we find that the petitioner bank had claimed as present outstanding, an amount of Rs. 24,61,985.54 Ps. and accordingly, the charge was kept upon the subject property by intimating public in general. The bank had described the immovable property over which the charge was kept in the notice issued under section 13(4) on 26-12-2009. Under the provisions of section 17 of the Act of 2002, any person aggrieved by any of the measures referred to in sub section 4 of section 13, is entitled to approach D.R.T. Under the provisions of section 18 of the said Act, any person aggrieved by any order passed by D.R.T. under section 17 may prefer an appeal along with such fees as may be prescribed. The second proviso to section 18 of the said Act provides that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him as claimed by the secured creditor. (emphasis supplied).

¶255

In the facts of the present case and considering the notice issued by the petitioner bank to respondent No. 2 it is clear that the amount due and claimed by the petitioner from respondent No. 2 for the purposes of entertaining the appeal by Appellate Tribunal would be amount of Rs. 24,61,985.54 Ps."

¶256

(emphasis supplied)

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Applying the principles of law laid down earlier, we will now examine whether the DRAT was justified in ordering the Petitioner to deposit a sum of Rs. 20,00,000/-. As set out above, the section 13(2) notice issued by the Respondent -Bank to the Petitioner was dated 14^th August, 2007. In the said notice the amount claimed as due from the Petitioner was Rs. 96,14,085.61 together with future interest. From the date of the section 13(2) notice (i.e. 14^th August, 2007) to 28^th February 2012, admittedly no payments were made by the Petitioner. As on 29th February, 2012 the outstanding dues owed by the Petitioner along with the interest accrued thereon came to Rs. 1,65,36,770.61. On the very same date (i.e. 29^th February, 2012), the Respondent - Bank forfeited the deposits of the Petitioner lying with it in the sum of Rs. 5,29,441/- and gave credit for the same in the loan account. Thereafter, one of the guarantors (viz. Mr. K.P. Malkani) sold one of the mortgaged properties with the consent of the Respondent - Bank and the sale proceeds thereof to the tune of Rs. 1,18,00,000/- were deposited with the Respondent - Bank on 24^th March, 2012. After giving due credit for the aforesaid amounts (Rs. 5,29,441/- plus Rs. 1,18,00,000/-), the amount outstanding as on 24^th March, 2012 was Rs. 52,24,200.16. Admittedly, no further payments were made by the Petitioner. The DRAT has taken into consideration this figure of Rs. 52,24,200/- for determining the amount that had to be deposited under the 2^nd proviso to section 18(1) of the SARFAESI Act. It is pertinent to note that the appeal and the waiver application preferred by the Petitioner before the DRAT, were filed on 4th March, 2010. On the said date, the outstanding of the Respondent -Bank was in excess of Rs. 96,14,085/- as no payments were made by the Petitioner between the date when the section 13(2) notice was issued (14^th August, 2007) and the date of filing of the appeal and waiver application (4^th March, 2010). However, this waiver application was heard by the DRAT on 30^th June 2014. By the time, the DRAT heard the waiver application, the Petitioner had made part payments of Rs. 1,23,00,000/- (approximately) towards its debt due to the Respondent -Bank. It is in this view of the matter that the DRAT whilst determining the amount to be deposited under the 2^nd proviso to section 18(1) of the Act took into consideration the figure of Rs. 52,14,200/-. Looking to these facts and the clear language of the 2^nd proviso to section 18(1) of the SARFAESI Act, we do not think that the DRAT

¶260

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¶262

committed any error in directing the Petitioner to deposit a sum of Rs. 20,00,000/- with the Registry of the Appellate Tribunal within a period of eight weeks from the date of the said order in two equal installments. We find that the said order is not only in conformity with the provisions of section 18 of the SARFAESI Act but does complete justice between the parties as it gives credit for the amounts paid by the Petitioner to the Respondent - Bank before directing the Petitioner to deposit a sum of Rs. 20,00,000/- as a condition precedent to entertaining its appeal. In this view of the matter, we do not think that any case has been made out by the Petitioner for review of our order dated 10^th June, 2015.

¶263

Having said this, we shall now deal with the judgments relied upon by Mr. Shah. The first judgment relied upon by Mr. Shah was a decision of the Madras High Court in the case of Sivakumar Textiles [AIR 2012 MADRAS 57]. On careful perusal of the aforesaid decision, what can be culled out therefrom is that the amount of "debt due from the borrower as claimed by the secured creditor" would have no other meaning except the amount claimed in the notice under section 13(2). We have no difficulty in accepting the aforesaid proposition. However, the question still remains whether the amount claimed in the 13(2) notice would be inclusive of future interest or otherwise. If the claim for future interest has been made in the notice under section 13(2), then the same would certainly have to be taken into account for determining the figure that would be required to be deposited by the borrower before his appeal can be entertained. This is more so when one looks at the definition of the word "debt" as defined under the SARFAESI Act which means any liability inclusive of interest claimed as due from any person by a bank or financial institution during the course of any business activity undertaken by the said bank or financial institution. We must also mention that on a close scrutiny of the said decision, we do not find any reference being made to the definition of the word "debt" appearing in section 2(ha) of the SARFAESI Act. We therefore find that this decision would not carry the case of the Petitioner any further.

¶264

The second judgment relied upon by Mr. Shah was a decision of the Delhi High Court in the case of Poonam Manshani [AIR 2010 DELHI 28]. It appears from the said decision that the Delhi High Court has taken a view that the

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expression "amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less" would have to be determined ignoring the interest component. On a close scrutiny of the aforesaid decision, we find no reference in the same to the definition of the word "debt" as defined under the provisions of the SARFAESI Act. As mentioned earlier, the word "debt" means any liability inclusive of interest claimed as due from any person by a bank or financial institution during the course of any business activity undertaken by the said bank or financial institution. When interest is specifically included in the definition of the word "debt", we see no reason why the same ought to be excluded whilst determining the amount that is to be taken into consideration for the purpose of arriving at the figure to be deposited by the borrower under the 2^nd proviso to section 18(1) of the SARFAESI Act. In fact, on a perusal of the said judgment, we do not find any reason given for making such an exclusion. We, therefore, with great respect to the Delhi High Court, are unable to agree with the ratio laid down in the aforesaid decision.”

¶268

That apart, learned standing counsel for the appellant Bank has

¶269

relied on the decision in Sekar Stores Home Mart and Ors. v. The Authorized Officer, Pridhvi Asset Reconstruction & Securitisation

¶270

Company Ltd. (MANU/TN/6032/2018 dated 09.10.2018 in W.P. Nos.26249, 26230 of 2018, W.M.P. Nos.30659 and 30471 of 2018), wherein a Hon'ble Division Bench of the Madras High Court after considering the statutory provision and decisions relied on, held as under:

¶271

“14. Section 18(1) provides that 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 1^st proviso stipulates that different fees may be prescribed for filing an appeal by a borrower and by a person other than the borrower. The 2nd

¶272

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proviso, and which is really germane for our purposes, inter alia stipulates that no appeal shall be entertained unless the borrower has deposited with the DRT fifty per cent of the amount of debt due from him as claimed by the secured creditors, or determined by the DRT, whichever is less. The 3rd proviso gives power to the DRAT to reduce the deposit amount from 50% to 25% provided reasons for the same are recorded in writing by the DRAT. As stipulated in the 3rd proviso, the DRAT has no power to reduce the amount of deposit less than 25% of the debt referred to in the 2nd proviso. Section 18(2) stipulates that save or otherwise provided in the Act, the DRAT shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the "RDDB Act") and the Rules made thereunder.

¶275

Since the 2^nd proviso to section 18 stipulates that the borrower has to deposit 50% of the amount of debt due from him, it would also be apposite to refer to the definition of the word "debt" appearing in section 2(ha) of the SARFAESI Act and which reads as under:-

¶276

"(ha) 'debt' shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (51 of 1993);"

¶277

As can be seen from the definition, the word "debt" shall have the meaning assigned to it in clause (g) of section 2 of the RDDB Act. Section 2(g) of the RDDB Act reads thus:-

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"(g) "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, 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;"

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On a plain reading of the 2^nd proviso to section 18(1) of the SARFAESI Act read with the definition under the word "debt" as defined in section 2(g) of the RDDB Act, it is clear that before an appeal can be entertained by the DRAT, the borrower has to deposit 50% of the amount of debt due from him as claimed by the secured creditors or as determined by the DRT whichever is less. If there is no determination of the debt by the DRT under the provisions of the RDDB Act, then the borrower would have to deposit 50% of the amount of debt due from him as claimed by the secured creditors. The provision on a plain reading does not in any way exclude taking into consideration the future interest that is accrued on the debt owed by the borrower to the secured creditor. In fact, the definition of the word "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution. Therefore, if the claim made by the secured creditor in the section 13(2) notice includes future interest, the same would certainly be included in the "amount of the debt due" from the borrower to the secured creditor as contemplated under the 2nd proviso to section 18(1) of the SARFAESI Act. There is therefore no justification to hold that it is only the figure that is mentioned in the section 13(2) notice that is to be taken into consideration and not the future interest accrued on the said sum, whilst determining the deposit amount under the 2nd proviso to section 18 of the SARFAESI Act. The amount of deposit would have to be determined on the basis of the amount of debt due by the borrower to the secured creditor on the date when the appeal is filed in DRAT. This would not only include the amount mentioned in the section 13(2) notice but also interest accrued thereon till the date of filing of the appeal under section 18 of the SARFAESI Act. To our mind, this is the only interpretation that is possible of the 2^nd proviso to section 18 of the SARFAESI Act. If we were to accept the contention of the Petitioner that the amount to be deposited by the borrower [under the 2nd proviso to section 18(1)] would be only on the basis of the sum/figure as mentioned in the section 13(2) notice and not the interest accrued thereon after the date of the said notice, the same would be violating the plain language of the statute. To interpret the 2^nd proviso to section 18(1) in this fashion, to our mind, would clearly violate the plain and unambiguous language of the said section.

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10.2. The learned counsel for the respondent-Bank also relied upon a judgment reported in 2017 1 Bankman (Debts Recovery Tribunal) 326 [Nathi Lal Rathore Vs. The Debt Recovery Appellate Tribunal and 2 others] wherein the Allahabad High Court held as follows:

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"...

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The term 'debt' as per the definition given in the statute is inclusive of interest, which is claimed as due, from a person, by the Bank or Financial Institutions. The proviso to Section 18(1) contemplates pre-deposit, with reference to the debt due, as claimed by the secured creditor or determined by Tribunal, whichever is less. Even if the notice under Section 13(2) is seen, in right perspective, it would be apparent that not only the sum quantified therein, but even future interest, is a part of debt due in terms of second and third proviso to section 18(1) of the Act. There is nothing in the statute which may restrict the debt due to the sum quantified in the notice under Section 13(2) of the Act alone, and exclude the amount of interest accrued which may have fallen due till the date of filing of appeal. Law is settled that if language employed in statute is plain, and does not admit any ambiguity, its literal meaning would have to be assigned. Merely because it causes hardship, would not be a ground to depart from the words used in the statute. Reference may be made to the Judgment of Apex Court in Rohitash v. Om Prakash Sharma, 2013 (11) SCC 451 and Narayan v. Baba Saheb, 2016 (6) SCC 725. Thus, I am inclined to hold that it is not just the sum specified in Section 13 alone, but the interest accrued thereupon till the filing of appeal, which needs to be reckoned for working out the amount of pre-deposit in terms of second proviso to Section 18 of the Act. The judgment of this Court in Gopal Ji Gupta (Supra) since fails to notice the definition of 'debt', as provided in the Act itself, as such, with greatest respect, I fail to agree with the ratio laid down therein.

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For the view which I propose to take, I am supported by a Division Bench Judgment of Bombay High Court in M.R.B. Road Construct. Pvt. Ltd. v. Rupee Co-op Bank Ltd. Para 17 to 19 of the Judgment, which is relevant for the present purposes, reads as under:--

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"17. On an ex-facie reading of the said definition, it is clear that the word "debt" has been given an extremely wide meaning and means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by such bank or financial institution under any law for the time being in force, in VRD 13 of 26 RPW78.15 FINAL. doc 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."

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On a perusal of Section 13(2) notices dated 11.01.2013, it could be seen that the respondent-Bank had claimed a sum of Rs. 11.72 crores as on 31.03.2012 together with interest. The petitioners have not taken into consideration the interest payable by them towards the loan amount. Even after a lapse of six years, the petitioners have not discharged their liability in entirety.

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The ratio laid down by the Division Bench of the Bombay High Court and Allahabad High Court apply to the facts and circumstances of the present case. Therefore, the orders passed by the Debt Recovery Appellate Tribunal directing the petitioners to make a pre-deposit of 25% of the amount claimed in Section 13(2) notices cannot be held as onerous or unreasonable.”

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Anyhow, the first question emerges for consideration is as to

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whether the finding rendered by the learned single Judge in the impugned judgment that the view adopted by the Hon'ble Division Bench of the

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Madras High Court is the correct one requires any interference.

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In our considered opinion, when the second proviso to Section 18(1) of Act, 2002 clearly specifies that 50% of the amount of debt due

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from the borrower, as claimed by the secured creditors, includes interest, as defined so under Section 2(ha) of Act, 2002 read with Section 2(g) of Act, 1993, and the language is so plain, there is no room for any further interpretation as to the quantum of the amount to be arrived at while directing to make the pre-deposit. That apart, when the interest rate is specified in the notice along with the consolidated figure contained in the claim, it is a continuing debt due till the entire amount inclusive of the interest is paid, and there is no indication at all in the provision in question

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to exclude the interest from the debt due. If the Parliament had any intention to exclude the interest from the pre- deposit, it could have stated so, by employing suitable expressions., but instead of doing so, it has incorporated the specific term “debt due,” intending thereby, not to exclude the interest from the purview of pre-deposit. This is more so, since the Parliament was conscious of the fact that the expression “debt due”, when employed in the second proviso to Section 18(1) would include interest as defined under the Act 2002.

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Even though learned counsel for the borrowers has invited our attention to a Hon'ble Division Bench judgment of the Chhattisgarh High Court, Shri Mohan Products Pvt. Ltd. and Ors v. State Bank of India and Ors. (Judgment reported in MANU/CG/0390/2020 dated 18.05.2020 in

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Writ Appeal No. 362 of 2019 dated 18.05.2020) and submitted that the “debt due” figured in the second proviso to Section 18(1) would not include the interest portion, we are unable to agree with the same, in view of the reasons assigned above.

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In sum and substance, we agree with the view expressed by the Bombay High Court in MRB Roadconst. Pvt. Ltd. (cited supra), and Madras High Court in Sekar Stores Home Mart and Ors. (cited supra). Therefore, we have no hesitation to say that DRAT was right in directing the borrowers to deposit the amount of Rs.2 Crores, which appears to be less than 50% of the total amount due, inclusive of interest up to the date of filing the appeal. The condition for pre-deposit, as adumbrated in the provision in question, has also an avowed object of precluding unnecessary appeals being preferred for protracting recovery of the amounts due, apart providing a remedy for the aggrieved.

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Insofar as the issue raised by the appellant Bank about the order passed by the DRAT that given the pre-deposit ordered in AIR No. 690/2018, no pre-deposit amount need be deposited in AIR No.691/2018, requires any interference at all, because the said appeal is nothing but an offshoot of the main appeal against the dismissal of securitisation appeal itself, which has no independent existence from the main appeal, and

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probably vice versa. In sum and substance, they are one and the same. To put it otherwise, two appeals had to be filed, in view of the findings rendered by the DRT in the interlocutory application, challenging the maintainability of the Securitisation Application and consequential dismissal of the same.

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In fact, what is under challenge before the Appellate Tribunal predominantly is the dismissal of T.S.A No.10/2016 by the Debt Recovery Tribunal; however, the order passed by the DRT in the interlocutory application is closely intertwined and interconnected, and therefore, the findings may have to be rendered in the appeals on the basis of the findings generated in the interlocutory application by the Tribunal thus, dismissing the Securitisation Appeal.

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It may be true that sub-section (1) of Section 18 of the SARFAESI Act, 2002, contemplates appeal from any order made by the Debt Recovery Tribunal, but the expression 'any order' cannot be brought into play, so as to interpret the term “pre-deposit”, in contemplation of second proviso to Section 18(1), in a circumstance like the one on hand. Therefore, we are of the considered view that the Appellate Tribunal was right in holding that there is no requirement for ordering a separate predeposit, in view of the pre-deposit ordered in AIR 690/2018. In that view

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of the matter, learned single Judge was also right in upholding the approach made by the Appellate Tribunal in that regard.

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Now, the third question emerges for consideration is whether the learned single Judge was right in directing the borrowers to deposit 50% of the amount ordered under Section 13(2) notice, without interest.

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In fact, we have held that, in order to entertain an appeal, 50% of the amount inclusive of interest, as claimed by the secured creditor, can be taken into account. It was taking note of the total amount due inclusive of interest at Rs 6 Crores, the Appellate Tribunal directed the borrowers to deposit Rs.2 Crores.

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In view of the findings rendered above, that the amount claimed by the secured creditors includes the interest due, we are of the undoubted opinion that the Appellate Tribunal was right in directing the borrowers to deposit Rs.2 Crores, which is 25% of the total amount due. In that regard, the judgment of the learned single Judge has to be interfered with. Moreover, the appellant Bank has not preferred any appeal against the said order of the Debt Recovery Appellate Tribunal.

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Therefore, we set aside the impugned judgment insofar as it directs the borrowers to deposit 50% of the amount claimed by the

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secured creditors in the notice. In view of the findings rendered by us above, the appeals filed by the auction purchasers in that regard do not merit any consideration.

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Resultantly, W.A. No. 242/2020 filed by the Union Bank of India is allowed. W.A. No.300/2020 filed by the appellants/borrowers against the direction to make pre-deposit of 50% with the Registrar of the Appellate Tribunal, is allowed to the extent specified above. W.A. No.401/2020 filed by the auction purchasers against the judgment in W.P.(C) No.9331/2019 dated 18.12.2019 is disposed of, in terms of directions in W.A. No.242/2020. W.A. No.233/2020 filed by the Bank against the iudgment in W.P.(C) No.11506/2019, in regard to waiver of pre-deposit by the Debt Recovery Appellate Tribunal is dismissed.

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Sd/- S.MANIKUMAR CHIEF JUSTICE

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Sd/- SHAJI P.CHALY JUDGE

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Krj

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APPENDIX IN W.A.NO.242/2020