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IA No. 653/2026 (application for waiver from making pre-deposit)
The instant application is filed for seeking waiver from making pre-deposit of (25%) of the debt of Rs.10,18,69,182/-
The appellants stated that the appellants never received loan amount of Rs.81 lakhs and as such the demand notice dated 12.06.2023 issued by the respondents is absolutely baseless wherein the respondents have claimed Rs.10,18,69,182/- from appellants. The respondents vide auction held on 21.04.2026 illegally auctioned the immovable property of the appellants. It is prayed that the present application be allowed and the condition of pre-deposit be waived off. The counsel for the appellant on instruction from appellant no. 2 who is proprietor of appellant no.1 stated that the appellants are not in a position to make the pre-deposit of whatever is directed by this Tribunal.
The present appeal is filed under Section 18(1) of the SARFAESI Act. The second proviso to Section 18(1) of the SARFAESI Act provides that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal (50%) amount of debt due from him, as claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less. The Appellate Tribunal, however, is empowered to reduce this amount to not less than (25%) of debt for the reasons to be recorded in writing.
Section 18(1) of the SARFAESI Act reads as under:-
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 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:
Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:
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:
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.
The appellants are appearing to be borrowers and unless and until they comply with the mandatory requirement of pre-deposit, the present appeal cannot be entertained. The appellants only stated that they have never took the loan from the respondents which require due consideration by the concerned DRT.
The Supreme Court in Kotak Mahindra Bank Pvt. Ltd. V. Ambuj A Kasliwal and others, Civil Appeal No.538/2021, decided on 16.02.2021, has observed that even the High Court does not have the power to waive the pre-deposit in its entirety, nor can it exercise discretion, which is against the mandatory requirement of the statutory provisions. The Supreme Court observed that any waiver of pre-deposit to the entire extent would be against the statutory provisions and, therefore, not sustainable in law. The Supreme Court in reference to Section 18 of the SARFAESI Act after referring Narayan Chandra Ghosh vs. UCO Bank and Others (2011) 4 SCC 548, observed that Section 18(1) of the Act confers a statutory right on a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17 of the Act to prefer an appeal to the Appellate Tribunal but the right conferred under Section 18(1) is subject to the condition laid down in the second proviso thereto. The second provision postulates that no appeal shall be entertained unless the borrower has deposited with 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, whoever is less. It was further observed that the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty-five per cent of the debt, referred to in the second proviso. It was held that there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled and unless the borrower makes, with the Appellate Tribunal, a pre deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be entertained by the Appellate Tribunal. The language of the said proviso is clear and admits no ambiguity.
In the present appeal, the appellants are not ready to make the pre-deposit as per the proviso attached to Section 18(1) of the SARFAESI Act which is a mandatory condition. The plea of the appellants that they never received the loan as alleged in demand notice dated 12.06.2023 cannot be entertained at this stage. The present appeal cannot be entertained for want of pre-deposit and is accordingly dismissed.