Rajasthan Artemporium vs Bank Of India And Ors.

S.N.H. Zaidi, J

The instant appeal has been filed against the order dated 20.9.2011 passed by the learned Presiding Officer of the Debt Recovery Tribunal (for short, the DRT), Chandigarh, having additional charge of the DRT Jaipur, in S. A. No. 4/2011 vacating the interim stay and allowing the respondent Bank to proceed with the sale proceedings and finalising the bids but restraining it from confirming the sale till the next date. Briefly stated, the relevant facts are that the appellant firm got sanctioned various loans/credit facilities by the respondent Bank totalling Rs. 6,43,00,000/- by hypothecation of goods and stock and mortgage of several immovable properties. As the appellant's account became irregular, the Bank, after classifying the account as Non Performing Asset (NPA), issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act) demanding an amount of Rs. 6,85,47,661/ -. The Bank took possession of the secured assets on 18.12.2010 and issued auction notice with regard to the mortgaged properties. The appellant firm, challenging the actions of the Bank filed application under Section 17 of the Act (SA No. 4/2011) against the Bank before the DRT, Jaipur. The learned DRT, on an application (IA No. 19/2011) moved by the appellant in the said SA, by order dated 25.1.2011, directed the Bank to proceed with the auction proceedings but restrained it to finalise the bids in favour of any party without its permission. The auction, however, could, not take place on the fixed date and the Bank issued fresh auction notice inviting bids in closed/sealed covers by 12.3.2011. The appellant moved another application (IA No. 74/2011) for stay of the auction proceedings pursuant to that notice and the learned DRT, vide order dated 15.3.2011, directed the Bank not to finalise the bids. In the meantime the appellant tried to amicably settle the dispute with the Bank, but it could not bear any fruit and on the appellant's fresh request for one week's more time for the same, the learned DRT, observing that sufficient time and opportunities had already been granted for settlement and the matter is not to be lingered any more, by the impugned order, vacated the stay and allowed the Bank to proceed with the sale and finalise the bids but restrained it to confirm the sale till the next date. It is this order which has been challenged in this appeal.

However, before the appellant's Counsel could be heard on admission, learned Counsel for the respondent Bank objected to the entertainability of the appeal on the ground of non compliance of requirement of pre-deposit of the debt amount, in accordance with the second proviso to Section 18(1) of the Act.

I have heard Mr. Rajeev Mehra, learned Senior Advocate, accompanied with Ms. Madhurima Tatia and Mr. Sanjeev Bhandari for the appellant and Mr. Naveen Pushkarna for the respondent Bank at length on the aforesaid objection and also on admission.

The contention of Mr. Pushkarna is that as this appeal has been filed under Section 18(1) of the Act, therefore, the mandatory requirement of pre-deposit under the second proviso to the said sub-section has to be complied with, without which the appeal cannot be entertained even if it may be against an interim or interlocutory order. In support of his submissions Mr. Pushkarna has referred to the observations of the Hon'ble Supreme Court made in the cases of Mardia Chemicals Ltd. & Ors. v. Union of India & Ors., : 110 (2004) DLT 665 (SC) : II (2004) BC 397 (SC) : II (2004) SLT 991 : (2004) 4 SCC 311 and Narayna Chandra Ghosh v. UCO Bank & Ors., IV (2011) SLT 229 : 11 (2011) CLT 355 (SC) : AIR 2011 SC 1913.

Mr. Rajeev Mehra, learned Senior Advocate, on the other hand, argued that the requirement of pre-deposit before the Appellate Tribunal would apply only to an appeal filed against an order of the DRT finally disposing of the application filed under Section 17 of the Act and not to an appeal which is preferred against an interim or interlocutory order passed on an application moved during the pendency of the substantive application. According to him, if the DRT, after examining the facts and circumstances of the case and considering the evidence produced by the parties, comes to the conclusion that any of the measures taken by the secured creditor is not in accordance with the provisions of the Act or the rules made thereunder, then it may, under Section 17(3), order that the recourse to such measures is invalid and restore the management of the business or the possession of the secured assets, as the case may be, to the borrower, but if it finds that the recourse taken by the secured creditor is in accordance with the provisions of the Act and the rules, then it may, under Section 17(4), make an order that the secured creditor is entitled to take recourse to such measures to recover his secured debt. Mr. Mehra, however, further submitted that the jurisdiction of the DRT is not restricted only to adjudicate whether or not the recourse to the measure/s taken under Section 13(4) is in accordance of the Act or the rules but all such grounds which render the action of the Bank/financial institutions invalid can be considered by the DRT in the proceedings under Section 17 of the Act (Misons Leathers Ltd. v. Canara Bank, I (2007) BC 440 : AIR 2007 Madras 268) and if the borrower prefers an appeal to the Appellate Tribunal against such an order then he will have to comply with the requirement of pre-deposit envisaged under the second proviso to Section 18(1) of the Act. He further went on to argue that where an interim or interlocutory order is passed on any application moved as a step in aid to the final determination of the substantive application, then such order would not come within the ambit of the order of Section 17 referred to in Section 18(1) of the Act and for entertaining the appeal against such order, the requirement of pre-deposit would not apply.

Mr. Mehra, citing certain observations of the Hon'ble Courts, also submitted that, Section 17(7) of the Act read with Section 19(12) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the DRT Act) empowers the DRT to pass interim orders under Section 17 of the Act in appropriate cases, Ram Murty Pyara Lal & Ors. v. Central Bank of India & Ors., : I (2011) BC 125 : 174 (2010) DLT 314 (DB). Besides that, Sub-sections (13), (15), (17), (18) and (25) of Section 19 of the DRT Act also empower the DRT to pass certain interim orders, including ad interim ex parte order of injunction or stay, against the defendant, ICICI Ltd. v. Grapco Industries Ltd., : 80 (1999) DLT 418 (SC) : V (1999) SLT 310 : AIR 1999 SC 1975. Likewise, Rule 18 of the Debt Recovery Tribunal (Procedure) Rules, 1993 enables the DRT to pass interim order, Allahabad Bank, Calcutta v. Radha Kishan Maity & Ors., : VII (1999) SLT 366 : 11 (1999) BC 600(SC) : (1999) 6 SCC 755.

His further submission is that Sub-section (2) of Section 22 of the DRT Act, also empowers the DRT to exercise similar powers as are vested in a Civil Court under the Code of Civil Procedure for trying a suit in respect of the matters enumerated therein and if an application seeking interim order relating to any of such matters is moved or an application is moved under Order 6 Rule 17, CPC for amending the substantive application on account of some subsequent change in the circumstances; or for impleading a certain party under Order 1 Rule 10, CPC; or for seeking the passing of judgment on failure to file written statement under Order 8 Rule 10, CPC; or for seeking cross-examination of witness under Rule 12(6) of the DRT (Procedure) Rules, 1993 and if any of such applications is rejected by the DRT and the borrower, being aggrieved by such order, prefers an appeal against it to the Appellate Tribunal under Section 18(1) of the Act, the Legislature could have never intended to require the appellant to pre-deposit the amount referred to in its second proviso for entertaining the appeal against such order, as it would lead to anomalous and absurd situation, Mr. Mehra illustrated his point by submitting that supposing during the pendency of the application of Section 17 of the Act, the borrower moves five applications before the DRT seeking interim/interlocutory orders which are refused and the borrower prefers appeals to the Appellate Tribunal then, according to the contention of Bank's Counsel, each appeal would require a pre-deposit of 50% (subject to reduction to not less than 25%) of the amount claimed in the notice under Section 13(2) of the Act, then the amount required to be deposited would be somewhere between 125% to 250% of the demanded amount. This would lead to absurdity which cannot be upheld and must be avoided and purposive interpretation, i.e., according to the intent of the makers (Legislature), as described by the Supreme Court in the case of National Insurance Co. Ltd. v. Laxmi Narain Dhut, III (2007) CPJ 13 (SC) : II (2007) ACC 28 (SC) : IV (2007) SLT 102 : AIR 2007 SC 1563(1), be resorted to. It has been pointed out by him that this Tribunal has also held in M/s. B.L. Gupta Construction (P) Ltd. & Ors. v. Vijya Bank, 2010(1) DRT Cases (PT-I1I) 297 that no pre-deposit amount is required to be deposited under Section 18 where the interlocutory order has been challenged in appeal.

Before considering the merits of the rival submissions, it would be appropriate and necessary to see the scope of some of the relevant provisions of the Act and how they have been interpreted by the Hon'ble Courts. Section 17 of the Act provides that any person, including a borrower, aggrieved by any of the measures referred to in Section 13(4) taken by the secured creditor, may make an application to the DRT, which shall consider whether any of such measures as taken by the secured creditor for enforcement of security are in accordance with the provisions of the Act and the rules and if the DRT, after considering the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of such measures taken by the secured creditor is not in accordance with the Act or the rules, it may restore the possession of the secured assets or the management of the business to the borrower, as the case may be, and may also pass necessary and appropriate order in relation to any of the recourse taken by the secured creditor under Section 13(4). Section 18 of the Act provides for a right of appeal to a person aggrieved by any order of the DRT made under Section 17 and reads as under:

Appeal to Appellate Tribunal- (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under Section i 7, may prefer an appeal along with such fee, as may be prescribed to an 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 persona 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 percent, of referred to in the second proviso.

(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.

It is noteworthy that Section 17(2) of the Act, as it stood prior to its substitution in 2004, had also provided for the pre-deposit of 75% of the amount claimed in the notice given under Section 13(2) for entertaining the appeal filed by the borrower before the DRT, which could be waived or reduced by the DRT under the proviso to that sub-section. The Supreme Court in the famous case of Mardia Chemicals (supra), while dealing with the validity/constitutionality of the condition of pre-deposit under Section 17, has held that the proceedings under the said section are not the appellate proceedings and in fact it is an initial action brought before a Forum prescribed under the Act raising the grievance against the action or measure taken by one of the parties to the contract and it is like filing a suit in Civil Court. In paragraphs 60 and 64 of its judgment the Apex Court has observed that:

The requirement of pre-deposit of any amount at the first instance of proceedings is not to be found in any of the decisions cited on behalf of the respondent. All these cases relate to appeals. The amount of deposit of 75% of the demand, at the initial proceeding itself sounds unreasonable and oppressive more particularly when the secured assets/the management thereof along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold. Requirement of deposit of such a heavy amount on basis of one sided claim alone, cannot be said to be a reasonable condition at the first instance itself before start of adjudication of the dispute. Merely giving power to the Tribunal to waive or reduce the amount, does not cure the inherent infirmity leaning one-sidedly in favour of the party, who, so far has alone been the party to decide the amount and the fact of default and classifying the dues as NPAs without participation/association of the borrower in the process. Such an onerous and oppressive condition should not be left operative in expectation of reasonable exercise of discretion by the concerned authority. Placed in a situation as indicated above, where it may not be possible for the borrower to raise any amount to make the deposit, his secured assets having already been taken possession of or sold, such a rider to approach the Tribunal at the first instance of proceedings, captioned as appeal, renders the remedy illusory and nugatory.

The condition of pre-deposit in the present case is bad rendering the remedy illusory on the grounds that, (i) it is imposed while approaching the adjudicating authority of the first instance, not in appeal; (ii) there is no determination of the amount due as yet; (iii) the secured assets or its management with transferable interest is already taken over and under control of the secured creditor; (iv) no special reason for double security in respect of an amount yet to be determined and settled; (v) 75% of the amount claimed by no means would be a meagre amount; (vi) it will leave the borrower in a position where it would not be possible for him to raise any funds to make deposit of 75% of the undetermined demand. Such conditions are not alone onerous and oppressive but also unreasonable and arbitrary. Therefore, in our view, Sub-section (2) of Section 17 of the Act is unreasonable, arbitrary and violative of Article 14 of the Constitution.

Post-decision of the Apex Court rendered in the Mardia Chemical case, the Act was amended by Act No. 30 of 2004 and the condition of pre-deposit of amount under Section 17(2) along with its proviso has been omitted, but by inserting second proviso to Section 18(1), deposit of 50 % of the amount of debt due from the borrower as claimed by the secured creditors or determined by the DRT, whichever is less, has been introduced as a condition precedent for entertaining the appeal filed by the borrower before the Appellate Tribunal and, by inserting third proviso to that section, the Appellate Tribunal has been empowered to reduce the amount of deposit, for reasons to be recorded in writing, to not less than 25% of the debt, referred to in the second proviso. Thus, deposit of the lesser of the two amounts has been made a condition precedent for entertainment of appeal to the Appellate Tribunal.

The constitutional validity of the second proviso to Section 18(1) of the Act has been upheld by the Delhi High Court in R. V. Saxena v. Union of India, : II (2006) BC 455 : 127 (2006) DLT 267 (DB) and it has been held that:

The right of appeal is not an inherent right but is a creature of the statute. The Legislature can impose conditions under which this is to be exercised. Moreover, the proviso to Section 18 does not require the entire amount to be deposited, but only 50% thereof which can be reduced to a minimum of 25% of the sum. We see no illegality in this proviso. There are similar provisions in many enactments and they are being upheld by the Supreme Court, For example, in the second proviso under Section 15(1) of the Foreign Trade (Development and Regulation) Act, 1992, it is provided that the appeal against an order imposing a penalty or redemption charges shall not be entertained unless the amount of the penalty or redemption charges have been deposited by the appellant. Similarly in many other statutes, there are such similar provisions such similar provisions."

In a recent case of Narayan Chandra Ghosh v. UCO Bank & Ors. (supra), the Supreme Court while holding that the requirement of pre-deposit under Subsection (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to it and no Court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute, has observed in paragraphs 7, 8 and 9 of the judgment that:

7.... Thus, there is an absolute bar to the entertainment of an appeal under Section 18 of the Act unless the condition precedent as stipulated, is fulfilled. Unless the borrower makes with the Appellate Tribunal, a pro-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 of no ambiguity.

It is well-settled that when a statute confers a right of appeal, while granting the right, the Legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under Sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no Court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the statute....

The argument of learned Counsel for the appellant that as the amount of debt due had not been determined by the Debts Recovery Tribunal, the appeal could be entertained by the Appellate Tribunal without insisting on pre-deposit, is equally fallacious. Under the second proviso to Subsection (1) of Section 18 of the Act the amount of fifty per cent, which is required to be deposited by the borrower, is computed either with reference to the debt due from him as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less. Obviously, where the amount of debt is yet to be determined by the Debts Recovery Tribunal, the borrower, while preferring an appeal, would be liable to deposit fifty per cent of the debt due from him as claimed by the secured creditors....

In Forum Diamonds & Ors. v. Bank of Baroda & Ors., : II (2010) BC 585, a Division Bench of the Bombay High Court has disagreed with the contention of the petitioner that unless the amount is determined and finding is recorded about the actual amount due to the borrower, the provision of Section 18 of the Act would not come into play and has observed that:

7....The provisions of Section 18 of the Securitization Act contemplates that 50% or 25% of the amount has to be deposited by the appellant of the amount claimed by the secured creditors or the amount determined by DRT whichever is less. There is some element of benefit available to the applicant under these provisions but the interpretation given by the petitioners as that itself would mean rendering the provisions of Section 13 as well as the provisions of Section 17 ineffective inoperative cannot be accepted. The Legislature in its wisdom has used the word "or" and the same as to be construed and read as "or" and not as "and" Either of the amount i.e. the amount claimed by the secured creditors or the amount determined by the DRT can be the basis of determining 50% % of the debts as the case may be....

The Madras High Court in Indian Bank Asset Recovery Management Branch v. Homosons Apparels Pvt. Ltd., , while construing the provisions of Section 18(1) of the Act rejected the contention that an appeal filed against an interim order of the DRT or against an order declining an interim relief by the DRT does not require the pre-deposit under that section as there is no determination of the due amount of the debt. It has been observed by the Court in paragraph 18 of the judgment that:

18....Similarly, in a case where appeal under Section 18 is preferred against interim order or for non-grant of interim order, the aggrieved persons, while praying for interim injunction to stall the proceeding, cannot allege that no determination has been made by DRT with regard to the claim. It cannot blow hot and cold by moving in appeal under Section 18 against interim order or non-grant of interim order, for the purpose of getting an appropriate interim order in appeal under Section 18 and allege non-determination of claim by Tribunal, which at best can be determined at the time of final hearing of the case, that too in a case where if any dispute is raised by party under Section 19 of DRT Act, 1993 or Bank files an application under Section 13(10)) of NPA Act. Therefore, the effect and correct meaning to give to the sentence "the amount of debt due from him as claimed by secured creditor or determined by Debts Recovery Tribunal, whichever is less" as mentioned under 2nd proviso to Section 18(1), a harmonious reading has to be made, which may tit in all situations. Therefore, we hold that the 2nd proviso to Section 18(1) stipulates pre-deposit of 50% due as claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less, and in absence of a determination by the Tribunal, the person has to deposit 50% of the amount claimed by the secured creditor, subject to waiver under 3rd proviso to Section 18(1). If any person, after notice under Section 13(2) has deposited any amount, including amount, if any, deposited during Section 13(4) stage or pendency of appeal under Section 17, it can be brought to the notice of the Appellate Tribunal for adjusting such amount for the purpose of determination Of amount of claim for the purpose of 2nd proviso to Section 18(1). Similarly, it is also open to any aggrieved person to show that another aggrieved person, for same action taken by secured creditor, while preferring appeal under Section 18 against common order, has deposited certain amount and in such case the Appellate Tribunal will take into consideration such amount for the purpose of determination of amount to be paid under 2nd proviso to Section 18(1) or for waiver under 3rd proviso to Section 18 (1).

In M/s. Swadeshi Cement Ltd. v. Asset Care Enterprises Ltd., W.P. (C) No. 13143/2009, decided by the Delhi High Court on 30.4.2010, where notice under Section 13(2) demanding the outstanding amount of Rs. 5,284.08 lacs and possession notice under Section 13(4) of the Act issued to the petitioner were assailed before the DRT and during the pendency of the application under Section 17 of the Act, the petitioner moved an interim application for appointment of Receiver for preparation of the list of assets. The DRT while disposing of that application directed the petitioner to deposit Rs. 10 crores within ten days and a further sum of Rs. 10 crores within ten days thereafter and subject to such deposits, respondent was restrained from proceeding against the properties in question. The petitioner, instead of depositing the amounts, filed an appeal to the Appellate Tribunal challenging the order of the DRT and also moved an application for waiver of the requirement of pre-deposit envisaged under the second proviso to Section 18 of the Act. The Appellate Tribunal refused to entertain the appeal unless 25% of the notice amount of Rs. 52.84 crores, which was computed to be 13.25 crores, is deposited and dismissed the waiver application. The order of the Appellate Tribunal was assailed under Articles 226 and 227 of the Constitution of India before the High Court. Their Lordships of the Court, after quoting the provisions of Section 18 of the Act has observed that:

Bare reading of aforesaid provision clearly shows that the Appeal cannot be entertained unless borrower deposits 50% of the amount of debt due from him. However, Appellate Tribunal is vested with the power to reduce this condition of deposit of 50% but is statutorily prohibited from venturing to less than 25% of the debt. The condition of pre-deposit is mandatory. Language employed in the proviso to Section 18(1) of SRFAESI Act mandates that Appeal shall not be entertained unless 25% of the amount of debt due is deposited with the Appellate Tribunal. In this case Appellate Tribunal did reduce the condition of deposit to the extent of 25% but this amount had not been deposited. Thus, we are of the view that Appeal itself could not be entertained....

The question whether the requirement of pre-deposit under Section 18(1) of the Act would be attracted where the order challenged in an appeal before the Appellate Tribunal is not a final order under Section 17, but an interlocutory order, specifically came for consideration before the Division Bench of the Bombay High Court in Vinay Containers Services Pvt. Ltd & Ors., v. AXIS Bank, IV (2011) BC 445. The Court while upholding the view of the DRAT, Bombay that the requirement of pre-deposit under Sub-section (1) of Section 18 of the Act would also apply where an appeal is filed against an interlocutory order passed by the DRT under Section 17 of the Act, has observed in Paragraph 8 of the judgment that:

8....The right of appeal under Section 18 arises in respect of "any order made by the Debt Recovery Tribunal" albeit under Section 17. The section refers to any order and those words are comprehensive enough to include a final as well as an interlocutory order. There is no reason or justification for this Court to exclude an interlocutory order from the purview of Sub-section (1) of Section 18. The plain language of Section

18 must be interpreted and given effect to. A restriction not envisaged cannot be read into Section 18. The Court cannot re-write legislation. An order under Section 17 of the Act undoubtedly includes an order finally disposing of the proceeding, on a proceeding questioning the measures taken by the secured creditor under Sub-section (4) of Section 13. But, equally, the Tribunal while exercising its power in an Appeal under Section 17 has the jurisdiction to pass interlocutory orders which are in aid of and ancillary to the exercise of the jurisdiction..

The Apex Court did not find any ground of interference in the aforesaid judgment and accordingly dismissed the Petition for Special Leave to Appeal (Civil) No. 36326/2010 filed against it on 7.1.2011.

Except the cases of R. V. Saxena v. Union of India (supra) and the Jammu & Kashmir Bank Ltd. v. M/s. Prabhat General Agencies & Ors., W.P. No. 4979/ 2006 decided by the Bombay High Court on 17.8.2006, in none of the cases cited on behalf of the appellants, the Courts had considered the question of compliance of pre-deposit for entertainment of appeal before the Appellate Tribunal. In the case of R. V. Saxena, the Delhi High Court, as mentioned earlier, has upheld the constitutional validity of second proviso to Section 18(1) of the Act, whereas in the case of the Jammu & Kashmir Bank the High Court, while dismissing the writ petition, has observed that there is no necessity of any pre-deposit where indisputably an amount, in excess of the amount due from the appellants, has been received by the Bank.

In the case of Naresh Kumar Mittal v. State Bank of India & Ors., : 161 (2009) DLT 452 : IV (2009) BC 50-W.P. (C) 520/2009 decided by the Delhi High Court on 17.7.2009 relied upon by the appellants, the High Court had only considered the question whether the fee payable on an appeal arising from an order on the interlocutory application filed in a substantive petition under Section 17 of the Act would be the same as that on an appeal from the final order passed in such substantive petition or would it be the same as payable in the first instance on an interlocutory application moved in substantive petition, and neither referred Section 18 of the Act nor considered the question of requirement of pre-deposit in appeal under that section. The principle of law laid down in that case has, therefore, no application in the present case. My learned predecessor, while deciding Appeal No. 226/2009, M/s. B.L.Gupta Construction (P) Ltd. v. Vijya Bank (supra), has solely relied upon the ratio of Naresh Kumar Mittal's case and as such the view expressed by him cannot be accepted as a guiding principle for this case.

The' Apex Court in Mardia Chemicals' case (supra) has expressly recognised that the DRT in exercise of its ancillary powers would have the jurisdiction to pass any stay or interim order subject to any condition as it may deem fit and proper to impose.

The legal position as emerged from the above discussion goes to show that the DRT has not only an undoubted jurisdiction to pass final order under Sub- section (3) or (4) of Section 17 of the Act on an application filed under Sub-section (1) thereof, but has also the ancillary power to make interim or interlocutory orders, with or without any condition, on applications filed during the pendency of the said application, under the said section or under any other provision of the Act, the DRT Act and the rules made thereunder. In the light of the aforesaid legal position, it is held that where an appeal is preferred to the Appellate Tribunal by the borrower against an interim order of the DRT staying any measure taken by the secured creditor under Section 13(4) of the Act with some condition or refusing/declining to stay such measure, the appellant would be liable to comply with the mandatory requirement of pre-deposit of the amount, referred to in the second proviso to Section 18(1) of the Act, failing which the appeal shall not be entertained.

I am also of the considered view that if during the pendency of substantive application, the Tribunal in exercise of the jurisdiction under any of the enabling provisions of the Act, the DRT Act or the rules, passes any interim or interlocutory order, which does not have the effect of staying the action or measure/s taken secured creditor for enforcement of security interest under Sub-section (4) of Section 13 of the Act, then the condition of pre-deposit would not be applicable for entertaining an appeal preferred to the Appellate Tribunal against such order.

The contention of the appellant that the requirement of pre-deposit is to be complied only where the substantive application is finally disposed of, by determining the amount of debt and thereby terminating the lis, therefore, cannot be accepted as the Supreme Court in the case of Narayan Chandra Ghosh (supra) has also held that where the amount of debt is yet to be determined by the DRT, the borrower while preferring appeal would be liable to deposit 50% of the debt due from him as claimed by the secured creditors which at best, the Appellate Tribunal could have, after recording the reasons, reduced to an amount of not less than 25% of the debt referred to in the second proviso.

The submission of Mr. Mehra that if, during the pendency of the application under Section 17 of the Act, the borrower moves five applications before the DRT seeking interim orders which are refused and he prefers appeals to the Appellate Tribunal against the order passed on each application and if he is required to make pre-deposit of 50% of the claimed amount of debt due (which can be reduced to not less than 25%) for entertaining each appeal, then he will be required to deposit an amount between 125% to 250% of the claimed amount, does not hold water and is unacceptable, because such a situation is too hypothetical and will never arise, as the Madras High Court in Indian Bank Asset Recovery Management Branch case (supra) has observed that "if any person, after notice under Section 13(2) has deposited any amount, including any amount, if any, deposited during Section 13(4) stage or pendency of appeal under Section 17, it can be brought to the notice of the Appellate Tribunal for adjusting such amount for the purpose of determination of amount of claim for the purpose of 2nd proviso to Section 18(1). Similarly, it is also open to any aggrieved person to show that another aggrieved person, for same action taken by secured creditor, while preferring appeal under Section 18 against common order, has deposited certain amount and in such case, the Appellate Tribunal will take into consideration such amount for the purpose of determination of amount to be paid under 2nd proviso to Section 18(1) or for waiver under 3rd proviso to Section 18 (1)". Thus, for determining the amount of pre-deposit any amount deposited subsequent to the issuance of notice under Section 13(2) of the Act will be adjusted and as such there will never be a situation of deposit of more than 50% of the claimed amount.

As the present appeal has been preferred by the borrower against the interim order whereby the DRT, by vacating the interim stay, has declined the appellant to stay the measure taken by the secured creditor, therefore, in view of the foregoing discussion, the appellant is obliged to comply with the mandatory condition of pre-deposit as contained in the second proviso to Section 18(1) of the Act for entertaining the appeal. The preliminary objection raised by Mr. Pushkarna on behalf of the Bank regarding pre-deposit is accordingly upheld.

The appellant is accordingly directed to comply with the requirement of pre-deposit of the amount referred to in the second proviso to Section 18(1) of the Act within six weeks from the date of this order, failing which the appeal shall not be entertained. The amount shall be deposited with the Registrar of this Tribunal who shall forthwith invest the same in Fixed Deposit in the name of Registrar, DRAT, Delhi with the respondent Bank for an initial period of 13 months and thereafter it will be renewed from time-to-time as and when required. The order on admission will be made when the appeal becomes entertainable. List on 3.2.2012 for further orders.