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Judgment
Present as under:
Mr. Sunil Humbre along with Ms. Mumtaz Khan i/b Mr. Ritesh Patadia, Counsel for Applicants.
Mr. Aayush Kothari along with Mr. Nikhil Rajani i/b M/s. V. Deshpande & Co., Counsel for Respondent.
Heard on Application I.A. No. 191/2026.
This Application has been filed seeking waiver of the mandatory pre-deposit to the extent of 25% of the debt due in terms of the third proviso to Section 18 of the SARFAESI Act.
The Learned Counsel for the Appellant would submit that waiver to the extent of 25% may be granted to the Applicant/Borrower as the financial position of the Applicant/Borrower has deteriorated after availing the loan from the Respondent Bank.
He would further submit that the deteriorated financial condition is reflected in the Income Tax Returns annexed with the Application at pages 14 to 29.
He would further submit that the annual income of the Applicant/Borrower is ₹13,93,920/-.
He would further submit that the debt due, on which the mandatory pre-deposit is required to be made, is ₹1,22,64,594.26/- as on 18.12.2025.
The Learned Counsel for the Applicant/Borrower would further submit that the Applicant/Borrower has been making sincere efforts to repay the loan availed from the Respondent Bank and has already paid a sum of ₹9,13,00,000/- after issuance of notice of under section 13(2) of the Act.
He would submit that, as per the Applicant/Borrower, a sum of ₹1,22,64,594.26/- remains due and payable.
Per contra, the Learned Counsel for the Respondent would submit that the amount payable as on today is ₹4,70,27,183/-. He would further submit that although the Applicant/Borrower had paid a sum of ́₹9,13,00,000/-, interest at the rate of 11% per annum is chargeable on the outstanding amount.
In reply, the Learned Counsel for the Applicant/Borrower would submit that the aforesaid submission made by the Learned Counsel for the Respondent is factually incorrect. He would submit that, in the affidavit dated 29.12.2025 filed by the Respondent before the Learned CMM, the amount stated to be payable is only ₹1,22,64,594.26/-.
Considered and perused the record.
In view of the submissions made by the parties above, this Appellate Tribunal is of the considered opinion that the ends of justice would be served if the mandatory pre-deposit in accordance with section 18 of the SARFAESI Act be waived to the extent of 35% under the third proviso to the section. Accordingly, this Appellate Tribunal directs the Applicants/Borrowers to deposit 35 % of ₹1,22,64,594.26/-, which comes to ₹42,92,608/-, on or before 25.09.2026.
With this observation, the I.A. No. 191/2026 is disposed of.
The Respondent Bank is at liberty to file a reply to the grounds of the Appeal with an advance copy to the other sides.
On deposit of the amount, the Registry is directed to register this appeal and interlocutory application, if otherwise in order under the rules.
The amount shall be deposited in the form of a Demand Draft with the Registrar of this Appellate Tribunal.
As and when the said amounts are deposited, the same shall be invested in term deposits in the name of the Registrar, DRAT, Mumbai with any nationalised Bank, initially for 13 months, and thereafter to be renewed periodically.
At this stage, the Learned Counsel for the Applicant/Borrower would pray for Application Diary No. 436/2026 for staying the order passed by the Ld. Presiding Officer, DRT-I, Ahmedabad.
The Learned Counsel for the Respondent opposes for grant of any stay on the ground that the Appeal is not yet registered due to non-payment of mandatory pre-deposit.
The Learned Counsel for the Respondent relied upon the judgment dated 04.03.2026 in Writ Petition No. 15718/2025 in Anil Kumar Pawar & Anr V/s The Authorised Officer, Union Bank of India & Ors, the Hon’ble High Court of Bombay observed that after depositing the pre-deposit amount under section 18 of the SARFAESI Act within time, the matter be sent before the Ld. Registrar for registering the Appeal and Interlocutory Application. Only after registration, the I.A. for stay or appeal be heard and decided.
Considered and perused the record.
The relevant part of the judgment of the Hon’ble High Court of Bombay is reproduced here as under.
“8.We find on perusal of the impugned order that it suffers from a serious procedural infirmity. The Application considered and decided in the impugned order dated 14th May 2025 was only the Application seeking waiver of pre-deposit under Section 18 of the Securitisation Act. The only prayer made on behalf of Respondent Nos. 2 and 3 before the DRAT was for such waiver on the basis of statements made in the said Application. While considering the said Application the DRAT discussed the rival submissions, made certain observations and thereupon found that the Respondent Nos.2 and 3 were required to deposit 40% of the amount due and that complete waiver from pre-deposit was not warranted. Having reached the said conclusion the DRAT was expected to issue a positive direction to Respondent Nos.2 and 3 to deposit such 40% amount towards pre-deposit so that the Appeal could be registered and then take up the Application for interim relief and the Appeal for further consideration. (emphasis supplied)
9.……………………………………………
10.We find that the aforesaid approach adopted by the DRAT suffers from serious procedural irregularity and infirmity. It appears that the DRAT proceeded on an assumption that the moment a pre-deposit direction was issued in an Application seeking waiver thereof, the interim relief would follow as a matter of course upon the amount so directed to be deposited, in fact being deposited by the Appellants (Respondent Nos.2 and 3 herein). We find that the approach of the DRAT is unsustainable.”
In re Anil Pawar Case (Supra) the Hon’ble High Court has castigated the approach of DRAT of granting stay or interim relief before the registration of the appeal on deposit of mandatory pre-deposit under Section 18 of the SARFAESI Act for filing of the appeal.
It would be important to revisit Section 18 of the Act.
It reads:
“18. Appeal to Appellate Tribunal.—(1) Any person
aggrieved, by an order made by the Debts Recovery Tribunal [under section 17, may prefer an appeal alongwith such fee, as may be prescribed] to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal:
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.
(2)…………………………………………………………… ……”
In view of the proviso to section 18 of the SARFAESI Act and observations of the Hon’ble High Court of Bombay in re “Anil Kumar Pawar” (Supra), this Appellate Tribunal is of the considered view that an appeal and application for interim relief can only be heard and decided only after registration of appeal on mandatory pre-deposit under section 18 of the SARFAESI Act. That is to say that before registration of an appeal on deposit of an amount as per section 18 of the ‘Act’, no Appeal or any Interlocutory Application therein can be entertained. Hence, no interim stay can be granted at this stage before registration of the Appeal and the interim stay application after depositing the mandatory amount under section 18 of the SARFAESI Act.
If the deposit is made as stated in para 8 above on or before 25.09.2026, list the Appeal on the date already fixed i.e. 20.11.2026 for reporting compliance and hearing.
In the event of failure to deposit the said amount till 25.09.2026, the Appeal shall stand dismissed automatically without further reference to this Appellate Tribunal.