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Judgment
The present Application has been filed by the Appellant for seeking waiver/reduction of the statutory pre-deposit as mandated under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, for entertaining the Appeal.
The present Appeal has been preferred by the Appellants assailing the order passed by the Learned Debts Recovery Tribunal -II, Ahmedabad whereby the liability of the Appellants have been determined in favour of the Respondent Bank in respect of the outstanding dues arising out of the credit facilities availed by the Appellants. Aggrieved by the said order, the Appellants have approached this Appellate Tribunal by way of the present Appeal along with the waiver Application seeking waiver/reduction of the statutory pre-deposit and also filed Stay Application which is at I.A. Dy. No. 1863/2025 for seeking stay the order dated 15.10.2025 passed by DRT-II, Ahmedabad.
Learned Counsel for the Appellants would submit that the amount determined by the Learned Tribunal is excessive and not in accordance with law. It is further submitted that the Appellants are under severe financial hardship and is not in a position to comply with the statutory requirement of pre-deposit of 50% of the amount of debt due. However, it is submitted that the Appellants are willing to deposit a reasonable amount, without prejudice to his rights and contentions in the Appeal.
Per contra, the Respondent Bank has filed its reply opposing the waiver application. The reply is taken on record. Learned Counsel for the Respondent Bank submits that the liability has been duly adjudicated by the Tribunal and no case for waiver or substantial reduction has been made out. It is further submitted that the provisions of Section 21 are mandatory in nature and deserve strict compliance and amount of outstanding is ₹14,92,05,247/- as on 09.04.2026.
Heard the Learned Counsel for the parties and perused the material available on record, including the waiver application and the reply filed by the Respondent Bank.
It is a settled position of law that the requirement of pre-deposit under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 is mandatory in nature. However, the proviso to the said Section empowers this Appellate Tribunal to reduce the amount of pre-deposit, for reasons to be recorded in writing, but not below 25% of the amount of debt so due.
Considering the submissions advanced, the financial difficulty pleaded by the Appellants, the contents of the reply filed by the Respondent Bank, and without expressing any opinion on the merits of the case, this Tribunal is of the view that the ends of justice would be met by directing the Appellants to deposit 40% of ₹14,92,05,247/-which comes ₹5,96,82,099/- on or before 22.04.2026.
It is pertinent to note that 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.
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.
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 view of the observations of the Hon’ble High Court of Bombay in re “Anil Kumar Pawar” (Supra), no interim stay can be granted at this stage.
In the event of failure to deposit the amount of ₹5,96,82,099/-on or before 22.04.2026, the Appeal shall stand dismissed automatically without further reference to the Tribunal.
The amount shall be deposited in the form of a Demand Draft/RTGS/NEFT 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 Registrar, DRAT, Mumbai with any nationalised Bank, initially for 13 months, and thereafter to be renewed periodically.
With this observation, the I.A. is disposed of. The Respondent Bank is at liberty to file a reply to the grounds of the Appeal with an advance copy to other sides.
List the case on 06.05.2026 before the Ld. Registrar.