While deciding Eskays Constructions P Ltd v Soma Papers& Industries Ltd [MANU/MH/2565/2016], Mumbai High Court held that even
if the mortgaged properties have been sold by the secured creditor, DRAT cannot
grant a waiver of the deposit to be made for filing appeal against the DRT
order stipulated under Section 18 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002.
The High Court observed that the 2nd proviso
to Section 18(1) of the Act requires the borrower who wishes to prefer an
appeal against the Order of DRT, 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. The 3rd proviso to Section 18(1) gives a discretion to the
DRAT to reduce the aforesaid amount to not less than 25%, provided the DRAT
gives reasons for the same which are to be recorded in writing. The High Court
held that these provisions create a jurisdictional bar on the DRAT from
entertaining an appeal filed by the borrower from an order passed under Section
17, unless the borrower makes the deposit. High Court pointed out in its
Judgement that the words "debt due from him" have to be interpreted
consistent with the object and purpose sought to be achieved by the SARFAESI
Act. Unless the debt due is secured, the borrower cannot be allowed the luxury
of litigation.
High
Court had reached to this decision based on an earlier decision of Supreme
Court in this regard in Narayan Chandra Ghosh v. UCO Bank [(2011) 4 SCC
548] wherein the Supreme Court has clearly held that the provisions of Section
18, and more particularly the second and the third proviso thereto are
mandatory in nature and the DRAT has no power to grant full waiver of deposit.
High Court observed that if such a waiver is permitted the same would be defeating the very purpose for which Section
18 was enacted, which is to curb unnecessary and frivolous litigation.
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