M/s MRB Roadconst. Pvt.Ltd. v/s Rupee Co-op. Bank Ltd. Bombay High Court

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
REVIEW PETITION NO.78 OF 2015
IN
WRIT PETITION NO.6778 OF 2014


M/s MRB Roadconst. Pvt.Ltd. ... Petitioner
v/s
Rupee Co-op. Bank Ltd. ... Respondent

Mr M.K. Shah for the Petitioner.
Mr Pratap Patil for the Respondent Bank.

CORAM :V.M. KANADE &  B.P. COLABAWALLA JJ.
Reserved On : 21st January, 2016
Pronounced On : 5th February, 2016
Judgment [ Per B. P. Colabawalla J. ] :-

1. This Review Petition seeks review of the order dated
10th June, 2015 passed by us in the above Writ Petition. On the
date when the order under review was passed, none appeared on
behalf of the Petitioner. We had perused the order passed by this
Court on 21st July, 2014 when this Court had granted time to the
Petitioner to deposit the amount of Rs.20,00,000/- in the Debt
Recovery Appellate Tribunal (for short, the “DRAT”), Mumbai
until further orders. The appeal filed by the Petitioner before the
DRAT was still pending. In this view of the matter, we had
extended the time granted by the DRAT for a further period of four
weeks with a direction that if the said amount of Rs.20,00,000/-
was not deposited in the aforesaid time, the appeal filed before the
DRAT, Mumbai would stand dismissed. With this direction, the Writ
Petition was disposed of. Thereafter, the learned counsel for the
Petitioner appeared before us and submitted that this order may be
reviewed as he was not heard before passing the said order. Since
this order was passed in the morning session, we had stated that
the Petitioner was at liberty to apply for review of this order by
filing an appropriate application. It is in this light that the Review
Petition has been filed before us.
2. Since the grievance of the Petitioner is that he was not
heard before passing the order dated 10th June, 2015 and the
issues raised by the Petitioner have not been dealt with by us in the
said order, we have heard Mr. Shah, the learned counsel for the
Petitioner, at length to examine whether the order dated 10th June,
2015 is required to be reviewed by us.
3. The learned counsel appearing on behalf of the Review

Petitioner submitted that the order dated 30th June, 2014 passed
by the DRAT, Mumbai in Miscellaneous Application No.237 of 2010
in Appeal No.197 of 2010 was perverse and illegal as it was
contrary to the mandate of section 18 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for short, the “SARFAESI Act”). We must
mention here that the above referred Miscellaneous Application
was a waiver application filed by the Petitioner seeking full waiver
of deposit. By its order dated 30th June 2014, the DRAT, after
hearing the parties, directed the Petitioner to deposit a sum of
Rs.20,00,000/- with the Registrar of the DRAT within a period of
eight weeks in two equal installments. It was further directed that
if the aforesaid deposit was not made, the appeal would stand
dismissed. It is the correctness of this order that has really been
put in issue before us.
4. Before we deal with the contentions raised by the
Petitioner, it would be appropriate to briefly narrate the facts. In
the year 2003, the Petitioner – Company had availed of a cash
credit facility from the Respondent – Bank to the tune of
Rs.75,00,000/- vide Cash Credit Account No.147. The aforesaid

facility was secured by mortgage of immovable as well as
hypothecation of movable property. The immovable properties
mortgaged was land admeasuring about 32.5R, situated at Survey
No.65, Hissa No.5 (old Survey No.829, Hiss No.5) and land
admeasuring of 1H and 57.7R situated at Chovishwadi, Taluka
Haveli, District Pune (hereinafter referred to as the “mortgaged
properties”).
5. Admittedly, the Petitioner defaulted in repayment and
therefore the Respondent – Bank obtained a Recovery Certificate
against the Petitioner under section 101 of the Maharashtra Cooperative
Societies Act, 1960. Thereafter in the year 2006, the said
Cash Credit Account was transferred to a separate ledger
maintained by the Bank for defaulted accounts in which a decree /
recovery certificate had been obtained.
6. The Petitioner admittedly did not make any payment to
satisfy the recovery certificate issued against it. As on 31st July,
2007 the total outstanding amount due to the Respondent – Bank
was Rs.96,14,085.61. In this view of the matter, the Respondent –
Bank initiated proceedings under the provisions of the SARFAESI

Act by issuing a notice under section 13(2) thereof on 14th August,
2007. In the said notice the Petitioner was called upon to pay the
said sum of Rs.96,14,085.61 (as on 31st July, 2007) together with
interest thereon within 60 days of receipt of the said notice failing
which the Respondent – Bank would proceed to take measures
under section 13(4) of the SARFAESI Act. As the Petitioner did not
comply with the requisitions contained in the section 13(2) notice,
the Respondent – Bank proceeded to take possession of the
mortgaged properties on 15th February, 2008 under section 13(4)
of the SARFAESI Act. Being aggrieved by this action of the
Respondent – Bank, the Petitioner filed Securitisation Application
No.28 of 2008 under section 17 before the Debt Recovery Tribunal
(for short, the “DRT”), Pune raising several grounds therein. To
the aforesaid Securitisation Application, the Respondent – Bank
also filed its affidavit in reply inter alia contending that there was
no merit in the Securitisation Application and that the same ought
to be dismissed. After hearing the parties, the DRT, Pune, by its
detailed reasoned order dated 13th January, 2010 dismissed the
Securitisation Application filed by the Petitioner.
7. Being aggrieved by this order of the DRT, Pune, the

Petitioner filed an appeal under section 18 of the SARFAESI Act
before the DRAT, Mumbai in around 4th March, 2010. Along with
the said appeal, the Petitioner also filed a Misc Application for
waiver of deposit as contemplated under the 2nd and 3rd provisos to
section 18 and sought a full waiver of deposit. It was the contention
of the Petitioner that there was no amount determined by the DRT,
Pune under section 17 and therefore according to the Petitioner,
nothing was due from it as required under section 18 of the
SARFAESI Act. In these circumstances, the Petitioner sought a full
waiver of deposit. The relevant averments in the said waiver
application read as under:-
“That appellant has filed the present appeal challenging the order
of the DRT, Pune, dismissing securitization application of the
appellant. Therefore, in fact there is no any necessity to deposit
any amount as required by law. As there is no any amount
determined under sec.17 by DRT there cannot be said any dues.
Therefore the said condition of deposit of amount is required to be
waived.”
8. After hearing the Petitioner as well as the Respondent –
Bank, the DRAT, Mumbai passed its order dated 30th June, 2014
wherein, after giving credit of the amounts already deposited by the
Petitioner with the Respondent – Bank, the DRAT directed the
Petitioner to deposit a sum of Rs.20,00,000/- within a period of
eight weeks in two equal installments, failing which the appeal of

the Petitioner would stand dismissed.
9. For the sake of completeness, it would not be out of
place to mention that after the issuance of the notice dated 14th
August, 2007 under section 13(2) of the SARFAESI Act, no
payments were made by the Petitioner till 28th February, 2012.
The outstanding dues of the Respondent – Bank as on 29th
February, 2012 was to the tune of Rs.1,65,36,770.61. The
Petitioner had deposits with the Respondent – Bank of
Rs.5,29,441/- which were forfeited by it on the said date and credit
for the same was given to the Petitioner. Thereafter, one of the
guarantors to the transaction (Mr K.P. Malkani) sold one of the
mortgaged properties with the consent of the Respondent – Bank
and the sale proceeds thereof to the tune of Rs.1,18,00,000/- were
deposited with the Respondent – Bank on 24th March, 2012. After
giving credit for the aforesaid amount, the outstanding dues of the
Respondent – Bank as on 24th March, 2012 were Rs.52,24,200.16.
It is also common ground before us that after 24th March, 2012 no
amount has been deposited/paid by the Petitioner. In the affidavit
in reply to this Review Petition, it is the case of the Respondent –
Bank that as on 17th July 2015, the total outstanding dues of the
Petitioner (after giving credit of all amounts paid/deposited) are to

the tune of Rs.63,48,914.61.
10. Be that as it may, since the outstanding amounts as on
31st March, 2012 were Rs.52,14,200.61, the DRAT, Mumbai took
the aforesaid figure into consideration before ordering the
Petitioner to deposit a sum of Rs.20,00,000/- for the purposes of
entertaining its appeal under section 18 of the SARFAESI Act.
Needless to mention that this amount of Rs.20,00,000/- is less than
50% of the figure of Rs.52,24,200.61.
11. In this factual backdrop, Mr Shah, learned counsel
appearing on behalf of the Petitioner, submitted that admittedly the
Petitioner had deposited a sum of Rs.1,23,29,441/- (Rs.5,29,441/ +
Rs.1,18,00,000/-) with the Respondent – Bank against the amount
claimed in the section 13(2) notice of Rs.96,14,985.61. He
therefore submitted that having deposited amounts with the
Respondent – Bank more than what was claimed in the section
13(2) notice, the DRAT ought to have directed full waiver of deposit
and not put the onerous condition of a further deposit of
Rs.20,00,000/- as was sought to be done in its order dated 30th
June, 2014. He submitted that as per the provisions of section 18
and more particularly the 2nd proviso thereto, no appeal could be

entertained unless the borrower had deposited with the DRAT 50%
of the amount of debt due from him, as claimed by the secured
creditors or determined by DRT, whichever was less. According to
Mr Shah, admittedly in the present case, there was no
determination of the debt by the DRT. In this view of the matter,
Mr Shah submitted that the Petitioner was required to deposit with
the DRAT 50% of the amount of the debt due from the Petitioner as
claimed by the secured creditor (the Respondent – Bank in the
present case). According to Mr Shah, the amount claimed by the
Respondent – Bank in the section 13(2) notice was
Rs.96,14,085.61. After this, the Petitioner had deposited with the
Respondent – Bank a sum of approximately Rs.1,23,00,000/- and
therefore the Petitioner was not required to deposit any further
amount as stipulated in the 2nd proviso to section 18. To put it
simply, it was the argument of Mr Shah that the amount that is to
be taken into consideration for the purposes of ordering deposit
under section 18 of the SARFAESI Act would be the amount claimed
in the section 13(2) notice alone and not the accrued interest on
the said sum thereafter. For all the aforesaid reasons, Mr Shah
submitted that the order of the DRAT directing the Petitioner to
deposit a sum of Rs.20,00,000/- was perverse, illegal and contrary
to the statutory mandate as set out in the 2nd proviso to section 18

of the SARFAESI Act. This being the case, Mr. Shah submitted that
the order dated 10th June, 2015 passed by us needed to be reviewed
and the reliefs sought for in the Writ Petition ought to be granted in
favour of the Petitioner and the order of the DRAT dated 30th June,
2014 is required to be quashed and set aside. In support of the
aforesaid proposition, Mr Shah relied upon the following decisions:-
(i) Sivakumar Textiles v/s Debt Recovery
Appellate Tribunal, Chennai and others;1
(ii) Poonam Manshani v/s J. & K. Bank Ltd. and
another;2 and
(iii) Narayan Chandra Ghosh v/s UCO Bank and
others.3
12. The short but interesting question posed for our
consideration is what sum (claimed by the secured creditor) is to be
taken into consideration by the DRAT whilst determining the
amount that ought to be deposited by the borrower under section
18 of the SARFAESI Act (before its appeal can be entertained).
Would it be (i) on the basis of the amount claimed by the secured
creditor in the section 13(2) notice alone or (ii) whether the DRAT
also has to take into account the interest accrued on the said sum

till the date of filing of the appeal.
13. To understand the present controversy, it would be
necessary to refer to the provisions of section 18 of the SARFAESI
Act. Section 18 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 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 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) 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.”
(emphasis supplied)
14. Section 18(1) provides that any person aggrieved by any order made by the DRT under section 17, may prefer an appeal to the DRAT within 30 days from the date of receipt of the order of
the DRT. The 1st proviso stipulates that different fees may be
prescribed for filing an appeal by a borrower and by a person other
than the borrower. The 2nd proviso, and which is really germane for
our purposes, inter alia stipulates that no appeal shall be
entertained unless the borrower has deposited with the DRT fifty
per cent of the amount of debt due from him as claimed by the
secured creditors, or determined by the DRT, whichever is less.
The 3rd proviso gives power to the DRAT to reduce the deposit
amount from 50% to 25% provided reasons for the same are
recorded in writing by the DRAT. As stipulated in the 3rd proviso,
the DRAT has no power to reduce the amount of deposit less than
25% of the debt referred to in the 2nd proviso. Section 18(2)
stipulates that save or otherwise provided in the Act, the DRAT
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 (for short, the “RDDB Act”) and the Rules
made thereunder.
15. Since the 2nd proviso to section 18 stipulates that the
borrower has to deposit 50% of the amount of debt due from him, it
would also be apposite to refer to the definition of the word “debt”
appearing in section 2(ha) of the SARFAESI Act and which reads as
under :-
“(ha) 'debt' shall have the meaning assigned to it in clause (g) of
section 2 of the Recovery of Debts Due to Banks and Financial
Institutions Act 1993 (51 of 1993);”
16. As can be seen from the definition, the word “debt” shall
have the meaning assigned to it in clause (g) of section 2 of the
RDDB Act. Section 2(g) of the RDDB Act reads thus:-
“(g) “debt” means any liability (inclusive of interest) which is
claimed as due from any person by a bank or a financial institution
or by a consortium of banks or financial institutions during the
course of any business activity undertaken by the bank or the
financial institution or the consortium under any law for the time
being in force, in cash or otherwise, whether secured or unsecured,
or assigned, or whether payable under a decree or order of any
civil court or any arbitration award or otherwise or under a
mortgage and subsisting on, and legally recoverable on, the date
of the application;”
17. On an ex-facie reading of the said definition, it is clear
that the word “debt” has been given an extremely wide meaning
and means any liability (inclusive of interest) which is claimed as
due from any person by a bank or a financial institution during the
course of any business activity undertaken by such bank or
financial institution under any law for the time being in force, in

cash or otherwise, whether secured or unsecured, or assigned, or
whether payable under a decree or order of any civil court or any
arbitration award or otherwise or under a mortgage and subsisting
on, and legally recoverable on, the date of the application.
18. On a plain reading of the 2nd proviso to section 18(1) of
the SARFAESI Act read with the definition under the word “debt” as
defined in section 2(g) of the RDDB Act, it is clear that before an
appeal can be entertained by the DRAT, the borrower has 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. If there is
no determination of the debt by the DRT under the provisions of the
RDDB Act, then the borrower would have to deposit 50% of the
amount of debt due from him as claimed by the secured creditors.
The provision on a plain reading does not in any way exclude taking
into consideration the future interest that is accrued on the debt
owed by the borrower to the secured creditor. In fact, the definition
of the word “debt” means any liability (inclusive of interest) which
is claimed as due from any person by a bank or a financial
institution. Therefore, if the claim made by the secured creditor in
the section 13(2) notice includes future interest, the same would
certainly be included in the “amount of the debt due” from the
:
borrower to the secured creditor as contemplated under the 2nd
proviso to section 18(1) of the SARFAESI Act. There is therefore
no justification to hold that it is only the figure that is mentioned in
the section 13(2) notice that is to be taken into consideration and
not the future interest accrued on the said sum, whilst determining
the deposit amount under the 2nd proviso to section 18 of the
SARFAESI Act. The amount of deposit would have to be determined
on the basis of the amount of debt due by the borrower to the
secured creditor on the date when the appeal is filed in DRAT. This
would not only include the amount mentioned in the section 13(2)
notice but also interest accrued thereon till the date of filing of the
appeal under section 18 of the SARFAESI Act. To our mind, this is
the only interpretation that is possible of the 2nd proviso to section
18 of the SARFAESI Act. If we were to accept the contention of the
Petitioner that the amount to be deposited by the borrower [under
the 2nd proviso to section 18(1)] would be only on the basis of the
sum/figure as mentioned in the section 13(2) notice and not the
interest accrued thereon after the date of the said notice, the same
would be violating the plain language of the statute. To interpret the
2nd proviso to section 18(1) in this fashion, to our mind, would
clearly violate the plain and unambiguous language of the said
section.

19. We must mention here that after the issuance of the
notice under section 13(2) and before the appeal is filed in the
DRAT under section 18 of the SARFAESI Act, if the borrower has
made any part payment of the debt due to the secured creditors,
then credit for the same would have to be given to the borrower and
for the purposes of deposit under the 2nd proviso to section 18(1),
the reduced amount (after giving credit) would have to be taken
into consideration for determining the amount required to be
deposited by the borrower. This is simply because on the date of
filing of the appeal, the debt due to the secured creditor would be
reduced after giving credit for the amount already paid.
20. In the view that we have taken we are also supported by
a decision of another Division Bench of this court in the case of
Godavari Laxmi Co-Op. Bank Ltd. Vs. Union of India and
another.4 The facts of the case were that Respondent No. 2 therein
was the borrower of the Petitioner – Godavari Laxmi Cooperative
Bank Ltd., and had filed proceedings under section 17 of SARFAESI
Act consequent to the issuance of a notice under section 13(4)
thereof. By judgment and order dated 7-3-2011, the DRT,

4 (2012) 4 Mh L J 472

Aurangabad dismissed the Securitisation Application of Respondent
No.2. Being aggreived thereby, Respondent No. 2 preferred an
appeal under the provisions of section 18 of the SARFAESI Act
before the DRAT, Mumbai along with an application seeking waiver
of deposit as prescribed under section 18(1) thereof, on 24-3-2011.
By an order dated 27-4-2011 the DRAT allowed the application filed
by Respondent No. 2 by observing that Respondent No. 2 cannot be
asked to deposit any more amount and no amount is required to be
deposited under section 18(1) of SARFAESI Act. In this factual
backdrop the Division Bench held as under:-
“7. The learned counsel appearing for respondent No. 2 submits
that proceedings were initiated before the Debt Recovery Tribunal,
Aurangabad consequent to the notice issued by the petitioner
under section 13(4) of the Act, 2002. Section 13(4) of the Act of
2002 relates to the amount claimed by the bank in notice issued
under section 13(2) of the Act of 2002. The counsel further submits
that in the possession notice, the petitioner bank had referred to
outstanding amount of Rs. 45,61,459.54 + interest and the present
outstanding amount of Rs. 24,61,985.54 + interest + expenses as
on 30-11-2009. It is submitted that even if these two figures of
amount claimed are clubbed together, it can be ascertained that
the respondent No. 2 having paid 41.50 lakhs in favour of the
petitioner bank, the pre condition for entertaining Appeal under
section 18 by Appellate Tribunal gets satisfied. In other words, the
respondent No. 2 claims that having deposited 50% of the amount
due from respondent No. 2 his Appeal filed before Appellate
Tribunal shall be entertained without calling upon the respondent
No. 2 to deposit any further amount.
8. We have perused the original record and proceedings, the
impugned order, reply filed by respondent, and the relevant notice
issued by the petitioner to the respondent No. 2. We have perused
the judgment cited supra.

9. There is no dispute between the parties that the bank had issued
notice under section 13(2) of the Act of 2002 on 11-5-2007. The
petitioner-bank had also resorted to measures as prescribed under
section 13(4) of the Act of 2002 by issuing a possession notice on
26-12-2009. The bank is entitled under section 13(4) of the Act of
2002 to take recourse to measures provided under the said
provisions to recover the secured debt on failure of borrower to
discharge his liability in full within the period specified in subsection
(2) of the Act.
10. In the facts of the case and considering the notice issued under
section 13(2) of the Act of 2002, we find that the petitioner bank
had claimed as present outstanding, an amount of Rs. 24,61,985.54
Ps. and accordingly, the charge was kept upon the subject property
by intimating public in general. The bank had described the
immovable property over which the charge was kept in the notice
issued under section 13(4) on 26-12-2009. Under the provisions of
section 17 of the Act of 2002, any person aggrieved by any of the
measures referred to in sub section 4 of section 13, is entitled to
approach D.R.T. Under the provisions of section 18 of the said Act,
any person aggrieved by any order passed by D.R.T. under section
17 may prefer an appeal along with such fees as may be
prescribed. The second proviso to section 18 of the said Act
provides that no appeal shall be entertained unless the borrower
has deposited with the Appellate Tribunal 50% of the amount of
debt due from him as claimed by the secured creditor
(emphasis supplied).
11. In the facts of the present case and considering the notice
issued by the petitioner bank to respondent No. 2 it is clear that the
amount due and claimed by the petitioner from respondent No. 2
for the purposes of entertaining the appeal by Appellate Tribunal
would be amount of Rs. 24,61,985.54 Ps.”
(emphasis supplied)
21. Applying the principles of law laid down earlier, we will
now examine whether the DRAT was justified in ordering the
Petitioner to deposit a sum of Rs.20,00,000/-. As set out above, the

section 13(2) notice issued by the Respondent – Bank to the
Petitioner was dated 14th August, 2007. In the said notice the
amount claimed as due from the Petitioner was Rs.96,14,085.61
together with future interest. From the date of the section 13(2)
notice (i.e. 14th August, 2007) to 28th February 2012, admittedly no
payments were made by the Petitioner. As on 29th February, 2012
the outstanding dues owed by the Petitioner along with the interest
accrued thereon came to Rs.1,65,36,770.61. On the very same date
(i.e. 29th February, 2012), the Respondent – Bank forfeited the
deposits of the Petitioner lying with it in the sum of Rs.5,29,441/-
and gave credit for the same in the loan account. Thereafter, one of
the guarantors (viz. Mr K.P. Malkani) sold one of the mortgaged
properties with the consent of the Respondent – Bank and the sale
proceeds thereof to the tune of Rs.1,18,00,000/- were deposited
with the Respondent – Bank on 24th March, 2012. After giving due
credit for the aforesaid amounts (Rs.5,29,441/- plus
Rs.1,18,00,000/-), the amount outstanding as on 24th March, 2012
was Rs.52,24,200.16. Admittedly, no further payments were made
by the Petitioner. The DRAT has taken into consideration this
figure of Rs.52,24,200/- for determining the amount that had to be
deposited under the 2nd proviso to section 18(1) of the SARFAESI
Act. It is pertinent to note that the appeal and the waiver

application preferred by the Petitioner before the DRAT, were filed
on 4th March, 2010. On the said date, the outstanding of the
Respondent – Bank was in excess of Rs.96,14,085/- as no payments
were made by the Petitioner between the date when the section
13(2) notice was issued (14th August, 2007) and the date of filing of
the appeal and waiver application (4th March, 2010). However, this
waiver application was heard by the DRAT on 30th June 2014. By
the time, the DRAT heard the waiver application, the Petitioner had
made part payments of Rs.1,23,00,000/- (approximately) towards
its debt due to the Respondent - Bank. It is in this view of the
matter that the DRAT whilst determining the amount to be
deposited under the 2nd proviso to section 18(1) of the Act took into
consideration the figure of Rs.52,14,200/-. Looking to these facts
and the clear language of the 2nd proviso to section 18(1) of the
SARFAESI Act, we do not think that the DRAT committed any error
in directing the Petitioner to deposit a sum of Rs.20,00,000/- with
the Registry of the Appellate Tribunal within a period of eight
weeks from the date of the said order in two equal installments. We
find that the said order is not only in conformity with the provisions
of section 18 of the SARFAESI Act but does complete justice
between the parties as it gives credit for the amounts paid by the
Petitioner to the Respondent – Bank before directing the Petitioner

to deposit a sum of Rs.20,00,000/- as a condition precedent to
entertaining its appeal. In this view of the matter, we do not think
that any case has been made out by the Petitioner for review of our
order dated 10th June, 2015.
22. Having said this, we shall now deal with the judgments
relied upon by Mr Shah. The first judgment relied upon by Mr Shah
was a decision of the Madras High Court in the case of Sivakumar
Textiles1. On careful perusal of the aforesaid decision, what can be
culled out therefrom is that the amount of “debt due from the
borrower as claimed by the secured creditor” would have no other
meaning except the amount claimed in the notice under section
13(2). We have no difficulty in accepting the aforesaid proposition.
However, the question still remains whether the amount claimed in
the 13(2) notice would be inclusive of future interest or otherwise.
If the claim for future interest has been made in the notice under
section 13(2), then the same would certainly have to be taken into
account for determining the figure that would be required to be
deposited by the borrower before his appeal can be entertained.
This is more so when one looks at the definition of the word “debt”
as defined under the SARFAESI Act which means any liability

1 AIR 2012 MADRAS 57

inclusive of interest claimed as due from any person by a bank or
financial institution during the course of any business activity
undertaken by the said bank or financial institution. We must also
mention that on a close scrutiny of the said decision, we do not find
any reference being made to the definition of the word “debt”
appearing in section 2(ha) of the SARFAESI Act. We therefore find
that this decision would not carry the case of the Petitioner any
further.
23. The second judgment relied upon by Mr Shah was a
decision of the Delhi High Court in the case of Poonam Manshani.2
It appears from the said decision that the Delhi High Court has
taken a view that the expression “amount of debt due from him, as
claimed by the secured creditors or determined by the Debts
Recovery Tribunal, whichever is less” would have to be determined
ignoring the interest component. On a close scrutiny of the
aforesaid decision, we find no reference in the same to the definition
of the word “debt” as defined under the provisions of the SARFAESI
Act. As mentioned earlier, the word “debt” means any liability
inclusive of interest claimed as due from any person by a bank or
financial institution during the course of any business activity

2 AIR 2010 DELHI 28

undertaken by the said bank or financial institution. When interest
is specifically included in the definition of the word “debt”, we see
no reason why the same ought to be excluded whilst determining
the amount that is to be taken into consideration for the purpose of
arriving at the figure to be deposited by the borrower under the 2nd
proviso to section 18(1) of the SARFAESI Act. In fact, on a perusal
of the said judgment, we do not find any reason given for making
such an exclusion. We, therefore, with great respect to the Delhi
High Court, are unable to agree with the ratio laid down in the
aforesaid decision.
24. The last judgment relied upon by Mr Shah was a
decision of the Supreme Court in the case of Narayan Chandra
Ghosh.3 We find that the reliance placed on this decision is wholly
misplaced. The issue before the Supreme Court in the aforesaid
decision was whether the DRAT had jurisdiction to exempt the
borrower preferring an appeal under section 18 of the Act from
making any pre-deposit in terms of the said provision. In other
words, the issue before the Supreme Court was whether the DRAT
had the power to grant a full waiver or whether it can waive only to
the extent of 25% as set out in the 3rd proviso to section 18(1) of the

3 (2011) 4 SCC 548 : AIR 2011 SC 1913

SARFAESI Act. This is clear from paragraphs 7, 8 and 9 of the said
decision and which read as under:-
“7. 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. However, the right conferred under Section 18(1) is
subject to the condition laid down in the second proviso thereto.
The second proviso postulates 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. However, under the third proviso to the subsection,
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.
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 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 of no ambiguity.
8. 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 subsection
(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. We
have no hesitation in holding that deposit under the second proviso
to Section 18(1) of the Act being a condition precedent for
preferring an appeal under the said section, the Appellate Tribunal
had erred in law in entertaining the appeal without directing the
appellant to comply with the said mandatory requirement.

9. The argument of the 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 sub-section (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. Therefore, the
condition of pre-deposit being mandatory, a complete waiver of
deposit by the appellant with the Appellate Tribunal, was beyond
the provisions of the Act, as is evident from the second and third
provisos to the said section. At best, the Appellate Tribunal could
have, after recording the reasons, reduced the amount of deposit of
fifty per cent to an amount not less than twenty-five per cent of the
debt referred to in the second proviso. We are convinced that the
order of the Appellate Tribunal, entertaining the appellant's appeal
without insisting on pre-deposit was clearly unsustainable and,
therefore, the decision of the High Court in setting aside the same
cannot be flawed.”
25. We fail to see how this decision in any way advances the
case of the Petitioner. The issue raised before us was not an issue at
all before the Supreme Court and therefore the said judgment is
wholly inapplicable in the present case.
26. For the reasons stated earlier in this judgment, we do
not find anything illegal and / or perverse in order dated 30th June,
2014 passed by the DRAT. Consequently, we do not find any error
in our dated 10th June, 2015 requiring interference in review
jurisdiction. The Review Petition is accordingly dismissed.
However, in the facts and circumstances of the case, we leave the
parties to bear their own costs.
(B. P. COLABAWALLA, J.) (V. M. KANADE J.)