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2020 (3) TMI 76 - SC - Indian LawsCompliance with the requirement of pre-deposit - whether the High Court was right in directing that pre-deposit was not required for entertaining an appeal before the DRAT as mandated by Section 18 of the SARFAESI Act, 2002? - HELD THAT - The order of the High Court does not show any exercise of such discretionary powers but according to the High Court on an interpretation of the Section, predeposit was not required. We are also not impressed with the argument of Mr. Chaudhri that his client is not a borrower. A guarantor or a mortgagor, who has mortgaged its property to secure the repayment of the loan, stands on the same footing as a borrower and if he wants to file an appeal, he must comply with the terms of Section 18 of the SARFAESI Act. Also, the High Court has no powers akin to powers vested in this Court under Article 142 of the Constitution. The High Court cannot give directions which are contrary to law. Appeal allowed.
Issues:
1. Interpretation of Section 18 of the SARFAESI Act regarding pre-deposit requirement for appeal before the DRAT. Analysis: The judgment in question pertains to an appeal before the Supreme Court against a Bombay High Court order directing the appellant to avail the statutory remedy of appeal before the Debt Recovery Appellate Tribunal (DRAT) without requiring a pre-deposit. The main issue for determination was whether the High Court was correct in holding that pre-deposit was not necessary for entertaining an appeal before the DRAT as mandated by Section 18 of the SARFAESI Act. The case involved respondent no. 1, who stood as a guarantor and mortgaged property for a loan availed by others. The property was auctioned, and respondent nos. 2 and 3 emerged as the highest bidders. The respondent no. 1 objected to the sale, alleging collusion between bank officers and the bidders. The High Court initially rejected the petition, stating that pre-deposit was not required for appeal before the DRAT. The successful bidders filed review petitions challenging the High Court's direction on pre-deposit. The High Court, in its review order, mentioned that the nature of the order and the absence of a passed decree or fixed liability could affect the need for pre-deposit. Arguments were presented by counsels on both sides, with the appellant's counsel contending that the High Court's order was against the SARFAESI Act and established legal principles. The respondent's counsel argued that the High Court's decision was a valid exercise of discretionary jurisdiction under Article 226 of the Constitution. The Supreme Court clarified that it was not delving into the case's merits but focusing on the pre-deposit requirement. Referring to Section 18 of the SARFAESI Act and a previous case law, the Court emphasized that pre-deposit was mandatory for entertaining appeals before the DRAT. The Supreme Court concluded that the High Court's observation on pre-deposit was incorrect and set aside the High Court's orders. It reiterated that compliance with Section 18's pre-deposit provision was essential for appeal filing, regardless of the borrower's role. The Court emphasized that the High Court lacked the authority to deviate from legal requirements and highlighted that its powers did not extend to Article 142-like discretionary powers. The judgment directed the auction purchasers to deposit the balance amount by a specified date and allowed respondent no. 1 to file an appeal within a set timeframe without limitation concerns. Pending applications were disposed of, emphasizing adherence to the SARFAESI Act's pre-deposit mandate for DRAT appeals.
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