2019 (10) TMI 1595 - HC - Indian Laws

Seeking waiver of the pre-deposit in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - rejection of application on the ground that Section 18(2) of the SARFAESI Act makes no distinction between an appeal filed against an interim order of the Debt Recovery Tribunal (DRT) and a final order - HELD THAT - The question before the DRAT therefore was whether it should entertain the Petitioner s application for waiver of the pre-deposit. The view taken by the DRAT that there could be no waiver of pre-deposit in terms of Section 18 of the SARFAESI Act appears to be incorrect in view of the decision of the Division Bench of this Court in Manju Devi and Ors. v M/s. R. B. L. Bank Ltd. and Ors. 2017 (4) TMI 476 - DELHI HIGH COURT . This Court in the said decision noted that the second proviso to Section 18(1) of the SARFAESI Act obligates the borrower to deposit with the DRAT 50% of the amount of debt due from him for the appeal, which may be filed either by the borrower or other party, to be entertained. The Court noted that if the said proviso had to be read literally to mean that such appeal would not be entertained, if neither the borrower nor the third person made the deposit then appeals by third persons would in effect and substance, be rendered nugatory for a third person, who would never be able to get his appeal entertained. On the facts of that case, which are similar to the facts in the present case, the petitioners therein were neither the borrowers nor the mortgagers or guarantors in respect of the loan facility availed by the principal borrower. In view of the legal position explained in Manju Devi this Court holds that the DRAT was in error in the present case in declining to entertain the prayer of the Petitioner for waiver of pre-deposit. It is the Petitioner s case that he is neither the principal borrower nor mortgager of the property in question and that issue has to await the consideration of the SA filed by him on the strength of the CFSL final report which is yet awaited. It may be noticed here that it is only an interim report of the CFSL that has been submitted before the DRT. The impugned order dated 8th February, 2018 passed by the DRT-I dismissing the Petitioner s application for condonation of delay is hereby set aside. The DRT-I is directed to take on record the affidavit of evidence and rejoinder filed by the Petitioner - Appeal disposed off.

Summary

Issues:
1. Application for waiver of pre-deposit under Section 18 of the SARFAESI Act.
2. Dismissal of application for condonation of delay by the Debt Recovery Tribunal (DRT).
3. Interpretation of Section 18 of the SARFAESI Act regarding waiver of pre-deposit.
4. Consideration of evidence and rejoinder filed by the Petitioner before the DRT.
5. Pending proceedings before the DRT and the need for expediting the final report from the Central Forensic Sciences Laboratory (CFSL).

Detailed Analysis:
1. The judgment deals with a writ petition challenging the Debt Recovery Appellate Tribunal's order rejecting the Petitioner's application for waiver of pre-deposit under Section 18 of the SARFAESI Act. The Petitioner disputed a demand notice issued under Section 13(2) of the SARFAESI Act, claiming no knowledge of the alleged borrowing. The court noted the importance of considering the borrower's status and the need for a fair hearing before dismissing such applications.

2. The Petitioner filed an application before the DRT seeking condonation of delay in filing evidence and rejoinder, which was initially declined by the DRT. The High Court set aside the DRT's order, emphasizing that the DRT had granted time for filing evidence and rejoinder, which needed to be considered in the interest of justice.

3. The judgment interprets Section 18 of the SARFAESI Act in light of a previous decision where the court held that the provision requiring a 50% deposit for appeals should not render appeals by third parties nugatory. The court emphasized that the borrower's status and involvement in the loan transaction should be considered before imposing pre-deposit conditions.

4. The court directed the DRT to accept the evidence and rejoinder filed by the Petitioner, highlighting the importance of ensuring a fair opportunity for presenting the case. The judgment underscores the need for a thorough examination of evidence and submissions before making decisions in matters related to financial disputes and enforcement of securities.

5. The judgment also addresses the pending proceedings before the DRT and the delay in receiving the final report from the CFSL. The court directed the CFSL to expedite the final report and transmit it directly to the DRT for independent consideration. The importance of timely resolution and access to relevant documents for all parties involved in the legal proceedings is emphasized throughout the judgment.