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TMI Blog2019 (12) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... sation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act). Section 21 of the RDB Act is more or less identical to Section 18 of SARFAESI Act. In both provisions, for an appeal to be entertained before the DRAT, it is mandatory for the Appellant to make a pre-deposit of 50% of the amount of debt due from such Appellant. While under the RDB Act the amount of debt is that determined by the DRT, under the second proviso to Section 18(1) of the SARFAESI Act it could be 50% of the amount of debt as claimed by the secured creditors or determined by the DRT, whichever is less - In either instance there is no discretion with the DRAT to waive the pre-deposit. Unlike Section 21 of the RDB Act, the first proviso to Section 35F of the CE Act requires the Commissioner (Appeals) or the CESTAT to consider if the deposit of duty demanded or penalty levied would cause undue hardship to such person‟ and gives the power to the Commissioner (Appeals) or the CESTAT to dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of the revenue.‟ This discretionary power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraudulently procured the aforementioned corporate guaranteed from the Petitioner, knowing fully well the precarious financial conditions of Bush Foods. The Petitioner filed CS (OS) (COMM) No. 9 of 2018 in this Court seeking inter alia refund of the sums paid by it to the consortium bank members. An interim order dated 14th September 2018 was passed in the said suit, where inter alia it was observed that within 8 - 9 months of taking over Bush Foods, the Plaintiffs have lost ₹ 442 plus about ₹ 800 crores of investment in a dead company i.e. about ₹ 1242 crores. Prima facie it appears that that the Plaintiffs have been cheated . The said order also noted that the payment of the amounts constituting 70% of the credit facilities advanced by the consortium banks to Bush Foods was not considered by the consortium bank to be a sufficient discharge of the amounts owed to them and that they had instituted proceedings before the Debt Recovery Tribunal (DRT) for recovery of ₹ 282 crores. The said interim order restrained the consortium banks from using any coercive methods against the Petitioner for recovery of the alleged dues. It further observed that in case the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making the pre-deposit in accordance with law. It was further directed by the DRAT that in case such deposit was made, it would be kept in fixed deposit for a period which should fetch the maximum rate of interest. Notice was issued in the appeal, subject to the Petitioner complying with the direction regarding pre-deposit. 8. Mr. N.K. Kaul, learned Senior Counsel appearing for the Petitioner, submits that it was unfair to call upon the Petitioner, which is a victim of fraud at the hands of the consortium banks, to pay any further sum to Respondent No.1, which is a successor-in-interest of ING Vysya Bank. He submitted that the Petitioner was a victim of cheating by Bush Foods in connivance with the consortium banks. The order of the DRT was plainly erroneous inasmuch as it made the Petitioner liable for a sum it did not owe in the first place. In the circumstances, the DRAT ought not to have imposed any pre-deposit requirement whatsoever on the Petitioner. 9. Mr. Kaul placed reliance on the decisions of the Division Benches (DBs) of this Court in Srishti Arogyadham Pvt. Ltd. v. Punjab National Bank 2018 SCC OnLine Del 12716 and Ambuj A. Kasliwal v. Kotak Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Enforcement of Securities Interest Act, 2002 (SARFAESI Act). The appeal to the DRAT from an order under the SARFAESI Act is in terms of Section 18 of the SARFAESI Act which 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id proviso is clear and admits of no ambiguity. 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 sub-section (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. (emphasis supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: 17. It is a conceded case of the respondents that none of the eventualities exist as the amount due to the Bank has been recovered. The application has been opposed by the respondents and decided by the DRAT primarily on an apprehension that since, the petitioner has challenged the auction, the same may be set aside. In other words, the sale remains in a nebulous stage and the sale will achieve finality/confirmed only when the legal proceedings come to an end. 18. This Court, therefore, proceeded entirely on the basis that no amount was due from the Petitioner in that case and that this was also the conceded case of the Respondents‟. 19. In the present case, there is no such concession by any of the Respondents and in particular from Respondent No.1 that no amount is due from the present Petitioner. Consequently, the aforementioned decision is of no assistance to the Petitioner. 20. Turning now to the decision in Ambuj A.Kasliwal v. Kotak Mahindra Bank Pvt. Ltd. (supra), it again appears to have turned on its peculiar facts. There appears to have been an earlier round where the Respondent bank had itself consented to hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of the revenue.‟ This discretionary power to waive the deposit is missing in Section 21 of the RDB Act. The decision in Benara Valves Ltd. v. Commissioner of Central Excise (supra) in fact interprets the expressions undue hardship to such person‟ and to safeguard the interest of the revenue‟ and points out that the rival stands have to be examined in detail with the reference to the material on record and that the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate condition as required to safeguard the interest of revenue. 23. Likewise the decision in Mehsana Dist. Co-Op. Milk P.U. v. Union of India (supra) also concerned an order of pre-deposit under Section 35F of the CE Act, which stands on an entirely different footing. These decisions, therefore, are also of no assistance to the Petitioner which is seeking a complete waiver of the pre-deposit under Section 21 of the RDB Act, when that provision does not give any discretion to the DRAT in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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