The Debts Recovery Appellate Tribunal (DRAT), Allahabad Bench held that the amount claimed in the demand notice under section 13(2) of the SARFAESI Act, is relevant for determining the pre-deposit requirement under section 18 of the Act.
The present appeal was filed under section 18 of the SARFAESI Act against the judgment dated 22/09/2022 of the DRT Ranchi, which dismissed S.A. No. 32/2018 filed by the appellant. The appellant, one of the partners of M/s Bhaskar Electric Company, had taken credit facilities from the respondent bank with Smt. Sushma Devi and the appellant acted as guarantors, and an equitable mortgage was created over their properties. As the loan was not repaid, the account was classified as an NPA, and the outstanding dues of the bank amounted to Rs. 1,47,48,616.37.
The respondent bank filed O.A. No. 4/2006 for recovery, and during its pendency, issued demand and possession notices under the SARFAESI Act. The borrower firm moved an application seeking direction for the Bank to accept the balance amount of OTS along with interest, which led to a series of litigations and interim orders.
The property was eventually sold for Rs. 1,74,37,000/- in an auction, and the recovery certificate was issued to the bank. The borrower firm challenged the sale notice, demand notice, and possession notice in separate proceedings, but those challenges were unsuccessful.
The appellant, another partner of the borrower firm, challenged the sale certificate issued after the auction, but the challenge was dismissed by the Tribunal below. The main contention in the present appeal was the pre-deposit requirement under section 18 of the SARFAESI Act.
The appellant argued that the pre-deposit amount should be based on the amount claimed in the demand notice under section 13(2) of the SARFAESI Act, while the bank contended that the amount due as determined by the Tribunal in the original application should be considered.
The DRAT, considering recent judgments of the Supreme Court, held that the amount claimed in the demand notice is relevant for the purpose of making a pre-deposit. Since the amount decreed by the Tribunal was more than the amount claimed in the demand notice, the appellant had already deposited more than 30% of the demand raised by the bank. As the property had already been sold, and the appellant deserved some relaxation, the Tribunal waived the rest of the amount of pre-deposit.
Therefore, the appellant was not required to deposit any further amount towards the pre-deposit for maintaining the appeal, and the waiver application was allowed. The case was listed for reply on 02/08/2023.