The Division Bench of Bombay High Court comprising Justices Nitin Jamdar and Abhay Ahuja was hearing petitions filed by the the secured creditor challenging the DRAT decision to grant a waiver of mandatory pre-deposit to the appellant, and held that the complete waiver of the pre-deposit requirement under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 should not be granted without sufficient reasons and prima facie merit, and an unreasoned order in this regard must be quashed and set aside.
The High Court disposed of two writ petitions that arose from the same order, which challenged the Debt Recovery Appellate Tribunal's (DRAT) decision to grant a waiver of mandatory pre-deposit to the appellant. The case involved Canara Bank (secured creditor), Yogoda Satsanga Society of India (auction purchaser of the secured asset), and the original appellant.
The Bank had filed a suit for recovery of dues, which was transferred to the DRT. During the proceedings, the original defendant passed away, and his legal heirs, including the appellant, were brought on record.
The Bank moved for attachment and proposed the sale of the attached properties. The appellant filed an application and subsequent review application, which were rejected. The auction took place, and the appellant filed an appeal before the DRT along with an application seeking a waiver of the deposit. The DRT dismissed the appeal without considering the waiver application.
The property was sold to the auction purchaser, and the appellant filed another appeal seeking a complete waiver, which the DRAT granted.
The High Court found that the complete waiver was not supported by adequate reasons and lacked prima facie merit. The High Court set aside the DRAT's order and restored the waiver application to be decided on its merits. Both writ petitions were disposed of accordingly.