Legal Heirs of Deceased Guarantor Must Comply with Section 21 Pre-Deposit to Challenge DRT Recovery Proceedings: Delhi High Court
- REEDLAW
- Aug 4
- 3 min read
Updated: Aug 12
REEDLAW Legal News Network reports that the Delhi High Court has held that legal heirs of a deceased guarantor, who inherit mortgaged property, must mandatorily comply with the pre-deposit condition under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, to appeal DRT orders before DRAT—even if they were not parties to the original proceedings.
The Division Bench of the Delhi High Court, comprising Justice Subramonium Prasad and Justice Harish Vaidyanathan, while adjudicating a Writ Petition and connected Civil Miscellaneous Application, held that a legal heir who inherits a mortgaged property from a deceased guarantor is mandatorily required to comply with the statutory pre-deposit under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, in order to maintain an appeal before the Debt Recovery Appellate Tribunal (DRAT). The Court clarified that this requirement is non-waivable, even if the legal heir was not originally a party to the proceedings before the Debt Recovery Tribunal (DRT).
The Delhi High Court dismissed a writ petition filed by the widow of a deceased guarantor, who challenged the orders passed by the Debt Recovery Tribunal (DRT) and the Debt Recovery Appellate Tribunal (DRAT), wherein her appeal was declined for want of a mandatory pre-deposit under Section 21 of the RDB Act, 1993. The petitioner had sought relief against the sale of her mortgaged residential property, contending that she was neither a borrower nor a guarantor, and had no knowledge of the proceedings until the sale proclamation notice was served.
The Court examined the petitioner's claim that recovery proceedings were initiated against her late husband without impleading his legal heirs and that the DRT order was passed against a dead person. It was further contended that no valid notice under Section 13(2) of the SARFAESI Act had been issued to her or the deceased prior to initiation of recovery proceedings. However, the Court noted that both sons of the deceased, who were co-owners of the mortgaged property, were made parties to the DRT proceedings and that multiple notices had been served at the common residential address, which strongly indicated the petitioner's knowledge of the recovery process.
The Court held that the property in question stood mortgaged to the bank and was inherited by the petitioner and her sons. Since the petitioner sought to protect this mortgaged asset, she fell within the ambit of Section 21 and was therefore required to make the pre-deposit before her appeal could be entertained. It further found no illegality in the DRAT’s direction requiring such a deposit and rejected the plea that the petitioner was entitled to exemption. The Court also relied on precedents, including Kotak Mahindra Bank v. Ambuj A. Kasliwal and Narayan Chandra Ghosh v. UCO Bank, holding that statutory pre-deposit requirements are mandatory and not waivable.
On examining the overall conduct of the petitioner, the Court found that she had withheld material facts and that the writ petition was filed without clean hands, primarily to delay recovery proceedings. It also observed that the estate of the deceased was well represented in the DRT proceedings, and the challenge based on non-service of notice was not maintainable. Consequently, the writ petition was dismissed along with all pending applications.
Mr. Manish Kumar Srivastava, Ms. Kamakshi Rao, Mr. Moksh Arora and Ms. Mahima Bajaj, Advocates, represented the Petitioner.
Ms. Pooja Mehra Saigal, Sr. Advocate with Mr. Yash Varma, Advocate, appeared for the Respondent No. 2.
This is premium content available to our subscribers.
To access the full content related to this article — including the complete judgment, detailed legal analysis, ratio decidendi, headnotes, cited case laws, and updates on relevant statutes and notifications — we invite you to subscribe to REEDLAW’s premium research platform.
Â
Click here to Subscribe and unlock exclusive access to structured legal analysis, judicial summaries, and a comprehensive legal research database.
Already a subscriber? Click the link below to access the full document and linked case laws.
REEDLAW Legal Research & Analysis is India’s most trusted legal publishing and research platform, empowering legal professionals with structured judicial insights and authoritative legal intelligence since 1985.
Our comprehensive legal intelligence platform covers Corporate Insolvency, Bankruptcy, SARFAESI, Company Law, Contract, MSMEs, Arbitration, Debt Recovery, and Commercial Laws. Through curated journals — IBC Reporter and Bank CLR — and an advanced digital database, REEDLAW simplifies complex legal research for professionals, institutions, and academia across India.