The Supreme Court has ordered that the Debt Recovery Appellate Tribunal (DRAT) cannot entertain appeals under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act without making mandated pre-deposit of 50% of the loan amount.
In the case of Union Bank of India vs. Rajat Infrastructure Pvt., the division bench of Apex Court overruled the earlier decision of the High Court of Bombay, wherein it was held that the no pre-deposit is required to entertain an appeal by Debt Recovery Appellate Tribunal (DRAT).
The division bench of Supreme Court of India comprising of Justice Deepak Gupta and Justice Aniruddha Bose held that Debt Recovery Appellate Tribunal (DRAT) cannot entertain appeals under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act without making mandated pre-deposit of 50% of the loan amount.
It was also affirmed by the learned division bench that Debt Recovery Appellate Tribunal (DRAT) after recording the reasons can allow reducing the amount to 25% but the deposit cannot be totally waived.
The right of appeal is conferred under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, however, this right is subjected to certain conditions which postulate that no appeal shall be entertained unless the borrower has deposited 50% of the amount of debt due to the borrower or that which is declared by the Debt Recovery Tribunal (DRT), whichever is less.
This provision pertaining to 50% of debt amount shall be paid before filing an appeal is not only applicable on the borrowers but also the guarantor and a mortgagor that if anyone amongst them can file an appeal only after the payment of 50% of the debt or loan is discharged under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.
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