The main legal point established in the judgment is that the provision relating to pre-deposit under Section 18 of the SARFAESI Act applies to both interlocutory and main application orders, and there is no power vested with the Appellate Tribunal to waive the pre-deposit.

ORDER :

1. The writ petition is filed challenging the constitutional validity of proviso to Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) and also prayer is made to quash the order passed by the Debt Recovery Appellate Tribunal, Chennai (hereinafter referred as ‘the DRAT’ for short) in proceeding No. AIR (SA) 523/2015 wherein in terms of order dated 24.8.2021, the DRAT rejected the appeal filed by the present writ petitioners.

2. The matter is listed for preliminary hearing. Learned counsel, Smt. Sumangala.A.Chakalabbi fairly submitted that challenge to the constitutional validity of proviso to Section 18 of the SARFAESI Act is upheld and as such, the prayer to strike down the proviso to Section 18 is made in this petition is not surviving. Nevertheless, it is the submission of the learned counsel for the petitioner that in the peculiar facts and circumstances of the case, the petitioner is not required to deposit the amount as required under proviso 2 and 3 of Section 18 of the SARFAESI Act.

3. The facts unfolding in the petition can be summarised as under;

The Canara Bank, Hubli branch had advanced loan to the petitioner. As a security for the loan, some of the immovable properties were mortgaged in favour of the said bank. The bank initiated an auction for recovery invoking the provisions of the SARFAESI Act. Subsequently, the property was auctioned and the auction sale in favour of the 4th respondent is confirmed on 19.2.2014. The 4th respondent was declared the highest bidder as he quoted Rs.112 lakhs as the price for the property auctioned. The said auction was called in question by filing writ petition No.100382/2014. The writ petition was not entertained on the ground that the petitioner has got an alternative remedy. This order is questioned by filing writ appeal No.100349/2014. The said appeal is also dismissed on 19.8.2014 on the ground that the petitioner has got an alternative remedy. The petitioner applied before the Debt Recovery Tribunal No.4, Bengaluru respondent No.4 (hereinafter referred to as ‘the DRT’ for short) in proceeding LR No.4482/2015. Since there was a delay of 157 days in applying, to condone the delay, an application is also filed. The DRT did not find any reasons to condone the delay and dismissed the application. Against the said order, an appeal is filed before the DRAT in AIR No.523/2015. In that proceeding, an application is also filed seeking waiver of pre-deposit mandated under the provisions of the SARFAESI Act. In terms of order dated 26.7.2021, the DRAT passed an order to deposit Rs.2 crores in 2 instalments of Rs.1 crore each by fixing a time for each deposit. Later, noticing the fact that the appellant before the DRAT has not deposited the amount in terms of order dated 26.7.2021, the appeal is dismissed for non-compliance of the order relating to pre-deposit. The order of dismissal of appeal passed on 24.8.2021 is called in question, in this writ petition.

4. Learned counsel, Smt. Sumangala A.Chakalabbi raised the following grounds;

(a) The order that was questioned before the DRAT is the order passed on inter-locatory order being an interlocutory order and challenge to the said order is filed by way of an appeal before the DRAT does not attract the provision relating to pre-deposit. According to the learned counsel for the petitioner, the provision relating to pre-deposit is only applicable in respect of orders passed on the main application, not on the interlocutory application.

(b) Bank has committed fraud while conducting the auction and has not advanced the amount to the borrower as per the agreement and because of serious lapses on the part of the bank, the borrower is put to great hardship and as such, should not be saddled with the burden of pre-deposit under Section 18 of the SARFAESI Act.

(c) Alternatively, it is also submitted that some amount is already recovered by wa