Non-borrowers cannot be subjected to pre-deposit requirements under Section 18 of the SARFAESI Act, confirming strict adherence to statutory definitions.

ORDER :

1. Rule. Rule made returnable forthwith. Heard by consent of parties.

2. By this Writ Petition, the Petitioner is impugning the orders dated 25^th July 2025 and 25^th June 2025 passed by the Debt Recovery Appellate Tribunal (“DRAT”) in Misc. Appeal No. 830 of 2025 and has sought for setting aside of the same.

3. By the 1^st impugned order of the DRAT dated 25^th June, 2025, the DRAT has directed the Petitioner, despite observing that the Petitioner is neither a borrower nor guarantor, to deposit 25% of the amount demanded by the Respondent No. 1 in order to meet the requirement under Section 18(1) of the SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT , 2002 (“SARFAESI Act”) for entertaining the appeal. By the 2^nd impugned order of DRAT dated 25^th July, 2025, the Misc. Appeal No. 830 of 2025 has been dismissed for non compliance of the 1^st impugned order dated 25^th June, 2025.

4. The facts briefly stated are as under:

(i) The Petitioner is a developer/seller who had entered into an Agreement for Sale with Respondent Nos. 2 and 3 i.e. purchasers for sale of Flat No. 701 in “Sea Palace”, Navi Mumbai (“subject flat”) on 06^th September 2014. It is pertinent to note that prior to the Agreement for Sale, PNB Housing Finance Limited had sanctioned a housing loan of Rs. 3,27,00,000/- to Respondent Nos. 2 and 3 (borrowers).

(ii) The Respondent Nos. 2 and 3 had sought from the Petitioner execution of an NOC in PNB Housing Finance Ltd’s standard form permitting Respondent Nos. 2 and 3 to mortgage the subject flat on 18^th September 2014.

(iii) The Petitioner by a letter dated 20^th November 2017 addressed to Respondent Nos. 2 and 3 stated that the subject flat had been erroneously sold and did not have status of an approved residential unit and the Petitioner was ready and willing to allot Flat No. 601 in lieu thereof.

(iv) The Petitioner refunded the entire amount received from the Respondent Nos. 2 and 3, along with additional sums to cover financing costs, i.e. a total refund of Rs. 4,50,00,000/- between 1^st February 2018 to 11^th June 2018.

(v) By a Deed of Assignment dated 30^th September 2022, PNB Housing Finance Ltd claims to have assigned all rights in the loan account of Respondent Nos. 2 and 3 to Respondent No. 1- M/s. Pegasus Assets Reconstruction Pvt. Ltd.

(vi) Respondent No. 1 obtained an ex parte order from the Chief Judicial Magistrate, Thane under Section 14 of the SARFAESI Act on 02^nd August 2023.

(vii) The Petitioner filed Transferred Securitisation Application No. 150 of 2023 under Section 17 of the SARFAESI Act before the DRT-1, Mumbai on 15^th September 2023.

(viii)An order dated 23^rd November 2023 came to be passed by the DRT recording the statement made by the Respondent No. 1 inter alia that the secured creditor “has deferred taking physical possession” of the subject flat.

(ix) The Petitioner filed an Interim Application No. 821 of 2025 in the Securitisation Application on 3^rd May 2025 seeking an urgent stay on possession being taken in view of notice having been issued by the Commissioner appointed in the said order dated 2^nd August 2023 under Section 14 of the SARFAESI Act for taking possession of the subject flat on 7^th May, 2025.

(x) An order came to be passed by the DRT on 06^th May 2025 granting interim protection to the Petitioner with a condition that possession (which Respondent No. 1 intended to take on 7^th May 2025) shall stand deferred provided that the Petitioner deposited a sum of Rs. 1,20,00,000/- with Respondent No. 1 by 11:00 am on 7^th May 2025 i.e. within a day.

(xi) The Petitioner filed Miscel