The requirement of pre-deposit under Section 18 of the SARFAESI Act is mandatory and serves as a deterrent to frivolous appeals, with provisions for reduction in exceptional cases.

JUDGMENT :

SABYASACHI BHATTACHARYYA, J.

1. The short question which has arisen for consideration is whether an appellant under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”) is mandatorily required to deposit the pre-requisite of 50 per cent (reducible up to 25 per cent) of payable debt even when the challenge is against an interlocutory order not touching the merits of the case and not deciding the rights of parties.

2. The writ petitioners are borrowers against whom SARFAESI action has been taken. In the said proceeding, a subsequent purchaser from the auction purchaser was impleaded, against which order the petitioners sought to prefer an appeal. The Appellate Tribunal directed the petitioners to deposit the pre-requisite 50 per cent and fixed a time-limit for the same. Having not done so, the appellants' appeal was dismissed on such ground.

3. Learned counsel appearing for the petitioners argues that the provision of making prior deposit would be rendered absurd and oppressive in the event an aggrieved person has to pay such amount at every stage of the proceeding, even while preferring appeals against interlocutory orders by which no rights of parties are decided effectively and/or which are not on merits. Otherwise, an appellant may have to approach the Appellate Tribunal against several interlocutory orders at different stages of the proceeding and ultimately against the final order; if at each stage the entire deposit of 50 per cent has to be made by the appellant, ultimately the total amount paid would be much more than the debt itself. The same would be thus an absurd proposition and would render the right of appeal nugatory.

4. Learned counsel cites Mardia Chemicals Ltd. vs. Union of India and Others, 2004 (3) Supreme 243 where the Supreme Court had inter-alia struck down the provisions of Section 17 of the Act as oppressive, onerous and arbitrary insofar as the same stipulated a condition of deposit of 75 per cent of the amount claimed before entertaining an appeal under Section 17 of the then sub-section (2) of Section 17 of the SARFAESI Act.

5. Learned counsel next cites Directorate of Enforcement vs. Deepak Mahajan and Another, AIR 1994 SC 1775, where the Supreme Court, quoting Maxwell on Statutes, observed that where the language of a statute leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. It was held that a Judge must not alter the material of which the Act is woven, but he can and should iron out the creases.

6. Learned counsel for the petitioners next cites Dr. (Major) Meeta Sahai vs. State of Bihar and Others, (2019) 20 SCC 17 where the Supreme Court observed that it is the responsibility of the courts to interpret the text in a manner which eliminates any element of hardship, inconvenience, injustice, absurdity or anomaly.

7. Learned counsel next relies on Sarla Goel and Others vs. Kishan Chand, (2009) 7 SCC 658, where it was held by the Supreme Court that the question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed.

8. Learned counsel next cites an unreported Division Bench judgment of the Madras High Court in WP No. 22981 of 2019 [M/s. Ashok Wood Works and Another vs. Indian Overseas Bank] where it was observed that since the order of the Debts Recovery Tribunal challenged before the Appellate Tribunal therein was only on an interlocutory application seeking to lodge the counter-claim by the borrowers, such an order would not require any pre-deposit since the position of law had been clarified by the co-ordinate Bench of the said Court, with which the Bench agreed.

9. Le