IMPORTANT POINT
The pre-deposit under Section 18 of the SARFAESI Act is to be computed based on the debt claimed by the secured creditor and cannot be influenced by contentious issues such as the resolution plan or the guarantor's liability.

JUDGMENT

Vibhu Bakhru, J. (Oral) - The petitioners have filed the present petition impugning an order dated 23.05.2023 (hereafter `impugned order'), passed by the learned Debts Recovery Appellate Tribunal, Delhi (hereafter `DRAT'), in Misc. Appeal No. 14/2023.

2. The petitioners had filed the said appeal against an order dated 20.01.2023, passed by the learned Debts Recovery Tribunal-II, Delhi (hereafter `DRT'), whereby the petitioner's application for interim relief in the Securitisation Application, being S.A. No. 372/2022, was declined.

3. By the impugned order, the learned DRAT had declined to entertain the petitioner's appeal on the ground that the petitioner had failed to make the pre-deposit quantified at 25% of the amount as claimed by the respondent (hereafter `SBI').

4. SBI had issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (`SARFAESI Act'), seeking recovery of an amount of Rs.31.26 crores, along with interest. This was in respect of the financial assistance extended by SBI to Nice Projects Private Limited (hereafter `the principal borrower'). The petitioners had guaranteed the repayment obligations in respect of the financial assistance extended to the said principal borrower by SBI. According to the petitioners, the security extended by the petitioners was limited to the value of the mortgaged property described as "DDA Flat No. 107, 2nd and 3rd Floor (Duplex), SFS Category-III, South Park Apartment, Block-B, Kalkaji, New Delhi-110019".

5. The petitioners contend that the pre-deposit in terms of Section 18 of the SARFAESI Act is required to be computed on the basis of their liability as guarantors, which, according to the petitioners, is the value of the mortgaged property.

6. The petitioner is essentially aggrieved as in terms of the impugned order, passed by the learned DRAT, the petitioners are now required to deposit 25% of the entire amount claimed by SBI as outstanding and payable by the principal borrower.

7. Mr. Ravi Gupta, learned senior counsel appearing for the petitioner s, also contends that a petition [C.P. No. (IB) 3042 (ND) of 2019 captioned Varun Shuttering Store v. Nice Projects Limited] under the Insolvency and Bankruptcy Code, 2016 was admitted by the National Company Law Tribunal against the principal borrower and corporate insolvency resolution proceedings were commenced. He points out that in the said proceedings, the resolution plan was drawn whereby the liability of SBI was admitted to the extent of Rs.29.10 crores. He contends that the said liability would be discharged in terms of the resolution plan, and therefore, there was no occasion for SBI to claim any further amount from the petitioners.

8. The learned counsel appearing for SBI countered the aforesaid submissions. He has referred to various Guarantee Deeds whereby the liability of the petitioners is not limited to the value of the mortgaged property. He also submits that the resolution plan has not been implemented as yet, and therefore, there is no impediment in SBI proceeding under Section 13(4) of the SARFAESI Act for auction of the mortgaged property.

9. At the outset, it is relevant to state that this Court is not required to examine and determine the petitioners' liability as a guarantor. It is apparent that the same is a contentious matter. Whereas SBI claims that the petitioners have guaranteed the repayment of the entire loan/financial assistance granted to the principal borrower in terms of the Guarantee Deeds, the petitioners dispute the same. According to the petitioners, the Guarantee Deeds must be read along with the sanction letters.

10. Plainly, the aforesaid dispute cannot be determined in the present proceedings.

11. In terms of proviso to Section 18 of the SARFAESI Act, no appeal under Section 18 of the SARFAESI Act can be entertained unless the borrower has deposited with the Appellate Tribunal, 50% of the amounts due from him