IMPORTANT POINT
If a person other than borrower/guarantor files appeal before Arbitral Tribunal then stipulation of pre-deposit of 50% (or 25%) of amount of debt due from him as claimed by secured creditors or determined by DRT shall not be insisted upon.

V. Kameswar Rao, C.J.—The challenge in this writ petition is to the order dated March 14, 2018 of the Debt Recovery Appellate Tribunal (for short „Appellate Tribunal’) in Misc. Appeal No. 72/2018 whereby the learned Appellate Tribunal has rejected the objection of the petitioner herein insisting on the pre-deposit of half of the amount, which had been claimed by the petitioner under Section 13(2) of the SARFAESI Act for entertaining the appeal of the respondent.

Facts:-

2. The borrower M/s Surya Construction Pvt. Ltd. (respondent No.6), had mortgaged the property J-14, Community Centre, Rajouri Garden, New Delhi in favour of the petitioner. On its failure to honour the terms of the Loan Agreement, the petitioner initiated action under the SARFAESI Act by issuing a notice under Section 13(2) of the SARFAESI Act to the said respondent.

3. It is the case of the petitioner that it took symbolic possession of the secured asset on January 05, 2015. On July 24, 2017, a sale notice was issued for recovery of Rs.4,16,04,827/-. The DRT-I set aside the sale notice dated July 24, 2017 on the ground that the complete description of the property had not been given. The petitioner again issued a demand notice for recovery of an amount of ‘12,33,78,319/- along with future interest. It is the case of the petitioner that it took symbolic possession of the secured asset for non-compliance of demand notice by the borrower. It appears, a sale notice of the secured asset was issued by the petitioner with auction date of October 30, 2017.

4. An SA titled Vaibhav Jhawar and Ors. v. Indiabulls Housing Finance Ltd. bearing No. 244/2017 was filed before the DRT by respondent Nos.1 to 5. It is the case of the petitioner that the respondent Nos. 1 to 5 are neither the owners of the property nor do they have any interest in the said property. On October 30, 2017, the DRT-1 rejected the interim relief application and directed that the auction sale shall remain subject to the final outcome of the SA. On December 05, 2017, an application under Order 7 Rule 11 CPC was filed by the petitioner seeking dismissal of the SA on the grounds that the respondent Nos.1 to 5 have no locus to prefer a securitization application challenging the SARFAESI action of the petitioner against the said property. The secured asset was auctioned on October 30, 2017 and sale was confirmed. A sale certificate was issued on January 03, 2018 in favour of the auction purchaser against the payment of entire sale consideration of Rs.25,04,10,000/-.

5. On February 17, 2018, the learned DRT, New Delhi allowed the application under Order 7 Rule 11 CPC of the petitioner and dismissed the SA. On February 27, 2018, respondent Nos. 1 to 5 preferred an appeal before the DRAT impugning the order dated February 17, 2018 passed by the learned DRT, New Delhi. The DRAT vide the impugned order, entertained the appeal without directing the respondent Nos.1 to 5 to make pre-deposit as required under the SARFAESI Act. The case of the respondent Nos.1 to 5 before the Ld. DRAT was that they have invested a sum of ‘5.71 crores with the borrower-respondent No.6 M/s Surya Construction Pvt. Ltd. The said loan was without any interest clause. The grievance of the respondent Nos.1 to 5 in the SA was that the property has been sold at much lower price. In other words, the grievance of the respondent Nos.1 to 5 was that, had the property been sold at a fair market value, it would have fetch much more than what was recoverable from the borrower and in that way, the dues which the borrower owes to the respondent Nos.1 to 5 would have also been recovered and the circumstances gives the appellant, a locus standi to challenge the action of the petitioner.

6. We may state here that the DRAT while rejecting the objection of the petitioner herein relied upon a judgment of this Court in the case of Manju Devi and Ors v. M/s RBL Bank Ltd. and Ors. W.P.(C) No. 11766/2016 decided on February 01, 2017 to reject the plea