IMPORTANT POINT
Appeal – Quantum of pre-deposit cannot be more than apparent subject matter of appeal.Case Referred:

JUDGMENT

The petitioners approached this Court challenging Ext.P12 Order of the Debt Recovery Appellate Tribunal, Chennai, which mandated them to pay 40% of the debt due, as a pre-deposit to entertain the appeal preferred by the petitioners before the said Appellate Tribunal, which is numbered as AIR (S.A.) No.1111/2025.

2. Learned counsel for the petitioners would submit that for realization of the amount due from the petitioners, one among the properties offered as security was sold in auction for a price of Rs.3.39 crores. It was pointed out that, going by Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), discretion has been granted to the Appellate Authority to direct a pre-deposit ranging from 25% up to 50% of the debt due. In the instant case, no reason, whatsoever, has been stated in Ext.P12 as to why 40% has been fixed, is the contention raised by the learned counsel for the petitioners. Learned counsel would also point out that the subject matter of appeal is the auction sale made in respect of the petitioners’ property for a consideration of Rs.3.39 crores, and therefore, a direction to pay an amount, more than the said sum of Rs.3.39 crores, will be onerous, besides being improper, if not illegal.

3. Learned counsel for the 1st respondent would submit that, going by the second proviso to Section 18 of the SARFAESI Act, the amount to be deposited is 50%. Discretion is afforded to the Appellate Tribunal to reduce the same to 25% for reasons to be recorded in writing. In cases, where the amount of debt has been determined by the Debt Recovery Tribunal or claimed by the secured creditors, 50% of the said amount, whichever is less, has to be paid. Therefore, there is no justification for the petitioners to insist that the pre-deposit amount to maintain the appeal should be limited to 25% of the debt due.

4. Learned counsel for the auction purchaser/2nd respondent would first submit that the Writ Petition filed under Article 227 of the Constitution is not maintainable, inasmuch as the Debt Recovery Appellate Tribunal, Chennai, is not a Tribunal falling within the jurisdiction of this Court. According to the said respondent, the Writ Petition ought to have been filed under Article 226 of the Constitution. Secondly, learned counsel would point out that the subject matter of the appeal has nothing to do, while fixing the amount of pre-deposit to be made for maintaining the appeal. The term employed in Section 18 is the ‘debt due’ and the amount to be deposited has to be considered on the basis of debt due, as defined in the SARFAESI Act; and not on the basis of the subject matter of the appeal.

5. Having heard the learned counsel appearing for the respective parties, this Court finds apparent merit in the submission made by the learned counsel for the petitioners. It is true that, going by the second proviso to Section 18, there is an interdiction that the appeal shall not be entertained, unless 50% of the debt due from the appellant, as claimed by the secured creditors, or determined by the Debt Recovery Tribunal, whichever is less, is paid. In the instant case, admittedly, there is no determination of the amount due by the Debt Recovery Tribunal. True, that there is an amount claimed by the secured creditors. The third proviso to Section 18 would give adequate liberty and discretion to the Appellate Tribunal to reduce the deposit amount to not less than 25% of the debt referred to in the second proviso, for which, reasons are to be recorded in writing. In the instant case, it is not in dispute that the Tribunal had chosen to exercise the discretion and reduce the pre-deposit amount to 40% of the debt due. As against the decision to exercise the discretion under the third proviso, there is no challenge at the instance of respondents 1 or 2. If that be so, the question which requires consideration is whether the determination of the pre-deposit at