The authority of the Recovery Officer to attach pre-deposit funds without following statutory procedures is legally unsustainable.

Muralee Krishna S., J.

Respondents 2 and 3 in W.P.(C)No.3068 of 2025 filed this writ appeal under Section 5 (i) of the Kerala High Court Act , 1958, challenging the judgment dated 08.10.2025 passed by the learned Single Judge in that writ petition.

2. The 1^st respondent-writ petitioner filed W.P.(C)No.3068 of 2025 under Article 226 of the Constitution of India, seeking the following reliefs;

“a. Issue a writ of certiorari or any other appropriate writ, order, or direction quashing Ext.P7 attachment order dated 13.01.2025 issued by the 1^st respondent;

b. Issue a writ of mandamus or any other appropriate writ, order, or direction directing the 1^st respondent to refrain from interfering with the custody or disposition of the pre-deposit amount held by the Hon’ble Debts Recovery Appellate Tribunal (DRAT), Chennai, in RA(SA)No.5 of 2024;

c. Direct the Hon’ble DRAT, Chennai, to release the pre-deposit amount of Rs.3,95,50,000/- (Rupees Three Crores Ninety-Five Lakhs Fifty Thousand Only) to the petitioner forthwith, as the appeal in RA(SA)No.5 of 2024 has been dismissed and no lawful appropriation or attachment of the pre-deposit has occurred.”

3. Going by the pleadings in the writ petition, the 1^st respondent-writ petitioner was the 2^nd appellant in R.A. (S.A) No.5 of 2024 before the Debts Recovery Appellate Tribunal (‘DRAT’ for short), Chennai. The said appeal was one filed against the order passed by the Debts Recovery Tribunal-I, Ernakulam (the ‘Tribunal’ for short), in O.A.No.76 of 2023, concerning the sale held on 30.07.2022. To comply with the statutory requirements of pre-deposit under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002 (‘SARFAESI Act’ for short), the 1^st respondent, along with the 1^st appellant therein, namely M/s. Annam Steels (P) Ltd. was directed by the DRAT, Chennai, in I.A.No.294 of 2023 to deposit a sum of Rs.3,95,50,000/-. In compliance with this direction, the said amount was deposited by the 1^st respondent and the 1^st appellant in S.A.No.5 of 2024 by way of a demand draft dated 21.12.2023 drawn on Indian Overseas Bank. Later, the appeal was dismissed by the DRAT on 31.07.2024. Thereafter, the 1^st respondent-writ petitioner filed Ext.P1 interlocutory application bearing I.A.No.561 of 2024 before the DRAT seeking release of the pre-deposit amount. When Ext.P1 interlocutory application was taken up for consideration by the DRAT, the respondents 2 and 3-appellants herein objected to the same, stating that the Tribunal was considering an attachment of the pre-deposit amount. Relying on the principles laid down by the Apex Court in Axis Bank v. SBS Organics Pvt. Ltd. [ (2016) 12 SCC 18 ], the 1^st respondent contended that once the appeal is dismissed, he is entitled to the refund of the pre-deposit, unless it has been lawfully appropriated, attached or adjusted with the consent of the depositor, none of which had occurred in that case. The 1^st respondent further contended that the appellants-respondents 2 and 3 failed to initiate proceedings under Section 13(10) of the SARFAESI Act r/w Rule 11 of the Security Interest (Enforcement) Rules, 2002, for the attachment of the pre-deposit. In the absence of such proceedings, any claim over the pre-deposit was legally unsustainable. It was also emphasised that the Recovery Officer of the Tribunal does not have jurisdiction to override the authority of the Appellate Tribunal concerning the custody and disposition of the pre-deposit.

3.1. After several adjournments, on 09.01.2025, the matter was heard in detail by the DRAT, and orders were reserved. The 1^st respondent, in the meanwhile, filed detailed objections before the 2^nd respondent,