The DRAT is required to consider the application for waiver of pre-deposit under Section 18 of the SARFAESI Act before passing any interim order.

ORDER

This petition under Article 227 of the Constitution of India has been filed by the petitioner being aggrieved by the order dated 24.05.2023 passed by the Debt Recovery Appellate Tribunal (DRAT), Allahabad, whereby interim order in respect of the secured asset has been directed in favour of the respondents No.1 and 2/borrower. 2. The brief facts of the case are that the respondents No. 1 and 2 availed a loan of Rs. 80,00,000/- from the respondent No.3 bank by way of equitable mortgage of the property in question. Upon failure to maintain fiscal discipline in repayment, the respondent/bank issued notice under Sections 13(2) and 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act). An auction was conducted by the respondent bank and the petitioner was declared as the successful bidder whereafter sale deed was executed in favour of petitioner-auction purchaser on 23.12.2022 in regard to the secured asset in question. At this later stage, the respondents No. 1 and 2/borrower moved an application under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal, Jabalpur which was dismissed on various grounds vide order dated 19.12.2022. Being aggrieved, the respondents No.1 and 2/borrower approached the DRAT by way of an appeal under Section 18 of the SARFAESI Act. On 11.04.2023, the DRAT issued notice on the application filed by the borrower for waiver of the pre-deposit amount.

However, on 24.05.2023, without considering the application for waiver, the DRAT passed an interim order of status-quo in respect of the secured asset, which is detrimental to the legal rights of the petitioner over the secured asset.

Hence, this petition.

3. Learned counsel for the petitioner contends that the DRAT has proceeded to pass an interim order of status quo in favour of the borrowers/respondents No. 1 and 2 without prior considering the application for waiver of the payment of pre-deposit as mandated under Section 18 of the SARFAESI Act. The interim order passed by the learned DRAT in an incompetent appeal is unsustainable in the eyes of law, hence, the same deserves to be set aside.

4. On perusal of the record, it is seen that the application for waiver of payment of pre-deposit has been allowed by the DRAT on 19.03.2024 and matter is now listed for further proceedings.

5. Having heard learned counsel for petitioner and on perusal of the orders passed by the DRAT, this Court is of the considered view that since the matter on merits is yet to be adjudicated by the Debts Recovery Appellate Tribunal and is listed on 09.07.2024 for reply and the application for vacating stay moved by petitioner-auction purchaser is also pending consideration, this Court refrains from entering into merits of the matter and leaves it to the DRAT to decide the matter within a reasonable period.

6. With the aforesaid observation, present writ petition stands disposed of.