1. Writ petition challenging DRAT order rejecting pre-deposit waiver in SARFAESI appeal — Borrower challenging auction after NPA declaration. (Para 1 , 2 )
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2026 Supreme(Online)(P&H) 3708
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Sheel Nagu, CJ, Sanjiv Berry, J
Shri Krishna Poultry Feed – Appellant
Versus
Canara Bank – Respondent
CWP-35252-2024 (O&M)
Important Points
Under Section 18 of the SARFAESI Act, the mandatory 50% pre-deposit for filing an appeal by a borrower must be calculated based on the amount claimed by the secured creditor or the amount determined by the DRT, whichever is lower.
Subject
Civil - Banking and Finance
Act Referred
Headnote
(A) SARFAESI Act, 2002 - Section 18 - Pre-deposit for Appeal - Calculation of deposit - The statutory requirement for a borrower to deposit 50% of the debt due as claimed by the secured creditor or as determined by the Debts Recovery Tribunal, whichever is less, must be strictly adhered to. Where the DRT has crystallized the amount via a Recovery Certificate and it is lower than the amount claimed by the creditor, the pre-deposit must be based on the lower DRT-determined amount. (Para 12, 13)
Issues: Whether the pre-deposit for an appeal under Section 18 of the SARFAESI Act should be calculated based on the amount claimed by the secured creditor or the amount determined by the DRT when the latter is lower.
Issues: Whether the pre-deposit for an appeal under Section 18 of the SARFAESI Act should be calculated based on the amount claimed by the secured creditor or the amount determined by the DRT when the latter is lower.
Legal Category Hierarchy
- banking and finance
- practice and procedure
Advocates:
For the Appellants/Petitioners: Rajiv Kataria, Neelam Chaudhary
For the Respondents: Rahish Pahwa
For the Appellants/Petitioners: Rajiv Kataria, Neelam Chaudhary
For the Respondents: Rahish Pahwa
Table of Contents
2. Petitioner argued pre-deposit should be 50% of DRT-determined amount; Bank argued Recovery Certificate not placed before DRAT. (Para 4 , 5 )
3. DRAT failed to consider that pre-deposit under Section 18 must be based on lesser of creditor's claim or DRT determination. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 )
4. Under Section 18, pre-deposit is 50% of debt due as claimed by secured creditor or determined by DRT, whichever is less. (Para 11 , 12 )
5. Impugned DRAT order set aside; DRAT directed to hear appeal on merits upon deposit of pre-deposit based on DRT-determined amount. (Para 14 , 15 )
6. What is the required pre-deposit amount for a borrower filing an appeal under Section 18 of the SARFAESI Act?
The borrower must deposit 50% of the debt due as claimed by the secured creditor or as determined by the DRT, whichever is less. (Para 7 , 11 , 12 )
7. Can the DRAT reduce the pre-deposit amount below 50% under the SARFAESI Act?
Yes, the DRAT may reduce the amount to not less than 25% of the debt referred to in the second proviso, for reasons recorded in writing. (Para 7 , 11 )
8. When a creditor's claim and DRT determination differ, which amount is used for calculating the pre-deposit under Section 18?
The provision specifies 'whichever is less' — the pre-deposit is calculated on the lower of the creditor's claim or the DRT-determined amount. (Para 11 , 12 , 13 )
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SANJIV BERRY, J.
1. The present writ petition under Article 226/227 of the Constitution of India has been preferred by the petitioner seeking writ of Certiorari for setting aside of the order dated 13.12.2024 passed by Debt Recovery Appellate Tribunal, Delhi in appeal No. 279/2024, besides seeking writ of Mandamus directing the DRAT to hear the appeal without any further demand of deposits as the requisite amount of 50% pre-deposit stipulated in the second proviso to Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act, 2002) stands already deposited.
2. Brief facts of the case are that the petitioner firm was running poultry feed firm and had availed cash credit limit from the respondent Bank in the year 2015. Due to financial irregularity in the account, during Covid-19 Pandemic, the account was declared as Non Performing Asset (NPA), and proceedings under the SARFAESI Act, 2002 initiated by way of issuance of notice under Section 13(2) of the SARFAESI Act, followed by consequential proceedings. Notice under Section 13 (4) of the SARFAESI Act was issued on 16.04.2024 mentioning amount of ₹34,31,000/- to be outstanding against the petitioner (Annexure P-1). Thereafter, auction of the property was held for ₹39,24,000/-. The petitioner preferred SA No. 347-2024 before Debt Recovery Tribunal-II, Chandigarh and the same was dismissed vide order dated 30.10.2024 (Annexure P-3).The petitioner preferred an appeal (Annexure P-4) before the Debt Recovery Appellate Tribunal, New Delhi under Section 18 of the SARFAESI, Act wherein he deposited Rs. 31,00,000/- as pre-deposit and sought exemption from deposit of 50% amount as claimed by the petitioner but the learned DRAT vide order dated 13.12.2024 (Annexure P-5) rejected the application which has been assailed in the present petition.
3. We have heard learned counsel for the parties and perused the record.
4. It is inter alia contended by learned counsel for the petitioner that the impugned order dated 13.12.2024 (Annexure P-5) passed by the learned DRAT New Delhi is against the proviso contained under Section 18 of the SARFAESI Act itself. He submits that the petitioner being borrower was required to deposit with the appellate Tribunal 50% of the amount of debt due as claimed by the secured creditor or as determined by the DRT, which ever is lesser, as pre-deposit. He points out that in the present case the DRT while adjudicating the Original Application (OA No. 4553/2017), vide order dated 29.12.2018 had issued the Recovery Certificate in favour of the respondent Bank against the petitioner to the extent of ₹35,49,723/- along with 12% simple interest per annum on reducing balance, which is Annexure P-4/A. He contends that the amount assessed by the DRT being lesser, therefore, under the provisions of Section 18 of the SARFAESI Act the learned DRAT was supposed to seek pre-deposit on the amount whichever is less. He submits that the petitioner under wrong legal advice had moved the application for seeking the pre-deposit @ 25% which infact was not required as the petitioner is entitled to pay pre-deposit in terms of the valuation as assessed by the learned DRT in Recovery Certificate (Annexure P-4/B).
5. Learned counsel representing the respondent Bank has assailed these arguments by submitting that the impugned order passed by the learned DRAT is justified and well reasoned and require no interference. She submits that the Recovery Certificate was never placed on record along with the appeal and as such there is no merit in the present petition. Hence prayed for dismissal of the writ petition.
6. After considering the rival contentions and perusing the record, it is observed that so far as the factual position is concerned, there is no dispute qua the same to the extent that the petitioner Firm was granted cash credit limit in 2015 which ultimately became NPA, leading to initiation of SARFA
