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HIGH COURT OF DELHI
Date of Decision: 05th October, 2023
TRENDSETTERS BOOKS LTD.
& ANR. ..... Petitioners
Through: Mr. Gurbaksh Singh and Mr. V.N. Sharma, Advocates.
Through: Mr. Utkarsh Dwivedi, Proxy Counsel.
Mr. Mahesh K. Chaudhary and Ms. Sushmita Chaudhary, Advocates.
HON'BLE MR. JUSTICE AMIT MAHAJAN VIBHU BAKHRU, J.
JUDGMENT
1. The petitioner has filed the present petition impugning an order dated 29.08.2023, passed by the learned Debts Recovery Appellate Tribunal (hereafter ‘DRAT’), in Misc. Appeal No. 169/2023, whereby the learned DRAT had directed that the said appeal cannot be entertained for want of compliance of the condition of pre-deposit under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereafter ‘SARFAESI Act’).
2. The petitioner had availed of certain credit facilities from Respondent No. 1 (hereafter ‘the Bank’). The said facilities were secured by certain immovable properties including the property of a guarantor located at Naraina Vihar, Delhi (hereafter ‘guarantor’s property’).
3. The Bank had auctioned the said property for recovery of its dues under the SARFAESI Act.
4. In addition to the above, the Bank was also secured by the petitioner’s property described as ‘Plot No. 12, Block No. 52, 3rd floor, Ramjas Road, Karol Bagh, New Delhi’ (hereafter ‘the subject property’).
5. The Bank has taken over possession of the subject property and it now proposes to auction the same.
6. The petitioner has filed a Securitisation Application (SA NO. 158/2021) before the Debts Recovery Tribunal-II, New Delhi (hereafter ‘DRT-II’) under Section 17 of the SARFAESI Act. However, the same was dismissed.
7. The petitioner had also filed an application for interim relief (I.A. No. 1008/2023), seeking stay of the auction of the subject property.
8. The said application was rejected by the learned DRT-II, by an order dated 01.08.2023.
9. The petitioner filed an appeal against the said order before the learned DRAT, being Misc. Appeal No. 169/2023, however, the same was dismissed by the impugned order.
10. It is the petitioner’s case that it is not required to make any predeposit as the Bank has already recovered part of the amounts due, by sale of the guarantor’s property, through which it realised a sum of ₹2,61,85,500/-.
11. The petitioner submits that, in addition to the sale of the guarantor’s property, the Bank has also sold another property located at Bhiwadi and recovered an amount of ₹1,32,30,000/-.
12. It is also the petitioner’s case that the Bank is seeking to recover excess interest amounting to ₹1.61 crores approximately.
13. According to the petitioner, the amounts recovered by sale of the mortgaged properties are required to be accounted for towards the petitioner’s obligation for making any pre-deposit under Section 18 of the SARFAESI Act.
14. Apart from the aforesaid contention, the learned counsel for the petitioner also contends that since the amount due has not been determined as yet by any Court or Tribunal, the provisions of Section 18 of the SARFAESI Act requiring the appellant to deposit 50% of the debts due, cannot be implemented.
15. Section 18 of the SARFAESI Act reads as under:
16. The second proviso of Section 18(1) of the SARFAESI Act postulates that no appeal would be entertained unless the borrower has deposited 50% of the amount of debts due from him “as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less”. There is no ambiguity that 50% of the amount payable is to be computed on the basis of the debts as claimed by the secured creditor or as determined by the Debts Recovery Tribunal (hereafter ‘DRT’), whichever is less. The contention that the debt due must be first adjudicated, before the provisions of Section 18(1) of the SARFAESI Act can be applied, is insubstantial.
17. In the present case, the learned DRT has not adjudicated the quantum of debt due and, therefore, the petitioner would be liable to deposit 50% of the amount as claimed by the Bank.
18. We are also not persuaded to accept that the benefit of any amount realised by the Bank, by sale of the mortgaged properties, can be assumed as amount deposited in discharge of the obligations under Section 18(1) of the SARFAESI Act.
19. The amount recovered by the Bank would, obviously, be considered for calculating the outstanding amount of debt as claimed by the secured creditor. However, the fact that the said amounts have been realised, does not absolve the petitioner from the rigours of the second proviso to Section 18(1) of the SARFAESI Act. The petitioner is required to deposit 50% of the amount as claimed by the secured creditor, which would, obviously, be calculated by reducing the amount already recovered.
20. In the present case, the Bank had claimed a sum of ₹6,64,78,338.06/-. There does not appear to be any dispute that the Bank has recovered a part of the said debt by sale of mortgaged properties. Thus, the amount to be deposited by the petitioner would be 50% of the remaining amount as claimed by the Bank.
21. It is also necessary to mention that in terms of the third proviso to Section 18(1) of the SARFAESI Act, the learned DRAT can reduce the amount to be deposited to 25% of the debt, however, the learned DRAT cannot exempt the petitioner from making the pre-deposit as has been authoritatively held by the Hon’ble Supreme Court in Kotak Mahindra Bank Pvt. Limited v. Ambuj A. Kasliwal & Ors: (2021) 3 SCC 549.
22. At this stage, learned counsel for the petitioner submits that the petitioner has been prevented from making the deposit as he is unable to deposit the cheques in his favour in his bank account. He contends that this is because the Bank has frozen the operation of the petitioner’s bank account.
23. In this regard, we clarify that if the petitioner furnishes the cheques in its favour for discharging the requirement under Section 18 of the SARFAESI Act, the learned DRAT shall pass appropriate orders for facilitating the deposit of the same.
24. The petition is disposed of in the aforesaid terms.
VIBHU BAKHRU, J AMIT MAHAJAN, J OCTOBER 5, 2023 “SS”