BY AD vs V.K.PEERMOHAMED KHAN

RESPONDENTS/RESPONDENTS/DEFENDANTS: 1 2 THE SOUTH INDIAN BANK LTD, REPRESENTED BY ITS BRANCH MANAGER, PALAKKAD MAIN BRANCH, G.B ROAD, PALAKKAD, PIN – 678013. THE AUTHORIZED OFFICER, SOUTH INDIAN BANK LTD.,REGIONAL OFFICE, FIRST FLOOR,D&D ARCADE BUILDING, CHITTUR ROAD, MANAPPULLIKKAVU,KUNNATHURMEDU P.O, PALAKKAD, PIN – 678013. SMT. S.LAKSHMY, SC THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 07.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP (DRT) NO. 108 OF 2025 2 JUDGMENT The petitioners suffered Ext.P3 final order in S.A.No.467 of 2024 on the file of the Debts Recovery Tribunal – 1, Ernakulam. The petitioners have preferred an appeal against Ext.P3 order before the Debts Recovery Appellate Tribunal, Chennai (Appellate Tribunal) under Section 18 of the SARFAESI Act along with an application for waiver of pre-deposit as also an application for stay of further proceedings pending disposal of the appeal. The petitioners are before this Court stating that till the Interlocutory Applications filed in Ext.P4 appeal are taken up and considered by the Debts Recovery Appellate Tribunal, further proceedings under the SARFAESI Act may be kept in abeyance.

2. The learned counsel appearing for the respondent Bank submits that the total liability in respect of which the proceedings were initiated against the petitioners is in excess of Rs.2.91 Crores. It is submitted with reference to the provisions of Section 18 of the SARFAESI Act that the petitioners are required to deposit at least 50% of the amount for the purposes of maintaining the appeal. It is submitted that unless the amount is so deposited, the Appellate Tribunal cannot entertain any appeal. It is submitted OP (DRT) NO. 108 OF 2025 3 that though there is a provision for waiver of pre-deposit, a reading of the provision indicates that the maximum waiver that can be granted by the Appellate Tribunal is 25%. In other words, it is submitted that even if the Appellate Tribunal were to grant waiver the petitioners will have to deposit 25% of the debt due from them if the appeal has to be entertained. It is submitted that in the absence of any material to suggest that the petitioners have complied with a condition to deposit at least 25%, there is no question of any direction being issued that the proceedings shall be kept in abeyance till the Interlocutory Applications filed in Ext.P4 appeal are taken up and considered by the Appellate Tribunal.

3. The learned counsel appearing for the petitioners would submit that it is for the Appellate Tribunal to pass orders on the application for waiver and it is only thereafter that the petitioners can make any payment. It is submitted that till such time as the application for waiver and the application for stay is taken up and considered, the petitioners are entitled to an interim order staying further proceedings.

4. Having heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondent Bank, I am of the opinion that the learned counsel for OP (DRT) NO. 108 OF 2025 4 the respondent Bank is right in contending that unless the petitioners were to demonstrate that they have deposited at least 25% of the debt due, this Court cannot direct that further proceedings under the SARFAESI Act shall be kept in abeyance till the Interlocutory Application filed for waiver and the Interlocutory Application for stay are considered by the Appellate Tribunal. Section 18 of the SARFAESI Act reads as follows:- “Section 18. Appeal to Appellate Tribunal.-- (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal. Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower: Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less: Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent. of debt referred to in the second proviso. (2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts OP (DRT) NO. 108 OF 2025 5 Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.” It is clear from a reading of Section 18 of the SARFAESI Act that while the Tribunal has the power to grant waiver of pre-deposit, such waiver can only be to the extent of 25%. A reading of the provision also indicates that there is a bar in entertaining an appeal unless there is a pre-deposit. It is thus clear that an appeal can be entertained along with an application for waiver of pre-deposit only if 25% of the debt due has been deposited. In the facts of the present case, though the petitioners have deposited a sum of Rs.20 lakhs after filing of this Original Petition, there is nothing to indicate that 25% of the debt due has been remitted by the petitioners. Therefore, I find no ground made out for grant of the reliefs sought for in the Original Petition. Faced with this situation, the learned counsel appearing for the petitioners would submit that the petitioners may be given some time to make the deposit equivalent to 25% of the debt due.

5. Having considered the submission of the learned counsel appearing for the petitioners, this original petition will stand disposed of directing that further proceedings under the SARFAESI Act initiated against the petitioners shall remain OP (DRT) NO. 108 OF 2025 6 suspended till 25.04.2025 to enable the petitioners to deposit a sum equivalent to 25% of the debt due from them (after giving credit to the amount of Rs.20 lakhs already paid by the petitioners). If the petitioners make such deposit by paying the aforesaid amount to the respondent Bank, the same shall be treated as a deposit made in terms of the provisions contained in Section 18 of the SARFAESI Act. If the deposit is made by the petitioners as above, the Appellate Tribunal shall take up the application filed by the petitioners for waiver of pre-deposit as also the application for stay and pass appropriate orders thereon, in accordance with the law. If the petitioners make the payment as directed above and within the time granted, the further proceedings against the petitioners will remain suspended till orders are passed by the Appellate Tribunal on the application for waiver and on the application for stay. Thereafter, the parties shall be governed by the orders to be passed by the Appellate Tribunal on the application for waiver and on the application for stay. The Original Petition will stand disposed of as above. DK Sd/- GOPINATH P. JUDGE OP (DRT) NO. 108 OF 2025 7 APPENDIX OF OP (DRT) 108/2025 PETITIONER EXHIBITS Exhibit-P1 Exhibit-P2 Exhibit-P3 Exhibit-P4 Exhibit-P5 Exhibit-P6 Exhibit-P7 TRUE COPY OF THE SA NO. 467 OF 2024 FILED BEFORE THE DRT-I ERNAKULAM DATED 24.06.2024 WITHOUT ANNEXURES TRUE COPY OF THE ARGUMENT NOTES FILED BY THE PETITIONERS IN SA NO. 467 OF 2024 FILED BEFORE THE DRT-I ERNAKULAM DATED 02.01.2025 TRUE COPY OF THE FINAL ORDER IN SA NO. 467 OF 2024 ON THE FILES OF THE DRT-I ERNAKULAM DATED 13.02.2025 TRUE COPY OF THE MEMORANDUM OF APPEAL FILED BEFORE THE HONORABLE DEBT RECOVERY APPELLATE TRIBUNAL WITHOUT ANNEXURES DATED 03.03.2025 DIARY NO.416 OF 2025 TRUE COPY OF THE PETITION FOR STAY ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.417 OF 2025 DATED 03.03.2025 TRUE COPY OF THE PETITION FOR WAIVER OF PRE-DEPOSIT ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.422/2025 DATED 03.03.2025 TRUE COPY OF THE PETITION FOR URGENT HEARING ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.426/2025 DATED 03.03.2025

RESPONDENTS/RESPONDENTS/DEFENDANTS: 1 2 THE SOUTH INDIAN BANK LTD, REPRESENTED BY ITS BRANCH MANAGER, PALAKKAD MAIN BRANCH, G.B ROAD, PALAKKAD, PIN – 678013. THE AUTHORIZED OFFICER, SOUTH INDIAN BANK LTD.,REGIONAL OFFICE, FIRST FLOOR,D&D ARCADE BUILDING, CHITTUR ROAD, MANAPPULLIKKAVU,KUNNATHURMEDU P.O, PALAKKAD, PIN – 678013. SMT. S.LAKSHMY, SC THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 07.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP (DRT) NO. 108 OF 2025 2 JUDGMENT The petitioners suffered Ext.P3 final order in S.A.No.467 of 2024 on the file of the Debts Recovery Tribunal – 1, Ernakulam. The petitioners have preferred an appeal against Ext.P3 order before the Debts Recovery Appellate Tribunal, Chennai (Appellate Tribunal) under Section 18 of the SARFAESI Act along with an application for waiver of pre-deposit as also an application for stay of further proceedings pending disposal of the appeal. The petitioners are before this Court stating that till the Interlocutory Applications filed in Ext.P4 appeal are taken up and considered by the Debts Recovery Appellate Tribunal, further proceedings under the SARFAESI Act may be kept in abeyance.

2. The learned counsel appearing for the respondent Bank submits that the total liability in respect of which the proceedings were initiated against the petitioners is in excess of Rs.2.91 Crores. It is submitted with reference to the provisions of Section 18 of the SARFAESI Act that the petitioners are required to deposit at least 50% of the amount for the purposes of maintaining the appeal. It is submitted that unless the amount is so deposited, the Appellate Tribunal cannot entertain any appeal. It is submitted OP (DRT) NO. 108 OF 2025 3 that though there is a provision for waiver of pre-deposit, a reading of the provision indicates that the maximum waiver that can be granted by the Appellate Tribunal is 25%. In other words, it is submitted that even if the Appellate Tribunal were to grant waiver the petitioners will have to deposit 25% of the debt due from them if the appeal has to be entertained. It is submitted that in the absence of any material to suggest that the petitioners have complied with a condition to deposit at least 25%, there is no question of any direction being issued that the proceedings shall be kept in abeyance till the Interlocutory Applications filed in Ext.P4 appeal are taken up and considered by the Appellate Tribunal.

3. The learned counsel appearing for the petitioners would submit that it is for the Appellate Tribunal to pass orders on the application for waiver and it is only thereafter that the petitioners can make any payment. It is submitted that till such time as the application for waiver and the application for stay is taken up and considered, the petitioners are entitled to an interim order staying further proceedings.

4. Having heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondent Bank, I am of the opinion that the learned counsel for OP (DRT) NO. 108 OF 2025 4 the respondent Bank is right in contending that unless the petitioners were to demonstrate that they have deposited at least 25% of the debt due, this Court cannot direct that further proceedings under the SARFAESI Act shall be kept in abeyance till the Interlocutory Application filed for waiver and the Interlocutory Application for stay are considered by the Appellate Tribunal. Section 18 of the SARFAESI Act reads as follows:- “Section 18. Appeal to Appellate Tribunal.-- (1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal. Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower: Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less: Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent. of debt referred to in the second proviso. (2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts OP (DRT) NO. 108 OF 2025 5 Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.” It is clear from a reading of Section 18 of the SARFAESI Act that while the Tribunal has the power to grant waiver of pre-deposit, such waiver can only be to the extent of 25%. A reading of the provision also indicates that there is a bar in entertaining an appeal unless there is a pre-deposit. It is thus clear that an appeal can be entertained along with an application for waiver of pre-deposit only if 25% of the debt due has been deposited. In the facts of the present case, though the petitioners have deposited a sum of Rs.20 lakhs after filing of this Original Petition, there is nothing to indicate that 25% of the debt due has been remitted by the petitioners. Therefore, I find no ground made out for grant of the reliefs sought for in the Original Petition. Faced with this situation, the learned counsel appearing for the petitioners would submit that the petitioners may be given some time to make the deposit equivalent to 25% of the debt due.

5. Having considered the submission of the learned counsel appearing for the petitioners, this original petition will stand disposed of directing that further proceedings under the SARFAESI Act initiated against the petitioners shall remain OP (DRT) NO. 108 OF 2025 6 suspended till 25.04.2025 to enable the petitioners to deposit a sum equivalent to 25% of the debt due from them (after giving credit to the amount of Rs.20 lakhs already paid by the petitioners). If the petitioners make such deposit by paying the aforesaid amount to the respondent Bank, the same shall be treated as a deposit made in terms of the provisions contained in Section 18 of the SARFAESI Act. If the deposit is made by the petitioners as above, the Appellate Tribunal shall take up the application filed by the petitioners for waiver of pre-deposit as also the application for stay and pass appropriate orders thereon, in accordance with the law. If the petitioners make the payment as directed above and within the time granted, the further proceedings against the petitioners will remain suspended till orders are passed by the Appellate Tribunal on the application for waiver and on the application for stay. Thereafter, the parties shall be governed by the orders to be passed by the Appellate Tribunal on the application for waiver and on the application for stay. The Original Petition will stand disposed of as above. DK Sd/- GOPINATH P. JUDGE OP (DRT) NO. 108 OF 2025 7 APPENDIX OF OP (DRT) 108/2025 PETITIONER EXHIBITS Exhibit-P1 Exhibit-P2 Exhibit-P3 Exhibit-P4 Exhibit-P5 Exhibit-P6 Exhibit-P7 TRUE COPY OF THE SA NO. 467 OF 2024 FILED BEFORE THE DRT-I ERNAKULAM DATED 24.06.2024 WITHOUT ANNEXURES TRUE COPY OF THE ARGUMENT NOTES FILED BY THE PETITIONERS IN SA NO. 467 OF 2024 FILED BEFORE THE DRT-I ERNAKULAM DATED 02.01.2025 TRUE COPY OF THE FINAL ORDER IN SA NO. 467 OF 2024 ON THE FILES OF THE DRT-I ERNAKULAM DATED 13.02.2025 TRUE COPY OF THE MEMORANDUM OF APPEAL FILED BEFORE THE HONORABLE DEBT RECOVERY APPELLATE TRIBUNAL WITHOUT ANNEXURES DATED 03.03.2025 DIARY NO.416 OF 2025 TRUE COPY OF THE PETITION FOR STAY ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.417 OF 2025 DATED 03.03.2025 TRUE COPY OF THE PETITION FOR WAIVER OF PRE-DEPOSIT ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.422/2025 DATED 03.03.2025 TRUE COPY OF THE PETITION FOR URGENT HEARING ALONG WITH THE AFFIDAVIT FILED BEFORE THE DRAT, CHENNAI WITH DIARY NO.426/2025 DATED 03.03.2025