Tribunal Given Leeway to Determine Pre-Deposit Amount in Absence of Adjudicated Debt
In a significant ruling, the Kerala High Court has provided clarity on the interpretation of the pre-deposit condition under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Division Bench comprising Chief Justice Soumen Sen and Justice Syam Kumar V.M. addressed an appeal filed by the Authorised Officer of Canara Bank against Glenny C.J. and others.
The appeal arose following measures taken under the SARFAESI Act, which saw some secured assets put up for sale. The key issue revolved around the requirement for borrowers to make a pre-deposit as a condition precedent for preferring an appeal under Section 18 of the Act. The learned Single Judge's interpretation of this requirement was challenged by the appellant bank, arguing that it misread the provisions of the Act.
The High Court elucidated that the Tribunal must consider the amount of debt due either as claimed by the secured creditor or as determined by the Debt Recovery Tribunal, whichever is less. This decision is pivotal as it provides relaxation in scenarios where the debt amount has not been adjudicated. In such cases, the Tribunal may rely on the claims made by the secured creditor, which in this case, is approximately Rs. 10 crores.
Furthermore, the court granted an extension of three weeks for the borrower to deposit the amount, labeling the direction as peremptory. It was clearly stated that failure to comply with this extended timeline would result in the revival of the order issued by the learned Single Judge.
This judgment underscores the judiciary's role in interpreting statutory provisions to ensure fair enforcement while also considering practical implications for the parties involved. By allowing flexibility in determining the pre-deposit amount, the court has balanced the interests of both the financial institutions and the borrowers, ensuring that the appeal process remains accessible even when the exact debt figures are yet to be adjudicated.
The ruling is expected to have significant implications for similar cases under the SARFAESI Act, providing a precedent for tribunals to exercise discretion in determining pre-deposit requirements when adjudicated debt amounts are unavailable.
Bottom line:-
Interpretation of pre-deposit condition under Section 18 of SARFAESI Act, 2002 - Tribunal to consider the lesser amount between the debt claimed by the secured creditor or as determined by the Debt Recovery Tribunal - Relaxation provided for determining pre-deposit in absence of adjudicated debt amount.
Statutory provision(s): Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
Authorised Officer, Canara Bank v. Glenny C.J., (Kerala)(DB) : Law Finder Doc id # 2915384
