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Act: Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: s.18 – Requirement of pre-deposit of amount in terms of s.18 – Whether mandatory – Held: Right to file appeal u/s.18 is conferred subject to condition laid down in the second proviso thereto – The second proviso postulates that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him, as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less – However, under the third proviso to the sub-section, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than 25% of the debt, referred to in the second proviso – Thus, there is an absolute bar to entertainment of an appeal u/s.18 of the Act unless the condition precedent, as stipulated, is fulfilled – In the instant case, the order of the Appellate Tribunal, entertaining borrower’s appeal without insisting on pre-deposit was clearly unsustainable – In the notice issued to the borrower u/s.13(2) of the Act, the debts due was Rs. 52,42,474/- – Since the Debts Recovery Tribunal had not determined the debt due, the borrower is directed to deposit with the Appellate Tribunal an amount of Rs. 15 lakhs within a period of four weeks – Thereafter, appeal to be entertained and decided on merits. s.18, second proviso – Right to file appeal subject to conditions – Held: When a statute confers a right of appeal, while granting the right, the legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory – Bearing in mind the object of the Act, the conditions hedged in the second proviso cannot be said to be onerous – Interpretation of statutes. The appellant-borrower filed an appeal under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Debt Recovery Tribunal did not entertain the appeal on a technical ground. The Debt Recovery Appellate Tribunal while allowing the application filed by the appellant under Section 18 of the Act exempted him from making any deposit in terms of second proviso to Section 18 of the Act. The question which arose for consideration in the instant appeal was whether the Appellate Tribunal has the jurisdiction to exempt the person, preferring an appeal under Section 18 of the Act from making any pre- deposit in terms of the said provision.

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English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2681 OF 2011
[Arising out of S.L.P. (C) No. 5488 of 2011]
Narayan Chandra Ghosh — Appellant (s)
VERSUS
UCO Bank & Ors. — Respondent (s)
O R D E R
1. Leave granted.
2. This appeal by the borrower is directed against judgment dated 7th
December, 2010 delivered by the High Court of Calcutta in C.O.
No.3608 of 2009. By the impugned judgment, the High Court has set
aside the order passed by the Debts Recovery Appellate Tribunal,
Kolkata (for short, “the Appellate Tribunal”) in Appeal No.35 of
2009, whereby the Appellate Tribunal, while allowing the application
filed by the appellant under Section 18(1) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for short, “the Act”) had exempted the appellant
from making any deposit in terms of second proviso to Section 18 of
the Act before entertaining the appeal against the order passed by the
Debts Recovery Tribunal.
3. With the consent of learned counsel for the appellant as also the
respondent-bank, which is on caveat, we have heard the matter finally
at the motion hearing stage itself. Since the issue canvassed before us
is a pure question of law, we deem it unnecessary to state the facts
giving rise to this appeal.
4. Assailing the judgment, Mr. Ranjan Mukherjee has submitted that
since the Debts Recovery Tribunal had not entertained the appeal
preferred by the appellant under Section 17 of the Act on a technical
ground and the quantum of amount due from the appellant had not
been determined, the Appellate Tribunal could not saddle the
appellant with any liability of pre-deposit under Section 18 of the Act.
It is thus, asserted that the Appellate Tribunal was justified in
entertaining the appeal without insisting on any deposit in terms of
Section 18 of the Act.
5. Per contra, learned counsel for the bank, while supporting the
judgment of the High Court has submitted that the Appellate Tribunal
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had failed to appreciate that the deposit of an amount in terms of
Section 18 of the Act is a condition precedent for entertainment of the
appeal. According to the learned counsel, the language of Section
18(1) of the Act being clear and unambiguous, the order passed by the
Appellate Tribunal was clearly unsustainable.
6. Thus, the short question for consideration is whether the Appellate
Tribunal has the jurisdiction to exempt the person, preferring an
appeal under Section 18 of the Act from making any pre-deposit in
terms of the said provision?
7. Section 18, which provides for appeal to the Appellate Tribunal, reads
as under:
“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:
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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) ….. ….. ….. ….. ….. ….. ….. ….
…”
8. Section 18(1) of the Act confers a statutory right on a person
aggrieved by any order made by the Debts Recovery Tribunal under
Section 17 of the Act to prefer an appeal to the Appellate Tribunal.
However, the right conferred under Section 18(1) is subject to the
condition laid down in the second proviso thereto. The second
proviso postulates 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.
However, under the third proviso to the sub-section, the Appellate
Tribunal has the power to reduce the amount, for the reasons to be
recorded in writing, to not less than twenty-five per cent of the debt,
referred to in the second proviso. Thus, there is an absolute bar to
entertainment of an appeal under Section 18 of the Act unless the
condition precedent, as stipulated, is fulfilled. Unless the borrower
makes, with the Appellate Tribunal, a pre-deposit of fifty per cent of
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the debt due from him or determined, an appeal under the said
provision cannot be entertained by the Appellate Tribunal. The
language of the said proviso is clear and admits of no ambiguity. It is
well-settled that when a Statute confers a right of appeal, while
granting the right, the Legislature can impose conditions for the
exercise of such right, so long as the conditions are not so onerous as
to amount to unreasonable restrictions, rendering the right almost
illusory. Bearing in mind the object of the Act, the conditions hedged
in the said proviso cannot be said to be onerous. Thus, we hold that
the requirement of pre-deposit under sub-section (1) of Section 18 of
the Act is mandatory and there is no reason whatsoever for not giving
full effect to the provisions contained in Section 18 of the Act. In that
view of the matter, no court, much less the Appellate Tribunal, a
creature of the Act itself, can refuse to give full effect to the
provisions of the Statute. We have no hesitation in holding that
deposit under the second proviso to Section 18(1) of the Act being a
condition precedent for preferring an appeal under the said Section,
the Appellate Tribunal had erred in law in entertaining the appeal
without directing the appellant to comply with the said mandatory
requirement.
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9. The argument of learned counsel for the appellant that as the amount
of debt due had not been determined by the Debts Recovery Tribunal,
appeal could be entertained by the Appellate Tribunal without
insisting on pre-deposit, is equally fallacious. Under the second
proviso to sub-section (1) of Section 18 of the Act the amount of fifty
per cent, which is required to be deposited by the borrower, is
computed either with reference to the debt due from him as claimed
by the secured creditors or as determined by the Debts Recovery
Tribunal, whichever is less. Obviously, where the amount of debt is
yet to be determined by the Debts Recovery Tribunal, the borrower,
while preferring appeal, would be liable to deposit fifty per cent of
the debt due from him as claimed by the secured creditors. Therefore,
the condition of pre-deposit being mandatory, a complete waiver of
deposit by the appellant with the Appellate Tribunal, was beyond the
provisions of the Act, as is evident from the second and third proviso
to the said Section. At best, the Appellate Tribunal could have, after
recording the reasons, reduced the amount of deposit of fifty per cent
to an amount not less than twenty five per cent of the debt referred to
in the second proviso. We are convinced that the order of the
Appellate Tribunal, entertaining appellant’s appeal without insisting
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on pre-deposit was clearly unsustainable and, therefore, the decision
of the High Court in setting aside the same cannot be flawed.
10. It is stated before us that in the notice issued to the appellant under
Section 13(2) of the Act, the debt due from the appellant as on 25th
September, 2006 was `52,42,474/-. Since in the present case Debts
Recovery Tribunal had not determined the debt due, we direct that on
appellant’s depositing with the Appellate Tribunal an amount of `15
lakhs within a period of four weeks from today, his appeal shall be
entertained and decided on merits. We direct that till the Appellate
Tribunal takes a final decision in the appeal, the bank shall maintain
status quo in respect of the property of which physical possession is
stated to have been taken by it.
11. Needless to add that if the appellant fails to make the said deposit
within the time granted, his appeal before the Appellate Tribunal shall
stand dismissed and it will be open to the respondent bank to take
further steps in the matter in accordance with law.
12. The appeal stands disposed of with no order as to costs.
.………………………………….
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(D.K. JAIN, J.)
..….…………………………….
(H.L. DATTU, J.)
NEW DELHI;
MARCH 18, 2011
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