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TMI Blog2025 (5) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... isposal by consent of the learned counsel for the parties. 2. In this Judgment, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is referred to as 'SARFAESI Act'. The Recovery of Debts and Bankruptcy Act, 1993 is referred to as 'RDB Act'. Debts Recovery Tribunal is referred to as 'DRT' and Debts Recovery Appellate Tribunal is referred to as 'DRAT'. Securitisation Application is referred to as 'SA', Interim Application is referred to as 'IA'. Non Performing Asset is referred to as 'NPA'. 3. The Petitioner is challenging the order dated 30.01.2025 passed in I.A. No.118 of 2022 in Misc. Appeal No. 40 of 2022 passed by DRAT- Mumbai. By the said impugned order, the DRAT has directed the Petitioner at a pre-deposit stage under Section 18 of the SARFAESI Act to deposit an amount of Rs.248,45,08,646/- in three equal installments as a condition for entertaining the appeal against the order dated 22.07.2021 passed in I.A. Nos.429 & 578 of 2021 in S.A No.46 of 2021 by DRT-II, Mumbai. The impugned order is passed under the exercise of power under 2nd proviso to Section 18(1) of the SARFAESI Act. 4. Few facts necessary for the disposal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No.5 only for the purpose of meeting construction cost, purchase of TDR - FSI and payment of premium to concerned authorities for implementation of the development project and the loan is serviced and discharged by Respondent No.5 in timely manner without making the Petitioner liable for repayment in any manner and under any circumstances and if there is any default by the Respondent No.5 in discharging the loan whereby the Respondent No.4-Bank enforces the mortgage, then the rights of the Respondent No.5 under Development Agreement shall stand assigned to the Petitioner. It was further informed that the Petitioner was to extend co-operation subject to the Petitioner not being liable for repayment of loan, cost, charges and interest in any manner whatsoever. It was also pointed out that Respondent No.4-Bank has agreed to special terms and conditions while sanctioning the loan, under which the bank has agreed to appoint an independent engineer who was required to submit reports quarterly and the disbursement was linked to progress of the project and it was subject to receipt of requisite approvals and Respondent No.5 was required to provide utilization statement prior and post to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order dated 22.07.2021 in DRAT. The Petitioner moved Interim Application No.118 of 2022 for waiver of pre-deposit required to be made for entertaining the appeal under provisions of Section 18(1) of the SARFAESI Act. During pendency of the Securitisation Application, the sale was successful and confirmed. The Yes Bank being original creditor assigned the debt to Respondent No.3 (JC Flowers Asset Reconstruction Pvt. Ltd.) and which, in turn assigned debt to Respondent No.1(Omkara Assets Reconstruction Company Pvt. Ltd.) In these circumstances, impugned order is passed. 5. The learned Senior Advocate for the Petitioner, inviting the Court's attention to Clause 2(ii) of the Mortgage Deed dated 30.11.2018 contended that the Petitioner being only Mortgagor is not responsible for payment of any facility or related interest, costs, charges etc. and further contended that under exchange of notice reply under Section 13(3A) and rejoinder of the Bank thereto, contention of the Petitioner about sole liability of Respondent No.5 is clearly communicated to the Bank. He submitted that the Original Application filed by the Bank in DRT-I, Mumbai only seeks recovery from present Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the outset we note that there is no dispute about the proposition of law as laid down in the judgments of Narayan Chandra Ghosh (supra) and Sree Jeya (supra) that condition of pre-deposit for entertaining appeal under section 18 of the SARFAESI Act is not an onerous condition and 'any person aggrieved' contemplated under said section will include mortgagor or even third party purchaser. 9. In Keystone Constructions Vs. State Bank of India (supra), while considering the provisions of Section 18(1) of the SARFAESI Act, it has been held that a 'mortgagor' is included in the expression 'borrower' as defined by Section 2(1)(f) of the SARFAESI Act. The expression 'debt' under Section 2(1)(ha) of the SARFAESI Act has the same meaning as assigned to it under Section 2(g) of the RDB Act. Section 2(g) of the RDB Act includes liability claimed by the Bank under mortgage. Therefore, any amount due from 'mortgagor' also would fall within the ambit of the expression 'debt due from him' as per the 2nd proviso to Section 18(1) of the SARFAESI Act. Therefore, the Petitioner will have to face the condition under Section 18(1), especially 2nd & 3rd proviso. 10. However, we also note that in paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stage of communication of reasons 'shall not confer any right' upon the Borrower to prefer an application to the DRT under Section 17. Again, words used are 'shall not'. Borrower includes mortgagor. This in our view creates a clear bar for the Borrower (including mortgagor) to approach the DRT 'at that stage'. This is an additional reason for us to hold that while deciding the amount of debt due as claimed at the stage of section 18(1) of the SARFAESI Act, there is no reason to exclude the consideration of objection/representation given by the Borrower (including mortgagor) and the Bank's response thereto. 14. In the result, we hold that while arriving at the amount of pre- deposit under 2nd and 3rd proviso to section 18(1) of the SARFAESI Act, there is no reason to restrict the determination of debt due as claimed, only on the basis of notice under Section 13(2) of the SARFAESI Act and there is no reason to exclude the consideration of the Bank's response, if given, pursuant to the objection / representation given by the borrower / mortgagor to the notice issued under Section 13(2) of the SARFAESI Act. In other words, if a lesser liability of the borrower/mortgagor is indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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