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Case Law Details

Case Name : Union Bank of India Vs Rajat Infrastructure Pvt. Ltd. & Ors. (Supreme Court)
Appeal Number : Civil Appeal No. 1902 of 2020
Date of Judgement/Order : 02/03/2020
Related Assessment Year :
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Union Bank of India Vs Rajat Infrastructure Pvt. Ltd. & Ors. (Supreme Court)

The issue under consideration is whether the High Court was right in directing that pre-­deposit was not required for entertaining an appeal before the DRAT as mandated by Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘SARFAESI Act’).

In the case of Narayan Chandra Ghosh vs. UCO Bank & Ors.1, held that keeping in view the language of the Section even if the amount or debt due had not been determined by the DRT, the appeal could not be entertained by the DRAT without insisting on pre­-deposit. The DRAT, at best could, after recording the reasons, have reduced the amount to 25% but could not have totally waived the deposit. This Court also held that the right of appeal conferred under Section 18(1) is subject to the conditions laid down in the second proviso therein which postulates that no appeal shall be entertained unless the borrower has deposited 50% of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less. The third proviso enables the DRAT, for reasons to be recorded in writing, to reduce the amount of deposit to not less than 25%.

SC are not in agreement with the submission of Mr. Chaudhri that the High Court has exercised its discretionary powers under Article 226 of the Constitution. The order of the High Court does not show any exercise of such discretionary powers but according to the High Court on an interpretation of the Section, pre­deposit was not required. SC are also not impressed with the argument of Mr. Chaudhri that his client is not a borrower. A guarantor or a mortgagor, who has mortgaged its property to secure the repayment of the loan, stands on the same footing as a borrower and if he wants to file an appeal, he must comply with the terms of Section 18 of the SARFAESI Act.

Furthermore, SC may add that the High Court has no powers akin to powers vested in this Court under Article 142 of the Constitution. The High Court cannot give directions which are contrary to law.

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