Case Note & Summary
The Bombay High Court upheld the DRAT's order mandating a pre-deposit based on "debt due" when the measures under Section 13(4) of the SARFAESI Act were primarily contested.
Sale value and related considerations are premature in the absence of a Sale Certificate.
Acts and Sections Discussed:
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) Section 13(4) Section 18(1)Ratio Decidendi:
The calculation of pre-deposit for appeals under Section 18(1) of the SARFAESI Act must consider "debt due" in cases where steps under Section 13(4) are challenged. The sale price of the secured asset becomes relevant only after confirmation of the sale and issuance of the Sale Certificate. 1. Background Para 1-2:The petitioners challenged the DRAT order dated 2nd December 2024, directing a pre-deposit of ₹24 crores in three installments. This was based on the outstanding dues of ₹48.87 crore as determined by the respondent bank (Canara Bank). 2. Petitioners' Argument Para 3:The petitioners, represented by Senior Advocate Mr. Vineet Naik, argued that the sale amount of ₹2.97 crore (auction bid value) should determine the pre-deposit under Section 18(1) since the petitioners challenged the sale of the secured asset. 3. Respondents' Argument Para 4:Respondents contended that since no Sale Certificate was issued and the auction was under Section 13(4) measures, the debt due amounting to ₹48.87 crore should remain the basis for pre-deposit calculation. 4. Legal Precedent Cited Para 5-6:Both parties referred to the Supreme Court judgment in Sidha Neelkanth Paper Industries Private Limited & Anr. v. Prudent ARC Limited & Ors. (2023 SCC OnLine SC 12), which delineates the scope of Section 18(1) regarding pre-deposit determination. 5. Court's Analysis Para 7:The court clarified that: If steps under Section 13(4) are challenged, the "debt due" is the determining factor for pre-deposit. The sale value comes into play only post-issuance of the Sale Certificate. 6. Final Decision Para 8:The writ petition was dismissed as the DRAT's calculation was aligned with the SARFAESI Act. The court refrained from commenting on the appeal's merits, focusing solely on procedural adherence.Subjects: SARFAESI Act Compliance in Auction Disputes.
#SARFAESIAct #DebtRecovery #PreDeposit #SecuredAsset #BankingLaw #AuctionDispute
Issue of Consideration: M/s. Shrinath Cotfab & Ors. Versus The Authorised Officer, Canara Bank & Ors.
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