The Petitioner, a tenant in a redeveloped building, challenged an order of the Debt Recovery Appellate Tribunal, Mumbai (DRAT, Mumbai) that required him to deposit 40% of the amount claimed by the Bank as a precondition for entertaining his Appeal against rejection of interim reliefs by the Debt Recovery Tribunal, Mumbai (DRT, Mumbai) in a Securitization Application. The Petitioner argued that as he was neither a borrower nor a guarantor of the loan taken by Respondent Nos. 2 and 3, the pre-deposit condition under Section 18 of the SARFAESI Act could not be imposed. The High Court agreed, citing judicial precedents and the clear language of Section 18, which limits the pre-deposit requirement to borrowers and guarantors. The Court allowed the Writ Petition, quashed the DRAT order, revived the Appeal, and directed the DRAT to consider it on merits without any pre-deposit, also ordering expedited disposal of the interim application.
The High Court of Judicature at Bombay allowed a Writ Petition challenging an order of the Debt Recovery Appellate Tribunal, Mumbai (DRAT, Mumbai) that directed the Petitioner to deposit 40% of the amount claimed by the Bank as a precondition for entertaining his Appeal -- The Court held that under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the pre-deposit condition in the proviso applies only to borrowers and guarantors, not to other aggrieved persons -- The Petitioner, being a tenant who entered into a Permanent Alternate Accommodation Agreement with the Developer, was neither a borrower nor a guarantor of the subject loan -- The Court relied on judgments of the Supreme Court in Sidha Neelkanth Paper Industries P. Ltd. and Another vs. Prudent ARC Ltd. and Others, the Bombay High Court in Anchor Electricals Pvt. Ltd. vs. Canara Bank and Another, and the Delhi High Court in Manju Devi & Ors. vs. M/s. R.B.L. Bank Ltd. & Ors., Indiabulls Housing Finance Ltd. vs. Vaibhav Jhawar and Others, and Manoj Kumar Pruthi vs. Magma Housing Finance -- The impugned order was quashed, the Appeal was revived, and the DRAT was directed to consider it on merits without insisting on any pre-deposit
The Writ Petition was allowed -- The impugned order dated 26th June 2025 passed by the DRAT was quashed and set aside -- The Appeal filed by the Petitioner was revived and restored -- The DRAT was directed to take up the Appeal for consideration on merits without insisting on any pre-deposit from the Petitioner -- The Interim Application No. 446 of 2025 was to be disposed of within four weeks from the date of the order
Citation: 2026 LawText (BOM) (01) 98
Case Number: Writ Petition (L) No. 21712 of 2025
Date of Decision: 2026-01-20
Case Title: Whether the Petitioner, who is neither a borrower nor a guarantor, was mandatorily required to deposit 25% or up to 50% of the outstanding loan amount as a precondition for entertaining his Appeal under Section 18 of the SARFAESI Act
Before Judge: Manish Pitale J. , Shreeram V. Shirsat J.
Equivalent Citations: 2026:BHC-OS:1603-DB
Advocate(s): Mr. Aseem Naphade i/b Mr. Rajendra Rathod for the Petitioner, Mr. Shashank Fadia for Respondent No.1, Mr. R.B. Mungekar a/w Mr. Sudhanshu Sawant for Respondent Nos. 2 and 3
Appellant: Ishtiyaque Aslam Khan
Respondent: DCB Bank and Ors.
Nature of Litigation: Writ Petition challenging an order of the Debt Recovery Appellate Tribunal, Mumbai (DRAT, Mumbai) imposing a pre-deposit condition for entertaining an Appeal under the SARFAESI Act
Remedy Sought: The Petitioner sought quashing of the DRAT order dated 26th June 2025 and revival of his Appeal without the pre-deposit requirement
Filing Reason: The Petitioner was aggrieved by the DRAT order directing him to deposit 40% of the amount claimed by the Bank, as his Appeal was rejected due to non-deposit, despite him being neither a borrower nor a guarantor
Previous Decisions: The Debt Recovery Tribunal, Mumbai (DRT, Mumbai) rejected interim reliefs in a Securitization Application filed by the Petitioner, leading to an Appeal before the DRAT, which imposed the pre-deposit condition and rejected the Appeal upon non-compliance
Issues: Whether the pre-deposit condition under Section 18 of the SARFAESI Act applies to a Petitioner who is neither a borrower nor a guarantor
Submissions/Arguments: The Petitioner argued that as he was neither a borrower nor a guarantor, the pre-deposit condition under Section 18 could not be imposed, citing judicial precedents -- The Respondent No.1/Bank argued that the Permanent Alternate Accommodation Agreement was executed in 2020, while loan documents were from 2018, suggesting no merit in the Petitioner's grievance
Ratio Decidendi: The proviso to Section 18 of the SARFAESI Act, which mandates pre-deposit of 50% or at least 25% of the amount due, applies only to borrowers and guarantors, not to other aggrieved persons filing an Appeal under Section 18 -- This interpretation is supported by the clear language of the provision and established judicial precedents
Judgment Excerpts: "We find substance in the contention raised on behalf of the Petitioner that while Appeal under Section 18 of the SARFAESI Act can be filed by any aggrieved person, the proviso mandatorily requiring pre-deposit of 50% of the amount due and for reasons to be recorded at least 25% of the amount due, can apply only to the borrower or the guarantor." (Para 7) "In the facts and circumstances of the present case, we find that the Petitioner is neither a borrower nor a guarantor of the subject loan in respect of which the Respondent No.1 is proceeding against the borrowers, i.e. Respondent Nos. 2 and 3." (Para 11) "This Writ Petition concerns the narrow question as to whether the Petitioner was mandatorily required to deposit 25% or upto 50% of the outstanding loan amount when he is neither the borrower nor the guarantor. In the light of the fact of the said question is no longer as res integra and the aforementioned judgments lay down the position of law in favour of the Petitioner, we are inclined to allow the Petition." (Para 13)
Procedural History: The Petitioner filed a Securitization Application before the DRT, Mumbai, and moved an Application for interim reliefs -- The DRT rejected the interim reliefs -- The Petitioner filed an Appeal before the DRAT, Mumbai -- The DRAT passed an order on 26th June 2025 directing the Petitioner to deposit 40% of the amount claimed as a precondition for entertaining the Appeal -- The Petitioner failed to deposit the amount, leading to rejection of the Appeal -- The Petitioner filed the present Writ Petition challenging the DRAT order -- The High Court heard the parties and allowed the Petition
