High Court Allows Writ Petition, Quashes DRAT Order Imposing Pre-deposit on Tenant Under SARFAESI Act -- Petitioner, Neither Borrower Nor Guarantor, Not Required to Deposit 40% for Appeal -- Appeal Revived and Restored for Merits Consideration Without Pre-deposit

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