The Supreme Court has recently observed that appeals against procedural orders issued by the Debts Recovery Tribunal (DRT) may not require a pre-deposit under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
This appeal stems from the Bombay High Court's order dated March 19, 2024, which upheld a decision by the Debts Recovery Appellate Tribunal (DRAT). The case involves two interim applications filed by the appellants—auction purchasers—seeking to be impleaded in a securitisation application pending before the DRT. After the DRT rejected their request, they approached the DRAT under Section 18 of the SARFAESI Act. However, the DRAT directed them to pre-deposit ₹125 crore as a condition for hearing the appeal.
The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan observed, “The plain reading of Section 18 of the SARFAESI Act, referred to above, would indicate that if any person which should also include a borrower is aggrieved by any order made by the DRT under Section 17 of the SARFAESI, he may prefer an appeal subject to the pre-deposit.”
Further it stated, “We are of the view, of course prima facie that the expression “any order” should be given some meaningful interpretation. Should any and every order that may be passed by DRT, if sought to be challenged, be made subject to pre-deposit?”
The Supreme Court observed that while a pre-deposit is required under Section 18 of the SARFAESI Act for appeals against final orders determining liability, the same may not apply to procedural orders—such as the rejection of an application to implead an auction purchaser in pending DRT proceedings.
The Court set aside the Bombay High Court’s order and remanded the matter for fresh consideration.
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