Challenge to Pre-Deposit Amount in SARFAESI Act Appeal Dismissed by Court.
19 December 2024
Sarfaesi >> Corporate Law | Securities and Banking Law >> Corporate Law
This writ petition of M/s. Shrinath Cotfab & Ors Vs The Authorised Officer Canara Bank & Others, challenges an order dated December 2, 2024, issued by the Debts Recovery Appellate Tribunal (DRAT). The petitioners sought a waiver of 25% of the pre-deposit under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The DRAT had directed the petitioners to deposit Rs.24 crores in three installments, considering the total outstanding dues of Rs.48.87 crore, despite the petitioners arguing that only the auction bid amount of Rs.2.97 crore should be considered for the pre-deposit.
The petitioners contended that their challenge was limited to the auction sale and not to the steps under Section 13(4) of the SARFAESI Act, hence the auction price should determine the pre-deposit. The respondents, however, supported the DRAT’s order, stating that no sale certificate had yet been issued.
The DRAT's order was based on the premise that the petitioners had challenged the steps taken under Section 13(4), which includes the entire debt owed, rather than just the auction sale price. The Supreme Court's judgment in Sidha Neelkanth Paper Industries was cited to affirm this approach, which specifies that in cases challenging the sale of secured assets, the pre-deposit is based on the sale amount only when the sale is confirmed. In conclusion, the court dismissed the writ petition, affirming that the DRAT’s decision was correct, as the challenge involved the broader debt due under the SARFAESI Act.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002