10 June 2024


High Court of Delhi

Manoj Kumar Pruthi Vs. Magma Housing Finance




Application for waiver of pre-deposit is to be entertained as Petitioners were neither borrowers nor mortgagers or guarantors in respect of loan facility availed by principal borrower

The present petition is directed against an order passed by the Debt Recovery Appellate Tribunal ('DRAT'), rejecting the Petitioner's application seeking waiver of the pre-deposit in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).

Present Court in Manju Devi and Ors. v. M/s. R.B.L. Bank Ltd. and Ors. noted that the second proviso to Section 18 (1) of the SARFAESI Act, obligates the borrower to deposit with the DRAT 50% of the amount of debt due from him for the appeal, which may be filed either by the borrower or other party, to be entertained. The Court noted that, if the said proviso had to be read literally to mean that such appeal would not be entertained, if neither the borrower nor the third person made the deposit then "appeals by third persons would in effect and substance, be rendered nugatory for a third person, who would never be able to get his appeal entertained." On the facts of that case, which are similar to the facts in the present case, the Petitioners therein were neither the borrowers nor the mortgagers or guarantors in respect of the loan facility availed by the principal borrower. In those circumstances in Manju Devi, present Court set aside the order of the DRAT requiring the petitioners therein to pay 50% of the amount due from the principal borrower as a condition for entertaining the appeal.

In view of the legal position explained in Manju Devi, present Court holds that the DRAT was in error in the present case in declining to entertain the prayer of the Petitioner for waiver of pre-deposit. It is the Petitioner's case that, he is neither the principal borrower nor mortgager of the property in question.

In order to avoid further delay in the matter, present Court is of the view that the delay in the Petitioner filing the affidavit of the evidence and rejoinder before the DRT ought to be condoned. Accordingly, the impugned order passed by the DRT-I dismissing the Petitioner's application for condonation of delay is set aside. The DRT-I is directed to take on record the affidavit of evidence and rejoinder filed by the Petitioner. The petition is disposed off.


Manju Devi and Ors. vs. R.B.L. Bank Ltd. and Ors. MANU/DE/0282/2017

Tags : Pre-deposit Direction Legality

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