Narayan Chandra Ghosh
Vs UCO Bank & Ors.
O R D E R
appeal by the borrower is directed against judgment dated 7th December, 2010 delivered
by the High Court of Calcutta in C.O. No.3608 of 2009. By the impugned
judgment, the High Court has set aside the order passed by the Debts Recovery Appellate
Tribunal, Kolkata (for short, "the Appellate Tribunal") in Appeal No.35
of 2009, whereby the Appellate Tribunal, while allowing the application filed by
the appellant under Section 18(1) of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (for short, "the
Act") had exempted the appellant from making any deposit in terms of
second proviso to Section 18 of the Act before entertaining the appeal against
the order passed by the Debts Recovery Tribunal.
the consent of learned counsel for the appellant as also the respondent-bank,
which is on caveat, we have heard the matter finally at the motion hearing
stage itself. Since the issue canvassed before us is a pure question of law, we
deem it unnecessary to state the facts giving rise to this appeal.
the judgment, Mr. Ranjan Mukherjee has submitted that since the Debts Recovery Tribunal
had not entertained the appeal preferred by the appellant under Section 17 of
the Act on a technical ground and the quantum of amount due from the appellant had
not been determined, the Appellate Tribunal could not saddle the appellant with
any liability of pre-deposit under Section 18 of the Act. It is thus, asserted that
the Appellate Tribunal was justified in entertaining the appeal without insisting
on any deposit in terms of Section 18 of the Act.
contra, learned counsel for the bank, while supporting the judgment of the High
Court has submitted that the Appellate Tribunal had failed to appreciate that the
deposit of an amount in terms of Section 18 of the Act is a condition precedent
for entertainment of the appeal. According to the learned counsel, the language
of Section 18(1) of the Act being clear and unambiguous, the order passed by
the Appellate Tribunal was clearly unsustainable.
the short question for consideration is whether the Appellate Tribunal has the jurisdiction
to exempt the person, preferring an appeal under Section 18 of the Act from
making any pre-deposit in terms of the said provision?
18, which provides for appeal to the Appellate Tribunal, reads as under: "18.
Appeal to Appellate Tribunal.--(1) Any person aggrieved, by any order made by the
Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee,
as may be prescribed to an Appellate Tribunal within thirty days from the date of
receipt of the order of Debts Recovery Tribunal. Provided that different fees
may be prescribed for filing an appeal by the borrower or by the person other than
the borrower: Provided further that no appeal shall be entertained unless the
borrower has deposited with the Appellate Tribunal fifty per cent of the amount
of debt due from him, as claimed by the secured creditors or determined by the
Debts Recovery Tribunal, whichever is less: Provided also that the Appellate Tribunal
may, for the reasons to be recorded in writing, reduce the amount to not less than
twenty-five per cent of debt referred to in the second proviso. (2) ..... .....
..... ..... ..... ..... ..... .... ..."
18(1) of the Act confers a statutory right on a person aggrieved by any order
made by the Debts Recovery Tribunal under Section 17 of the Act to prefer an
appeal to the Appellate Tribunal. However, the right conferred under Section 18(1)
is subject to the condition laid down in the second proviso thereto. The second
proviso postulates that no appeal shall be entertained unless the borrower has
deposited with the Appellate Tribunal fifty per cent of the amount of debt due
from him, as claimed by the secured creditors or determined by the Debts Recovery
Tribunal, whichever is less. However, under the third proviso to the sub-section,
the Appellate Tribunal has the power to reduce the amount, for the reasons to be
recorded in writing, to not less than twenty-five per cent of the debt, referred
to in the second proviso.
Thus, there is an absolute
bar to entertainment of an appeal under Section 18 of the Act unless the condition
precedent, as stipulated, is fulfilled. Unless the borrower makes, with the
Appellate Tribunal, a pre-deposit of fifty per cent of 4the debt due from him or
determined, an appeal under the said provision cannot be entertained by the Appellate
Tribunal. The language of the said proviso is clear and admits of no ambiguity.
It is well-settled that when a Statute confers a right of appeal, while
granting the right, the Legislature can impose conditions for the exercise of
such right, so long as the conditions are not so onerous as to amount to unreasonable
restrictions, rendering the right almost illusory. Bearing in mind the object
of the Act, the conditions hedged in the said proviso cannot be said to be
Thus, we hold that
the requirement of pre-deposit under sub-section (1) of Section 18 of the Act
is mandatory and there is no reason whatsoever for not giving full effect to
the provisions contained in Section 18 of the Act. In that view of the matter, no
court, much less the Appellate Tribunal, a creature of the Act itself, can refuse
to give full effect to the provisions of the Statute. We have no hesitation in holding
that deposit under the second proviso to Section 18(1) of the Act being a
condition precedent for preferring an appeal under the said Section, the Appellate
Tribunal had erred in law in entertaining the appeal without directing the appellant
to comply with the said mandatory requirement.
argument of learned counsel for the appellant that as the amount of debt due
had not been determined by the Debts Recovery Tribunal, appeal could be entertained
by the Appellate Tribunal without insisting on pre-deposit, is equally fallacious.
Under the second proviso to sub-section (1) of Section 18 of the Act the amount
of fifty per cent, which is required to be deposited by the borrower, is computed
either with reference to the debt due from him as claimed by the secured creditors
or as determined by the Debts Recovery Tribunal, whichever is less. Obviously,
where the amount of debt is yet to be determined by the Debts Recovery
Tribunal, the borrower, while preferring appeal, would be liable to deposit
fifty per cent of the debt due from him as claimed by the secured creditors.
Therefore, the condition
of pre-deposit being mandatory, a complete waiver of deposit by the appellant
with the Appellate Tribunal, was beyond the provisions of the Act, as is
evident from the second and third proviso to the said Section. At best, the
Appellate Tribunal could have, after recording the reasons, reduced the amount
of deposit of fifty per cent to an amount not less than twenty five per cent of
the debt referred to in the second proviso. We are convinced that the order of the
Appellate Tribunal, entertaining appellant's appeal without insisting 6 on
pre-deposit was clearly unsustainable and, therefore, the decision of the High
Court in setting aside the same cannot be flawed.
is stated before us that in the notice issued to the appellant under Section 13(2)
of the Act, the debt due from the appellant as on 25th September, 2006 was `52,42,474/-.
Since in the present case Debts Recovery Tribunal had not determined the debt
due, we direct that on appellant's depositing with the Appellate Tribunal an
amount of `15 lakhs within a period of four weeks from today, his appeal shall be
entertained and decided on merits. We direct that till the Appellate Tribunal
takes a final decision in the appeal, the bank shall maintain status quo in
respect of the property of which physical possession is stated to have been
taken by it.
to add that if the appellant fails to make the said deposit within the time
granted, his appeal before the Appellate Tribunal shall stand dismissed and it will
be open to the respondent bank to take further steps in the matter in
accordance with law.
appeal stands disposed of with no order as to costs.
(D.K. JAIN, J.)
(H.L. DATTU, J.)