Pre-Deposit For Filing Appeals Before DRAT Is A Mandatory Requirement: Supreme Court

The Supreme Court observed that entire waiver of pre-­deposit for filing appeal before Debt Recovery Appellate Tribunal under Section 21 of the Recovery of Debts and Bankruptcy Act, is impermissible.

In all cases fifty per cent of the decretal amount i.e. the debt due is to be deposited before the DRAT as a mandatory requirement, but in appropriate cases for reasons to be recorded the deposit of at least twenty-five per cent of the debt due would be permissible, but not entire waiver, the bench comprising CJI SA Bobde, Justices AS Bopanna and V. Ramasubramanian said.

The court observed thus while setting aside a Delhi High Court judgment which had permitted prosecution of an appeal without pre­deposit before DRAT.  Referring to Section 21 of the RDBA, the bench observed:

A perusal of the provision which employs the phrase "appeal shall not be entertained" indicates that it injuncts the Appellate Tribunal from entertaining an appeal by a person from whom the amount of debt is due to the Bank, unless such person has deposited with the Appellate Tribunal, fifty percent of the amount of debt so due from him as determined by the Tribunal under Section 19 of the Act. The proviso to the said Section, however, grants the discretion to the Appellate Tribunal to reduce the amount to be deposited, for reasons to be recorded in writing, but such reduction shall not be less than twenty-five per cent of the amount of such debt which is due. Hence the pendulum of discretion to waive pre­deposit is allowed to swing between fifty per cent and twenty-five per cent of the debt due and not below twenty-five per cent, much less not towards total waiver. It is in that background, keeping in perspective the said provision, the DRAT has in the instant case ordered deposit of fifty per cent of the amount.

While allowing the appeal, the bench observed that the High Court does not have the power to waive the pre­deposit in its entirety, nor can it exercise discretion which is against the mandatory requirement of the statutory provision as contained in Section 21. The court said:

"In all cases fifty per cent of the decretal amount i.e. the debt due is to be deposited before the DRAT as a mandatory requirement, but in appropriate cases for reasons to be recorded the deposit of at least twenty-five per cent of the debt due would be permissible, but not entire waiver. Therefore, any waiver of pre­deposit to the entire extent would be against the statutory provisions and, therefore, not sustainable in law. The order of the High Court is, therefore, liable to be set aside."

Taking note of the peculiar facts and circumstances of this case, the bench, in this case, permitted the pre­deposit of  twenty-five per cent of the amount as taken note by the DRAT.

Case: Kotak Mahindra Bank Pvt. Limited vs. Ambuj A. Kasliwal [CIVIL APPEAL NO. 538 OF 2021]

Coram: CJI SA Bobde, Justices AS Bopanna and V. Ramasubramanian

Counsel: Sr. Adv V.Giri, Sr. Adv. Mukul Rohtagi and Sr. Adv Ritin Rai

Citation: LL 2021 SC 89

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