Order On Miscellaneous Applications U/S 17 Regarding Court Fee Is Appealable U/S 18 SARFAESI Act: Allahabad High Court

The Allahabad High Court has held that order on miscellaneous application regarding the court fee is appealable under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Justice Ajit Kumar held that Section 18 of the SARFAESI Act, which provides for appeals, does not specify that appeals can only be filed against final orders and not interlocutory orders. Observing that order under Section 17 may be interlocutory in nature, the Court held that remedy of appeal under Section 18 ought to be availed against such orders.

Perusing Section 18 of the SARFAESI Act, the Court held that “it comes out very clearly that any order made by Debt Recovery Tribunal is appealable but of course passed under Section 17 of SARFAESI Act, 2002. The section does not prescribe or put a rider that order should be a final order.”

Case Background

Petitioners challenged the order passed by the Debt Recovery Tribunal in a miscellaneous application (Kasturi Devi Sheetalaya Pvt. Ltd. v. Bank of India) arising out of Securitization Application No.- 461 of 2022 in writ jurisdiction. Counsel for respondent objected to the maintainability of the writ petition on grounds of remedy of appeal being present under Section 18 of the SARFAESI Act.

Counsel for petitioner argued that appeal under Section 18 would only lie against orders passed under Section 17 of the SARFAESI Act. It was submitted that order passed on miscellaneous application regarding the court fee is not an order under Section 17 and could not be appealed under Section 18 of the SARFAESI Act, accordingly writ petition was maintainable.

High Court Verdict

Section 17 of the SARFAESI Act provides that any aggrieved person including the borrower can make an application to the Debt Recovery Tribunal against the measures adopted for recovery of secured if the borrower has failed to discharge his liability under Section 13(2) of the Act. Section 17(1A) provides the jurisdiction of the DRT before which such application can be made.

The Court observed that for entertaining any application under Section 17, the DRT ought to look into the cause of action wholly or in part for assuming jurisdiction under Section 17(1A). the Court held that the Tribunal has the power to entertain all objections which may be raised by any party for the purpose of dealing with applications under Section 17.

Further, observing that an order under Section 17 maybe interlocutory in nature, the Court held that by virtue of Rule 13 of the Security Interest (Enforcement) Rules, 2002 court fees is payable on any application made under Section 17 as well as on appeals under Section 18 of the SARFAESI Act.

“If the borrower makes an application that earlier securitization application was moved but since the bank withdrew its proceedings to recover the secured debts at that stage and subsequently issued a fresh notice and hence the court fee already paid should be taken into consideration, would amount to a miscellaneous application.”

The Court held that orders under Section 17 were amenable to the appellate jurisdiction under Section 18 of the Act even if they were interlocutory in nature.

Case Title: Kasturi Devi Sheetalaya Pvt Ltd And Another v. The Presiding Officer Debt Recovery Tribunal And Another [WRIT - C No. - 18388 of 2024]

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