Kerala High Court
S.R.Educational And Charitable Trust vs Asset Reconstruction Company (India) ... on 24 October, 2025
2025:KER:79322
O.P(DRT) 246/2025 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
FRIDAY, THE 24TH DAY OF OCTOBER 2025 / 2ND KARTHIKA, 1947
OP (DRT) NO. 246 OF 2025
AGAINST THE ORDER/JUDGMENT DATED 01.08.2025 IN AIR NO.1241
OF 2025 OF DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI ARISING OUT
OF THE ORDER/JUDGMENT DATED IN SA NO.63 OF 2025 OF DEBT RECOVERY
TRIBUNAL- 2, ERNAKULAM
PETITIONERS/RESPONDENTS/PETITIONERS/APPELLANTS/APPLICANTS:
1 S.R.EDUCATIONAL AND CHARITABLE TRUST,
(REG. NO.IV/61/2002), REP. BY ITS MANAGING TRUSTEE,
TC/2/2700, DIVYA PRABHA MARAPPALAM,PATTOM.P.O.,
THIRUVANANTHAPURAM., PIN - 695004
2 SHAJI.R,
AGED 68 YEARS
S/O.LATE RAGHAVAN,DIVYA PRABHA MARAPPALAM,PATTOM.P.O.,
THIRUVANANTHAPURAM, PIN - 695004
3 SREEDEVI.M.G,
AGED 62 YEARS
W/O.MR.SHAJI.R.,TC/2/2700,DIVYA PRABHA
MARAPPALAM,PATTOM.P.O., THIRUVANANTHAPURAM., PIN -
695004
4 SHILPA SHAJI,
AGED 35 YEARS
W/O.ALLE SHIV KUMAR,TC/2/2700,DIVYA PRABHA
MARAPPALAM,PATTOM.P.O., THIRUVANANTHAPURAM., PIN -
695004
BY ADVS.
SHRI.ZAKEER HUSSAIN
2025:KER:79322
O.P(DRT) 246/2025 2
SMT.K.A.SANJEETHA
SHRI.ABY GEORGE
SHRI.AKSHAY ASOK
RESPONDENT/PETITIONER/RESPONDENT/RESPONDENT/DEFENDANT:
ASSET RECONSTRUCTION COMPANY (INDIA) LTD
REPRESENTED BY ITS AUTHORIZED OFFICER, THE RUBY, 10TH
FLOOR, 29, SENAPATI, BAPAT MARG, DADAR (W),MUMBAI.,
PIN - 400028
BY ADVS.
SRI.CHANDRAN PILLAI (SR.)
SHRI.SUNIL SHANKER
SMT.VIDYA GANGADHARAN
THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR
ADMISSION ON 13.10.2025, THE COURT ON 24.10.2025 DELIVERED THE
FOLLOWING:
2025:KER:79322
O.P(DRT) 246/2025 3
MOHAMMED NIAS C.P., J.
.........................................................
OP (DRT) No. 246 of 2025
.............................................................
Dated this the 24th day of October , 2025
JUDGMENT
The question that arises for consideration is whether, for the purpose of computing the 'debt due' under the proviso to Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as the SARFAESI Act for short), future interest accruing after the issuance of notice under Section 13(2) of the SARFAESI Act is liable to be included?
2. The petitioners, appellants in AIR No.1241/2025 before the Debts Recovery Appellate Tribunal, challenge the legality of the pre-deposit order passed in review. The petitioners, an Educational and Charitable Trust managing medical and dental institutions at Varkala, had availed multiple credit facilities aggregating to about Rs. 100 crores, secured by equitable mortgage of 9.88 acres of land. Upon default, proceedings under the SARFAESI Act were initiated, culminating in S.A. No.63/2025 before 2025:KER:79322 O.P(DRT) 246/2025 4 the DRT-II, Ernakulam, which was dismissed by order dated 05.05.2025.
The ensuing appeal, AIR No.1241/2025, was accompanied by a waiver petition under the third proviso to Section 18(1).
2.1. The DRAT, by order dated 11.07.2025, directed the petitioners to deposit 40% of Rs. 22.80 crores, being the amount shown as due in the proceedings under Section 14 of the SARFAESI Act. However, on a review filed by the respondent, the Appellate Tribunal, by order dated 01.08.2025, re-assessed the "debt due" as Rs. 193.10 crores and required a pre-deposit of 30% thereof.
2.2. The petitioners contend that the Appellate Tribunal travelled far beyond its review jurisdiction in re-determining the "debt due" on the basis of subsequent correction affidavits filed in Section 14 proceedings. It is urged that for the purposes of Section 18(1), the expression "debt due"
must be confined to the quantified liability contained in the notice issued under Section 13(2), which alone represents the demand forming the foundation for enforcement. Inclusion of future interest subsequently introduced in Section 14 proceedings is said to be contrary to the 2025:KER:79322 O.P(DRT) 246/2025 5 statutory scheme.
2.3. It is further pointed out that substantial payments exceeding Rs.
30 crores have been made after the issuance of the Section 13(2) notice, and that the mortgaged property relates only to four of the ten loans. By mechanically adopting the enhanced figure of Rs. 193.10 crores, the DRAT is alleged to have imposed an unrealistic pre-deposit condition, thereby rendering the statutory appeal illusory.
2.4. The petitioners therefore contend that the impugned order dated 01.08.2025 in Review Petition No.1/2025 is without jurisdiction, contrary to the mandate of Section 18 of the Act, and unsustainable in law.
3. In the statement filed on behalf of the respondent, it is contended that the Original Petition is not maintainable either in law or on the facts and has been filed only to delay recovery and avoid repayment of substantial dues. It is submitted that between 2012 and 2018, the petitioners availed and renewed several credit facilities aggregating over Rs. 100 crores, secured by an equitable mortgage of 9.88 acres of land at 2025:KER:79322 O.P(DRT) 246/2025 6 Cherunniyoor. The accounts were classified as NPA on 28.02.2019, leading to a series of proceedings, W.P.(C) Nos. 16877/2019 and 28193/2019, and S.A. No.342/2019, followed by the assignment of the financial assets to the respondent ARC on 16.07.2021. An OTS sanctioned for Rs. 90 crores on 13.07.2022 was defaulted, resulting in further measures under Section 13(4), including M.C. No.1039/2024 before the CJM, and subsequent writ proceedings in W.P.(C) Nos. 43827/2024 and 21871/2025.
3.1. It is further submitted that the petitioners thereafter filed S.A. No.63/2025 with I.A. No.373/2025 before the DRT, which was dismissed by Ext. P12 order dated 05.05.2025. Their writ petition, W.P.(C) No.21871/2025, was later withdrawn. Aggrieved, the petitioners preferred Appeal No. AIR 1241/2025 before the DRAT, which, by order dated 11.07.2025, directed pre-deposit of 40% of Rs. 22.80 crores in two instalments. On the respondent's review (I.A. No.828/2025), the DRAT modified the requirement to 30% of Rs. 193.10 crores by order dated 01.08.2025. As on 24.06.2025, Rs. 209.09 crores with further interest remained due, secured by the mortgaged property referred to in Ext. P1.
The respondent asserts that the petitioners' contention regarding the 2025:KER:79322 O.P(DRT) 246/2025 7 absence of a mortgage is false, as evident from Ext. P9 S.A., and that repeated OTS proposals, including one for Rs. 81.74 crores on 10.06.2025 (rejected on 11.06.2025), affirm their liability. The Original Petition is thus alleged to be a dilatory tactic devoid of merit.
4. The petitioners in their reply affidavit reiterate that the challenge in this O.P.(DRT) is directed only against the order of the DRAT reviewing its earlier order and re-fixing the pre-deposit at 30% of Rs. 193.10 crores.
The issue is confined to whether such a review was legally permissible.
The scope of review under the law is extremely limited and does not permit a fresh re-hearing on the merits or the introduction of new material.
5. Heard the learned counsel for the petitioners, Smt. K.A. Sanjeetha, and Sri. Chandran Pillai, learned Senior Counsel, instructed by Sri. Sunil Shanker for the respondent.
6. The definitions of "debt" in the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter "RDDB Act") are extracted 2025:KER:79322 O.P(DRT) 246/2025 8 below:
Section 2 (ha) of SARFAESI Act defines Debt as "debt" shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and includes-- (i) unpaid portion of the purchase price of any tangible asset given on hire or financial lease or conditional sale or under any other contract; (ii) any right, title or interest on any intangible asset or licence or assignment of such intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of such intangible asset or an obligation incurred or credit otherwise extended to enable any borrower to acquire the intangible asset or obtain licence of such asset;] Section 2 (g) of the RDDB Act defines Debt as -
"debt"means any liability (inclusive of interest) which is claimed as due from any person or a pooled investment vehicle as defined in clause (da) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956)] by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution 2025:KER:79322 O.P(DRT) 246/2025 9 or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;"
7. Three High Courts, in the decisions enumerated in Table A below, have taken the view that interest accruing after the issuance of notice under Section 13(2) of the SARFAESI Act cannot be reckoned while computing the 'debt due' for the purpose of Section 18(1) of the SARFAESI Act.
TABLE A:
Sl. Name of the Case Reasoning No 1 Madras High Court The Court held that the statutory deposit under the
(DB) in Mrs Mekala second proviso to Section 18(1) SARFAESI must be Raj v. DRAT Chennai reckoned with reference to the debt claimed in the 2025:KER:79322 O.P(DRT) 246/2025 10 (2017 SCC OnlineSection 13(2) notice, and not by including future Mad. 16033) interest. "Reading of the proviso to Section 18 of the SARFAESI Act, 2002, makes it clear that appeal shall not be entertained, if a person aggrieved, deposits with the Appellate Tribunal, the amount of debt claimed by the secured creditors or determined by the Debt Recovery Tribunal, whichever is less and Section contemplates the amount claimed, which is referable to the notice issued, under Section 13(2) of the SARFAESI Act, 2002 and it cannot be stretched to meet the amount accrued, after issuance of notice under Section 13(2) of the Act. By addition of interest on the amount claimed, Proviso has to be taken literal meaning and there cannot be any substitution as argued by the learned counsel for the second respondent/Tamil Nadu Mercantile Bank, Chennai."
2 Chattisgarh High The Court held that "debt due" in the second proviso Court (DB) to Section 18(1) means only the amount already in Mohan Products payable and claimed in the Section 13(2) notice Pvt. Ltd. v. SBI W.A. (principal + interest accrued till that date). Future or No. 362/2019: unaccrued interest after issuance of the notice (MANU/CG/0390/202 cannot be treated as "debt due," since the provision
0) refers to what is "claimed" as due, not what is "claimable." Including future interest would amount to rewriting the law.
The Court, while deciding the pre-deposit issue, placed reliance on Mekala Raj v. Presiding Officer, DRAT (Madras HC), Sivakumar Textiles v. DRAT (Madras HC), and Poonam Manshani v. J&K Bank (Delhi HC), all of which held that the statutory deposit under the second proviso to Section 18(1) SARFAESI must be reckoned with reference to the debt claimed in the Section 13(2) notice, and not by including future interest. The Court also relied upon Narayana Chandra Ghosh v. UCO Bank (2011) 4 SCC 548, particularly para 10, which clarified that the deposit is linked to the "debt due" as stated in Section 13(2) demand. However, the Court expressly disagreed with the Bombay High Court's view in M/s MRB Roadconst Pvt. Ltd. v. Rupee Co-op Bank, which had treated "debt" as including future interest, holding that such an interpretation was inconsistent 2025:KER:79322 O.P(DRT) 246/2025 11 with the legislative intent to make the right of appeal real and not illusory.
3 Madras High Court "While the said proviso employs the words 'amount of debt (DB) in Sivakumar due from the borrower as claimed by the secured Textiles v. Debt creditors', it must necessarily relate back to the claim Recovery Appellate made by the secured creditor in the notice under Section Tribunal, Chennai & 13(2). Otherwise, the legislature would have restricted the Ors. (AIR 2012 wording by using 'the amount of debt due from him', Madras 57) without including the further wording 'as claimed by the secured creditors'. In the event the amount of debt due from the borrower is alone mentioned in the proviso, such claim may be as per Section 13(2) notice or an amount that could have been mentioned under Section 13(4) or an amount that could have been claimed by the secured creditors while opposing an application for waiver. However, when the legislature had used the words 'the amount of debt due from the borrower as claimed by the secured creditor', it would have no other meaning except the amount claimed in the notice under Section 13(2)."
4 Delhi High Court "First of all, the Appellate Tribunal ignored the interest (DB) in Poonam component and went by the amount claimed under the Manshani v. J and K notice under Section 13(2). Secondly, the Appellate Bank and Anr. (AIR Tribunal was of the view that only 25% of the demanded 2010 Delhi 28) amount be deposited by way of pre-deposit under Section
18. The third aspect of the matter, which was considered by the Appellate Tribunal, was that the amount of Rs 8.60 crores, which was recovered from the borrower, cannot be adjusted in favour of the petitioner, who is a guarantor inasmuch as, according to the Appellate Tribunal, the guarantor (the petitioner herein) would have to stand on her own legs. She cannot claim any advantage of the amount recovered by the Bank from the sale of one property of the borrower.
9. We are not interfering with the first two aspects of the Appellate Tribunal's consideration, but we find that insofar as the third aspect of the matter is concerned, the Appellate Tribunal has misdirected itself."
2025:KER:79322 O.P(DRT) 246/2025 12
8. Three High Courts, in the decisions enumerated in Table B below, have taken the view that interest accruing after the issuance of notice under Section 13(2) of the SARFAESI Act is to be reckoned while computing the 'debt due' for the purpose of Section 18(1).
Table B:
Sl. Name of the Case Reasoning
No
1 Kerala High Relying on MRB Roadconst and Sekar Stores, Home Mart
Court (DB) in and others. cases, it has reasoned that "when the second
Union Bank of proviso to Section 18(1) of Act, 2002 clearly specifies that
India v. 50% of the amount of debt due from the borrower, as
R.Dhanalakshmi claimed by the secured creditors, includes interest, as
(W.A No. defined so under Section 2(ha) of Act, 2002 read with Section
233/2020) 2(g) of Act, 1993, and the language is so plain, there is no
room for any further interpretation as to the quantum of the amount to be arrived at while directing to make the pre- deposit. That apart, when the interest rate is specified in the notice along with the consolidated figure contained in the claim, it is a continuing debt due till the entire amount, inclusive of the interest, is paid, and there is no indication at all in the provision in question to exclude the interest from the debt due."
The Division Bench held that "debt due" under Section 18(1) SARFAESI is defined with reference to Section 2(g) RDDB Act, which expressly includes interest. The pre- deposit is to be computed not only on the principal and accrued interest shown in the Section 13(2) notice but also on the further interest accrued thereon until the date of filing the appeal before DRAT. Otherwise, the statutory mandate would be defeated and the secured creditor's claim artificially frozen at the 13(2) figure.
2 Bombay High The Court held that under Section 18(1) SARFAESI, "debt"
Court (DB) in M/s as defined in Section 2(ha) SARFAESI, read with Section 2(g) 2025:KER:79322 O.P(DRT) 246/2025 13 MRB Roadconst of the RDDB Act, expressly includes interest. Therefore, the Pvt. Limited v. pre-deposit is to be calculated not only on the principal Rupee Co-op Bank sum in the Section 13(2) notice but also on the interest Limited (2016 2 accrued till the date of filing of the appeal. If the 13(2) AIR BomR 256) notice itself claims future interest, that also forms part of the debt due. To hold otherwise would contradict the plain statutory language. DRAT was correct in considering outstanding dues (principal + interest) as on the appeal date, after giving credit for payments already made.
"This would not only include the amount mentioned in the section 13(2) notice but also interest accrued thereon till the date of filing of the appeal under section 18 of the SARFAESI Act. To our mind, this is the only interpretation that is possible of the 2nd proviso to section 18 of the SARFAESI Act."
3 Madras High Court (DB) in The Division Bench held that for the purpose of computing Sekar Stores pre-deposit under Section 18(1) SARFAESI, the term Home Mart and "debt"--defined in Section 2(g) RDDBFI Act as "any liability Ors. v. The (inclusive of interest)"--must be given its full meaning. Authorized Consequently, the "amount of debt due" includes not only Officer, Pridhvi the sum quantified in the Section 13(2) notice but also the Asset future interest accrued till the date of filing the appeal. To Reconstruction & restrict the deposit only to the figure in the Section 13(2) Securitisation notice would violate the plain and unambiguous language Company Ltd. of Section 18(1).
(MANU/TN/6032/ 2018) "For the view which I propose to take, I am supported by a Division Bench Judgment of Bombay High Court in M.R.B. Road Construct. Pvt. Ltd. v. Rupee Co-op Bank Ltd. Para 17 to 19 of the Judgment, which is relevant for the present purposes, reads as under:--
"17. On an ex-facie reading of the said definition, it is clear that the word "debt" has been given an extremely wide meaning and means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by such bank or financial institution under any law for the time being in force, otherwise, whether secured or unsecured, or assigned, or whether 2025:KER:79322 O.P(DRT) 246/2025 14 payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application."
11. On a perusal of Section 13(2) notices dated 11.01.2013, it could be seen that the respondent-Bank had claimed a sum of Rs. 11.72 crores as on 31.03.2012 together with interest. The petitioners have not taken into consideration the interest payable by them towards the loan amount. Even after a lapse of six years, the petitioners have not discharged their liability in entirety.
12. The ratio laid down by the Division Bench of the Bombay High Court and Allahabad High Court applies to the facts and circumstances of the present case. Therefore, the orders passed by the Debt Recovery Appellate Tribunal directing the petitioners to make a pre-deposit of 25% of the amount claimed in Section 13(2) notices cannot be held as onerous or unreasonable."
9. While the learned counsel for the petitioners placed reliance on the decisions referred to in Table A, the learned counsel for the respondent, on the other hand, relied upon the judgments enumerated in Table B.
10. The learned counsel for the petitioners, Smt. K. Sanjeetha argues that though the Division Bench of this Court in Union Bank of India v. R. Dhanalakshmi (W.A. No. 233/2020) reversed the decision of the single Bench, which held that future interest after the issuance of Section 13(2) 2025:KER:79322 O.P(DRT) 246/2025 15 notice cannot be reckoned, the Division Bench did so, relying on M/s MRB Roadconst Pvt. Limited v. Rupee Co-op Bank Limited (2016 2 AIR BomR 256) judgment of the Bombay High Court. The learned counsel argued that the judgment of the Supreme Court in Narayana Chandra Ghosh v. UCO Bank (2011) 4 SCC 548, though referred was not discussed in the Division Bench judgment of this Court, and therefore the same has not correctly laid down the law. It is argued that the judgment of the Madras High Court in Sivakumar Textiles v. Debt Recovery Appellate Tribunal, Chennai & Ors.
(AIR 2012 Madras 57), and that of the Mohan Products Pvt. Ltd. v. SBI (W.A. No. 362/2019) of the Chhattisgarh High Court had considered all the relevant judgments and laid down the correct law, holding that interest after the issuance of notice under Section 13(2) cannot be counted.
11. Learned Senior Counsel Sri. Chandran Pillai, for the 1st respondent, argued that the issue is no longer res integra as the Apex Court decided in Sidha Neelkanth Paper Industries Pvt Limited v. Prudent ARC Ltd. (2023 SCC Online SC 12) as follows:
"13. As per Section 2 (ha) of the SARFAESI Act, "debt" shall have the same meaning assigned to it in clause (g) of Section 2 of the Act, 1933. As per 2(g) 2025:KER:79322 O.P(DRT) 246/2025 16 of the Act 1933, "debt" means any liability inclusive of interest which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by the bank or the financial institution, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of the application. That the "debt"
means any liability inclusive of interest.
As per Section 18 of the SARFAESI Act, any person aggrieved, by any order made by the DRT under section 17, may prefer an appeal within thirty days to an appellate Tribunal (DRAT) from the date of receipt of the order of DRT. Second proviso to section 18 provides that no appeal shall be entertained unless the "borrower" has deposited with the Appellate Tribunal fifty percent of the amount of "debt due" from him, as claimed by the secured creditors or determined by the DRT, whichever is less and only and only then, an appeal under Section 18 of the SARFAESI Act is permissible against the order passed by the DRT under Section 17 of the SARFAESI Act. Under Section 17, the scope of enquiry is limited to the steps taken under Section 13(4) against the secured assets. Therefore, whatever amount is mentioned in the notice under Section 13(2) of the SARFAESI Act, in case steps taken under Section 13(2)/13(4) against the secured assets are under challenge before the DRT will be the 'debt due' within the meaning of proviso to Section 18 of the SARFAESI Act. In case of challenge to the sale of the secured assets, the amount mentioned in the sale certificate will have to be considered while determining the amount of pre- deposit under Section 18 of the SARFAESI Act. However, in a case where both are under challenge, namely, steps taken under Section 13(4) against 2025:KER:79322 O.P(DRT) 246/2025 17 the secured assets and also the auction sale of the secured assets, in that case, the "debt due" shall mean any liability (inclusive of interest) which is claimed as due from any person, whichever is higher.
14. In a case where the borrower also challenges the auction sale and does not accept the same and also challenges the steps taken under Section 13(2)/13(4) of the SARFAESI Act with respect to secured assets, the borrower has to deposit 50% of the amount claimed by the secured creditor along with interest as per Section 2(g) of the Act, 1993 and as per Section 2(g), "debt" means any liability inclusive of interest which is claimed as due from any person.
17. ......the borrower has to deposit 50% of the amount of "debt due" as claimed by the bank/financial institution/assignee along with interest as claimed in the notice under Section 13(2) of the SARFAESI Act and the borrower is not entitled to claim adjustment/appropriation of the amount realised by selling the secured properties and deposited by the auction purchaser when the auction sale is also under challenge."
12. Following the judgment of the Hon'ble Supreme Court in Sidha Neelkanth Papers Industries Pvt. Ltd. (supra), three High Courts have subsequently applied and followed the said principle while interpreting the expression "debt due" under Section 18(1) of the SARFAESI Act. The Delhi High Court in Golden Netsoft Pvt. Ltd. v. HDFC Bank Ltd. (MANU/DE/2299/2024), the Gujarat High Court in Shree Ram 2025:KER:79322 O.P(DRT) 246/2025 18 Rayon v. Authorised Officer and Chief Manager, Tamilnad Mercantile Bank Ltd. (MANU/GJ/0239/2023), and the Bombay High Court in Sony Mony Developers Pvt. Ltd. v. Asset Care and Reconstruction Enterprises (MANU/MH/8082/2024) examined the issue and affirmed the broader interpretation of "debt due" adopted in the decision of the Apex Court in Sidha Neelkanth (supra).
13. Upon a cumulative reading of the statutory provisions and the above precedents, I am of the view that the decisions in Sidha Neelkanth Papers Industries Pvt. Ltd. (Supra) and the subsequent judgments that relied and followed Sidha Neelkanth, Golden Netsoft Pvt.
Ltd. v. HDFC Bank Ltd., Shree Ram Rayon v. Tamilnad Mercantile Bank Ltd., and Sony Mony Developers Pvt. Ltd. v. Asset Care and Reconstruction Enterprises - consistently affirm that the expression "debt due" under the proviso to Section 18(1) of the SARFAESI Act necessarily includes the entire liability claimed by the secured creditor, inclusive of accrued and future interest up to the date of appeal. The term "debt", as defined in Section 2(g) of the RDDB Act, is of the widest amplitude, covering any liability inclusive of interest claimed as due from the borrower, and when 2025:KER:79322 O.P(DRT) 246/2025 19 read with Section 18(1) of the SARFAESI Act, it mandates that the pre-
deposit must reflect the borrower's entire subsisting liability, comprising both principal and interest, either as claimed by the secured creditor or as determined by the DRT, whichever is less. There is no exclusion in the statute of future or accrued interest, and, therefore, the computation of "debt due" must necessarily reflect the total liability as on the date of filing of the appeal before the DRAT and not be confined to the amount specified in the Section 13(2) notice. Such an interpretation alone aligns with the legislative intent that a borrower approaching the appellate forum must do so bona fide, with the deposit reflecting the true and continuing debt, inclusive of interest accrued till that date.
14. The judgment of the Apex Court in Sidha Neelkanth (supra) does not exclude such interest; rather, when read as a whole, it supports the computation of "debt due" as on the date of appeal, encompassing both principal and accrued interest. Thus, the statutory definition and the ratio of Sidha Neelkanth (supra), firmly establish that for purposes of the mandatory pre-deposit under Section 18(1), the "debt due" must include not merely the sum mentioned in the Section 13(2) notice but also the 2025:KER:79322 O.P(DRT) 246/2025 20 interest accrued thereon till the date of filing of the appeal, as the borrower's liability under the Act is a continuing one until full discharge of the debt.
15. In Sidha Neelakanth (supra), the Hon'ble Supreme Court had considered and reversed the Delhi High Court Judgment, Prudent ARC Limited v. Sidha Neelkanth Paper Industries and Ors (MANU/DE/2284/2020), insofar as it had held that the "debt due" does not include future interest. In the above judgment of the Delhi High Court, it is held that the borrower has to deposit 50% of the amount of "debt due"
as claimed by the bank/financial institution/assignee and that while computing the "amount of debt due", the amount of the debt claimed by the secured creditor in its notice issued under Section 13 (2) of the Act, shall be relevant and any future interest need not be taken into consideration for purposes of determining, "the amount of debt due as claimed by the secured creditor"/ in cases where the DRT has not determined the liability of a borrower. The Hon'ble Supreme Court has therefore held in Sidha Neelakanth (supra) that the Delhi High Court has erred in excluding the amount payable towards interest while considering 2025:KER:79322 O.P(DRT) 246/2025 21 the "debt due". As per Section 2 (g) of the Act, 1993, "debt" means liability inclusive of interest as claimed by the bank/financial institution.
16. Having regard to the statutory definition and the ratio in Sidha Neelkanth (supra) and other precedents, the term 'debt due' under the proviso to S.18(1) of the Act necessarily includes the interest accruing even after the issuance of notice under S.13(2) of the Act.
17. In view of the above conclusion and noticing that the amount directed to be paid does not exceed 50% of the debt, no interference is warranted with the orders impugned in this original petition.
However, as a measure of indulgence, three weeks' time from today is granted to the petitioners, as a last chance, to comply with the deposit directed by the Appellate Tribunal on 01.08.2025. Needless to say that if the deposit is made as directed above, the appeal shall be heard on merits and appropirate orders will be passed by the Tribunal.
Subject to the above, the Original Petition is dismissed.
Sd/-MOHAMMED NIAS C.P. JUDGE okb 2025:KER:79322 O.P(DRT) 246/2025 22 APPENDIX OF OP (DRT) 246/2025 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE DEMAND NOTICE DATED 26/07/2019 ISSUED BY THE SOUTH INDIAN BANK.
Exhibit P2 TRUE COPY OF THE ASSIGNMENT AGREEMENT DATED
16/07/2021 EXECUTED BETWEEN THE SOUTH
INDIAN BANK LTD AND ASSET RECONSTRUCTION
COMPANY.
Exhibit P3 TRUE COPY OF THE OTS SANCTION LETTER DATED
13/07/2022 ISSUED BY THE RESPONDENT.
Exhibit P4 TRUE COPY OF THE PROCEEDINGS/ORDER NO.
DDMA/01/200/COVID(5/1) DATED 16/03/2020 OF THE CHIEF EXECUTIVE OFFICER, DISTRICT DISASTER MANAGEMENT AUTHORITY, THIRUVANANTHAPURAM.
Exhibit P5 TRUE COPY OF THE JUDGMENT IN WRIT PETITION (C) NO.27889/2021 DATED 14/02/2022 OF THIS COURT.
Exhibit P6 TRUE COPY OF THE JUDGMENT DATED 01/08/2025 IN W.P.(C) NO.6653/2023 OF THIS COURT.
Exhibit P7 TRUE COPY OF THE ORDER DATED 15/11/2024 IN MC NO.1039/2024 OF THE CHIEF JUDICIAL MAGISTRATE COURT, THIRUVANANTHAPURAM.
Exhibit P8 TRUE COPY OF THE JUDGMENT IN WRIT PETITION (C) NO.43827/2024 DATED 13/12/2024 OF THIS COURT.
Exhibit P9 TRUE COPY OF THE SA NO.63/2025 (WITHOUT ANNEXURES) ON THE FILE OF THE DRT-II, ERNAKULAM DATED 06/01/2025.
Exhibit P10 TRUE COPY OF THE STAY PETITION IA
NO.373/2025 IN SA NO.63/2025 ON THE FILE OF
THE DRT-II, ERNAKULAM DATED 10/01/2025.
Exhibit P11 TRUE COPY OF THE COUNTER AFFIDAVIT (WITHOUT
ANNEXURES) FILED BY THE RESPONDENT DATED
14/02/2025 IN IA NO.373/2025 IN SA
NO.63/2025.
Exhibit P12 TRUE COPY OF THE ORDER DATED 05/05/2025 IN
I.A NO.373/2025 IN SA NO.63/2025 OF DRT-II,
ERNAKULAM.
Exhibit P13 TRUE COPY OF THE APPEAL AIR NO.1241/2025
DATED 30/06/2025 (WITHOUT ANNEXURES) FILED 2025:KER:79322 O.P(DRT) 246/2025 23 BY THE PETITIONERS BEFORE THE DRAT, CHENNAI.
Exhibit P14 TRUE COPY OF THE STAY PETITION DATED 30/06/2025 IN AIR NO.1241/2025 FILED BY THE PETITIONERS BEFORE THE DRAT, CHENNAI.
Exhibit P15 TRUE COPY OF THE COUNTER AFFIDAVIT IN IA NO.825/2025 IN APPEAL AIR NO.1241/2025 OF THE DRAT, CHENNAI (WITHOUT ANNEXURES).
Exhibit P16 TRUE COPY OF THE PROCEEDINGS/COMMON ORDER DATED 11/07/2025 IN I.A.NO.823/2025(DELAY) AND IA NO.825/2025 (WAIVER) IN AIR NO.1241/2025 OF THE DRAT, CHENNAI.
Exhibit P17 TRUE COPY OF THE DEMAND DRAFT DATED 17/07/2025 FOR RS.4,56,09,437/- IN FAVOUR OF REGISTRAR, DRAT, CHANNAI.
Exhibit P18 TRUE COPY OF THE REVIEW PETITION RP
NO.1/2025 IN IA NO.825/2025 DATED
17/07/2025 (WITHOUT ANNEXURES) FILED BY THE RESPONDENT.
Exhibit P19 TRUE COPY OF THE ORDER IN CMP NO.3246/2024
IN MC NO.1039/2024 AND COPY OF THE
CORRECTED AFFIDAVIT IN MC NO.1039/2024 ON
THE FILE OF CJM COURT, THIRUVANANTHAPURAM.
Exhibit P20 TRUE COPY OF THE WRITTEN STATEMENT DATED
25/06/2025 (WITH ANNEXURES) FILED BY THE
RESPONDENT BEFORE THE DRT-II IN SA
NO.63/2025.
Exhibit P21 TRUE COPY OF THE PROCEEDINGS DATED
30/07/2025 IN RP NO.1/2025 IN IA
NO.825/2025 IN AIR NO.1241/2025.
Exhibit P22 TRUE COPY OF THE COUNTER AFFIDAVIT DATED
31/07/2025 IN RP NO.1/2025 IN IA
NO.825/2025 ON THE FILE OF DRAT, CHENNAI
(WITHOUT ANNEXURES).
Exhibit P23 TRUE COPY OF THE PROCEEDINGS/ORDER DATED
01/08/2025 IN RP NO.1/2025 IN IA
NO.825/2025 ON THE FILE OF DRAT, CHENNAI.
Exhibit P24 TRUE COPY OF THE LETTERS ALONG WITH THE
DOCKET PRODUCED BY THE RESPONDENT BEFORE
THE CJM COURT, THIRUVANANTHAPURAM IN MC
NO.1039/2024.