Union Bank Of India vs M/S. Suwique Traders on 26 June, 2025

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Kerala High Court

Union Bank Of India vs M/S. Suwique Traders on 26 June, 2025

The respondents in O.P.(DRT)No.173 of 2025 are before this Court in this writ appeal, invoking the provisions under Section 5(i) of the Kerala High Court Act, 1958, challenging the judgment of the learned Single Judge dated 16.06.2025 in that original petition filed under Article 227 of the Constitution of India to the extent the appellants, namely, the Union Bank of India and its Authorised Officer, are directed to keep in abeyance further coercive steps against the respondents-petitioners under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), till appropriate orders are passed by the Debts Recovery Appellate Tribunal, Chennai in Ext.P3 application for stay and Ext.P4 application for waiver of pre-deposit filed in Ext.P2 appeal challenging Ext.P1 order dated 17.04.2025 of the Debts Recovery Tribunal-2, Ernakulam in S.A.No.404 of 2024.

2. The respondents-petitioners filed S.A.No.404 of 2024 before the Debts Recovery Tribunal-2, Ernakulam, invoking the provisions under Section 17(1) of the SARFAESI Act, challenging 2025:KER:46809 WA NO. 1514 OF 2025 4 the demand notice dated 31.01.2024, possession notices dated 11.04.2024 issued by the 2nd appellant Authorised Officer as well as the sale notice and Section 14 measures initiated by the Bank against the secured assets in respect of the financial facilities availed by them from the 1st appellant Bank. The amount mentioned in the demand notice issued under Section 13(2) of the SARFAESI Act, was Rs.3,01,59,964.99. The Tribunal by Ext.P1 order dated 17.04.2025 dismissed S.A.No.404 of 2024 with a cost of Rs.30,000/- to the 1st appellant Bank on a finding that the applicants, the respondents herein, caused unnecessary delay in the securitisation proceedings without any valid ground. In Ext.P1 order the Tribunal found that the applicants have raised only general averments challenging the measures under Section 14 of the SARFAESI Act. No specific illegality in the securitization proceedings causing substantial prejudice to the applicants is raised in the Securitisation Application. As evident from the endorsement made on Ext.P1 order, a free copy of the same was delivered to the respondents herein from the office of the Debts Recovery Tribunal on 22.04.2025.

3. Challenging Ext.P1 order dated 17.04.2025 of the 2025:KER:46809 WA NO. 1514 OF 2025 5 Debts Recovery Tribunal-2, Ernakulam in S.A.No.404 of 2024, the respondents herein filed Ext.P2 memorandum of appeal under Section 18(1) of the SARFAESI Act before the Debts Recovery Appellate Tribunal, Chennai, on 15.05.2025, which is assigned with Diary No.900 of 2025. The said appeal is accompanied by Ext.P3 I.A. with Diary No.902 of 2025 filed under Section 18(1), seeking stay of all further proceedings initiated by the Bank under the provisions of the SARFAESI Act, pursuant to Ext.P1 order dated 17.04.2025 of the Debts Recovery Tribunal, pending disposal of the appeal; and Ext.P4 I.A. with Diary No.901 of 2025 filed under Section 18(1), seeking an order of complete waiver of statutory pre-deposit to be made to the Bank of the outstanding dues and to pass such other suitable order or orders as the Appellate Tribunal may deem fit, in the facts and circumstances of the case. The document marked as Ext.P5 is another I.A. with Diary No.1105 of 2025 filed on 26.05.2025 under Section 18(1), seeking an order to hear the waiver petition, i.e., Ext.P4 I.A., on an urgent basis and pass appropriate orders. The document marked as Ext.P6 is a copy of the notice dated 10.06.2025 issued by the Advocate Commissioner appointed by the Chief Judicial 2025:KER:46809 WA NO. 1514 OF 2025 6 Magistrate Court, Kottayam, in M.C.No.770 of 2024 demanding vacant possession of the secured asset. In O.P.(DRT)No.173 of 2025 filed before this Court on 13.06.2025, the respondents herein sought for the following reliefs;

"(1) Call for the files leading to Ext.P2 appeal memorandum and to pass order directing the respondent bank to kept in abeyance of proceedings for dispossession of the petitioners, until the Ext.P2 Appeal filed before the DRAT, Chennai get listed and orders passed in Ext.P3 stay petition;

(2) Issue appropriate orders in original petition or direction by ordering to direct the Debts Recovery Appellate Tribunal, Chennai to post Ext.P2 appeal along with Ext.P3 stay petition before the bench, finalising the scrutiny of the same, within the time as framed by this Hon'ble Court."

4. On 16.06.2025, when O.P.(DRT)No.173 of 2025 came up for admission, the learned counsel for the respondents herein submitted that the respondents have already filed Ext.P2 appeal before the Debts Recovery Appellate Tribunal, Chennai, in which Ext.P3 stay petition and Ext.P4 application for waiver of pre- deposit have been filed. Ext.P5 application has also been filed for urgent posting. After hearing the learned counsel for the petitioners and the learned Standing Counsel for Union Bank of 2025:KER:46809 WA NO. 1514 OF 2025 7 India for the respondents, the learned Single Judge disposed of the original petition by the impugned judgment dated 16.06.2025. Paragraph 3 of that judgment reads thus;

"3. After hearing the learned counsel for the petitioners and Sri.R. Ranjit, the learned counsel for respondents and taking note of the fact that Exts.P3 and P4 applications are pending before the Appellate Tribunal, there will be a direction to the Debts Recovery Appellate Tribunal, Chennai to pass appropriate orders in the applications referred to above in Ext.P2 appeal preferred against the final order dated 17.04.2025 in S.A.No.404 of 2024 by the Debts Recovery Tribunal-II, Ernakulam. Appropriate orders shall be passed in accordance with law on Exts.P3 and P4 within a month from the date of receipt of a copy of this judgment. Till orders are passed as directed above, further coercive steps against the petitioner shall be kept in abeyance."

(underline supplied)

5. As already noticed hereinbefore, the impugned judgment of the learned Single Judge to the extent the appellants are directed to keep in abeyance further coercive steps against the respondents under the provisions of the SARFAESI Act, till appropriate orders are passed by the Debts Recovery Appellate Tribunal, Chennai, in Ext.P3 application for stay and Ext.P4 application for waiver of pre-deposit filed in Ext.P2 appeal 2025:KER:46809 WA NO. 1514 OF 2025 8 challenging Ext.P1 order dated 17.04.2025 of the Debts Recovery Tribunal-2, Ernakulam in S.A.No.404 of 2024, is under challenge in this writ appeal.

6. Heard the learned Standing Counsel for Union Bank of India for the appellants-respondents and the learned counsel for the respondents-petitioners.

7. The issue that requires consideration in this writ appeal is as to whether the direction contained in the impugned judgment dated 16.06.2025 of the learned Single Judge in O.P.(DRT)No.173 of 2025 to the extent the appellants are directed to keep in abeyance further coercive steps against the respondents under the provisions of the SARFAESI Act, till appropriate orders are passed by the Debts Recovery Appellate Tribunal, Chennai, in Ext.P3 application for stay and Ext.P4 application for waiver of pre- deposit filed in Ext.P2 appeal, warrants interference in this writ appeal filed under Section 5(i) of the Kerala High Court Act.

8. As already noticed hereinbefore, O.P.(DRT)No.173 of 2025 is one filed by the respondents herein for the reliefs quoted hereinbefore at paragraph 3, invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India. The 2025:KER:46809 WA NO. 1514 OF 2025 9 second relief sought for in the original petition is one seeking direction against the Debts Recovery Appellate Tribunal, in exercise of the supervisory jurisdiction under Article 227 of the Constitution of India. However, the first relief sought for in the original petition, i.e., an order directing the 1st appellant Bank to keep in abeyance the proceedings for dispossession of the petitioners until Ext.P2 appeal filed before the Debts Recovery Appellate Tribunal get listed and orders passed in Ext.P3 stay petition, is one invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India.

9. In State Bank of India v. M/s. Kinship Services (India) (P) Ltd. [2013 (4) KHC 21] a Division Bench of this Court, after taking note of the judgment of the Apex Court in State of Madhya Pradesh v. Sanjay Kerlaker [(2009) 17 SCC 766], held that a writ appeal can be entertained under Section 5(i) of the Kerala High Court Act, 1958 against the interim order dated 06.09.2013 passed by the learned Single Judge in O.P.(DRT)No.2931 of 2013, staying confirmation of sale till further orders in respect of one item of property, which was sought to be sold in the auction scheduled to be held on 11.09.2013 under 2025:KER:46809 WA NO. 1514 OF 2025 10 SARFAESI proceedings, since the nature of the interim relief granted by the learned Single Judge is nothing but a discretion exercised under Article 226 of the Constitution of India.

10. The learned counsel for the respondents-petitioners would point out the judgment of this Court dated 29.05.2025 in W.A.No.1021 of 2025 - P.B. Manaf and others v. Union Bank of India and others [2025:KER:37622]. In the said writ appeal filed under Section 5(i) of the Kerala High Court Act, this Court was dealing with a case in which though the writ petition was filed under Article 226 of the Constitution of India, the relief sought for was a writ of certiorari to quash an order dated 08.01.2025 of the Sessions Court, Ernakulam in Crl.M.P.No.102 of 2025 in Crl.R.P.No.3 of 2025. The respondents in that writ petition raised a contention that such a relief cannot be granted under Article 226 of the Constitution of India and therefore, the writ petition is not maintainable. Relying on the law laid down by the Apex Court in Ramesh Chandra Sankla v. Vikram Cement [(2008) 14 SCC 58] the learned Single Judge held that mere description or the nature of a petition filed does not determine the nature of the jurisdiction that may be exercised by the High Court. It is well 2025:KER:46809 WA NO. 1514 OF 2025 11 within the jurisdiction of the High Court under Article 227 of the Constitution of India to set aside an order of any court subordinate to it, where the High Court is of the opinion that the court subordinate to it has exercised a jurisdiction not vested in it. On the facts of the case on hand, the learned Single Judge found that the exercise of the power of revision by the Sessions Court was not warranted for the reason indicated in the judgment and, therefore, set aside Ext.P1 order in exercise of the jurisdiction vested in the High Court under Article 227 of the Constitution of India. Therefore, in P.B. Manaf [2025:KER:37622], the Division Bench, after taking note of the law laid down in John V.O. v. Catholic Syrian Bank and others [2009 (1) KHC 337] held that the appellants cannot invoke the appellate jurisdiction of this Court under Section 5(i) of the Kerala High Court Act, in order to challenge the impugned judgment dated 10.04.2025 of the learned Single Judge in W.P.(C)No.14656 of 2025.

11. In the case on hand, the first relief sought for in O.P.(DRT)No.173 of 2025 is an order directing the 1st appellant Bank to keep in abeyance the proceedings for dispossession of the petitioners until Ext.P2 appeal filed before the Debts Recovery 2025:KER:46809 WA NO. 1514 OF 2025 12 Appellate Tribunal get listed and orders passed on Ext.P3 stay petition and Ext.P4 application for waiver of pre-deposit, which is one invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India. The direction contained in the impugned judgment dated 16.06.2025 of the learned Single Judge, which is under challenge in this writ appeal, i.e., the direction to the appellants to keep in abeyance further coercive steps against the respondents under the provisions of the SARFAESI Act, till appropriate orders are passed by the Debts Recovery Appellate Tribunal, Chennai, in Ext.P3 application for stay and Ext.P4 application for waiver of pre-deposit, is one granted by the learned Single Judge in exercise of the discretion under Article 226 of the Constitution of India. In view of the law laid down by the Division Bench in M/s. Kinship Services (India) (P) Ltd. [2013 (4) KHC 21], we find that the challenge made in this writ appeal against the impugned judgment of the learned Single Judge to the extent of granting such a direction against the 1st appellant Bank is perfectly maintainable in an intra court appeal filed under Section 5(i) of the Kerala High Court Act.

12. The learned Standing Counsel for the 1st appellant Bank 2025:KER:46809 WA NO. 1514 OF 2025 13 would point out that Ext.P2 appeal filed before the Debts Recovery Appellate Tribunal, by the respondents herein, invoking the provisions under Section 18 of the SARFAESI Act, is accompanied by Ext.P4 I.A. seeking an order of complete waiver of pre-deposit to be made to the Bank of the outstanding dues and to pass such other suitable orders as the Appellate Tribunal may deem fit, in the facts and circumstances of the case. Such a relief is beyond the scope of the third proviso to Section 18(1) of the SARFAESI Act. In such circumstances, the learned Single Judge went wrong in exercising the discretion under Article 226 of the Constitution of India and directing the appellants to keep in abeyance further coercive steps against the respondents under the provisions of the SARFAESI Act, till appropriate orders are passed by the Debts Recovery Appellate Tribunal on Exts.P3 and P4 applications filed in Ext.P2 appeal.

13. The submission of the learned counsel for the respondents is that when Ext.P2 appeal filed before the Debts Recovery Appellate Tribunal, invoking the provisions under Section 18(1) of the SARFAESI Act, is accompanied by Ext.P4 application invoking the third proviso to Section 18(1) for waiver of the pre-

2025:KER:46809 WA NO. 1514 OF 2025 14 deposit provided under the second proviso to Section 18(1), the respondents herein are required to remit only the prescribed fee as provided under Section 18(1) of the Act, at the time of preferring an appeal against the order of the Debts Recovery Tribunal in a Securitisation Application filed under Section 17, and the question of deposit with the Appellate Tribunal the pre-deposit provided under the second proviso to Section 18(1) arises only on an order being passed by the Appellate Tribunal on the application for waiver.

14. Section 18 of the SARFAESI Act, which deals with appeal to Appellate Tribunal, reads thus;

"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 the 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 2025:KER:46809 WA NO. 1514 OF 2025 15 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) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder."

15. In view of the provisions under Section 18(1) of the SARFAESI Act, any person aggrieved, by an order made by the Debts Recovery Tribunal under Section 17, may prefer an appeal along with such fee, as may be prescribed, to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal. As per the second proviso to Section 18(1) 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. As per the third proviso to Section 18(1), the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of debt referred to in the second 2025:KER:46809 WA NO. 1514 OF 2025 16 proviso.

16. In Narayan Chandra Ghosh v. Uco Bank [(2011) 4 SCC 548] the question that came up for consideration before the Apex Court was whether the Debts Recovery Appellate Tribunal has the jurisdiction to exempt a person preferring an appeal under Section 18 of the SARFAESI Act from making any pre-deposit in terms of the said provision. After quoting the provisions under Section 18 of the Act, the Apex Court noticed that Section 18(1) of the said Act confers a statutory right on a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17 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 Section 18(1), 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 2025:KER:46809 WA NO. 1514 OF 2025 17 to in the second proviso. Thus, there is an absolute bar to the 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 the 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.

17. In Narayan Chandra Ghosh [(2011) 4 SCC 548], the Apex Court noticed 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 SARFAESI Act, the conditions hedged in the second proviso to Section 18(1) cannot be said to be onerous. Thus, the Apex Court held that the requirement of pre-deposit under the second proviso to Section 18(1) 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 2025:KER:46809 WA NO. 1514 OF 2025 18 full effect to the provisions of the statute. Therefore, the Apex Court concluded that the deposit under the second proviso to Section 18(1), 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.

18. In Narayan Chandra Ghosh [(2011) 4 SCC 548], before the Apex Court, the argument of the learned counsel for the appellant was that as the amount of debt due had not been determined by the Debts Recovery Tribunal, the appeal could be entertained by the Appellate Tribunal without insisting on pre- deposit. The Apex Court found the said argument as fallacious. The Apex Court noticed that, under the second proviso to Section 18(1) of the SARFAESI 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 an appeal, would be liable to deposit fifty per cent of 2025:KER:46809 WA NO. 1514 OF 2025 19 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 provisos to the Section 18(1). 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. Therefore, the Apex Court was convinced that the order of the Appellate Tribunal, entertaining the appellant's appeal without insisting on pre-deposit was clearly unsustainable and, therefore, the decision of the High Court in setting aside the same cannot be flawed.

19. In view of the provisions under Section 18(1) of the SARFAESI Act and the law laid down by the Apex Court in Narayan Chandra Ghosh [(2011) 4 SCC 548] there is an absolute bar to the entertainment of an appeal under Section 18 unless the condition precedent, as stipulated in the second proviso to Section 18(1), is fulfilled. As held by the Apex Court, the requirement of pre-deposit under the second proviso to Section 2025:KER:46809 WA NO. 1514 OF 2025 20 18(1) is mandatory, and the Debts Recovery Appellate Tribunal, which is a creature of the statute, cannot refuse to give full effect to the provisions of Section 18(1). In view of the provisions contained in the second and third provisos to Section 18(1), a complete waiver of pre-deposit is beyond the provisions of Section 18(1). In an appeal filed under Section 18, which is accompanied by an application for waiver of pre-deposit, invoking the provisions under the third proviso to Section 18(1), the Appellate Tribunal can, for reasons to be recorded in writing, reduce the pre-deposit to not less than twenty-five per cent of the debt referred to in the second proviso to Section 18(1).

20. When complete waiver of pre-deposit is beyond the provisions of Section 18(1) of the SARFAESI Act, it cannot be contended that, a person aggrieved by any order made by the Debts Recovery Tribunal under Section 17, can prefer an appeal before the Appellate Tribunal, within the time limit specified in Section 18(1), along with an application for complete waiver of pre-deposit under the second proviso to Section 18(1), after remitting only the fee provided under Section 18(1), since the Appellate Tribunal cannot grant complete waiver of pre-deposit, 2025:KER:46809 WA NO. 1514 OF 2025 21 which is beyond the scope of the provisions contained in the second and third provisos to Section 18(1). In that view of the matter, in an appeal filed under Section 18 of the Act, which is accompanied by an application invoking the provisions of the third proviso to Section 18(1) for waiver of pre-deposit, as stipulated in the second proviso to Section 18(1), the appellant has to deposit with the Appellate Tribunal twenty-five per cent of the debt referred to in the second proviso to Section 18(1). The Appellate Tribunal cannot entertain, i.e., give judicial consideration of an appeal filed under Section 18 and the interlocutory application filed under the third proviso to Section 18(1) for waiver of pre- deposit, as stipulated in the second proviso to Section 18(1), unless the appellant has deposited with the Appellate Tribunal twenty-five per cent of the debt referred to in the second proviso to Section 18(1). Therefore, we find absolutely no merit in the submission of the learned counsel for the respondents-petitioners that the respondents are required to remit only the prescribed fee as provided under Section 18(1) of the Act, at the time of preferring Ext.P2 appeal and the question of deposit with the Appellate Tribunal the pre-deposit provided under the second 2025:KER:46809 WA NO. 1514 OF 2025 22 proviso to Section 18(1) arises only on an order being passed by the Appellate Tribunal on the application for waiver.

21. In the case on hand, Ext.P2 appeal filed by the respondents herein before the Appellate Tribunal, invoking the provisions under Section 18 of the SARFAESI Act is accompanied by Ext.P4 I.A for complete waiver of the pre-deposit to be made under the second proviso to Section 18(1), which is beyond the scope of the third proviso to Section 18(1), in view of the law laid down by the Apex Court in Narayan Chandra Ghosh [(2011) 4 SCC 548]. Therefore, the learned Single Judge went wrong in directing the 1st appellant Bank, in exercise of the discretion under Article 226 of the Constitution of India, to keep in abeyance the proceedings for the dispossession of the respondents herein until Ext.P2 appeal filed before the Debts Recovery Appellate Tribunal get listed and orders passed in Ext.P3 application for stay and Ext.P4 application for waiver of pre-deposit.

22. In such circumstances, we find absolutely no grounds to sustain the direction contained in the impugned judgment dated 16.06.2025 of the learned Single Judge in O.P.(DRT)No.173 of 2025, to the extent of interfering with the coercive steps initiated 2025:KER:46809 WA NO. 1514 OF 2025 23 by the 1st appellant Bank under the provisions of the SARFAESI Act, whereby the appellants are directed to keep in abeyance further coercive steps against the respondents herein under the provisions of the said Act, till appropriate orders are passed by the Debts Recovery Appellate Tribunal in Ext.P3 application for stay and Ext.P4 application for waiver of pre-deposit in Ext.P2 appeal filed under Section 18.

In the result, this writ appeal is allowed as above.

Sd/-

ANIL K. NARENDRAN, JUDGE Sd/-

MURALEE KRISHNA S., JUDGE rkr

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