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4. Since the amount demanded was not paid under Section 13(2) of the SARFAESI Act, measures under Section 13(4) of the SARFAESI Act were initiated by the respondent No.5/Andhra bank that took over possession of one of the mortgaged properties, being property bearing No.170 Deepali Pitampura, Delhi-110034. Respondents No.2 and 3/Mr. Ram Niwas Gupta and Mrs. Saroj Jindal filed S.A. No.264/2013 before the DRT-III, challenging the measures taken by the respondent No.5/Andhra Bank under Section 13(4) of the SARFAESI Act.

23. Under Section 13(2) of the SARFAESI Act, a secured creditor is required to issue a notice requiring a defaulting borrower to discharge its liabilities in full. If on receipt of such a notice, the borrower is unable to discharge its debts, the secured creditor is free to take recourse under Section 13(4) of the SARFAESI Act which includes taking over possession of the mortgaged property and selling the same, etc. The borrower can only approach the DRT for relief by invoking Section 17 of the SARFAESI Act. It is appropriate to mention that Section 17(2) as originally enacted, required the borrower to deposit 75% of the amount of debt due in order to question any decision taken under Section 13(4) of the SARFAESI Act. However, the said provision was struck down by the Supreme Court in Mardia Chemicals Ltd. v. Union of India, reported as (2004) 4 SCC 311, on the ground that since proceedings under Section 17 of the Act were akin to approaching the courts, such a provision in the first instance, was too onerous. After examining the requirement of making a pre-deposit prescribed in other statutes, the Supreme Court held that in all other statutes, pre-deposit was demanded at the appellate stage. Therefore, Section 17(2) as it stood then, requiring a deposit of 75% at the first instance, could not withstand the test of Article 14 of the Constitution of India and was struck down.

51. A sequitor to a decision taken by a secured creditor to enforce its security interest under Section 13(4) of the Act is the initiation of proceedings under Section 17, followed by Section 18 of the SARFAESI Act.

52. A perusal of the scheme under Section 13 of the SARFAESI Act would demonstrate that under Section 13(2), the secured creditor claims the debt which is due to it and this amount includes the principal and the interest accrued thereon. If the borrower fails to pay the said amount within the time stipulated under Section 13, then the secured creditor has got the option of either selling the property, or taking over the management of the borrower. Once possession of the property is taken over or the business is taken over by the Bank or the ARC, as the case may be, then can it be said that the meter of interest on the principal amount due would continue to run for purposes of entertaining an appeal under Section 18 of the SARFAESI Act ? In our view, once a property is taken over by the secured creditor and the borrower loses control over the same, for it to be sold without there being a determination of the amount due under the RDDB Act, then 'the amount due' cannot include the interest accrued on the principal amount, after issuance of the Section 13(2) notice for purposes of Section 18 of the SARFAESI Act'.

60. For avoidance of all doubts and at the cost of repetition, it is clarified that this court is refraining from commenting on the liability of a borrower to pay interest after issuance of a notice under Section 13(2) of the SARFAESI Act and the observations made above of non-accrual of interest after issuance of the notice under Section 13(2) are only in the context of filing an appeal under Section 18 of the SARFAESI Act and no more.

61. This leaves the last issue which is that in the event a portion of the debt has been recovered by the secured creditor, would that impact the amount of pre deposit required to be made by the aggrieved person under the Act for maintaining an appeal ?