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Kotak Mahindra Bank Pvt. Limited v. Ambuj A. Kasliwal & Ors.

Civil Appeal · 2021 INSC 90Decided 16 Feb 2021
Civil Appeal No. 538 of 2021
Chief Justice S.A. Bobde · Justice A.S. Bopanna · Justice V. Ramasubramanian

Background

A company had defaulted on loans guaranteed personally by respondents 1 and 2; the Bank (as assignee of the debt) obtained a recovery certificate from the Debts Recovery Tribunal (DRT) for Rs. 145 crore with interest, after accounting for a large compensation amount (over Rs. 152 crore) received from land acquisition of the company's mortgaged property. When the guarantors appealed to the Debts Recovery Appellate Tribunal (DRAT), they sought a full waiver of the mandatory pre-deposit under Section 21 of the RDBA Act, arguing the compensation already received exceeded the decretal debt. The DRAT ordered a 50% pre-deposit on the remaining balance, but the Delhi High Court set that aside and allowed the guarantors to appeal without any pre-deposit, prompting the Bank's appeal to the Supreme Court along with a contempt petition over non-compliance with an earlier Rs. 20 crore deposit direction.

Decision Breakdown

The Supreme Court held that Section 21 of the RDBA Act mandates a pre-deposit of 50% of the debt due before an appeal can be entertained, with discretion to reduce this only down to a floor of 25% for recorded reasons, never to a complete waiver, relying on its own precedent on the analogous SARFAESI Act provision (Narayan Chandra Ghosh v. UCO Bank). Since the DRAT had itself found a balance debt of roughly Rs. 68 crore still outstanding even after crediting the compensation amount, the High Court had no power to waive the pre-deposit entirely, and its order was set aside. Taking into account that a major portion of the debt had already been recovered through the compensation money and that the guarantors' remaining mortgaged property secured the balance, the Court modified the DRAT's order to require a reduced pre-deposit of 25% (rather than 50%) of the outstanding amount, to be paid within 8 weeks failing which the appeal would not survive; the related contempt petition was closed as unnecessary since the earlier interim deposit direction had been superseded.

Lesson Learnt

The statutory pre-deposit requirement for appeals under debt-recovery and securitisation laws is mandatory and cannot be waived entirely by a court or tribunal, even where a large sum has already been recovered: at most it can be reduced to the statutory floor (here 25%) for recorded reasons.

Official source (sci.gov.in)View Judgment (PDF)

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