LexAXIS BANK versus SBS ORGANICS PRIVATE LIMITED AND ANOTHER
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A B c D E [2016] 2 S.C.R. 920 AXIS BANK v . . , SBS ORGANICS PRJVATE LIMITED AND ANOTHER (Civil Appeal No. 4379 of2016) APRIL 22, 2016 [KURIAN JOSEPH AND ROHINTON FALi NARIMAN, JJ.] Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - s.18 - Appeal under - Partial deposit by borrower before the Debt Recovery Appellate Tribunal as a pre-condition for considering the appeal on merits - Borrowers right to get back the deposit -- Held: Partial deposit is not a secured asset - It is not a secured debt either. since the borrower or the aggrieved person has not created any security interest on such pre-deposit in favour of the secured creditor - On disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, on prayer by the borrower for refund of the pre-deposit, the same has to be allowed - On facts, deposit made before the DRAT is to be refunded to the first respondent-borrower - Security Interest (Enforcement) Rules, 2002. Dismissing the appeal, the Court HELD: 1.1 The actual appeal is contemplated under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Any person aggrieved by the order of the DRT under Section 17 of the F SARFAESI Act, is entitled to prefer an appeal along with the prescribed fee within the permitted period of 30 days. For 'preferring' an appeal, a fee is prescribed, whereas for the Tribunal to 'entertain' the appeal, the aggrieved person has to make a deposit of fifty 11er cent of the amount of debt due from him as claimed by the secured creditors or determined by the G DRT, whichever is less. This amount can, at the discretion of the Tribunal, in appropriate cases, for recorded reasons, be reduced to twenty-five per cent of the debt. [Paras 18, 19] (931-D-E; 932- B-C] 1.2 The appeal under Section 18 of the Act is permissible H only against the order passed by the DRT under Section 17 of 920 AXIS BANK v. SBS ORGANICS PRIVATE LIMITED the Act. Under Section 17, the scope of enquiry is limited to the steps taken under Section 13(4) against the secured assets. The partial deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of Section 18 of the Act, is not a secured asset. It is not a secured debt either, since the borrower or the aggrieved person has not created any security interest on such pre-deposit in favour of the secured creditor. If that be so, on disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, in case, the appellant makes a prayer for refund of the pre-deposit, the same has to be allowed and the pre-deposit has to be returned to the appellant, unless the appellate tribunal, on the request of the secured creditor but with the consent of the depositors, had already appropriated the pre-deposit towards the liability of the borrower, or with "the consent, had adjusted the amount towards the dues, or if there be any attachment on the pre-deposit in any proceedings under Section 13(10) of the Act read with Rule 11 of The Security Interest (Enforcement) Rules, 2002, or if there be any attachment in any other proceedings known to law. The submission that the Bank has a lien on the pre-deposit made under Section 18 of the SARFAESI Act in terms of Section 171 of the Contract Act, 1872 cannot be accepted. [Paras 22, 23] [934-B-H; 935-A] 1.3 Section 171 of the Contract Act, 1872 provides for retention of the goods bailed to the bank by way of security for the general balance of account. The pre-deposit made by a borrower for the purpose of entertaining the appeal under Section 18 of the Act is not with the bank but with the Tribunal. It is not a bailment with the bank as provided u/s. 148 of the 1872 Act. [Para 24] [935-C-D] 1.4 The first respondent had in fact sought withdrawal of the appeal, since the appellant had already proceeded against the secured assets by the time the appeal came up for consideration on merits. There is neither any order of appropriation during the pendency of the appeal nor any attachment on the pre-deposit. Therefore, the deposit made by the first respondent is liable to be returned to the first respondent. Though for different reasons as well, the view taken by the High Court is endorsed. Thus, there is no merit in the appeal. [Paras 25, 26] [935-E-F] 921 A B c D E
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