SARFAESI Pre-Deposit Must Reflect Actual Debt Post-13(3A) Exchange | HC

Case Details: Prime Downtown Estates (P.) Ltd. v. Omkara Assets Reconstruction Company (P.) Ltd. - [2025] 174 taxmann.com 13 (HC-Bombay)

Judiciary and Counsel Details

• A.S. Chandurkar & M.M. Sathaye, JJ.
• Nitin Thakkar, Sr. Adv., Nishit Dhruva, Ms Prashansa Agrawal, Darshit Rupda & Bhavesh Poojary, Advs. for the Petitioner.
• Vikram Nanakani, Sr. Adv., Malhar Zatakia, Kunal Kanungo, Atishay Jain, Ms Sushmita Gandhi, Ms Anamika Singh, Kushal Boolchandani, Ms Kritika Garg, Ayush Rajani & Ms Khushboo Shah, Advs. for the Respondent.

Facts of the Case

In the instant case, the bank had sanctioned a loan to the borrower, which later became a Non-Performing Asset (NPA). The bank issued a notice under section 13(2) of the SARFAESI Act, 2002, to both the borrower and the petitioner-mortgagor.

Under section 13(3A) of the Act, the mortgagor replied that the loan had been used solely for the project construction costs and should not make the mortgagor liable for repayment.

The mortgagor filed a Securitisation application to prevent further action. However, the DRT rejected this application. The Mortgagor appealed to the DRAT and requested a waiver of pre-deposit for the appeal.

During this process, the property was sold, and the debt was assigned to respondent no.1. DRAT directed the mortgagor to deposit Rs. 248.45 crore in three instalments to proceed with the appeal under section 18(1) of the SARFAESI Act.

It was noted that the mortgagor is considered a borrower, and if the amount due from them under the mortgage is the amount for pre-deposit purposes under section 18(1) of the Act. Further, while determining the amount of pre-deposit under the 2nd and 3rd provisos to section 18(1), there is no reason to exclude consideration of the objection/representation given by the borrower and the bank’s response.

High Court Held

The High Court held that if a lesser liability of borrower/mortgagor is indicated in bank’s response than liability indicated in notice issued under section 13(2), or even if absence of liability is shown, the same is required to be taken into consideration while arriving at pre-deposit figure under 2nd and 3rd proviso to section 18(1) of the Act. Therefore, the petitioner’s reply and the Bank’s rejoinder must be considered before arriving at a figure of ‘debt due’.

List of Cases Reviewed

• Keystone Constructions v. State Bank of India, [2013 SCC OnLine Bom 2098] (para 9) followed.

List of Cases Referred to

• Keystone Constructions v. State Bank of India 2013 SCC OnLine Bom 2098 (para 5)
• Sree Jeya Soundharam Textile Mills Pvt. Ltd. v. Canara Bank & Ors. 2019 SCC OnLine Mad 30541 (para 6)
• Narayan Chandra Ghosh v. UCO Bank & Ors. (2011) 4 SCC 548 (para 6).