Summary
The Supreme Court held that the statutory pre-deposit for a debtor’s DRAT appeal could not be waived entirely. Section 21 permitted reduction from fifty per cent to no less than twenty-five per cent of the debt due, for recorded reasons. Earlier recoveries had been credited, yet a balance remained for pre-deposit purposes. On these facts the Court allowed the guarantors to deposit twenty-five per cent of Rs 68,18,92,841 within eight weeks, leaving the actual debt and appeal merits open. The connected contempt petition was closed.
Issues
- Whether the High Court could waive the DRAT appeal pre-deposit entirely and what deposit was appropriate on these facts.
Provisions considered
- Section 21, Recovery of Debts and Bankruptcy Act, 1993Pre-deposit was mandatory; reduction for recorded reasons could not go below twenty-five per cent of the debt determined due. (¶¶ 9-14, 16-20)
Held
- The statutory discretion extends from fifty to twenty-five per cent, not to complete waiver. The High Court could not dispense entirely with the condition where debt remained due. (¶ 9-14)
- The DRAT had already credited the acquisition compensation received by the bank and identified a remaining balance. Merely pointing to that recovery did not justify treating the appeal as exempt from deposit. (¶ 12-14)
- Given the substantial recovery, remaining mortgaged security and the appellants’ position as guarantors, the minimum twenty-five per cent deposit was appropriate. The balance used for this calculation did not finally determine the actual debt. (¶ 16-18)
- The deposit was to be made within eight weeks, failing which the appeal would not subsist. In view of the final order, the earlier interim deposit direction lost relevance and the contempt petition was closed as unnecessary. (¶ 19-20)
Result
Appeal partly allowed; High Court waiver set aside and DRAT order modified to require twenty-five per cent of Rs 68,18,92,841 within eight weeks. Actual debt and merits left open; contempt petition closed. No costs.