1. The appellants, who are husband and wife, and before the Tribunal below are the Security Applicants having filed a petition under Section 17(1) (being S.A. No. 61/2008) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) sought to be sold by way of public auction by the respondent Bank claiming the same to have been mortgaged in its favour by respondent No. 3 herein, to secure the repayment of loan which had been granted by the respondent No. 1 Bank to respondent No. 4 herein and for taking over physical possession of that property the CMM had appointed a Court Receiver, respondent No. 2 herein. The appellants have been successful so far in retaining the possession of their property because of this legal battle going on since the year 2008 and the Tribunal below, which is the creation under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, object behind which was ensuring speedy recovery of monies which the Banks and Financial Institutions are to recover from their defaulting borrowers, has also not been unfortunately able to bring that battle to an end within the time prescribed under Section 17(5) of SARFAESI Act.

2. The appellants moved an application before the DRT seeking permission of the Tribunal to cross-examine the Banks witness. That application has been rejected by the DRT vide impugned order dated 7.3.2016 and the appellants are now before this appellate Tribunal for a second time with an appeal under Section 18 of the SARFAESI Act challenging the said order of the DRT rejecting their application. Earlier in the year 2010 they had approached this Tribunal when the DRT had rejected their application for amendment of their S.A. which they had filed under Section 17(1) of SARFAESI Act.

3. The appellants along with this appeal had filed one application being M.A. No. 248/2016 and sought waiver of the condition of pre-deposit of 50% of the amount of debt claimed by the Bank from its defaulting borrower through notice of demand under Section 13(2) of SARFAESI Act for the entertainment of this appeal, as is the requirement of law under Section 18(2) of this Act.

4. The main argument advanced by Mr. Rajeeve Mehra, learned senior Counsel for the appellants was that since the appellants are neither borrowers nor guarantors but are third parties trying to save their residential house from being auctioned by the respondent No. 1 Bank to recover its money advanced by it to respondent No. 4 herein as a financial facilities during the period 2002 2007 and to secure which respondent No. 3 had created equitable mortgage of the property in dispute which is 1st floor of property No. 401. Gagan Vihar, New Delhi, in favour of the Respondent No.1 in the year 2002. The appellants claimed before the DRT that the appellant No. 1 was sold the property in dispute by the owner, respondent No. 3 herein, in November, 2003 after showing the original title document and promising to hand over the same subsequently on some excuses and since the appellants knew the said seller they went ahead with the registration of the sale deed in November, 2003 without insisting for the original sale deed at that time. The litigation started when the Bank started initiating proceedings for sale of the property in dispute and the grievance of the appellants is that they are victims of fraud played upon them by the owner of the property in conspiracy with Bank officials and criminal proceedings had been registered against them for cheating/fraud etc. and already charge sheet also stands filed in the concerned Court.

5. On the other hand, learned Counsel for the respondent No. 1 Bank submitted that the pre-deposit is a mandatory requirement of law for the entertainment of such like appeals and that even otherwise on merits the appellants have no prima facie case for granting them waiver of the condition of pre-deposit since the mortgage was created in favour of the Bank in 2002 while the appellants claim to have purchased the property in question in 2003 and so Section 48 of the Transfer of Property Act comes in operation since the Bank is a prior mortgagee. It was also submitted that the appellants have so far been able to thwart the Banks efforts to recover its dues which at the time of filing of the S.A. in the year 2008 were over a crore of rupees.

6. I need not labour much on this aspect of the matter since a Division Bench of Honble Delhi High Court has recently given a decision on this aspect in W.P.(C) 11766/2016, Manju Devi & Ors. v. R.B.L Bank Ltd. & Ors., decided on 1.2.2017, This writ petition arose out of an order passed by this Tribunal only when some persons claiming themselves to be third party bona fide purchasers had approached this Tribunal with an appeal and question of pre-deposit cropped up at the preliminary stage and this Tribunal held that those appellants were required to comply with the condition of pre-deposit. Honble High Court, however held to the contrary that in such like cases where the litigant filing a petition under Section 17 of SARFAESI Act is claiming to be a bona fide purchaser of a property which is being sought to be auctioned by a Bank as its mortgagee and some appeal is filed against some order passed by the DRT then that litigant is not required to make any pre-deposit for the entertainment of the appeal.

7. The relevant paras from this judgment of Honble High Court which give the factual background of the case and the discussion on the aspect of waiver of the condition of pre-deposit and the final conclusion are re produced below:

1. In this writ petition, the petitioners have challenged an order dated 5.12.2016 passed by the Debts Recovery Appellate Tribunal, Delhi, in Misc. Appeal No. 460/2016, against an order dated 16.11.2016, passed by the Debt Recovery Tribunal, Delhi, in an application filed by the petitioners under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter referred to as the "Securitisation Act being SA No. 205/2016, whereby the order of status quo in respect of the property being the subject matter of the said application has been withdrawn.

2. By the order impugned, the Debt Recovery Appellate Tribunal has directed each of the appellants, being the writ petitioners, to deposit 50% of the amount demanded by the Respondent Bank from one Mr. Ajay Kumar Gupta, in his capacity as the sole proprietor of Asian Dairy Milk Food Company.

3. The said Ajay Kumar Gupta, being the proprietor of Asian Daily Milk Food Company, had obtained loans from the Respondent Bank for his proprietary Concern. By way of security for the loans advanced by the Respondent Bank, to his proprietory concern, of the said Ajay Kumar Gupta mortgaged to the Bank, his property at D-534, out of Khasra No. 929/537, situated at Village Saboli in abadi of D Btock, Gali No. 7, Ashok Nagar, Illaqa Shahdara, Delhi-110093, hereinafter referred to as the said premises.

4. The petitioners claim to be the purchasers of shop rooms/rooms situated at the said premises. They claim that they purchased the shop rooms/ rooms for valuable consideration, long before the mortgage in respect of the said premises was created.

8. The said premises being secured in favour of the Bank, the Bank invoked the provisions of the Securitization Act and attempted to take possession of the said premises, whereupon the petitioners filed applications under Section 17 of the Securitization Act in the Debt Recovery Tribunal-III, Delhi.

9. Initially, status quo was directed to be maintained in respect of the said premises The order of status quo was later vacated by the Debt Recovery Tribunal 111, vide the order dated 16.11.2016, against which the petitioners appealed before the Debt Recovery Appellate Tribunal.

12. The short question involved in this writ petition is, whether the appellants before the Debt Recovery Appellate Tribunal, Delhi, who are neither borrowers, nor guarantors and have not pledged or mortgaged any property to the Respondent Bank can be called upon to deposit a percentage of the loan amount claimed and/or adjudicated against the borrower as the condition precedent for entertaining their appeal under Section 18 of the Securitization Act.

13. In the context of the question of whether a third party, who is not a borrower within the meaning of Section 2 (f) of the Securitization Act, is required to make a predeposit as a pre-condition for having his appeal heard, it would be pertinent to refer to the following provisions of the Securitisation Act:

2(1)(f) "borrower means any person who has been granted financial assistance by any Bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any Bank or financial institution and includes a person who becomes borrower of a securitization company or reconstruction company consequent upon acquisition by it of any rights or interest of any Bank or financial institution in relation to such financial assistance:

17. Right to appeal(I) Any person (including borrower), aggrieved by any of the measures referred to in Sub-section (4) of section 13 taken by the secured creditor or his authorized officer under this Chapter, [may make an application along with such fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken:

Provided that different fees may be prescribed for making t he application by the borrower and the person other than the borrower.

Explanation: For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.]

(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in Sub-section (d) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in Sub-section (4) of Section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order,. declare the recourse to any one or more measures referred to in Subsection (4) of Section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditors under Sub-section (4) of Section 13.

(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under Sub-section (4) of Section 13, is in accordance with the provisions of this Act and the rules made there under, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under Sub-section (4) of Section 13 to recover his secured debt.

(5) Any application made under Sub section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:

Provided that the Debts Recovery Tribunal may, from time-to-time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under Sub-section (I).

(6) If the; application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in Sub-section (5), any party to the application may make any application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the rules made thereunder.]

18. Appeal to Appellate Tribunal(I) Any person aggrieved, by any order made by the Debts Recovery Tribunal [under Section 17, may prefer an appeal along with such fee, as may be prescribed] to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal:

Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:

Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less:

Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of debt referred to in the second proviso.

(2) Save as otherwise provided in this Act. the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.

14. A perusal of Section 18 reveals that an appeal may be filed by a borrower or by any other person, aggrieved by any action taken under Section 13(4) and/or order passed under Section 17 of the Securitization Act. The definition of borrower in Section 2(1)(f) of the Securitization Act includes a guarantor or a mortgager or a pledger, who has created security for the financial assistances granted by any Bank or financial institution. The definition includes a person, who becomes borrower of a securitization company or reconstruction company, consequent upon acquisition by it of any rights or interest of any Bank or financial institution in relation to such financial assistance.

15. Section 18 makes it absolutely clear that an appeal may be filed by any person aggrieved, whether or not, he is a borrower within the meaning of Section 2(l)(f). This is evident from the first proviso to Section 18(1), which provides that different fees may be prescribed for appeals by the borrower or by the person other than the borrower.

16. The second proviso reads that no appeal is to be entertained unless the borrower has deposited with the Appellate Tribunal 50% of the amount of debt due from him. as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less. The second proviso relates to the appeal of a borrower, for a third party, who has not obtained any finance from a Bank or a financial institution is under no obligation to pay.

17. The second proviso reads that no appeal is to be entertained, unless the borrower has deposited with Appellate Tribunal 50% of the debt due from him. If the proviso is to be read literally to mean that no appeal, be it of a borrower or a third person, is to be entertained unless the borrower has deposited 50% of the amount of debt due from him, appeals by third persons would in effect and substance, be rendered nugatory for a third person, who would never be able to get his appeal entertained."

(Emphasis supplied)

8. In view of this decision of the Honble Delhi High Court, which is the jurisdictional High Court as far as this Tribunal is concerned, the application for waiver of the condition of pre-deposit filed by the two appellants deserves to be allowed and is hereby allowed. This appeal is now entertained for hearing on merits without calling upon the appellants to make any pre-deposit making it clear that by granting the relief of waiver this Tribunal has not gone into the merits of the rival contentions of the parties.

Videseparate order of even date waiver application of the appellants has been allowed.

This appeal shall now be taken up for final hearing on 21.8.2017.

In the meanwhile the record of the DRT shall also be obtained.

Ordered accordingly.