On 16/02/2021, a three judge bench of Hon’ble Supreme Court of India in Civil Appeal No. 538  of 2021, titled Kotak Mahindra Bank Pvt. Ltd. Vs. Ambuj A. Kasliwal & Ors., has decided a substantial question of law relating to the statutory requirement of pre-deposit on appeal envisaged under section 21 of The Recovery of Debts Due to Banks and Financial Institution Act, 1993, wherein, Hindon River Mills Ltd (respondent no. 3) had availed financial assistance from the IFCI Ltd. (respondent No.6). The respondent Nos. 1 and 2 had offered their personal guarantee in respect of the said financial assistance.

The respondent Nos. 1 to 3 had defaulted in re­payment of the dues and the account having been classified as non­performing asset was thereafter auctioned by respondent No.6 ­IFCI Ltd. wherein the appellant was the successful bidder and accordingly, the unpaid debt and non­-performing asset was assigned in their favour. This was challenged before High Court through writ petition, which was dismissed by High Court. Thereafter, SLP was filed, in which settlement entered into between the parties was recorded. As per the settlement, the respondent Nos. 1 to 3 had agreed to repay the sum of Rs. 145 Crores with interest at 15% per annum.  Repayment was not made by the respondent Nos. 1 to 3 according to the terms of settlement. The appellant Bank, therefore, instituted recovery proceedings by filing an application before the Debts Recovery Tribunal.

During the pendency of the said proceeding before the DRT, the National Highways Authority of India (respondent No.7) acquired a portion of the mortgaged property belonging to respondent No. 3 and deposited the total compensation amount of Rs. 152,81,07,159/­- before the DRT, which was credited to the account of respondent No.3. With these developments in the background, the DRT ordered issue of recovery certificate. Appeals were preferred against the order passed by DRT before the DRAT. The respondent Nos. 1 and 2 had also filed an application seeking waiver of pre-deposit amounting to fifty percent of the debt determined by the DRT. The DRAT taking into consideration that the amount of Rs. 152,81,07,159/- was received by the appellant Bank, had in that context noted that the balance of the debt due works out to Rs. 68,18,92,841/-. Hence, DRAT directed that fifty per cent of the said amount is to be deposited.

The respondent Nos. 1 and 2 filed Writ Petition before High Court of Delhi against the order of DRAT. High Court has arrived at the conclusion that the respondent Nos. 1 and 2 are to be permitted to prosecute the appeal without pre­-deposit and directed accordingly. Issue before the Hon’ble Supreme Court  for consideration is with regard to the correctness of the order passed by the DRAT and the High Court of Delhi in the matter relating to pre-­deposit of the debt due, in an appeal before the DRAT.

The Hon’ble Court has held that, in the facts and circumstances arising herein, when further amount is due and payable in discharge of the decree/recovery certificate issued by the DRT in favour of the appellant/Bank, the High Court does not have the power to waive the pre­-deposit in its entirety, nor can it exercise discretion which is against the mandatory requirement of the statutory provision as contained in Section 21. In all cases, fifty per cent of the decretal amount i.e. the debt due is to be deposited before the DRAT as a mandatory requirement, but in appropriate cases for reasons to be recorded the deposit of at least twenty ­five per cent of the debt due would be permissible, but not entire waiver. Therefore, any waiver of pre-­deposit to the entire extent would be against the statutory provisions and, therefore, not sustainable in law. The order of the High Court is, therefore, liable to be set aside. For the purpose of determining the pre­-deposit, the decretal amount due is taken at Rs.68,18,92,841/­-“. 

It was further held that, we deem it appropriate that in the peculiar facts and circumstances of this case to permit the pre-deposit of twenty ­five per cent of the amount as taken note by the DRAT i.e. twenty ­five per cent of Rs.68,18,92,841/-. To the said extent, the order passed by the DRAT is liable to be modified.