Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   2681    OF 2011 [Arising out of S.L.P. (C) No. 5488 of 2011]

Narayan Chandra Ghosh — Appellant (s)

VERSUS

UCO Bank & Ors. — Respondent (s)

O R D E R  

1. Leave granted.  

2. This appeal  by the borrower is  directed against  judgment  dated 7th  

December,  2010  delivered  by  the  High  Court  of  Calcutta  in  C.O.  

No.3608 of 2009.  By the impugned judgment, the High Court has set  

aside  the  order  passed  by  the  Debts  Recovery  Appellate  Tribunal,  

Kolkata  (for  short,  “the  Appellate  Tribunal”)  in  Appeal  No.35  of  

2009, whereby the Appellate Tribunal, while allowing the application  

filed by the appellant under Section 18(1) of the Securitisation and  

Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  

Interest Act, 2002 (for short, “the Act”) had exempted the appellant

from making any deposit in terms of second proviso to Section 18 of  

the Act before entertaining the appeal against the order passed by the  

Debts Recovery Tribunal.

3. With  the  consent  of  learned  counsel  for  the  appellant  as  also  the  

respondent-bank, which is on caveat, we have heard the matter finally  

at the motion hearing stage itself.  Since the issue canvassed before us  

is a pure question of law, we deem it unnecessary to state the facts  

giving rise to this appeal.

4. Assailing  the  judgment,  Mr.  Ranjan  Mukherjee  has  submitted  that  

since  the  Debts  Recovery  Tribunal  had  not  entertained  the  appeal  

preferred by the appellant under Section 17 of the Act on a technical  

ground and the quantum of amount due from the appellant had not  

been  determined,  the  Appellate  Tribunal  could  not  saddle  the  

appellant with any liability of pre-deposit under Section 18 of the Act.  

It  is  thus,  asserted  that  the  Appellate  Tribunal  was  justified  in  

entertaining the appeal without insisting on any deposit in terms of  

Section 18 of the Act.

5. Per  contra,  learned  counsel  for  the  bank,  while  supporting  the  

judgment of the High Court has submitted that the Appellate Tribunal  

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had failed  to  appreciate  that  the  deposit  of  an amount in  terms of  

Section 18 of the Act is a condition precedent for entertainment of the  

appeal.   According to the learned counsel,  the language of Section  

18(1) of the Act being clear and unambiguous, the order passed by the  

Appellate Tribunal was clearly unsustainable.

6. Thus,  the short  question for consideration is  whether the Appellate  

Tribunal  has  the  jurisdiction  to  exempt  the  person,  preferring  an  

appeal under Section 18 of the Act from making any pre-deposit in  

terms of the said provision?

7. Section 18, which provides for appeal to the Appellate Tribunal, reads  

as under:

“18.  Appeal  to  Appellate  Tribunal.—(1)  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  an 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:

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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) ..... ….. ….. ….. ….. ….. ….. ….

…”

8. Section  18(1)  of  the  Act  confers  a  statutory  right  on  a  person  

aggrieved by any order made by the Debts Recovery Tribunal under  

Section 17 of the Act to prefer an appeal to the Appellate Tribunal.  

However,  the right  conferred under Section 18(1)  is  subject  to the  

condition  laid  down  in  the  second  proviso  thereto.   The  second  

proviso  postulates  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.  

However,  under  the  third  proviso  to  the  sub-section,  the  Appellate  

Tribunal has the power to reduce the amount, for the reasons to be  

recorded in writing, to not less than twenty-five per cent of the debt,  

referred to in the second proviso.  Thus, there is an absolute bar to  

entertainment of  an appeal  under  Section 18 of  the Act unless the  

condition precedent, as stipulated, is fulfilled.  Unless the borrower  

makes, with the Appellate Tribunal, a pre-deposit of fifty per cent of  

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the  debt  due  from  him  or  determined,  an  appeal  under  the  said  

provision  cannot  be  entertained  by  the  Appellate  Tribunal.   The  

language of the said proviso is clear and admits of no ambiguity.  It is  

well-settled  that  when  a  Statute  confers  a  right  of  appeal,  while  

granting  the  right,  the  Legislature  can  impose  conditions  for  the  

exercise of such right, so long as the conditions are not so onerous as  

to  amount  to  unreasonable  restrictions,  rendering  the  right  almost  

illusory.  Bearing in mind the object of the Act, the conditions hedged  

in the said proviso cannot be said to be onerous.  Thus, we hold that  

the requirement of pre-deposit under sub-section (1) of Section 18 of  

the Act is mandatory and there is no reason whatsoever for not giving  

full effect to the provisions contained in Section 18 of the Act.  In that  

view of  the  matter,  no  court,  much  less  the  Appellate  Tribunal,  a  

creature  of  the  Act  itself,  can  refuse  to  give  full  effect  to  the  

provisions  of  the  Statute.   We  have  no  hesitation  in  holding  that  

deposit under the second proviso to Section 18(1) of the Act being a  

condition precedent for preferring an appeal under the said Section,  

the  Appellate  Tribunal  had  erred  in  law in  entertaining  the  appeal  

without  directing  the  appellant  to  comply with  the  said  mandatory  

requirement.

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9. The argument of learned counsel for the appellant that as the amount  

of debt due had not been determined by the Debts Recovery Tribunal,  

appeal  could  be  entertained  by  the  Appellate  Tribunal  without  

insisting  on  pre-deposit,  is  equally  fallacious.   Under  the  second  

proviso to sub-section (1) of Section 18 of the Act the amount of fifty  

per  cent,  which  is  required  to  be  deposited  by  the  borrower,  is  

computed either with reference to the debt due from him as claimed  

by  the  secured  creditors  or  as  determined  by  the  Debts  Recovery  

Tribunal, whichever is less.  Obviously, where the amount of debt is  

yet to be determined by the Debts Recovery Tribunal, the borrower,  

while preferring appeal, would be liable  to deposit fifty per cent of  

the debt due from him as claimed by the secured creditors.  Therefore,  

the condition of pre-deposit being mandatory, a complete waiver of  

deposit by the appellant with the Appellate Tribunal, was beyond the  

provisions of the Act, as is evident from the second and third proviso  

to the said Section.  At best, the Appellate Tribunal could have, after  

recording the reasons, reduced the amount of deposit of fifty per cent  

to an amount not less than twenty five per cent of the debt referred to  

in  the  second  proviso.   We  are  convinced  that  the  order  of  the  

Appellate Tribunal,  entertaining appellant’s appeal without insisting  

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on pre-deposit was clearly unsustainable and, therefore, the decision  

of the High Court in setting aside the same cannot be flawed.

10. It is stated before us that in the notice issued to the appellant under  

Section 13(2) of the Act, the debt due from the appellant as on 25th  

September, 2006 was  `52,42,474/-.  Since in the present case Debts  

Recovery Tribunal had not determined the debt due, we direct that on  

appellant’s depositing with the Appellate Tribunal an amount of  `15  

lakhs within a period of four weeks from today, his appeal shall be  

entertained and decided on merits.  We direct that till the Appellate  

Tribunal takes a final decision in the appeal, the bank shall maintain  

status quo in respect of the property of which physical possession is  

stated to have been taken by it.

11. Needless to add that if the appellant  fails to make the said deposit  

within the time granted, his appeal before the Appellate Tribunal shall  

stand dismissed and it  will  be open to the respondent bank to take  

further steps in the matter in accordance with law.

12. The appeal stands disposed of with no order as to costs.

                                          .………………………………….

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                   (D.K. JAIN, J.)

                              ..….…………………………….                     (H.L. DATTU, J.)

NEW DELHI; MARCH 18, 2011

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