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Court: Supreme Court of India
Judges: Justices J.B. Pardiwala and K.V. Viswanathan
Case Number : Civil Appeal No. 5290/2025; 17 April 2025
Case Name: M/s Sunshine Builders and Developers v. HDFC Bank Limited & Ors.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), Sections 17 and 18 – Pre-deposit requirement for appeals – High Court’s order set aside – Matter remitted for reconsideration.
Issue
Whether pre-deposit under Section 18 applies to procedural orders, such as rejection of an application to implead auction purchasers in a pending Securitisation Application before the Debts Recovery Tribunal (DRT).
Held
The expression “any order” in Section 18 requires meaningful interpretation; prima facie, pre-deposit may not apply to procedural orders like declining to implead auction purchasers – High Court erred in focusing solely on the appellant’s status as a mortgagor under Section 2(1)(f) without addressing the nature of the order.
Remanded to High Court for fresh adjudication.
Facts
The appellant, M/s Sunshine Builders and Developers, challenged an order by the Debts Recovery Appellate Tribunal (DRAT) requiring a pre-deposit of Rs. 125 crore under Section 18(1) of the SARFAESI Act to entertain an appeal. The appeal arose from the Debts Recovery Tribunal’s (DRT) rejection of interim applications to implead auction purchasers and condone delay in a pending Securitisation Application under Section 17. The High Court of Bombay, in Writ Petition No. 3929/2024, upheld the DRAT’s order, finding the appellant, as a mortgagor, fell within the definition of “borrower” under Section 2(1)(f) of the SARFAESI Act, thus liable for the pre-deposit.
Reasoning
The High Court erred by focusing solely on the appellant’s status as a mortgagor who consented to the mortgage, without evaluating the nature of the DRT’s order. The Supreme Court noted that Section 18’s pre-deposit provision typically applies to appeals against final orders determining liability, not procedural ones. The Court emphasized the need for the High Court to reconsider whether Section 18 applies to such orders.
Disposition
The High Court’s order was set aside, and the matter was remanded for fresh adjudication of Writ Petition No. 3929/2024. The appellant was permitted to approach the Supreme Court again if an adverse order is passed.
Multiple Choice Questions (MCQs)
- What was the primary issue before the Supreme Court in M/s Sunshine Builders and Developers v. HDFC Bank Limited?
a) Whether the appellant was a principal borrower under the SARFAESI Act
b) Whether the pre-deposit requirement under Section 18 of the SARFAESI Act applies to procedural orders
c) Whether the auction purchasers could be impleaded in the Securitisation Application
d) Whether the High Court had jurisdiction to hear the Writ Petition
Answer: b) Whether the pre-deposit requirement under Section 18 of the SARFAESI Act applies to procedural orders - What was the amount of pre-deposit ordered by the Debts Recovery Appellate Tribunal (DRAT)?
a) Rs. 259 crore
b) Rs. 125 crore
c) Rs. 50 crore
d) Rs. 25 crore
Answer: b) Rs. 125 crore - Under which section of the SARFAESI Act was the Securitisation Application filed before the Debts Recovery Tribunal (DRT)?
a) Section 14
b) Section 17
c) Section 18
d) Section 2(1)(f)
Answer: b) Section 17 - What was the Supreme Court’s rationale for remanding the case to the High Court?
a) The High Court lacked jurisdiction to hear the Writ Petition
b) The High Court failed to consider whether procedural orders require pre-deposit under Section 18
c) The DRAT’s order was perverse and required reversal
d) The appellant was not a borrower under the SARFAESI Act
Answer: b) The High Court failed to consider whether procedural orders require pre-deposit under Section 18 - What did the Supreme Court suggest about the interpretation of “any order” in Section 18 of the SARFAESI Act?
a) It applies only to final orders determining liability
b) It applies to all orders, including procedural ones
c) It should be given a meaningful interpretation
d) It excludes orders related to impleadment
Answer: c) It should be given a meaningful interpretation
Frequently Asked Questions (FAQs)
What did the Supreme Court direct after disposing of the appeal?
The Supreme Court set aside the High Court’s order, remitted the matter to the High Court for fresh adjudication of Writ Petition No. 3929/2024, and allowed the appellant to approach the Supreme Court again if an adverse order is passed.
What was the main dispute in the Sunshine Builders and Developers v. HDFC Bank case?
The dispute centered on whether the appellant, M/s Sunshine Builders and Developers, was required to make a pre-deposit of Rs. 125 crore under Section 18 of the SARFAESI Act to appeal a procedural order by the Debts Recovery Tribunal (DRT). The DRT had rejected applications to implead auction purchasers and condone delay in a pending Securitisation Application.
Why did the Supreme Court set aside the High Court’s order?
The Supreme Court found that the High Court erred by focusing only on the appellant’s status as a mortgagor under Section 2(1)(f) of the SARFAESI Act, without addressing whether the pre-deposit requirement under Section 18 applies to procedural orders, such as the DRT’s rejection of an impleadment application.
What is the significance of Section 18 of the SARFAESI Act in this case?
Section 18 governs appeals to the Debts Recovery Appellate Tribunal (DRAT) from DRT orders under Section 17. It mandates a pre-deposit of 50% of the debt due (reducible to 25%) for borrowers. The Supreme Court questioned whether this applies to procedural orders, suggesting a need for a meaningful interpretation of “any order.”
What was the role of the Debts Recovery Appellate Tribunal (DRAT) in this case?
The DRAT ordered the appellant to deposit Rs. 125 crore as a pre-deposit to entertain an appeal against the DRT’s procedural order. This order was upheld by the High Court but challenged before the Supreme Court.
Counsel: Mr. C.U. Singh (Senior Advocate) and Ms. Radhika Gautam for the appellant.