In a significant relief to two Thrissur residents, the Kerala High Court on Friday modified an order of the Debt Recovery Appellate Tribunal (DRAT), Chennai, which had insisted that they deposit 40% of their total debt to pursue an appeal. Justice C. Jayachandran found the tribunal’s direction legally unsustainable, calling it an “onerous and unreasonable burden without recorded justification.”
Background
The petitioners, Glenny C.J. and his wife Jaya Jose, had approached the High Court after the DRAT, in its July 31 order, directed them to pay over ₹4.04 crore constituting 40% of their outstanding dues as a pre-condition to hear their appeal.
The couple had earlier lost before the Debt Recovery Tribunal (DRT) in Ernakulam after Canara Bank auctioned one of their mortgaged properties in Thrissur for ₹3.39 crore to recover the loan. The appeal before the DRAT questioned the legality of that auction.
Their counsel argued that as per Section 18 of the SARFAESI Act, the tribunal could demand only up to 50% of the “debt due,” with discretion to reduce it to 25%, provided reasons were recorded. However, the DRAT’s order allegedly gave no reasoning for fixing 40%.
Court's Observations
Justice Jayachandran agreed with the petitioners, stressing that the appellate tribunal must justify the percentage of deposit demanded.
“When the law itself grants discretion to reduce the pre-deposit amount, the exercise of that discretion must be reasoned and proportionate,” the court said.
The judge further remarked that demanding a pre-deposit higher than the auction amount itself ₹3.39 crore was “beyond reason and contrary to fundamental principles of judicial procedure.”
Rejecting the auction purchaser’s objection that the writ petition was wrongly filed under Article 227 instead of 226, the court observed:
“Misquoting the Article under which relief is sought is no ground to deny justice. The Court is well within its right to treat it under Article 226.”
The court also noted that the subject matter of the appeal namely, the auctioned property could not be brushed aside while determining the pre-deposit. In the judge’s words,
“It cannot be said that the subject matter of appeal is wholly irrelevant. The very purpose of granting discretion under Section 18 is to ensure fairness and case-specific assessment.”
Referring to the Privy Council’s ruling in Mask and Co. (AIR 1940 PC 105) and the Supreme Court’s Dhulabhai v. State of Madhya Pradesh (AIR 1969 SC 78), the judge said that tribunals must act in line with “fundamental principles of judicial procedure,” failing which higher courts could intervene.
Court’s Decision
Finding the DRAT’s order vitiated for lack of reasoning, the High Court modified the pre-deposit amount to ₹3.39 crore, which represents 33.53% of the total debt. The amount is to be paid in two equal instalments within one month.
Concluding the matter, Justice Jayachandran held:
“A direction to deposit an amount more than the subject matter of appeal cannot survive legal scrutiny, besides being onerous.”
The writ petition was disposed of accordingly.
Case Title: Glenny C.J. & Anr. vs. Authorised Officer, Canara Bank & Anr.
Case Number: O.P. (DRT) No. 256 of 2025
Date of Judgment: 24 October 2025