The Gauhati High Court on Friday raised important questions over the requirement of a heavy pre-deposit for appeals under the SARFAESI Act. The matter came up in a case filed by Umesh Chandra Das, who challenged an order of the Debt Recovery Tribunal (DRT) that had directed him to deposit 35% of the disputed loan amount before his appeal could be heard.
Background
Das had borrowed around ₹1.46 crore from the State Bank of India (SBI). According to him, he never agreed to mortgage any property as part of the loan arrangement.
The controversy arose when the bank claimed that he had created an equitable mortgage by depositing his original sale deed. Das disputed this, saying he was still in possession of the original deed himself.
When the bank rejected his objections, he approached the DRT. However, the tribunal also refused to accept his plea and, in addition, directed him to deposit 35% of the outstanding dues before filing an appeal. The order triggered his move to the High Court.
Court's Observations
The bench, led by Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury, examined whether such a deposit was mandatory when the appeal was against a narrow procedural issue rather than the main debt itself.
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The petitioner argued that his appeal only challenged the DRT's refusal to send the sale deed for scientific examination, which was crucial to establish who really held the original title. "For such a limited challenge, why should one be forced to deposit such a massive sum?" his counsel submitted.
Referring to Section 18 of the SARFAESI Act, the court noted that while the law requires a borrower to deposit 50% of the debt (reducible to 25% by the appellate authority), the Supreme Court has previously clarified that the phrase "any order" should not be stretched to cover every minor order.
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The bench remarked,
"The question is whether refusal to send a document for examination falls under the scope of ‘any order’ that attracts mandatory deposit."
At the same time, the judges reminded that courts have consistently held the pre-deposit requirement to be mandatory, unless the borrower can demonstrate genuine hardship. In this case, no evidence of financial hardship was placed before them.
Decision
After hearing the matter, the High Court stopped short of giving a final ruling but issued notice to the SBI and other respondents. It directed that until the writ petition is decided, the DRT shall not dismiss the appeal merely because Das had not deposited the 35% amount.
The case will now come up again on October 24, 2025, when the respondents are expected to file their replies.
Case Title: Umesh Chandra Das vs The State Bank of India and 2 Ors
Case No.: WP(C)/5143/2025
