The judgment clarifies the scope of Section 18(1) of the SARFAESI Act, 2002, particularly the conditions for pre-deposit waivers by borrowers appealing orders of the Debt Recovery Tribunal. The court upheld the necessity of the prima facie case and financial hardship for granting waivers and ruled against attempts to prolong recovery proceedings.

• SARFAESI Act Compliance: The Appellate Tribunal's jurisdiction under Section 18(1) requires borrowers to deposit 50% of the debt due, with possible reduction to 25% if a strong prima facie case and financial hardship are proven.
• Prima Facie Evaluation: The court emphasized that typographical errors and unsubstantiated claims of hardship are insufficient to establish a prima facie case.
• Interest Inclusion: In determining the debt due, the interest component up to the appeal filing date must be included.

Introduction (Paras 1-3)

• Multiple petitions were consolidated into a common judgment.
• Central issues: waiver of pre-deposit under Section 18(1) of SARFAESI Act and inclusion of interest in debt determination.

Petitioner’s Arguments (Paras 4-10)

1. Section 13(2) and NPA Classification Discrepancy:
   The petitioners argued discrepancies in NPA classification dates (May 2021 vs. July 2022).
2. Financial Hardship and COVID-19 Impact:
   Claims of financial hardship were raised, supported by partial submissions (e.g., tax returns).
3. Waiver of Section 13(2) Notice:
   The petitioner claimed that payments post-notice waived the proceedings.

Respondent’s Counterarguments (Paras 11-15)

1. Typographical Error in NPA Date:
   Respondents clarified the typographical error and confirmed the actual classification date (May 2021).
2. No Financial Hardship Evidence:
   Borrower failed to substantiate hardship with credible financial records.
3. Inclusion of Interest:
   Debt determination should include accrued interest, as upheld in previous rulings.

Court’s Determination (Paras 20-59)

1. Prima Facie Case (Paras 36-45):
   The borrower failed to establish a prima facie case, relying on unsubstantiated claims and typographical discrepancies.
2. Financial Hardship (Paras 27-35):
   The court dismissed claims of hardship due to lack of evidence, rejecting late-stage attempts to introduce new material.
3. Interest Component (Paras 47-51):
   It reaffirmed that accrued interest is integral to debt calculations for pre-deposit purposes.

Acts and Sections Discussed:

• SARFAESI Act, 2002

  • Section 13(2): Preconditions for initiating recovery.
  • Section 18(1): Appeal to Appellate Tribunal with mandatory pre-deposit requirements.

• Recovery of Debts and Bankruptcy Act, 1993

  • Section 2(g): Definition of debt, inclusive of interest.

Ratio Decidendi:

The discretionary waiver of pre-deposit under Section 18(1) of the SARFAESI Act requires borrowers to:

1. Prove financial hardship with credible evidence.
2. Establish a strong prima facie case, beyond technical errors or unsupported claims.

Subjects:

Banking Law, SARFAESI Act, Recovery Proceedings
NPA Classification, Pre-Deposit Waiver, Prima Facie Case, Debt Recovery, Accrued Interest