Axis Bank Vs SBS Organics Pvt. Ltd & Anr, on 22nd April, 2016; Supreme Court of India: Case Brief – Read Judgment

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Amount deposited as pre-condition for appeal before Tribunal should be returned back on withdrawal of the case by the depositor

Civil Appeal No. 4379 of 2016
Bench: Justice Kurian Joseph; Justice Rohinton Fali Nariman

Case Brief: In the present matter, a challenge is brought by way of appeal against the decision of the High Court’s division bench which had dismissed the appeal of the appellant- bank here. The bench observed that there was a pure legal issue for consideration, and as such referring the factual position in detail is not necessary. However, in the necessary facts of the case, the first respondent- borrower earlier filed a Securitisation Application, after being aggrieved by the steps taken by the secured creditor, before the Debt Recovery Tribunal. Later, an interim relief was granted, but it was vacated by another order, as such this borrower preferred challenge before Appellate Tribunal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. In this provision, a proviso clause requiring this borrower to deposit Rs. 50 lakh before the Appellate Tribunal. However, during the pendency of said challenge, the original application was disposed of by the Debt Recovery Tribunal and thereafter it was realized that the appeal will not survive, the first borrower sought permission to withdraw the same amount with the withdrawal of the appeal. Appellate Tribunal granted permission and appeal withdrawn on condition that the withdrawal would be subject to the result of the appeal. When borrower approached the Single Judge with the writ petition, the Single Judge set aside the said condition and permitted him to withdraw the amount unconditionally. Bank then preferred appeal, which division bench dismissed and now here, its order in challenge. The bench here observed that section 18 of the said Act requires the deposit of such amount, but what is the fate of such deposit on the disposal of the appeal, is the question to be considered, here. This bench also observed that the scheme and purpose of the concerned Act is different from that of other statutes like Income- Tax Act, 1961, The Central Excise Act, 1944, etc. as those Acts providing preconditions. It is also observed that the appeal under section 18 of the Act is permissible only against the order passed by the Tribunal under section 17 of the Act. And section 17 provides for limited scope for enquiry to the steps taken under section 13 (4) against the secured assets. The pre- condition of deposit of the amount for considering the appeal on merits is not a secured asset. Also bench found that the same amount is not bailment with the bank as provided under section 148 of the Indian Contract Act, 1872. Thus, this bench decided to return the deposit made by the borrower, back to him. Thus, there was no merit in appeal and as such it was dismissed.

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Read the Judgment: Axis Bank Vs SBS Organics Pvt. Ltd & Anr

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