Heirs inheriting mortgaged property must satisfy Section 18’s mandatory pre-deposit requirement for appeals.

Merril Impex Private Limited availed credit facilities from the State Bank of India in 2007. The company was subsequently renamed Global Metcoke Private Limited and thereafter Janmani International Private Limited. The credit limits were enhanced from time to time, ultimately reaching ₹59.99 crore under a sanction letter dated 29 January 2013.

The loan was secured by an equitable mortgage over duplex flats at premises no. 6, Asoka Road, Alipore, Kolkata, created by deposit of four title deeds standing in the names of Uttam Kumar Bagaria, Mamta Bagaria and Gita Bagaria.

Uttam Kumar Bagaria, the petitioner’s deceased father, was alleged by the Bank to have stood as a guarantor and mortgagor. He died on 20 February 2012, after which his interest in the property devolved upon the petitioner and the other heirs and legal representatives.

Following default and classification of the loan account as an NPA, the Bank issued a demand notice under Section 13(2) of the SARFAESI Act, 2002, followed by a possession notice dated 13 March 2023.

The Debts Recovery Tribunal-I, Kolkata dismissed the securitisation application by judgment dated 11 July 2025 and upheld the demand and possession notices.

The petitioner filed an appeal before the Debts Recovery Appellate Tribunal along with an application seeking waiver of the statutory pre-deposit under Section 18 of the SARFAESI Act. The DRAT directed her to deposit 50% of ₹1,12,12,58,945.

Whether the petitioner, as the legal representative and heir of the deceased guarantor/mortgagor, was required to comply with the pre-deposit condition under the second proviso to Section 18(1) of the SARFAESI Act in order to maintain an appeal before the DRAT

Whether the DRAT could completely waive the statutory pre-deposit, or whether it could reduce the deposit only to a minimum of 25% of the debt due after recording reasons in writing

Whether the DRAT’s finding that Uttam Kumar Bagaria was a guarantor suffered from perversity warranting interference under Article 227 of the Constitution

The Court applied Section 2(1)(f) of the SARFAESI Act, 2002, which defines “borrower” broadly to include a person who has given a guarantee or created a mortgage or pledge as security for financial assistance.

Under the second proviso to Section 18(1), an appeal by a borrower cannot be entertained unless 50% of the debt due, as claimed by the secured creditor or determined by the DRT, whichever is less, is deposited; under the third proviso, the DRAT may reduce the amount only for recorded reasons and not below 25%.

In Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548, the Supreme Court held that the pre-deposit is mandatory, that complete waiver is impermissible, and that the DRAT can reduce the deposit only to a minimum of 25%.

In Union of India v. Rajat Infrastructure Pvt. Ltd., (2020) 3 SCC 770, the Supreme Court held that a guarantor or mortgagor who secures repayment of a loan stands on the same footing as a borrower for purposes of Section 18.

The Court held that the materials disclosed an equitable mortgage over the duplex flats through deposit of four title deeds and that Uttam Kumar Bagaria’s alleged personal guarantees had not been effectively disproved.

The letters relied upon by the petitioner were issued after his death and therefore did not establish that he had never acted as a guarantor; the petitioner also failed to produce relevant guarantee documents executed before his death, justifying an adverse inference.

Since the petitioner inherited her father’s mortgaged property and succeeded to his legal position and liabilities, she fell within the expanded statutory concept of “borrower” under Section 2(1)(f), notwithstanding that she had not personally borrowed the money or executed the original security documents.

The mandatory nature of Section 18 meant that the DRAT could not grant a complete waiver. Its direction to require a 50% deposit was therefore legally permissible, particularly as the statutory framework allowed reduction only to 25% and not total waiver.

No perversity or jurisdictional error was shown warranting interference under Article 227.

It held that, as the legal representative and heir of the deceased guarantor/mortgagor, the petitioner could not avoid the statutory pre-deposit requirement, and that complete waiver was impermissible.

The matter was dismissed without any order as to costs.