Statutory Pre-deposit Under Section 18 of SARFAESI Act is Mandatory for Appeals Challenging Condonation of Delay.

The respondent-borrower (Pradeep Vora) defaulted on credit facilities from HDFC Bank, leading to the classification of his account as an NPA in 2020.

After a first round of litigation where a securitisation application was dismissed on merits in 2023, the bank took possession and auctioned the mortgaged land to Aloukik Construwell LLP (Petitioner).

The borrower filed a second securitisation application before the DRT-II with a delay condonation request, which was dismissed on 15.09.2025.

The borrower appealed this dismissal to the DRAT. On 18.11.2025, the DRAT ordered status quo without detailed reasoning while hearing a waiver application.

On 08.12.2025, the DRAT granted a total waiver of the mandatory pre-deposit, relying on the M/s. Gadekar Ginning precedent, on the grounds that the appeal only concerned a delay condonation.

1. Whether the requirement of mandatory pre-deposit under the second proviso to Section 18(1) of the SARFAESI Act applies to an appeal challenging a DRT order that refused to condone delay.

2. Whether the DRAT has the power to grant a total waiver of the pre-deposit amount.

3. Whether the interim order of status quo passed by the DRAT without recording findings on prima facie case, balance of convenience, and irreparable loss was legally sustainable.

Section 18(1) of the SARFAESI Act, 2002, which mandates a deposit of 50% (reducible to 25%) of the debt due for any appeal to be "entertained".

Supreme Court decisions in Narayan Chandra Ghosh v. UCO Bank and Union Bank of India v. Rajat Infrastructure Pvt. Ltd., which established that pre-deposit is a mandatory condition precedent and total waiver is prohibited.

Division Bench ruling in Vinay Container Services Pvt. Ltd. v. Axis Bank, which held that "any order" under Section 18(1) includes interlocutory and procedural orders.

M/s. Sunshine Builders and Developers v. HDFC Bank, which reaffirmed that even appeals against delay condonation refusals attract pre-deposit.

The court found that the DRAT erred in granting a total waiver by relying on M/s. Gadekar Ginning, as that decision was rendered per incuriam because it ignored binding Supreme Court precedents and the earlier Division Bench ruling in Vinay Container Services.

The court reasoned that the phrase "any order" in Section 18(1) is comprehensive and includes orders dismissing delay condonation applications; otherwise, a dilatory borrower would be in a better legal position than a diligent one.

Regarding the status quo order, the court noted it was passed in a "casual and cavalier manner" in a waiver application, failing to evaluate the three mandatory pillars of interim relief: prima facie case, balance of convenience, and irreparable injury.

Furthermore, following Sidha Neelkanth Paper Industries, the court clarified that the amount recovered via auction does not exempt the borrower from the pre-deposit requirement.

The High Court allowed the writ petitions and quashed the DRAT orders dated 18.11.2025 and 08.12.2025; status quo was vacated, and the DRAT was directed to decide the waiver application afresh by determining a pre-deposit amount between 25% and 50% of the debt due.