Facts: Sunshine Builders, a partnership firm, challenged an order by the Debts Recovery Appellate Tribunal (DRAT) directing them to pre-deposit ₹125 crores as a condition for entertaining their appeal. The appeal stemmed from a DRT order dismissing their applications to implead an auction purchaser and to bring subsequent facts (including the sale of the property) on record, along with seeking condonation of delay. The property in question was declared a slum under the Maharashtra Slum Area Act, with Sunshine Builders appointed as the developer for slum rehabilitation. They entered into co-development agreements with other parties, including Respondent No. 3, who mortgaged the property to HDFC Bank (Respondent No. 1). Sunshine Builders claimed they were unaware of the mortgage and that Respondent No. 3 acted without authority. HDFC Bank initiated SARFAESI proceedings due to defaults, leading to the sale of the property to Respondent No. 5. Sunshine Builders filed a Securitisation Application (SA) before the DRT, challenging the SARFAESI measures. They later sought to amend the SA to include challenges to the sale and implead the auction purchaser, which was dismissed by the DRT.
Procedural Posture: The case reached the Bombay High Court as a Writ Petition challenging the DRAT's order that mandated a pre-deposit for entertaining the appeal against the DRT's dismissal of the petitioner's applications for amendment and condonation of delay in their Securitisation Application. The Supreme Court had previously remanded the matter to the High Court for a fresh hearing.
Issue: Did the DRAT err in directing Sunshine Builders to make a pre-deposit under Section 18(1) of the SARFAESI Act as a condition precedent for entertaining their appeal, considering their contention that the DRT's order was merely procedural and that they are not borrowers?
Holding: No, the DRAT did not err. The High Court dismissed the Writ Petition, holding that the DRAT's order was not merely procedural, and Sunshine Builders fell within the definition of "borrower" under the SARFAESI Act.
Reasoning: The Court reasoned that Sunshine Builders, as a mortgagor of the property, squarely fell within the meaning of "borrower" as defined in Section 2(1)(f) of the SARFAESI Act, referencing Keystone Constructions (supra) and Union Bank of India (supra). The court emphasized that Section 18 of the SARFAESI Act is clear and unambiguous, requiring a pre-deposit for any appeal against an order made by the DRT under Section 17, regardless of whether it is a final or interlocutory order. The court also noted that the DRT's order was not merely procedural but involved a consideration of the delay and the rights acquired by the auction purchaser. The court further stated that the petitioner was guilty of inordinate delay and has slept on its rights and selectively chosen to enforce them. The court declined to exercise its extraordinary equitable jurisdiction under Article 226 of the Constitution of India.