AXIS BANKversusSBS ORGANICS PRIVATE LIMITED AND ANOTHER

                                 [2016] 2 S.C.R. 920



A                                     AXIS BANK

                             .   ,         v.
           SBS ORGANICS PRJVATE LIMITED AND ANOTHER
                       (Civil Appeal No. 4379 of2016)
B                                    APRIL 22, 2016
    [KURIAN JOSEPH AND ROHINTON FALi NARIMAN, JJ.]
           Securitisation and Reconstruction of Financial Assets and
    Enforcement of Security Interest Act, 2002 - s.18 - Appeal under -
    Partial deposit by borrower before the Debt Recovery Appellate
c   Tribunal as a pre-condition for considering the appeal on merits -
    Borrowers right to get back the deposit -- Held: Partial deposit is
    not a secured asset - It is not a secured debt either. since the borrower
    or the aggrieved person has not created any security interest on
    such pre-deposit in favour of the secured creditor - On disposal of
D   the appeal, either on merits or on withdrawal, or on being rendered
    infructuous, on prayer by the borrower for refund of the pre-deposit,
    the same has to be allowed - On facts, deposit made before the
    DRAT is to be refunded to the first respondent-borrower - Security
    Interest (Enforcement) Rules, 2002.
E          Dismissing the appeal, the Court
        HELD: 1.1 The actual appeal is contemplated under Section
  18 of the Securitisation and Reconstruction of Financial Assets
  and Enforcement of Security Interest Act, 2002. Any person
  aggrieved by the order of the DRT under Section 17 of the
F SARFAESI Act, is entitled to prefer an appeal along with the
  prescribed fee within the permitted period of 30 days. For
  'preferring' an appeal, a fee is prescribed, whereas for the
  Tribunal to 'entertain' the appeal, the aggrieved person has to
  make a deposit of fifty 11er cent of the amount of debt due from
  him as claimed by the secured creditors or determined by the
G DRT, whichever is less. This amount can, at the discretion of the
  Tribunal, in appropriate cases, for recorded reasons, be reduced
  to twenty-five per cent of the debt. [Paras 18, 19] (931-D-E; 932-
    B-C]
          1.2 The appeal under Section 18 of the Act is permissible
H   only against the order passed by the DRT under Section 17 of
                                          920
     AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                           921



the Act. Under Section 17, the scope of enquiry is limited to the         A
steps taken under Section 13(4) against the secured assets. The
partial deposit before the DRAT as a pre-condition for considering
the appeal on merits in terms of Section 18 of the Act, is not a
secured asset. It is not a secured debt either, since the borrower
or the aggrieved person has not created any security interest on
                                                                          B
such pre-deposit in favour of the secured creditor. If that be so,
on disposal of the appeal, either on merits or on withdrawal, or
on being rendered infructuous, in case, the appellant makes a
prayer for refund of the pre-deposit, the same has to be allowed
and the pre-deposit has to be returned to the appellant, unless
the appellate tribunal, on the request of the secured creditor but        c
with the consent of the depositors, had already appropriated the
pre-deposit towards the liability of the borrower, or with "the
consent, had adjusted the amount towards the dues, or if there
be any attachment on the pre-deposit in any proceedings under
Section 13(10) of the Act read with Rule 11 of The Security
                                                                          D
Interest (Enforcement) Rules, 2002, or if there be any attachment
in any other proceedings known to law. The submission that the
Bank has a lien on the pre-deposit made under Section 18 of the
SARFAESI Act in terms of Section 171 of the Contract Act, 1872
cannot be accepted. [Paras 22, 23] [934-B-H; 935-A]
      1.3 Section 171 of the Contract Act, 1872 provides for              E
retention of the goods bailed to the bank by way of security for
the general balance of account. The pre-deposit made by a
borrower for the purpose of entertaining the appeal under Section
18 of the Act is not with the bank but with the Tribunal. It is not
a bailment with the bank as provided u/s. 148 of the 1872 Act.            F
[Para 24] [935-C-D]
       1.4 The first respondent had in fact sought withdrawal of
the appeal, since the appellant had already proceeded against
the secured assets by the time the appeal came up for
consideration on merits. There is neither any order of
                                                                          G
appropriation during the pendency of the appeal nor any
attachment on the pre-deposit. Therefore, the deposit made by
the first respondent is liable to be returned to the first respondent.
Though for different reasons as well, the view taken by the High
Court is endorsed. Thus, there is no merit in the appeal. [Paras
25, 26] [935-E-F]                                                         1-1
922             SUPREME COURT REPORTS                         [2016) 2 S.C.R.


A             Babu Ganesh Singh Deepnarayan v. Union of India and
              another AIR 2009 Gu.i. 98; Mardia Chemicals v. Union of
              India (2004) 4 SCC 311:2004 (3) SCR 982; Lakshmi Rattan
              Enginerring Works Limited v. Assistant Commissioner Sales
              _Tax, Kanpur and Another AIR 1968 SC 488: 1968 SCR 505
              - referred to.
 B
                              Case Law Reference
              AIR 2009 Guj. 98          referred to      Para6
              2004 (3) SCR 982          referred to      Para 17
              1968 SCR 505              referred to      Para 20
 c            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4379 of
      2016.
            From the Judgment and Order dated 1.04.2015 of the High Court
      of Gujarat at Ahmedabad in LPA No. 513 of2015.
 D            C. U. Singh, Sr. Adv., Sanjay Bhatt, Dushyant Kumar, Rabin
      Majumder, M. Dutta, Ashish Rana, Advs. for the Appellant.
            Ms. Preeti Rongta, Sanjeev Sarva, Dinesh S. Badiar, Prashant
      Singh, Rameshwar Prasad Goyal, Vipul Jai, Ms. Shailly Dinkar, Vipin
      Kumar Jai, Prashant Pandit, Pranaya Kumar Mahapatra, Kedar Nath
 E    Tripathy, Advs. for the Respondents.
              The Judgment of the Court was delivered by
              KURIAN, J.: I. Leave granted.
             2. An appeal under Section 18 of The Securitisation and
      Reconstruction offinancial Assets and Enforcement of Security Interest
 F
      Act, 2002 (hereinafter referred to as 'SARFAESI Act') before the Debt
      Recovery Appellate Tribunal (hereinafter referred to as 'DRAT') can
      be entertained only if the borrower deposits fifty per cent of the amount
      in terms of the order passed by the Debt Recovery Tribunal (hereinafter
      referred to as 'ORT') under Section 17 of the Act or fifty per cent of the
 G    amount due from the borrower as claimed by the secured creditor,
      whichever is less. The Appellate Tribunal may reduce the amount to
      twenty five per cent. What is the fate of such deposit on the disposal of
      the appeal is the question arising for consideration in this case.
             3. Being a pure legal issue, it may not be necessary for us to refer
 H    to the factual position in detail. The first respondent, being a borrower
       AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                              923
                       [KURIAN, J.]

and aggrieved by the steps taken by the secured creditor, filed                A
Securitisation Application No. 152 of 2010 before the Debt Recovery
Tribunal, Ahmedabad. Though, initially an interim relief was granted, the
same was vacated by order dated 20.01.2011. Therefore, the first
respondent moved the Debt Recovery Appellate Tribunal, Mumbai under
Section 18 of the SARFAESIAct. In terms of the proviso under Section
                                                                               B
18, the first respondent made a deposit ofRs.50 lakhs before the Appellate
Tribunal. During the pendency of the appeal before the DRAT,
Securitisation Application itself came to be finally disposed of before the
Debt Recovery Tribunal at Ahmedabad, setting aside the sale. Realising
that the appeal did not survive thereafter, the first respondent sought
permission to withdraw the same and also for refund of the deposit of          c
Rs. 50 lakhs. Permission was granted, however, making it subject to the
disposal of the appeal. As the appeal itself was being withdrawn, the
first respondent moved the High Court of Gujarat at Ahmedabad by
way of Writ Petition (Special Civil Application), aggrieved by the
observation that the withdrawal would be subject to the result of the
                                                                               D
appeal. The same was disposed of by order dated 05.03.2015 by the
learned Single Judge, setting aside the said condition and permitting the
first respondent herein to withdraw the amount unconditionally. Aggrieved,
the appellant-Bank filed an intra-Court appeal. That appeal was dismissed
by order dated 01.04.2015 by a Division Bench, and thus aggrieved, the
Bank has come up in appeal before this Court.                                  E
       4. Heard learned Senior Counsel Shri C. U. Singh appearing for
the appellant-Bank and learned Counsel Prashant Pandit appearing for
the respondents.
       5. The l~arned Senior Counsel appearing for the appellant-Bank
submits that the first respondent has no right to get back the deposit         F
made by it as a pre-condition for entertaining the appeal. The said amount
has to be set off against the dues of the first respondent, which has
actually been quantified and for which, Section 13 recovery steps have
been permitted. It is submitted thatthe appellant-Bank has to secure the
entire debt by proceeding against the secured assets, and therefore, the       G
deposit is liable to be appropriated by the Bank. Reference is also made
to Section 13(10) of the SARFAESI Act and Rule 11 of The Security
Interest (Enforcement) Rules, 2002, which read as follows:
       "13(10) Where dues of the secured creditor are not fully satisfied
       with the sale proceeds of the secured assets, the as may be             H
924                SUPREME COURT REPORTS                          [2016] 2 S.C.R.


A              prescribed to the Debts Recovery Tribunal havingjurisdiction or a
               competent court, as the case may be, for recovery of the balance
               amount from the borrower."
               "11. Procedure for Recovery of shortfall of secured debt.-
               (1) An application for recovery of balance amount by any secured
 B             creditor pursuant to sub-section (10) of section 13 of the Act shall
               be presented to the Debts Recovery Tribunal in the form annexed
               as Appendix VI to these rules by the authorised officer or his
               agent or by a duly authorised legal practitioner, to the Registrar of
               the Bench within whose jurisdiction his case falls or shall be sent
               by registered post addressed to the Registrar of Debts Recovery
 c             Tribunal.
               (2) The provisions of the Debts Recovery Tribunal (Procedure)
               Rules, 1993 made under Recovery of Debts Due to Banks and
               Financial Institutions Act, 1993 (51 of 1993), shall mutalis
               mutandis apply to any application filed by under sub-rule (I).
 D
               (3) An application under sub-rule (1) shall be accompanied with
               fee as provided in rule 7 of the Debts Recovery Tribunal
               (Procedure) Rules, 1993."
          6. Learned Senior Counsel further submits that the Bank has a
 E lien on the amount under Section 171 of The Indian Contract Act, 1872.
   The decision of the High Court of Gujarat in Babu Ganesh Singh
   Deepnarayan v. Union oflndia and another' which has been followed
   by the Division Bench in the impugned judgment, does not reflect the
   true legal position, it is further submitted.
 F           7. Babu Ganesh (supra) was a case involving a challenge on the
      vires of the second proviso under Section 18 of the SARFAESI Act, on
      the mandatory pre-deposit. While upholding the provision, at paragraphs-
      5 and 6, it was observed that, in case the appeal is dismissed, the amounts
      deposited for entertaining the appeal would be refunded. To quote:
               "5. Right of appeal is a creature of the statute. Legislature can
 G             impose <:onditiono under which it is to be exercised. Without a
               statutory provision creating such a right, a person aggrieved is not
               entitled to prefer an appeal. Legislature while granting right of
               appeal can impose conditions which it thinks reasonable. Such
               conditions merely regulate the exercise of right of appeal so that
 H     1
           AIR 2009 Guj. 98
       AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                                 925
                       [KURIAN, J.]

       the same is not abused by a recalcitrant party, and there is no            A
       difficulty in the enforcement of the order appealed against in case
       the appeal is ultimately dismissed. Imposition of such a condition
        is essential, so that frivolous appeals would not be filed. Ultimately
        if the appeal is dismissed, the aggrieved party can always seek
        refund of the amount deposited and therefore, he is not in any
                                                                                  B
        way aggrieved. Further the Third Proviso to Section 18 (I) of the
        Securitization Act also enables the Appellate Tribunal, for the
        reasons to be recorded in writing, reduce the amount to not less
        than 25% of the debt referred to in the Second Proviso. We are
        not prepared to accept the contention that conditions imposed in
        the second and third proviso to Section 18(1) of the Securitization       c
      : Act are onerous in nature so as to make the right ofappeal illusory.
        Delhi High Court in R. V Saxena s case (supra) also upheld the
        validity of Second Proviso to Section 18( 1) of the Securitization
        Act with which we fully concur.
         6. We have also not come across any provision in the Statute,            D
       enabling the secured creditor to adjust or appropriate the amount
       deposited by the borrower to prefer an appeal under Section 18( I)
       of the Act. On dismissal of the appeal the amount deposited as a
       pre-condition for filing the appeal will be refunded to the appellant
       and therefore, he is no way prejudiced. We therefore, find no
       merit in the contention raised by the petitioner that the second           E
       proviso to Section 18(1) of the Act is discriminatory or violative of
       Article 14 of the Constitution of India. Petitions lack merit and the
       same are dismissed."
        .8. At this juncture, it may be necessary to refer to the scheme of
 the SARFAESI Act. The Act was intended to facilitate easy and faster             F
 recovery of loans advanced by banks and financial institutions. The
 ordinary recovery mechanism contemplated in The Code of Civil
 Procedure, 1908 was not considered sufficient. Thus, the Recovery of
 Debts Due to Banks and Financial Institutions Act, 1993 was introduced
·for a special and speedier mechanism for the recovery. Almost a decade
                                                                                  G
 of experience proved that the recovery process was not achieving the
 intended objects and hence, the SARFAESI Act to regulate securitisation
 and reconstruction of financial assets and enforcement of security interest
 was enacted. The Act incorporates a system whereby direct action for
 recovery of secured debt may be initiated against the secured assets of
 a borrower after the debt is declared to be a non performing asset (NPA).        H
926            SUPREME COURT REPORTS                           [2016) 2 S.C.R.


A            9. "Borrower" is defined under Section 2(1)(1), which reads as
      follows:
               "2(1)(1) "borrower" means any person who has been
               granted financial assistance by any bank or financial
               institution or who has given any guarantee or created
B              any mortgage or pledge as security for the financial
               assistance granted by any bank or financial institution
               and includes a person who becomes borrower of a
               securitisation company or reconstruction company
               consequent upon acquisition by it of any rights or interest
               of any bank or financial institution in relation to such
 c             financial assistance;"
            I 0. "Secured Asset"', under Section 2( I )(zc), is defined as:
                     "2(l)(zc)"secured asset" means the property on
                  which the security interest is created"
D           11. "Section 2( I )(zd) provides for definition of"secured creditor",
      which reads as follows:
            "2(l)(zd) "secured creditor" means any bank or financial
            institution or any consortium or group of hanks or financial
            institutions and includes-
 E
               (i) debenture trustee appointed by any bank or financial
               institution; or
               (ii) securitisation company or reconstruction company,
               whether acting as such or managing a trust set up by
               such securitisation company or reconstruction company
 F
               for the securitisation or reconstruction, as the case may
               be; or any other trustee holding securities on behalf of a
               bank or financial institution, in whose favour security
               interest is created for due repayment by any borrower
               of any financial assistance;"
 G          12. Section 2(1 )(ze) defines "secured debt" to mean "a debt which
      is secured by any security interest''.
            13. "Security interest" is defined under Section 2( 1)(zf):
               "(zf) "security interest" means right, title and interest
 H             of any kind whatsoever upon property, created in favour
      AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                                 927
                      [KURIAN, J.]

         of any secured creditor and includes any mortgage,                      A
         charge, hypothecation, assignment other than those
         specified in section 31;"
      14. The mechanism for enforcement of security interest is
contemplated under Section 13 of the Act. Sub- Sections (1 ), (2),(3),(3A)
and (4) of Section 13 are relevant for the purposes of the present case          B
and they are extracted below:
      "13. Enforcement of security interest
      (I) Notwithstanding anything contained in section 69 or section
      69 A of the Transferof Property Act, 1882 ( 4of1882), any security
      interest created in favour of any secured creditor may be enforced,        c
      without the intervention of court or tribunal, by such creditor in
      accordance with the provisions of this Act.
      (2) Where any borrower, who is under a liability to a secured
      creditor under a security agreement, makes any default in
      repayment of secured debt or any installment thereof, and his              D
      account in respect of such debt is classified by the secured creditor
      as non-performing asset, then, the secured creditor may require
      the borrower by notice in writing to discharge iii full his liabilities
      to the secured creditor within sixty days from the date of notice
      failing which the secured creditor shall be entitled to exercise all       E
      or any of the rights under sub-section (4).
      (3) The notice referred to in sub-section (2) shall give details of
      the amount payable by the borrower and the secured assets
      intended to be enforced by the secured creditor in the event of
      non-payment of secured debts by the borrower.
                                                                                 F
      (JA) If, on receipt of the notice under sub-section (2), the borrower
      makes any representation or raises any objection, the secured
      creditor shall consider such representation orobjection and if the
      secured creditor comes to the conclusion that such representation
      or objection is not acceptable or tenable, he shall communicate
                                                                                 G
      within one week ofreceipt of such representation or objection the
      reasons for non-acceptance of the representation or objection to
      the borrower:
       Provided that the reasons so communicated or the likely action of
       the secured creditor at the stage of communication of reasons
                                                                                 H
928             SUPREME COURT REPORTS                             [2016] 2 S.C.R.


A           shall not confer any right upon the borrower to prefer an application
            to the Debts Recovery Tribunal under section 17 or the Court of
            District Judge under section 17 A.
            (4) In case the borrower fails to discharge his liability in full within
            the period specified in sub-section (2), the secured creditor may
 B          take recourse to one or more of the following measures to recover
            his secured debt, namely:-
                ( a)   take possession of the secured assets of the borrower
                including the right to transfer by way of lease, assignment or
                sale for realising the secured asset;
c               (b) take over the management of the business of the borrower
                including the right to transfer by way of lease, assignment or
                sale for realising the secured asset:
            Provided that the right to transfer by way of lease, assignment or
            sale shall be exercised only where the substantial part of the
 D          business of the borrower is held as security for the debt.
            Provided further that where the management of whole of the
            business or part of the business is severable, the secured creditor
            shall take over the management of such business of the borrower
            which is relatable to the security for the debt.
 E
                (c)   appoint any person (hereafter referred to as the
                manager), to manage the secured assets the possession of
                which has been taken over by the secured creditor;
                (d) require at any time by notice in writing, any person who
                has acquired any of the secured assets from the borrower and
 F
                from whom any money is due or may become due to the
                borrower, to pay the secured creditor, so much of the money
                as is sufficient to pay the secured debt."
            15. A conspectus of the aforesaid provisions shows that under the
      scheme of the SARFAESI Act, a secured creditor is entitled to proceed
 G    against the borrower for the purpose of recovering his secured debt by
      taking action against the secured assets, in case the borrower fails to
      discharge his liability in full within the period specified in the notice issued
      under Section 13(2) of the Act. It is the mandate of Section 13(3) of the
      Act that the notice issued under Section 13(2) should contain details of
 H
       AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                               929
                       [KURIAN, J.]

the amount payable by the borrower and also the secured assets intended         A
to be enforced by the secured creditor in the event of non-payment of
the dues as per Section 13(2) notice. Thus, the secured creditor is entitled
to proceed only against the secured assets mentioned in the notice under
Section 13(2). However, in terms of Section 13(11) of the Act, the secured
creditor is also free to proceed first against the guarantors or sell the
                                                                                B
pledged assets. To quote:
      "13(11} Without prejudice to the rights conferred on the secured
      creditor under or by this section, the secured creditor shall be
      entitled to proceed against the guarantors or sell the pledged assets
      without first taking any of the measures specified in clauses( a) to
      (d) of sub-section (4) in relation to the secured assets under this
                                                                                c
      Act."
       16. Section 17 of the Act provides for a right to appeal to the ORT
in respect of the grievances on the measures taken by the secured creditor
under Section 13 of the Act. To quote for easy reference, Section 17 of
the Act:                                                                        D

       "17. Right to appeal.-(!) Any person (including borrower),
       aggrieved by any of the measures referred to in sub-section (4) of
       section 13 takei1 by the secured creditor or his authorised officer
       under this Chapter, may make an application alongwith such fee,
       as may be prescribed to the Debts Recovery Tribunal having               E
       jurisdiction in the matter within forty-five days from the date on
       which such measure had been taken:
       Provided that different fees may be prescribed for making the
       application by the borrower and the person other than the borrower.
                                                                                F
       Explanation: For the removal of doubts, it is hereby declared that
       the communication of the reasons to the borrower by the secured
       creditor for not having accepted his representation or objection or
       the likely action of the secured creditor at the stage of
       communication of reasons to the borrower shall not entitle the
       person (including borrower) to· make an application to the Debts         G
       Recovery Tribunal under sub-section (I).
       (2) The Debts Recovery Tribunal shall consider whether any of
       the measures referred to in sub-section (4) ofsection·lJ taken by
       the secured credit or for enforcement of security are in
                                                                                H
930      SUPREME COURT REPORTS                            [2016) 2 S.C.R.



A     accordancewith the provisions of this Act and the rules made
      thereunder.
      (3) If, the Debts Recovery Tribunal, after examining the facts and
      circumstances of the case and evidence produced by the parties,
      comes to the conclusion that any of the measures referred to in
B     sub-section (4) of section 13, taken by the secured creditor are
      not in accordance with the provisions of this Act and the rules
      made thereunder, and require restoration of the management of
      the business to the borrower or restoration of possession of the
      secured assets to the borrower, it may by order, declare the
      recourse to any one or more measures referred to in sub-section
c     (4) of section 13 taken by the secured creditors as invalid and
      restore the possession of the secured assets to the borrower or
      restore the management of the business to the borrower, as the
      case may be, and pass such order as it may consider appropriate
      and necessary in relation to any of the recourse taken by the
D     secured creditor under sub-section (4) of section 13.
      (4) If, the Debts Recovery Tribunal declares the recourse taken
      by a secured creditor under sub-section (4) of section 13, is in
      accordance with the provisions of this Act and the rules made
      thereunder, then, notwithstanding anything contained in any other
 E    law for the time being in force, the secured creditor shall be entitled
      to take recourse to one or more of the measures specified under
      sub-section (4) of section 13 to recover his secured debt.
      (5) Any application made under sub-section (1) shall be dealt with
      by the Debts Recovery Tribunal as expeditiously as possible and
 F    disposed of within sixtx days from the date of such application:
      Provided that the Debts Recovery Tribunal may, from time to
      time, extend the said period for reasons to be recorded in writing,
      so, however, that the total period of pendency of the application
      with the Debts Recovery Tribunal, shall not exceed four months
      from the date of making of such application n1ade under sub-
 G
      section (1 ).
      (6) If the application is not disposed of by the Debts Recovery
      Tribunal within the period of four months as specified in sub-section
      (5), any party to the application may make an application, in such
      form as may be prescribed, to the Appellate Tribunal for directing
 H
         AXIS .BANK v. SBS ORGANICS PRIVATE LIMITED                            931
                          [KURIAN, J.]

        the Debts Recovery Tribunal for expeditious disposal of the             A
        application pending before the Debts Recovery Tribunal and the
        Appellate Tribunal may, on such application, make an order for
        expeditious disposal of the pending application by the Debts
        Recovery Tribunal.
          (?)Save as otherwise provided in this Act, the Debts Recovery         B
        Tribunal shall, as far as may be, dispose of the application in
        accordance with the provisions of the Recovery of Debts Due to
        Banks and Financial Institutions Act, 1993 and the rules made
        thereunder."
       17. Though Section 17 of the Act is titled as a 'Right to appeal',       c
the liberty granted to the aggrieved person is to make an application to
the ORT and the parties are at a liberty to lead evidence before the
tribunal. And thus, it is actually a trial before the ORT on the grievances
of the aggrieved persons in the respect of the measures taken by the
secured creditor for recovery of dues of the borrower in proceeding
against the secured assets.(See Mardia Chemicals v. Union oflndia')             D

    18. The actual appeal is contemplated under Section 18 of the
SARFAESI Act. The provision reads as follows:
         "18.Appeal to Appellate Tribunal.-( 1) Any person aggrieved,
         by any order made by the Debts Recovery Tribunal under section         E
         17, may prefer an appeal alongwith such fee, as may be prescribed
         to the Appellate Tribunal within thi1ty days from the date of
         receipt of the order of Debts RecoveryTribunal:
         Provided that different fees may be prescribed for filing an appeal
         by the borrower or by the person other than the borrower:              F
         Provided further that no appeal shall be entertained unless the
         borrower has deposited with the Appellate Tribunal fifty per cent
         of the amount of debt due from him, as claimed by the secured
         creditors or determined by the Debts Recovery Tribunal, whichever
         is less:
                                                                                G
         Provided' also that the Appellat Tribunal may, for the reasons to
         be recorded in writing, reduce the amount to not less than twenty-
         five per cent. of debt referred to in the second proviso.

2
    (2004) 4 sec 311
                                                                                H
932            SUPREME COURT REPORTS                            [2016] 2 S.C.R.


A           (2) Save as otherwise provided in this Act, the Appellate Tribunal
            shall, as far as may be, dispose of the appeal in accordance with
            the provisions ofthe Recovery of Debts Due to Banks and Financial
            Institutions Act, 1993 (51 of 1993) and rules made thereunder."
             19. Any person aggrieved by the order of the DRT under Section
 B    17 of the SARFAESI Act, is entitled to prefer an appeal along with the
      prescribed fee within the permitted period of30 days. For 'preferring'
      an appeal, a fee is prescribed, whereas for the Tribunal to 'entertain' the
      appeal, the aggrieved person has to make a deposit of fifty per cent of
      the amount of debt due from him as claimed by the secured creditors or
      determined by the DRT, whichever is less. This amount can, at the
 c    discretion of the Tribunal, in appropriate cases, for recorded reasons, be
      reduced to twenty- five per cent of the debt.
            20. This Court, in Lakshmi Rattan Enginerring Works Limited
      v. Assistant Commissioner Sales Tax, Kanpur and Another\ had
      the occasion to consider the meaning of the expression 'entertain' in the
 D    context of a similar provision in the Uttar Pradesh Sales Tax Act, 1948
      where it was held that in such context, the expression has the meaning
      of"admitting to consideration''. The relevant discussion is available at
      paragraphs - 9 and 10:
            "9.The word 'entertain' is explained by a Divisional Bench of the
 E          Allahabad High Court as denoting the point of time at which an
            application to set aside the sale is heard by the court. The expression
            'entertain', it is stated, does not mean the same thing as the filing
            of the application or admission of the application by the court. A
            similar view was again taken in Dhoom Chand Jain v. Chamanlal
 F          Gupta & Anr. AIR 1962 All. 543, in which the learned Chief Justice
            Desai and Mr. Justice Dwivedi gave the same meaning to the
            expression 'entertain'. It is observed by Dwivedi J. that the word
            'entertain' in its application bears the meaning 'admitting to
            consideration'. and therefore when the court cannot refuse to
            take an application which is backed by deposit or security, it cannot
 G          refuse judicially to consider it. In a single bench decision of the
            same court reported in Bawan Ram & Anr. v. Kuni Beharilal
            A.LR. 1961All.42, one of us (Bhargava, J.) had to consider the
            same rule. There the deposit had not been made within the period
            of limitation and the question had arisen whether the court could
 H    3 AIR 1968 SC 488
AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                               933
                [KURIAN, J.]

entertain the application or not. It was decided that the application    A
could not be entertained because proviso (b) debarred the court
from entertainingan objection unless the requirement of depositing
the amount or furnishing security was complied with within the
time prescribed. In that case of the word 'entertain' is not
interpreted but it is held that the court cannot proceed to consider
                                                                         B
the application in the absence of deposit made within the time
allowed by law. This case turned on the fact that the deposit was
made out oftime. In yet another case of the Allahabad High Court
reported in Haji Rahim Bux &Sons and Ors. v. Firm Samiullah &
Sons A.LR. 1963 All. 326, a division bench consisting of Chief
Justice Desai and Mr. Justice S. D. Singh interpreted the words          c
of 0. 21, r. 90, by saying that the word 'entertain' meant not
 'receive' or 'accept' but proceed to consider on merits' or
 'adjudicate upon'.
IO.In our opinion these cases have taken a correct view of the
word 'entertain' which according to dictionary also means 'admit D
to consideration'. It would therefore appear that the direction to
the court in the proviso to s. 9 is that the court shall not proceed to
admit to consideration an appeal which is not accompanied by
satisfactory proof of the payment of the admitted tax. This will be
when the case is taken up by the court for the first time. In the
decision on which the Assistant Commissioner relied, the learned E
ChiefJustice (Desai C.J.) holds that the words 'accompanied by'·
showed that something tangible had to accompany the
memorandum ofappeal. lfthe memorandum of appeal had to be
accompanied by satisfactory proof, it had to be in the shape of
something tangible, because no intangible thing can accompany a F
document like the memorandum ofappeal. In our opinion, making
 'an appeal' the equivalent of the memorandum of appeal is not
sound. Even under 0. 41 of the Code of Civil Procedure, the
expression "appeal" and "memorandum of appeal" are used to
distinct two distinct things. In Wharton's Law Lexicon, the word
"appeal" is defined as the judicial examination of the decision by a G
higher Court of the decision of an inferior court. The appeal is the
 judicial examination; the memorandum of appeal contains the
 grounds on which the judicial examination is invited. For purposes
 oflimitation and for purposes of the rules of the Court it is required
 that a written memorandum of appeal shall be filed. When the H
              SUPREME COURT REPORTS                          [2016) 2 S.C.R.


A         proviso speaks of the entertainment of the appeal, it means that
          the appeal such as was filed will not be admitted to consideration
          unless there is satisfactory proof available of the making of the
          deposit of admitted tax."
         21. We are also conscious of the fact that such a pre-condition is
B present in several statutes while providing for statutory appeals, like The
  Income-Tax Act, 1961, The Central Excise Act, 1944, The Consumer
  Protection Act, 1986, The Motor Vehicles Act, 1988, etc. However, unlike
  those statutes, the purpose of the SARFAESI Act is different, it is meant
  only for speedy recovery of the dues, and the scheme under Section
  13(4) of the Act, permits the secured creditor to proceed only against
c the secured assets. Of course, the secured creditor is free to proceed
  against the guarantors and the pledged assets, notwithstanding the steps
  under Section 13(4) and without first exhausting the recovery as against
  secured assets referred to in the notice under Section 13(2). But such
  guarantor, if aggrieved, is not entitled to approach DRT under Section
D 17. That right is restricted only to persons aggrieved by steps under
  Section 13(4) proceeding for recovery against the secured assets.
         22. The Appeal under Section 18 of the Act is permissible only
  against the order passed by the DRT under Section 17 of the Act. Under
  Section 17, the scope of enquiry is limited to the steps taken under Section
E 13(4) against the secured assets. The partial deposit before the DRAT
  as a pre-condition for considering the appeal on merits in terms of Section
  18 of the Act, is not a secured asset. It is not a secured debt either, since
  the borrower or the aggrieved person has not created any security interest
  on such pre-deposit in favour of the secured creditor. If that be so, on
  disposal of the appeal, either on merits or on withdrawal, or on being
F rendered infructuous, in case, the appellant makes a prayer for refund
  of the pre-deposit, the same has to be allowed and the pre-deposit has to
  be returned to the appellant, unless the Appellate Tribunal, on the request
  of the secured creditor but with the consent of the depositors, had already
  appropriated the pre-deposit towards the liability of the borrower, or
G with the consent, had adjusted the amount towards the dues, or if there
  be any attachment on the pre-deposit in any proceedings under Section
   13(10) of the Act read with Rule 11 of The Security Interest
  (Enforcement) Rules, 2002, or if there be any attachment in any other
  proceedings known to law.

H          23. We are also unable to agree with the contention that the Bank
       AXIS BANK v. SBS ORGANICS PRIVATE LIMITED                                935
                       [KURIAN, J.J

has a lien on the pre-deposit made under Section 18 of the SARFAESI              A
Act in terms of Section 171 of The Indian Contract Act, 1872. Section
17I of The Indian Contract Act, 1872 on general lien, is in a different
context:
        "171. General lien of bankers, factors, wharfingers,
        attorneys and policy-brokers.-Bankers, factors, wharfingers, B
      . attorneys of a High Court and policy-brokers may, in t!ie absence
        of a contract to the contrary, retain as a security for a general
        balance of account, any goods bailed to them; but no other persons
        have a right to retain, !JS a security for such balance, goods bailed ·
        to them, unless there is an express contract to that effect."
                                                                                 c
       24. Section 171 of The Indian Contract Act, 1872 provides for
retention of the goods bailed to the bank by way of security for the
general balance of account. The pre-deposit made by a borrower for
the purpose of entertaining the appeal under Section 18 of the Act is not
with the bank but with the Tribunal. It is not a bailment with the bank as
provided under Section 148 of The Indian Contract Act, 1872.                     D
Conceptually, it should be an argument available to the depositor, since
the goods bailed are to be returned or otherwise disposed of, after the
purpose is accomplished as perthe directions of the bailor.
       25. In the case before us, the first respondent had in fact sought
withdrawal of the appeal, since the appellant had already proceeded              E
against the. secured assets by the time the appeal came up for
consideration on merits. There is neither any order of appropriation during
the pendency of the appeal nor any attachment on the pre-deposit.
Therefore, the deposit made by the first respondent is liable to be returned
to the first respondent.                                                         F
        26. Though for different reasons as well, we endorse the view
taken by the High Court. Thus, there is no merit in the appeal. It is
accordingly dismissed.
      27. We make it clear that the dismissal of the appeal is without
prejudice to the liberty available to the appellant to take appropriate steps    G
under Section 13(10) of the SARFAESI Act read with Rule 11 of the
Security Interest (Enforcement) Rules, 2002.
        28. There shall be no order as to costs.

 Nidhi Jain                                                 Appeal dismissed.
                                                                                 H