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Bombay HC – Third Parties Need Not Pre-Deposit Under Section 18 of the SARFAESI Act

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Section 18 Proviso of SARFAESI Act – Pre-deposit as a pre-condition to entertain DRT appeal – Whether applicable to the third party who is neither a borrower nor guarantor.

The petitioner was the tenant in the original building.  The respondent no.4 Developer had Permanent Alternate Accommodation Agreement (PAAA) with the petitioner. However, it is the case of the petitioner had committed fraud on him by recording that flat no.403 was allotted to him in PAAA and at the same time, sold the same flat to respondent nos.2 and 3 who took home loan from respondent n.1 Bank on the said property.

DRAT rejected the application of the petitioner for interim reliefs.  The petitioner filed appeal.   DRAT passed the impugned order dated 26.6.2025 directing the petitioner to deposit 40% of the amount claimed by the Bank as amount due from borrowers and on failure, the appeal would stand rejected.

In that context, it was HELD that while Appeal under Section 18 of the SARFAESI Act can be filed by any aggrieved person, the proviso mandatorily requiring pre-deposit of 50% of the amount due and for reasons to be recorded at least 25% of the amount due, can apply only to the borrower or the guarantor.

Judgment dated 20.1.2026 of the High Court of Bombay in Writ Petition (L) No.21712 of 2025 of Ishtiyaque Aslam Khan  Vs.  DCB Bank and others

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