The Illusory Right To Appeal: The Constitutionality Of The Mandatory Pre- Deposit Requirement Under Section 18 Of The SARFAESI Act, 2002
Raghav Kidambi, B.COM LLB (Hons.), Jindal Global Law School
ABSTRACT
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was enacted to enable swift, court-free recovery of non-performing assets. Section 18 of the Act requires an appeal to the Debts Recovery Appellate Tribunal on a mandatory pre-deposit of fifty per cent of the debt due which can be waived to twenty-five percent but not less than that at the Tribunal's discretion to not less than that. This paper argues that this rigid framework, where the appellant's secured asset has already been sold before the appeal is preferred, renders the statutory right of appeal illusory for economically weaker litigants, reinforcing the very defect the Supreme Court identified and struck down in Mardia Chemicals Ltd. v. Union of India in respect of the erstwhile Section 17. The paper explores the constitutionality of Section 18 of the Act in respect of Supreme Court rulings on the right to appeal in Garikapati Veeraya and the characterization of the right to appeal as a fundamental right under Article 14 and 21 of the Constitution in Anita Kushwaha. The paper compares similar pre-deposit provisions in different Act’s and draws two recommendations to balance the objective of the SARFAEASI Act while also upholding every citizen’s right to appeal as a fundamental right.
