LHD CINEMAS LLP vs STATE BANK OF INDIA on 4 September 2026

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Justice Vivek Bharti Sharma, Chairperson I.A. No. 542/2026 (WoD) In

Misc. Appeal Diary No. 1480/2026 Between

LHD Cinemas LLP & Anr. … Appellant/s V/s. The Authorised Officer. State Bank of India …Respondent/s

-: Order dated: 04/09/2026: -

Present as under:

Mr. Puneet Gogad, Counsel for Applicants/Borrowers. Mr. Zulfiq Multani along with Mr. Manoj Mishra, i/b Mishra Legal, Counsel for Respondent Bank.

2. The matter is taken up for hearing by way of praecipe filed by the Applicants/Borrowers for seeking urgent relief.

Heard on I.A. No. 542/2026.

3. submit that as per the demand notice issued under Section 13(2) of the SARFAESI Act dated 27.10.2025, an amount of ₹12,25,30,415.06/- was demanded. He would further submit that the application seeking interim relief filed by the Applicants/Borrowers was rejected by the order dated 01.08.2026 passed by the DRT-I, Ahmedabad.

4. The Learned Counsel for the Applicants/Borrowers would submit that the property, possession of which is sought to be taken by the Respondent Bank is situated within the jurisdiction of the District Magistrate, Ahmedabad, or the Chief Metropolitan Magistrate, Ahmedabad, however, the order for taking possession was obtained from the Chief Judicial Magistrate, Gandhinagar. He would further submit that the Learned DRT-I, Ahmedabad, in the impugned order dated 01.08.2026, observed that the proceedings under Section 14 of the SARFAESI Act are criminal in nature according to him is incorrect in law and cannot be sustained, therefore, waiver may be granted.

5. submit that the demand notice issued under Section 13(2) of the SARFAESI Act does not contain the details of the bifurcation of the amount demanded as required in view of the judgment passed by the Hon’ble High Court at Ahmedabad in Punjab National Bank Vs. Mithilanchal Industries Pvt. Ltd. MANU/GJ/1069/2020.

6. The Learned Counsel for the Respondent Bank tenders the reply. Same is taken on record. He would further submit that the grounds raised by the Applicants/Appellants do not warrant grant of waiver and waiver cannot be granted on the grounds urged by the Applicants/Borrowers.

7. Considered and perused the record.

8. In the considered view of this Appellate Tribunal, the points raised by the Learned Counsel for the Applicants/Borrowers are not relevant to the question of waiver at this stage. The issues raised are essentially matters to be considered on the final merits of the appeal and cannot be adjudicated upon at the stage of considering the application for waiver. However, the amount to be kept in mind is the large amount demanded in the notice. Therefore, this Tribunal directs the Applicants/Borrowers to deposit 40% of ₹12,25,30,415.06/-, which comes to ₹4,90,12,166.02/- on or before 11.09.2026. On deposit of the amount, the Registry is directed to register this appeal and interlocutory application, if otherwise in order under the rules.

9. At this stage, the Learned Counsel for the Applicants/Borrowers would pray for Application Diary No. 1553/2026 for staying the order passed by the Ld. Presiding Officer, DRT-I, Ahmedabad.

10. The Learned Counsel for the Respondent Bank for grant for any stay on the ground that the Appeal is not yet registered due to non- payment of mandatory pre-deposit.

11. The Learned Counsel for the Respondent Bank relied upon the judgment dated 04.03.2026 in Writ Petition No. 15718/2025 in Anil Kumar Pawar & Anr V/s The Authorised Officer, Union Bank of India &

Ors, the Hon’ble High Court of Bombay observed that after depositing the pre-deposit amount under section 18 of the SARFAESI Act within time, the matter be sent before the Ld. Registrar for registering the Appeal and Interlocutory Application. Only after registration, the I.A. for stay or appeal be heard and decided.

12. Considered and perused the record. The relevant part of the judgment of the Hon’ble High Court of Bombay is reproduced here as under. “8. We find on perusal of the impugned order that it suffers from a serious procedural infirmity. The Application considered and decided in the impugned order dated 14th May 2025 was only the Application seeking waiver of pre-deposit under Section 18 of the Securitisation Act. The only prayer made on behalf of Respondent Nos. 2 and 3 before the DRAT was for such waiver on the basis of statements made in the said Application. While considering the said Application the DRAT discussed the rival submissions, made certain observations and thereupon found that the Respondent Nos.2 and 3 were required to deposit 40% of the amount due and that complete waiver from pre-deposit was not warranted. Having reached the said conclusion the DRAT was expected to issue a positive direction to Respondent Nos.2 and 3 to deposit such 40% amount towards pre-deposit so that the Appeal could be registered and then take up the Application for interim relief and the Appeal for further consideration. (emphasis supplied)

9. ……………………………………………

10. We find that the aforesaid approach adopted by the DRAT suffers from serious procedural irregularity and infirmity. It appears that the DRAT proceeded on an assumption that the moment a pre-deposit direction was issued in an Application seeking waiver thereof, the interim relief would follow as a matter of course upon the amount so directed to be deposited, in fact being deposited by the Appellants (Respondent Nos.2 and 3 herein). We find that the approach of the DRAT is unsustainable.”

13. In re Anil Pawar Case (Supra) the Hon’ble High Court has castigated the approach of DRAT of granting stay or interim relief before the registration of the appeal on deposit of mandatory pre- deposit under Section 18 of the SARFAESI Act for filing of the appeal. It would be important to revisit Section 18 of the Act. It reads: “18. Appeal to Appellate Tribunal.—(1) Any person aggrieved, by an order made by the Debts Recovery Tribunal [under section 17, may prefer an appeal alongwith such fee, as may be prescribed] to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal: Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower 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: Provided also that the Appellate 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.

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14. In view of the proviso to section 18 of the SARFAESI Act and observations of the Hon’ble High Court of Bombay in re “Anil Kumar Pawar” (Supra), this Appellate Tribunal is of the considered view that an appeal and application for interim relief can only be heard and decided only after registration of appeal on mandatory pre-deposit under section 18 of the SARFAESI Act. That is to say that before registration of an appeal on deposit of an amount as per section 18 of the ‘Act’, no Appeal or any Interlocutory Application therein can be entertained. Hence, no interim stay can be granted at this stage before registration of the Appeal and the interim stay application after depositing the mandatory amount under section 18 of the SARFAESI Act.

15. The amount shall be deposited in the form of a Demand Draft with the Registrar of this Appellate Tribunal.

16. As and when the said amounts are deposited, the same shall be invested in term deposits in the name of the Registrar, DRAT, Mumbai with any nationalised Bank, initially for 13 months, and thereafter to be renewed periodically.

17. With this observation, the I.A. No. 542/2026 is disposed of. The Respondent Bank is at liberty to file a reply to the grounds of the Appeal with an advance copy to the other sides.

18. If the deposit is made as stated in para 8 above on or before 11.09.2026, list the Appeal on 18.09.2026 for reporting compliance and hearing.

In the event of failure to deposit the said amount till 11.09.2026, the Appeal shall stand dismissed automatically without further reference to this Appellate Tribunal. Sd/- Chairperson 04.09.2026 Psa-05