DRAT waiver and status quo orders need fresh scrutiny

The Bombay High Court, speaking through Justice Manish Pitale and Justice Shreeram Vinayak Shirsat, dealt with a SARFAESI dispute arising out of proceedings between a secured creditor, an auction purchaser, and the borrower. The challenge was to DRAT orders dated 18 November 2025 and 8 December 2025, passed in the borrower’s appeal.

The borrower had availed credit facilities from HDFC Bank, secured by mortgage over a flat and land. After the account was classified as NPA, the bank initiated action under the SARFAESI Act. The borrower’s earlier challenge before the DRT failed, and later proceedings before the DRAT also did not succeed when a pre-deposit direction was not complied with. The bank proceeded with sale of the mortgaged land, the auction purchaser emerged successful, paid the bid amount, and received the sale certificate and possession.

The borrower then filed a fresh securitisation application before the DRT-II, along with a delay condonation application, which was dismissed. In the appeal before the DRAT, the borrower sought waiver of pre-deposit. The DRAT first adjourned the matter and directed the parties to maintain status quo. Later, it allowed the waiver application and directed registration of the appeal and stay application for further consideration.

The High Court found fault with the manner in which the DRAT had proceeded. It held that the order dated 18 November 2025 directing status quo could not be treated as an ad-interim order in the circumstances of the case. The Court also held that the subsequent orders merely continuing that status quo direction could not survive once the foundational order was set aside.

On the question of pre-deposit, the Court clarified that complete waiver was not automatic. The DRAT has discretion under Section 18 of the SARFAESI Act to direct pre-deposit between 25% and 50% of the amount due, and the waiver application had to be decided afresh after hearing both sides. The Court expressly left it open to the DRAT to consider interim relief on its own merits.

The writ petitions were allowed, the impugned DRAT orders were quashed and set aside, and the appeal stood de-registered.

Practical takeaway: In SARFAESI appeals, DRAT must independently decide waiver and interim relief, and status quo directions cannot substitute for a reasoned order.