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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

Sunrise Textiles Pvt Ltd, Surat, owes Bank of Baroda a debt that the Debts Recovery Tribunal determined at Rs 4 crore under section 19. Sunrise wants to appeal to the Appellate Tribunal. Under section 21 of the RDB Act, what must it do before the appeal can be entertained?

Sunrise must deposit fifty per cent of the Rs 4 crore debt, which is Rs 2 crore, with the Appellate Tribunal. Section 21 says the appeal will not be entertained without this deposit. The earlier seventy-five per cent rate was replaced by fifty per cent in 2016.

  1. ADeposit 50 per cent of the debt, i.e. Rs 2 crore, with the Appellate TribunalCorrect
  2. BDeposit 75 per cent of the debt, i.e. Rs 3 crore, with the Appellate Tribunal
  3. CDeposit 25 per cent of the debt, i.e. Rs 1 crore, with the Debts Recovery Tribunal
  4. DDeposit nothing, as the pre-deposit applies only to appeals by banks

Explanation

Section 21 bars the Appellate Tribunal from entertaining the appeal unless the debtor deposits fifty per cent of the debt determined under section 19. 50% of Rs 4 crore is Rs 2 crore. The 75 per cent figure was the earlier rate, replaced from 1 September 2016.

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