An appeal from an order of the Debt Recovery Tribunal (DRT) lies to the Debts Recovery Appellate Tribunal (DRAT) and must be filed within 30 days of receiving a copy of the order. If the appellant is the borrower, the appeal will not be heard unless they first deposit 50 per cent of the debt. The DRAT can reduce that to 25 per cent, for reasons recorded in writing, but the Supreme Court has held that it cannot waive the deposit altogether. This post explains the limitation period, how the deposit is calculated under each law, how reduction works and what the Supreme Court has said.
Which law is the appeal under?
The DRT applies two statutes, and the appeal provisions differ slightly:
- Section 18 of the SARFAESI Act, 2002 governs an appeal against a DRT order on a Section 17 application, that is, a challenge to a lender’s possession, sale or other enforcement measure.
- Section 20 of the Recovery of Debts and Bankruptcy Act, 1993 governs an appeal against a DRT order on a bank’s original application for recovery, and Section 21 of that Act sets the deposit.
Identify which order you are appealing before calculating anything. Some disputes involve both, for example where a recovery application and a Section 17 application about the same loan are decided separately.
The limitation period: 30 days
Under Section 18(1) of the SARFAESI Act, an appeal must be filed within 30 days from the date of receipt of the DRT’s order. Under Section 20(3) of the Recovery of Debts and Bankruptcy Act, the period was 45 days until the 2016 amendment substituted 30 days.
Both periods run from receipt of a copy of the order, so record when and how the order reached you. The DRAT can admit a late appeal if it is satisfied there was sufficient cause. In Baleshwar Dayal Jaiswal v. Bank of India (2015) the Supreme Court held that the DRAT has power to condone delay in a Section 18 appeal. That power is discretionary. A delay application must explain each day, and it is safer not to need one.
The pre-deposit under each law
| Section 18, SARFAESI Act | Section 21, Recovery of Debts and Bankruptcy Act | |
|---|---|---|
| Who must deposit | The borrower | The person from whom the debt is due |
| Base amount | Debt claimed by the secured creditor or determined by the DRT, whichever is less | Debt as determined by the DRT |
| Standard deposit | 50% | 50% |
| Lowest the DRAT can go | 25%, with reasons in writing | 25%, with reasons in writing |
| Total waiver | Not permitted | Not permitted |
Section 21 was changed in 2016. Before then it required 75 per cent and allowed the DRAT to waive or reduce the deposit. The amendment cut the figure to 50 per cent and replaced the power to waive with a power to reduce it, but not below 25 per cent.
What counts as “debt due”
The deposit is a percentage of the debt, so the base matters more than the percentage.
- Under Section 18 of the SARFAESI Act, the base is the lower of two figures: the amount the secured creditor claimed (usually in the Section 13(2) notice) and the amount the DRT determined. Where the DRT has not determined a figure, the claim in the notice is the usual reference point.
- Under Section 21 of the Recovery of Debts and Bankruptcy Act, the base is the debt as determined by the DRT in its order under Section 19. If the DRT allowed only part of the bank’s claim, the deposit is calculated on the part allowed.
Disputes often arise over whether interest after the notice, penal charges or costs form part of the base. The answer depends on the wording of the notice and the order, and should be worked out before filing, because an appeal filed with a short deposit is not entertained.
Applying for a reduction to 25 per cent
The DRAT may reduce the deposit, but not below 25 per cent, and it must record reasons. An application for reduction usually rests on:
- a strong case on the merits, such as a clear defect in the NPA classification, the notices or the sale process;
- genuine financial hardship, shown by documents rather than assertion;
- the value of the security already in the lender’s hands compared with the debt;
- amounts already paid or recovered that the claim does not reflect.
File the reduction application with the appeal, and be ready to deposit the reduced amount within the time the DRAT fixes. If the deposit is not made, the appeal can be dismissed without a hearing on the merits.
What the Supreme Court has held
- Mardia Chemicals v. Union of India (2004). The Court upheld most of the SARFAESI Act but struck down the pre-deposit condition that then applied to a borrower’s first challenge to enforcement before the DRT. That is why a Section 17 application today requires no deposit.
- Narayan Chandra Ghosh v. UCO Bank (2011). The Court held the pre-deposit under Section 18 mandatory, so the DRAT cannot entertain an appeal without it.
- Kotak Mahindra Bank v. Ambuj A. Kasliwal (2021). Considering Section 21 of the Recovery of Debts and Bankruptcy Act, the Court held that the DRAT may reduce the deposit to 25 per cent but cannot waive it entirely, and relied on Narayan Chandra Ghosh for the parallel SARFAESI provision.
- Baleshwar Dayal Jaiswal v. Bank of India (2015). The DRAT can condone delay in filing a Section 18 appeal where there is sufficient cause.
On the role of the High Court, United Bank of India v. Satyawati Tondon (2010) and PHR Invent Educational Society v. UCO Bank (2024) both hold that writ petitions should not ordinarily be entertained where the DRT and DRAT remedies are available. The High Court’s supervisory jurisdiction remains for exceptional cases, and our page on writ petitions in Delhi explains when it applies.
Step by step: filing a DRAT appeal
- Obtain a certified copy of the DRT order and note the date of receipt. Count 30 days.
- Identify the law the order was made under, and calculate the deposit base.
- Decide whether to seek a reduction, and gather the documents to support it.
- Draft the memorandum of appeal, with the grounds, the order under challenge and the relief sought, and attach the DRT record relied on.
- File the appeal with the deposit or the reduction application, and any delay condonation application if needed.
- Seek interim relief, such as a stay of the sale, if the matter is urgent. The DRAT usually considers this alongside the deposit.
- Make the deposit in the time and manner the DRAT directs.
A DRAT appeal commonly takes several months to a few years to decide. That is a range, not a promise.
If the debtor is a company in insolvency
If the borrower company is in corporate insolvency under the Insolvency and Bankruptcy Code, 2016, the Section 14 moratorium halts recovery and enforcement proceedings against it, including pending ones. That moratorium does not cover a personal guarantor. See our page on NCLT matters in Delhi.
Talk to us
Our DRT and DRAT lawyers in Delhi act for borrowers, guarantors and lenders in appeals and pre-deposit applications. If you are facing SARFAESI action earlier in the process, our post on what to do after a Section 13(2) notice sets out the first 60 days. Call 99115 44811 with the date you received the DRT order. This post is general information and not advice on your case, and no lawyer can guarantee how the DRAT will decide an appeal or a reduction application.