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Estimate the mandatory pre-deposit required under Section 18 of the SARFAESI Act, 2002 or Section 21 of the RDB Act, 1993 before the Debt Recovery Appellate Tribunal (DRAT) will entertain an appeal.
Amount in figures (Rupees). Use the full decretal amount including interest.
Default — 50%
₹0
—
50% (Default)
₹0
25% (If Reduced)
₹0
Note: The deposit is 50% of the debt due under both routes, but the base differs. On a SARFAESI appeal (Section 18) it is the amount claimed by the secured creditor or the amount determined by the DRT, whichever is less. On a recovery appeal (Section 21, RDB Act) it is the amount of debt due as determined by the Tribunal under Section 19. Under both, the DRAT may for reasons recorded in writing reduce the deposit to not less than 25%. The deposit must be made before the appeal is entertained.
Appealing to the DRAT? Our team drafts the appeal and moves for a reasoned reduction of the pre-deposit to 25% — under the third proviso to Section 18 SARFAESI, or the proviso to Section 21 of the RDB Act.
Section 18 of the SARFAESI Act, 2002 lets any person aggrieved by an order of the Debts Recovery Tribunal under Section 17 appeal to the Debts Recovery Appellate Tribunal within thirty days of receiving the order. Its second proviso bars the DRAT from entertaining that appeal unless the borrower has deposited fifty per cent of the amount of debt due from him — the base being the amount claimed by the secured creditor or the amount determined by the DRT, whichever is less.
The third proviso allows the DRAT, for reasons to be recorded in writing, to reduce that amount to not less than twenty-five per cent of the debt. The reduction is not automatic — the appellant must apply, demonstrate hardship or other grounds, and obtain a reasoned order. Twenty-five per cent is a floor: the DRAT cannot go below it, and it cannot waive the deposit altogether.
The parallel provision for recovery appeals. An appeal against a DRT order in a Section 19 recovery proceeding runs under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993, which now carries the same percentages: fifty per cent of the amount of debt due as determined by the Tribunal under Section 19, with a proviso allowing the DRAT to reduce it to not less than twenty-five per cent for reasons recorded in writing. The percentage is the same; the base is not. Section 18 measures against the amount claimed or determined, whichever is less — Section 21 against the amount determined.
Both figures in Section 21 are recent. Act 44 of 2016 substituted “fifty per cent.” for “seventy-five per cent.”, and replaced a power to “waive or reduce” with the present twenty-five per cent floor, both with effect from 1 September 2016. Judgments and commentary predating that amendment — and later judgments discussing the unamended provision — still refer to seventy-five per cent and to a power of waiver.
The pre-deposit is a condition precedent to the appeal being entertained on merits — if not made, the appeal is liable to be dismissed at the threshold. The deposit becomes refundable on success of the appeal, or adjustable against the eventual recovery if the appeal fails.
Need counsel for a DRT or DRAT matter?
Unified Chambers and Associates handles DRT and DRAT appellate practice across all 5 Debt Recovery Appellate Tribunals in India. Contact legal@unifiedchambers.com or call +91 84008 60008.