Filing an appeal before the Debt Recovery Appellate Tribunal (DRAT) against any order passed by a Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act is governed strictly by Section 18. Section 18(1) mandates that no appeal by a borrower or aggrieved party shall be entertained unless the appellant has deposited with the Appellate Tribunal 50 per cent of the amount of debt claimed by the secured creditor or determined by the DRT, whichever is less.
Recognizing that onerous pre-deposit demands can defeat the right of appeal, the second proviso to Section 18(1) empowers the Chairperson of DRAT to reduce the pre-deposit amount to a minimum of 25 per cent for reasons recorded in writing. High Court precedents published on Indian Kanoon establish that DRAT must apply its judicial mind when evaluating waiver petitions.
To successfully obtain a reduction of pre-deposit from 50% to 25% before DRAT benches in Delhi, Mumbai, Kolkata, Chennai, or Allahabad, the waiver application must establish:
While DRAT itself cannot statutorily waive pre-deposit below 25%, the Supreme Court in Axis Bank v. SBS Organics Private Limited (2016) and High Courts across India have affirmed that under Article 226/227 of the Constitution, High Courts retain extra-ordinary jurisdiction to grant interim relief where strict adherence to pre-deposit would cause gross miscarriage of justice.
Section 18 mandates a statutory pre-deposit of 50% of the debt claimed by the secured creditor or determined by the DRT, whichever is lower.
The Chairperson of DRAT has statutory discretion to reduce the pre-deposit amount to a minimum of 25% for reasons recorded in writing.
No. Under the SARFAESI Act, DRAT has no statutory authority to reduce pre-deposit below 25%. However, High Courts under Article 226/227 may grant interim protection in exceptional cases.
Demonstrating severe financial hardship, prima facie patent illegality in DRT's order, or already-recovered payments by the bank.
An appeal against a DRT order must be filed before the DRAT within 30 days from the date of receipt of the DRT order.
The 5 DRAT seats are located in Delhi, Mumbai, Kolkata, Chennai, and Allahabad.
Yes, if the bank has already realized funds through partial property auctions, those amounts can be pleaded for pre-deposit credit.
Failure to deposit the mandated pre-deposit results in automatic dismissal of the appeal for non-compliance with statutory preconditions.
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