DRAT Appeal: Process, Deadline and Deposit Rules

The first question worth answering about a DRAT appeal is not whether the order was wrong. It is what the appeal costs to file. Both statutes that feed the Debts Recovery Appellate Tribunal make a money deposit a precondition to the appeal being entertained, and the two figures are different.

If you are appealing a determination of debt by the DRT in a bank’s recovery case, Section 21 of the Recovery of Debts and Bankruptcy Act 1993 requires a deposit of 75 percent of the amount of debt determined, with a power in the DRAT to waive or reduce it for reasons recorded in writing. If you are appealing an order in a SARFAESI matter, Section 18 of the SARFAESI Act 2002 requires 50 percent of the debt due as claimed by the secured creditor or determined by the DRT, whichever is less, reducible to not less than 25 percent and never waivable altogether. Either way the appeal itself must be filed within 30 days of receiving a copy of the order.

That difference shapes strategy long before judgment, which is why the deposit is worth understanding at the first hearing of the case, not after losing it.

Two routes, two rules

Most confusion comes from treating the DRAT as a single appellate regime. It is one tribunal hearing appeals under two different statutes, and the conditions do not match.

	Appeal from an OA order	Appeal in a SARFAESI matter
Provision	Sections 20 and 21, RDB Act 1993	Section 18, SARFAESI Act 2002
Order appealed	DRT’s determination of the debt in the bank’s Original Application	DRT’s order on a securitisation application under Section 17
Time to appeal	30 days from receipt of the order	30 days from receipt of the order
Deposit	75 percent of the debt determined	50 percent of the debt claimed or determined, whichever is less
Relief from the deposit	May be waived or reduced for reasons recorded	May be reduced, but not below 25 percent
Who must deposit	Any person from whom the debt is due	The borrower, which includes guarantors and mortgagors

The practical consequence is counterintuitive. The higher headline figure, 75 percent under the RDB Act, comes with a genuine power of waiver. The lower figure, 50 percent under SARFAESI, comes with a hard floor of 25 percent that the tribunal cannot go below however sympathetic the facts. A borrower with no liquidity has more room in an RDB Act appeal than in a SARFAESI one.

On a determination of Rs 2 crore in a SARFAESI matter, the furthest a reduction can go is Rs 50 lakh, and that sum has to be found before the appeal is entertained. That number, more than any legal ground, is what decides whether the DRT stage is the real fight. It usually is. Our note on how a DRT case proceeds from filing to Recovery Certificate sets out what that stage involves.

The 30 days, and what starts a DRAT appeal

Both provisions count from the date a copy of the order is received, not from the date it is pronounced or uploaded. Keep the covering letter or the registry endorsement showing the date of receipt, because it is the only proof you will have if limitation is disputed.

Delay can be excused. Section 20(3) of the RDB Act allows the DRAT to entertain an appeal after 30 days where it is satisfied there was sufficient cause. The position under Section 18 of the SARFAESI Act has been argued both ways, since that section applies the RDB Act provisions to such appeals only so far as they can be applied. Tribunals do entertain condonation applications in SARFAESI appeals, but the ground has to be real and documented. Do not build a strategy on it.

A separate trap: the limitation runs on the appeal, not on the deposit. File the memorandum of appeal inside the 30 days along with an application to waive or reduce the deposit. The tribunal then hears that application and fixes a figure and a date. An appellant who spends the 30 days trying to arrange money before filing loses the appeal without an argument being heard.

Getting the deposit reduced

The power to reduce, and under the RDB Act to waive, is discretionary and must be exercised by a reasoned order. What persuades is evidence of the appellant’s actual position, not adjectives.

• Audited accounts, income tax returns and bank statements for the relevant years.
• A statement of assets, including what is already mortgaged, attached or under the Recovery Officer.
• The realisable value of the security already in the bank’s hands, since a lender holding property worth more than the claim is in a different position from one holding nothing.
• Anything showing the appeal has substance: a documented procedural defect, credits the account statement does not reflect, or an interest calculation that departs from the sanction terms.
• Any amount already paid or deposited at the DRT stage, which tribunals do take into account.

Two practices worth knowing. Tribunals commonly direct that the deposited sum be kept in an interest bearing deposit pending the appeal, so the money is not simply appropriated by the bank while the matter runs. And where a reduced amount is fixed with a deadline, the deadline is generally treated as a condition, so a missed date can bring the appeal down without a hearing on merits.

The bank appeals for free

The deposit condition attaches to “any person from whom the amount of debt is due” under the RDB Act and to “the borrower” under SARFAESI. It does not attach to the lender. A bank, a financial institution or an asset reconstruction company appealing an adverse DRT order pays no deposit at all.

This asymmetry is deliberate, and it has a strategic edge. A borrower who wins at the DRT should expect the lender’s appeal to arrive without any financial brake on it, and should plan for the possibility of the DRT’s order being stayed in that appeal.

The definition of borrower matters on the other side too. Section 2(f) of the SARFAESI Act takes in a person who gave a guarantee or created a mortgage as security for someone else’s financial assistance. A guarantor appealing a Section 18 order therefore carries the same deposit condition as the principal borrower, a point we develop in the note on guarantor rights in bank recovery.

How the appeal actually runs

A DRAT appeal is filed with the appellate tribunal exercising jurisdiction over the DRT that passed the order. Confirm the correct bench from the tribunal’s own cause list or registry rather than from assumption, since the mapping of DRTs to appellate benches has been reorganised over the years.

The filing carries the memorandum with grounds, a certified copy of the impugned order, the paperbook of what was before the DRT, the vakalatnama, the prescribed fee on the rules slab, and the applications for interim stay and for waiver or reduction of the deposit. Appeals are argued on the record made below. The DRAT is not a place to file evidence you chose not to file at the DRT, and applications to bring in fresh material need a proper explanation for why it was not produced earlier.

Section 20(6) of the RDB Act directs the DRAT to endeavour to dispose of an appeal within six months. Contested appeals frequently take longer. On the SARFAESI side, Section 17(6) gives either party a route to ask the DRAT for a direction to expedite where the DRT has not decided the securitisation application within four months.

At the end, the DRAT can confirm, modify or set aside the order, or remand the matter to the DRT for fresh consideration. A remand is common where the DRT decided a securitisation application without dealing with a specific compliance ground.

After the DRAT

There is no further statutory appeal. A DRAT order is challenged only by a writ petition before the High Court under Articles 226 and 227 of the Constitution, and the scope there is narrow: jurisdictional error, a breach of natural justice, or a finding no tribunal could reasonably reach. High Courts decline to re-examine the account or reweigh the evidence.

For appeals arising out of orders of DRT Jabalpur, that writ jurisdiction lies with the Madhya Pradesh High Court, whose principal seat is at Jabalpur. We act in these matters at both the tribunal and writ stages, and the work is described on our banking and DRT practice page.

Mistakes that end appeals early

1. Treating the deposit as negotiable after filing. It is a precondition to the appeal being entertained. Plan the funds while the DRT case is still running.
2. Missing the 30 days while arranging money. File first, argue the deposit second.
3. Assuming a stay follows the appeal. It does not. Interim protection has to be applied for and is usually conditional.
4. Appealing an interim order that is better challenged at the DRT. Some grievances are cured faster by a fresh application below than by an appeal that triggers a deposit.
5. Filing a thin waiver application. A plea of poverty without accounts, returns and an asset statement invites the statutory figure.
6. Overlooking the settlement window. A pending appeal, particularly one where a deposit has been made, often improves the terms available in negotiation. That is worth weighing against the cost of fighting, as discussed in the comparison of one-time settlement and litigation.

Treat a DRAT appeal as an expensive second look rather than a fresh start. The tribunal below is where the documents go in, the compliance grounds are established and the interest working is tested. An appeal built on that record has something to work with. An appeal built on regret does not.

This article is general information about appellate procedure and deposit rules, not legal advice on any particular order or account. The figures and time limits apply differently depending on which statute your case arises under. To discuss your own facts, reach us through the contact page.