DRAT

This page explains DRAT appeals and pre-deposit in plain terms: the law, the forum, the documents and the usual steps. Legals365 is the legal platform of Advocate B.K. Singh and associates, based in Delhi NCR.

In short. An appeal against a Debts Recovery Tribunal order goes to the Debts Recovery Appellate Tribunal (DRAT). Against an order in a bank's recovery application (section 20, RDB Act) the appeal is filed within 45 days with a pre-deposit of 75% of the debt determined; against a SARFAESI section 17 order (section 18) within 30 days with 50%. DRAT can reduce either deposit, but not below 25%.

The Debts Recovery Appellate Tribunal is the only appeal forum above the Debts Recovery Tribunal. If the DRT has passed a recovery certificate against you, refused to stop a SARFAESI auction, rejected a tenant's claim, or set aside a sale you bought at, the next step is an appeal to the DRAT. There are five DRATs in India, at Delhi, Allahabad, Kolkata, Mumbai and Chennai, and each hears appeals from the DRTs attached to it.

What makes DRAT work different from an ordinary appeal is money. A borrower or guarantor cannot even get the appeal heard unless a large part of the amount is deposited first. Most of the real fighting at the DRAT, at least in the first few hearings, is about that deposit: how much, by when, and whether the tribunal will bring it down. This page explains the two kinds of appeal, how the pre-deposit is calculated and reduced, the time limits, the procedure, what grounds actually succeed, and what comes after the DRAT.

Law

Recovery of Debts and Bankruptcy Act 1993 (sections 20 and 21); SARFAESI Act 2002 (section 18); Debts Recovery Appellate Tribunal (Procedure) Rules 1994; Limitation Act 1963 where applied.

Forum

Debts Recovery Appellate Tribunal with jurisdiction over the DRT that passed the order (Delhi, Allahabad, Kolkata, Mumbai or Chennai). After DRAT, a writ petition in the High Court under Articles 226 and 227.

Time limit

45 days from receiving the copy of the DRT order for an appeal under section 20 of the RDB Act; 30 days from receiving the order for an appeal under section 18 of the SARFAESI Act. Delay can be condoned for sufficient cause, but do not plan on it.

Pre-deposit

RDB Act appeal: 75% of the debt determined by the DRT, reducible to not less than 25%. SARFAESI appeal: 50% of the debt claimed by the bank or determined by the DRT, whichever is less, reducible to not less than 25%.

Documents

Certified or free copy of the impugned DRT order, the original application or securitisation application with all annexures, replies, evidence affidavits, order sheets, statement of account, proof of date of receipt of the order, and an application for reduction of pre-deposit with financial details.

What a DRAT appeal is

A DRAT appeal is a full appeal against an order of the Debts Recovery Tribunal, on facts and on law. The DRAT can confirm the order, set it aside, modify the amount, or send the matter back to the DRT for a fresh decision. It is presided over by a Chairperson, usually a retired High Court judge, sitting alone.

Two features shape everything else. First, the appeal is not heard at all until the pre-deposit is made or reduced by order, so an appeal without money or a strong reduction application is often dead on arrival. Second, there is no further statutory appeal from the DRAT. The next stop is a writ petition in the High Court, which looks at jurisdiction and serious legal error rather than re-weighing evidence. In practice the DRAT is the last place where your facts get a full second look.

Two kinds of appeal: section 20 RDB Act and section 18 SARFAESI

Appeals reach the DRAT under two different statutes, and the time limit and the deposit depend on which one you are in. An appeal under section 20 of the Recovery of Debts and Bankruptcy Act 1993 lies against orders in a bank's Original Application for recovery of money: the final order and recovery certificate, and also many interim orders such as attachment before judgment. Orders of the DRT on appeals from the Recovery Officer under section 30 also come up this way.

An appeal under section 18 of the SARFAESI Act 2002 lies against orders of the DRT on a securitisation application under section 17, which is the borrower's or any affected person's challenge to the bank's possession notice, physical possession or auction. If you lost a Section 17 SARFAESI application, or the DRT refused interim stay of an auction, this is your appeal. The bank can appeal too, if the DRT set aside its measures.

Read the cause title of the DRT order. If it says OA, it is an RDB Act matter. If it says SA (securitisation application), it is a SARFAESI matter. Getting this wrong means you calculate the wrong limitation and the wrong deposit, and both mistakes are expensive.

The provisions that govern DRAT appeals

RDB Act appeal and SARFAESI appeal compared

How the pre-deposit is calculated

The pre-deposit is a percentage of a specific figure, and much depends on identifying that figure correctly. In an RDB Act appeal it is the debt as determined by the DRT in the order under appeal: the principal and interest the DRT actually allowed up to the date it fixed, not the higher amount the bank claimed in its Original Application and not the running balance in the bank's ledger today. If the DRT allowed a smaller amount than claimed, the deposit is on the smaller amount.

In a SARFAESI appeal the statute gives you the lower of two figures: the debt claimed by the bank (normally the amount in the section 13(2) demand notice, sometimes updated in later notices) and the debt determined by the DRT, if the DRT determined any. Where the DRT did not determine a debt at all, which is common because a section 17 application is about the legality of measures, the bank's claim is usually the base. Look carefully at which notice the bank relies on, because the claim grows with every quarter and the appellant should not pay a percentage of interest added after the appeal was filed.

When Advocate B.K. Singh's office prepares a DRAT appeal, the first worksheet is not the grounds of appeal but this calculation: the exact base figure, where in the record it appears, and what 75%, 50% and 25% of it come to. Arguing reduction without knowing these numbers precisely makes a poor impression in the first hearing, and the first hearing is often where the deposit is fixed.

Getting the pre-deposit reduced to 25 percent

The DRAT can reduce the deposit, but only by a reasoned order and never below 25%. Total waiver is not available under the current text of either section, and the Supreme Court has held that the SARFAESI pre-deposit cannot be waived altogether. So the real question in most appeals is where between 25% and the full percentage the tribunal will settle.

Reduction is not granted because the appellant is short of money. The DRAT looks at two things together: how strong the appeal looks on a first reading, and whether insisting on the full deposit would effectively shut out a serious challenge. A clear legal defect in the DRT order, such as a decree passed against a guarantor whose guarantee had been discharged, a claim that is plainly time-barred, interest compounded against the contract, or a SARFAESI sale held without the mandatory notice, carries more weight than a long account of business losses.

Support the application with real financial material: recent income tax returns, audited balance sheets for a business, bank statements, a list of other liabilities and attached assets. Offer what you can actually pay, and by when. A tribunal that sees a genuine offer of, say, a third of the debt within four weeks is more likely to fix something near it than one faced with a bare plea for the minimum. If the deposit ordered is not paid on time, the appeal is dismissed and the DRT order becomes final, so never promise a figure you cannot raise.

Who has to make the pre-deposit

The deposit is tied to the person from whom money is due. In an RDB Act appeal that means the principal borrower, every co-borrower and every guarantor against whom the DRT passed the recovery certificate. Liability under a recovery certificate is usually joint and several, so if several of them appeal, the DRAT normally fixes one deposit for the debt rather than a separate deposit for each appellant, but this depends on the order and on whether their liabilities differ.

A bank appealing against a DRT order does not make any pre-deposit. Nor, generally, does a person who owes nothing to the bank, such as an auction purchaser whose sale was set aside, or a third party claiming the property in its own right. In SARFAESI appeals, tenants, purchasers from the borrower and family members claiming a share have argued that the deposit does not apply to them, with varying results depending on the facts. If you are not the borrower or guarantor, take advice on this point before you raise the money, because it may not be needed at all.

Appeals against interim orders that do not determine any debt, for example an order refusing to condone delay or an order on a discovery application, are generally treated differently from appeals against a final determination. The DRAT still has to be satisfied that the appeal is maintainable, but the 75% rule is linked to a debt determined, so there may be nothing to calculate.

Limitation and condonation of delay

Count the days from the date you received a copy of the DRT order, not from the date it was pronounced, and keep proof of that date. For a section 20 RDB Act appeal the period is 45 days; for a section 18 SARFAESI appeal it is 30 days. Where the order was pronounced in your presence and uploaded the same day, the bank will argue that you had it from that day, so the safe course is to treat the pronouncement date as the starting point.

The DRAT can admit an appeal filed late if there was sufficient cause, and the Limitation Act's principles on condonation are applied. But delay costs you in two ways. The application for condonation has to explain each day of delay with something better than illness of a clerk or misplacement of papers, and while you are explaining, the bank is free to execute the recovery certificate or complete the auction. An appeal filed within time with a modest reduction application is almost always in a better position than a late one with a perfect memorandum.

How a DRAT appeal runs

Timelines vary a lot between DRATs and depend on whether a Chairperson is in office. The sequence below is typical.

1. Get the order and the record

   Obtain the certified copy of the DRT order and the full DRT file, including the application, replies, evidence affidavits and order sheets. Note the date of receipt. Calculate limitation and the pre-deposit base the same day.

2. Draft the memorandum of appeal

   Set out the facts briefly, the order under appeal, and numbered grounds. Each ground should point to a specific error: a document ignored, a wrong legal test, a calculation mistake, a notice not served. File the reduction application, any condonation application and any stay application with it.

3. File and seek listing

   File in the DRAT registry, usually through e-filing, with the fee and copies for the respondent bank. Where an auction or coercive step is close, mention the matter for urgent listing and serve advance notice on the bank's counsel.

4. First hearing on pre-deposit

   The DRAT hears the reduction application, often before the bank has filed a reply on the merits. It fixes the deposit and the date to pay. It may grant interim protection conditional on payment by that date.

5. Deposit and admission

   Deposit the amount with the DRAT within the time allowed, usually by demand draft or as the registry directs, and file proof. The money is normally kept in an interest-bearing deposit until the appeal is decided. The appeal is then admitted and the bank is asked to reply.

6. Pleadings and hearing

   The bank files its reply; you may file a rejoinder. The appeal is decided on the DRT record and arguments. Fresh evidence is allowed only in limited circumstances, so the record you made before the DRT matters.

7. Judgment and release of deposit

   If the appeal succeeds, the deposit is refunded with accrued interest or adjusted as the order directs. If it fails, the DRAT usually permits the bank to withdraw the deposit towards the dues.

Keep a copy of every order sheet. Many disputes later, about whether time was extended or whether interim protection continued, are settled only by what the order sheet records.

Grounds that work in a DRAT appeal

The appeals that succeed point to concrete errors in the DRT's order, not a general complaint that the bank was unfair. In recovery appeals the strongest grounds are usually about the amount and the parties: interest charged above the contract rate or compounded more often than agreed, penal charges capitalised contrary to RBI's directions on penal charges, credits not given, a claim time-barred for want of a valid acknowledgment, a guarantor held liable for a facility he never guaranteed, or a guarantee discharged because the bank varied the loan terms without the guarantor's consent.

Procedural grounds succeed when the defect caused real prejudice. A recovery certificate passed ex parte where summons were never properly served, a written statement refused on a technical ground, a counter-claim not decided at all, or a final order that gives no reasons on the main defence, are typical examples. The DRAT often sends such cases back to the DRT for a fresh decision rather than deciding them itself.

In SARFAESI appeals the usual grounds are those that ought to have succeeded under section 17: the account was not properly classified as a non-performing asset, the section 13(2) notice was defective, the borrower's objection under section 13(3A) was never answered, the valuation and reserve price were unreliable, the sale notice did not give the 30 days required by the Security Interest (Enforcement) Rules, or the property was agricultural land outside the Act. A ground not raised before the DRT can be raised in appeal only if it is a pure question of law on admitted facts, so the quality of the DRT pleadings decides much of what you can do in appeal.

Stay of recovery and auction while the appeal is pending

Filing an appeal does not by itself stop anything. The recovery certificate remains executable and the bank can go ahead with possession and sale unless the DRAT passes a stay order. So the stay application must be filed with the appeal and pressed at the first hearing.

The DRAT usually links interim protection to the pre-deposit: it may say that if the appellant deposits the amount fixed by a given date, no coercive steps will be taken, or the auction will not be confirmed, until the next date. If the deposit is missed, the protection falls away automatically. Where an auction is already scheduled within days, ask for the matter to be taken up before the auction date and serve the bank's counsel in advance, because the tribunal is reluctant to interfere after a sale has been confirmed and a third party has paid. For the specific problem of an imminent sale, see our page on stopping or challenging a bank auction.

Documents for a DRAT appeal

Which DRAT hears your appeal

Each DRT is attached by notification to one of the five DRATs, and the appeal must go to that DRAT. Appeals from the three DRTs in Delhi go to DRAT Delhi. DRATs at Allahabad, Kolkata, Mumbai and Chennai cover their own regions; for example appeals from the Lucknow DRT go to DRAT Allahabad and appeals from the Bengaluru DRTs to DRAT Chennai. Check the current jurisdiction notification of the Department of Financial Services before filing, because DRT boundaries have been redrawn more than once.

Practical realities differ between tribunals. When a Chairperson's post falls vacant, the Chairperson of another DRAT may be given additional charge, and urgent matters may be heard on fixed days or by video conference. Check the cause list and the DRAT's notices before planning around a hearing date, especially when an auction is close. For borrowers in Delhi NCR, the commute question is simple: the DRAT you appeal to is decided by the DRT that passed the order, not by where you live or where the property is.

How the appeal changes by party

Borrower company or firm. The company appeals with its directors or partners who are guarantors. The pre-deposit is usually the biggest obstacle, and a reduction application has to show the business's real position through audited accounts. If the company is an MSME, raise in appeal any failure of the bank to follow the RBI framework for revival and rehabilitation of MSMEs, but only if you invoked it before the bank, since the Supreme Court has held it must be raised in time. Our page on MSME legal issues covers that framework.

Guarantor. A guarantor's appeal is strongest when it turns on the guarantee itself: whether it covers the facility sued on, whether it was discharged by a change in terms or release of security, or whether it is a continuing guarantee that was revoked. If the borrower company is already in insolvency, proceedings against the guarantor can still continue, but where the guarantor is a personal guarantor and an application under the Insolvency and Bankruptcy Code has been filed against him, an interim moratorium may apply. See our page on insolvency under the IBC.

Home loan borrower. An individual whose house is under SARFAESI action usually appeals against refusal of interim stay or dismissal of the section 17 application. The equity of the case, a family home, substantial repayment already made, a sale at a low price, weighs in the reduction application, though it does not replace legal grounds.

Auction purchaser. If the DRT set aside a sale you bought at, you can appeal without pre-deposit. Your concern is the money already paid and the possession you may have taken. Ask in the appeal for protection of your deposit and for directions on refund with interest if the sale ultimately fails.

Bank as appellant. Banks appeal where the DRT reduced the claim, rejected a guarantor's liability or set aside SARFAESI measures. If you are the respondent, you do not deposit anything, but you should file a reply promptly and oppose any interim order that would let the bank proceed while the appeal is pending.

Mistakes that sink DRAT appeals

• Missing the 30-day SARFAESI limit. People assume 45 days for every DRAT appeal. For a section 18 appeal it is 30 days from receiving the order.
• Asking for total waiver. The law does not permit going below 25%. An application that asks for nil wastes the first hearing and annoys the tribunal.
• Promising a deposit you cannot raise. If the amount fixed is not deposited on time, the appeal goes. It is better to offer less and pay it than to offer more and default.
• Relying on the appeal to stop the auction. Filing does not stay anything. Without a stay order the bank may lawfully sell.
• New facts in appeal. The appeal is decided on the DRT record. A defence you never pleaded before the DRT is hard to introduce now, unless it is a pure point of law.
• Ignoring the order sheet. Missing the date on which the deposit was to be made, or the date to which interim protection was extended, is a common and avoidable disaster.
• Running parallel cases without telling the tribunal. If you have also filed a writ, a civil suit or a consumer complaint on the same facts, disclose it. Concealment can lead to dismissal and costs.

After the DRAT: writ petition and SLP

There is no further statutory appeal from a DRAT order. A party who loses can file a writ petition under Articles 226 and 227 before the High Court that has territorial jurisdiction, which for DRAT Delhi orders is usually the Delhi High Court. The High Court does not rehear the case. It interferes where the DRAT acted without jurisdiction, ignored binding law, or reached a conclusion no reasonable tribunal could reach on the record.

High Courts are also reluctant to entertain writs against DRT orders directly, skipping the DRAT, because the statute provides an appeal; the Supreme Court said as much in United Bank of India v Satyawati Tondon (2010). A writ is not a way around the pre-deposit. From the High Court, a special leave petition under Article 136 can be filed in the Supreme Court within 90 days, but leave is granted sparingly in debt recovery matters.

What to do this week if you have lost before the DRT

• Note the date you received the DRT order and calculate the last date for appeal: 45 days for an OA, 30 days for an SA.
• Apply for the certified copy and the complete DRT file at once, if you do not already have them.
• Identify the exact base figure for the pre-deposit and work out 75% or 50%, and 25%.
• Decide realistically how much you can deposit and by when, and collect the financial papers to support a reduction.
• List the specific errors in the DRT order, with the page of the record where each appears.
• Check whether the bank has fixed a possession or auction date, and plan the urgent listing accordingly.
• Write down every other case on the same loan (cheque bounce, IBC, writ, criminal complaint) so they can be disclosed.
• Keep talking to the bank about settlement in writing; it does not stop the appeal, and it sometimes ends it.

Settlement while the appeal is pending

Many DRAT appeals end in a settlement rather than a judgment. Once the deposit is in, the bank has part of its money, the borrower has a pending challenge, and both sides have a reason to talk. A one-time settlement can be recorded before the DRAT, and the deposit adjusted towards it. Our page on loan settlement and one-time settlement with banks explains how banks usually approach these proposals, and the DRTs and DRATs also hold Lok Adalats where pending appeals can be settled; see mediation, conciliation and Lok Adalat.

There are also cases where appealing is the wrong decision. If the DRT order is sound on the amount and the only complaint is that the bank was harsh, the deposit will tie up money that might settle the account outright. In appeals that reach Advocate B.K. Singh's office, the honest first advice is sometimes to use the 45 days to negotiate a settlement instead of filing, and sometimes to file at once to keep the right alive while negotiating. Which one fits depends on the size of the error in the order and the money you can raise.

If you want the DRT order and your papers checked before the limitation runs out, the team of Advocate B.K. Singh at Legals365 can review them and tell you the next step: talk to a lawyer. For the original recovery case itself, see defending a bank Original Application in the DRT.

Frequently asked questions

What is the pre-deposit for a DRAT appeal?

For an appeal against a DRT order in a bank's recovery application, the borrower or guarantor must deposit 75% of the debt determined by the DRT. For an appeal against a SARFAESI section 17 order, the deposit is 50% of the debt claimed or determined, whichever is less. In both cases the DRAT can reduce it, but not below 25%.

Can DRAT waive the pre-deposit completely?

No. Under the present text of section 21 of the RDB Act and section 18 of the SARFAESI Act the DRAT can only reduce the deposit, and not below 25%. The Supreme Court has held the SARFAESI pre-deposit cannot be waived altogether.

What is the time limit for filing an appeal in DRAT?

45 days from receiving a copy of the order for an appeal under section 20 of the RDB Act, and 30 days for an appeal under section 18 of the SARFAESI Act. Late appeals can be admitted for sufficient cause, but the delay must be explained properly and the bank can act in the meantime.

Does filing a DRAT appeal stop the bank auction?

No. The appeal alone does not stay anything. You need a specific stay order, which the DRAT usually makes conditional on paying the pre-deposit by a fixed date.

Does the bank have to make a pre-deposit if it appeals?

No. The pre-deposit applies only to a person from whom money is due to the bank. A bank appealing against a DRT order pays only the prescribed fee.

Is a guarantor required to make the pre-deposit in DRAT?

Generally yes, if the DRT has passed a recovery order against the guarantor, because the guarantor is a person from whom the debt is due. Where the guarantor's liability is limited or disputed, that is a strong reason to ask for reduction.

Can the pre-deposit be paid in instalments?

The DRAT has some discretion over the time it allows and sometimes permits payment in two or more parts within a fixed period. It cannot reduce the total below 25%, and missing any instalment usually leads to dismissal of the appeal.

What happens to the pre-deposit if I win the appeal?

It is normally kept in an interest-bearing deposit while the appeal is pending. If the appeal succeeds, it is refunded with the interest earned, or adjusted as the final order directs. If the appeal fails, the bank is usually allowed to withdraw it towards the dues.

Which DRAT will hear my appeal from DRT Delhi?

Appeals from the Delhi DRTs go to DRAT Delhi. Each DRT in India is attached to one of the five DRATs by notification, so check the current notification for DRTs outside Delhi.

Can I file a writ in the High Court instead of appealing to DRAT?

Ordinarily no. High Courts decline writs where the statute provides an appeal, and the Supreme Court has said so in SARFAESI cases. A writ lies against the DRAT's final order, not as a substitute for the appeal.

Can I bring new evidence in a DRAT appeal?

Only in limited cases, with the tribunal's permission and a good explanation of why it was not produced before the DRT. The appeal is mainly decided on the DRT record, so it pays to build that record properly.

How long does a DRAT appeal take?

The RDB Act asks the DRAT to try to decide appeals within six months, but actual time varies widely with the tribunal's workload and vacancies. The first few hearings, on pre-deposit and stay, usually come quickly; final hearing can take much longer.