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Pre-Deposit for a DRAT Appeal Explained
For a borrower who has lost before the Debts Recovery Tribunal (DRT), filing an appeal is not just about preparing grounds and meeting the limitation period. A DRT appeal requires a statutory pre-deposit before the Debts Recovery Appellate Tribunal (DRAT) can entertain the appeal.
The DRT appeal pre-deposit is one of the most important requirements in debt recovery litigation. The applicable amount depends on whether the appeal is filed under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) or the SARFAESI Act, 2002. The two laws contain separate pre-deposit provisions, and the Section 21 pre-deposit under the RDB Act was amended in 2016, which is why older articles often state the wrong percentage.
Two statutes, two regimes
An appeal to the Debts Recovery Appellate Tribunal (DRAT) may arise under either of two Acts, and the DRAT appeal pre-deposit requirements differ depending on the law under which the appeal is filed.
Appeals from an adjudication under the Recovery of Debts and Bankruptcy Act, 1993. Where a Tribunal has decided a bank’s Original Application under Section 19, an appeal lies under Section 20, and Section 21 governs the deposit.
Appeals from an order under the SARFAESI Act. Where a Tribunal has decided a borrower’s application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, an appeal lies under Section 18 of that Act, which contains its own deposit provision.
Section 21 of the RDB Act — and the 2016 change
Section 21 provides that where an appeal is preferred by a person from whom the amount of debt is due to a bank, a financial institution, or a consortium, the appeal shall not be entertained by the Appellate Tribunal unless that person has deposited with the Appellate Tribunal fifty per cent of the amount of debt so due from him as determined by the Tribunal under Section 19. The proviso permits the Appellate Tribunal, for reasons to be recorded in writing, to reduce the amount to be deposited, to an amount not less than twenty-five per cent of the debt so due.
Two features of the current text reflect amendments made by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, with effect from 1 September 2016.
The headline figure was reduced from seventy-five per cent to fifty per cent — a change favourable to borrowers, and the reason so much older material remains wrong on this point.
At the same time, the earlier power to “waive or reduce” was replaced by a power only to reduce, to not less than twenty-five per cent. Complete waiver, which had previously been available, was removed. The floor is now statutory.
Note also the base on which the percentage is calculated: the amount of debt as determined by the Tribunal under Section 19, not the sum the bank originally claimed.
Section 18 of the SARFAESI Act
Section 18 provides that no appeal shall be entertained from a borrower unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or as determined by the Tribunal, whichever is less. The Appellate Tribunal has discretion, for reasons to be recorded in writing, to reduce that amount to not less than twenty-five per cent.
The base differs from Section 21 in a way that can matter considerably: it is the lesser of the amount claimed by the secured creditor and the amount determined by the Tribunal.
A comparison
| RDB Act, Section 21 | SARFAESI Act, Section 18 | |
|---|---|---|
| Appeal against | Tribunal’s order on the bank’s Original Application | Tribunal’s order on the borrower’s Section 17 application |
| Deposit | Fifty per cent | Fifty per cent |
| Base for calculation | Debt due as determined by the Tribunal under Section 19 | Amount claimed by the secured creditor or determined by the Tribunal, whichever is less |
| Power to reduce | Yes, for recorded reasons, to not less than twenty-five per cent | Yes, for recorded reasons, to not less than twenty-five per cent |
| Complete waiver | Not available since the 2016 amendment | Not available |
| Applies to the bank as appellant | No — the condition applies to the person from whom the debt is due | No — it applies to the borrower |
The asymmetry in the final row is worth noting. The pre-deposit binds the borrower. A bank appealing an adverse order faces no equivalent condition.
How the courts have treated it
The pre-deposit for an appeal before the DRAT has been construed as a genuine condition precedent rather than a procedural formality. In Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548, the Supreme Court, while interpreting Section 18 of the SARFAESI Act, held that the pre-deposit is mandatory and that the Appellate Tribunal cannot entertain the appeal without compliance with the statutory requirement. The Court also held that complete waiver is impermissible; the Appellate Tribunal may reduce the deposit, for reasons recorded in writing, but not below the statutory minimum of 25%.
The practical consequences
The Tribunal stage is where the case must be won. For a borrower without liquidity, the appellate route may be closed as a practical matter. That reality should shape how the case is presented at first instance — the evidence, the objections and the interim applications all matter more than they would in a system with an unconditional right of appeal.
Reduction must be asked for, and justified. An application to reduce the deposit should accompany the appeal and should set out, with material, why the full fifty per cent cannot be found. The Appellate Tribunal must record reasons, so it needs reasons to record.
Quantum is worth contesting at first instance. Since the deposit is a percentage of an amount determined by the Tribunal — or, under SARFAESI, the lesser of the claim and the determination — a successful challenge to the computation of interest and charges reduces not just the liability but the price of appealing.
An appeal does not automatically stay enforcement. Separate interim relief must be sought, and the deposit is not a substitute for it.
Check the current text, not the older figure. The seventy-five per cent figure under Section 21 has not applied since 1 September 2016, but it continues to circulate. Anyone budgeting for an appeal on that basis is working from the wrong number in the wrong direction.
FAQs
1. How much pre-deposit is required for a DRAT appeal?
Generally, the pre-deposit is 50% of the applicable debt amount, subject to the statutory rules under the RDB Act or SARFAESI Act.
2. Can the DRAT appeal pre-deposit be reduced?
Yes. The DRAT may reduce the pre-deposit to not less than 25%, provided reasons are recorded in writing.
3. Can the DRAT waive the pre-deposit completely?
No. Complete waiver is not available under the current statutory provisions.
4. Is the pre-deposit based on the bank’s original claim?
Not always. Under the RDB Act, it is based on the debt determined by the DRT. Under SARFAESI, the lesser of the amount claimed or determined is relevant.
5. Does filing an appeal automatically stay recovery proceedings?
No. A separate application for interim relief or stay may be required.
6. Does the pre-deposit requirement apply when the bank files the appeal?
No. The statutory pre-deposit requirement is directed at the borrower or person from whom the debt is due.
Legal Information Disclaimer
This article is published for general legal information and educational purposes only. It reflects the position of Indian law as researched up to 10 August 2026 and may not account for subsequent amendments, notifications, rule changes or judicial developments. It is not legal advice, does not take into account any individual’s particular facts or circumstances, and no advocate-client relationship arises from reading it. Outcomes in litigation depend on the specific facts of each case and on procedural requirements in force at the relevant time. Readers dealing with an actual dispute should obtain independent professional advice from a qualified advocate of their own choosing before acting on any information contained here.
Sources / Authorities
- Recovery of Debts and Bankruptcy Act, 1993 — Sections 19, 20 and 21, as amended — India Code, https://www.indiacode.nic.in/bitstream/123456789/1775/1/AArecovery1993__51.pdf
- Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, in force from 1 September 2016 vide Notification S.O. 2831(E) dated 1 September 2016 — substitution of “fifty per cent.” for “seventy-five per cent.” in Section 21 and replacement of the power to waive or reduce
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Sections 17 and 18 — India Code, https://www.indiacode.nic.in/handle/123456789/2042
- Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548 — pre-deposit as a mandatory condition precedent
