Is Pre-Deposit Mandatory for Filing an Appeal Before DRAT Under SARFAESI Act?

In the complex world of debt recovery and secured lending, borrowers often face challenging decisions when contesting orders from the Debts Recovery Tribunal (DRT). A common question arises: Whether Pre Deposit is Required for Filing Appeal before the Appellate Tribunal (DRAT) under the SARFAESI Act? This issue becomes particularly pressing when appealing interim or interlocutory orders issued by the Presiding Officer of the DRT.

This blog post explores the legal requirements, judicial precedents, and practical implications of the pre-deposit condition under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). While the principles discussed here draw from established case law, note that this is general information and not specific legal advice—consult a qualified lawyer for your situation.

Understanding the Pre-Deposit Requirement

The SARFAESI Act provides a statutory remedy for aggrieved parties through appeals to the Debt Recovery Appellate Tribunal (DRAT). However, this right is not unconditional. Section 18(1) mandates that no appeal shall be entertained by the DRAT unless the appellant deposits with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the DRT, whichever is less. The second proviso allows the DRAT to reduce this to not less than 25% for reasons recorded in writing. [