DRAT stands for Debts Recovery Appellate Tribunal. It is the appellate forum above the Debts Recovery Tribunal, and for a borrower who has just lost before the DRT it is usually the only forum left. Two things decide whether a DRAT appeal against a DRT order is ever heard: whether it is filed within thirty days, and whether the borrower can put money on the table before the tribunal will entertain it.
Both figures were changed by amendment in 2016, and a good deal of material still in circulation carries the old numbers. This post sets out the current position, the two separate routes up to the DRAT, and what the tribunal can and cannot do once the appeal is admitted.
What is DRAT, and what does it cover
The DRAT is established under Section 8 of the Recovery of Debts and Bankruptcy Act, 1993. The statute began as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act 51 of 1993) and was renamed by the Insolvency and Bankruptcy Code, 2016, which is why the same Act is still written variously as the RDB Act, the RDDBFI Act or the DRT Act.
Under Section 9 a DRAT consists of one person, the Chairperson. Section 10 requires that person to be, or have been, or be qualified to be, a Judge of a High Court, or to have held a Grade I post in the Indian Legal Service for at least three years, or to have served three years as the Presiding Officer of a tribunal. Section 17(2) gives the DRAT jurisdiction over appeals against any order made, or deemed to have been made, by a DRT under the Act. Section 17A additionally gives the Chairperson general superintendence over the DRTs in his region and the power to transfer a case from one DRT to another.
The Department of Financial Services records 39 DRTs and 5 DRATs currently functioning, the appellate benches being at Allahabad, Chennai, Delhi, Kolkata and Mumbai. DRAT Delhi’s cluster ordinarily covers the three Delhi DRTs along with Chandigarh and Jaipur. Bench allocation has shifted in the past, so confirm the operationally active bench for your DRT with the registry before filing. Filing before the wrong appellate tribunal is a jurisdictional defect, not a curable irregularity.
One threshold point comes up early. Under Section 1(4) the Act does not apply where the debt due falls below the notified figure, which the Central Government raised from ten lakh rupees to twenty lakh rupees by notification S.O. 4312(E) dated 6 September 2018. Below that there is no DRT order to appeal from, because the bank’s remedy is an ordinary civil suit for money recovery.
Two routes up, and they are not the same
An order of a DRT can reach the DRAT by either of two statutory routes, and the requirements differ.
The first is Section 20 of the RDB Act, used where the DRT has decided a bank’s Original Application for recovery. If you are at the stage before that, our guides on DRT Delhi filing and how to file a case in DRT Delhi cover the OA and SA distinction.
The second is Section 18 of the SARFAESI Act, 2002, used where the DRT has decided a borrower’s application under Section 17 challenging measures taken by a secured creditor, typically a bank auction of secured property.
Both now carry a thirty-day limitation, but the pre-deposit is calculated on a different base in each. Getting the route wrong affects the deposit computation and the grounds available, so the first thing to identify is which application the impugned order arose from.
Thirty days, not forty-five
Section 20(3) requires an appeal to be filed within thirty days from the date on which a copy of the DRT’s order is received by the appellant. The figure was substituted for “forty-five days” by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, with effect from 1 September 2016. Any note still stating forty-five days is describing the pre-2016 position.
Three details matter in practice. The period runs from receipt of the copy of the order, not from the date it was pronounced, so the date of receipt should be recorded and provable. The proviso to Section 20(3) allows the DRAT to entertain a late appeal where it is satisfied there was sufficient cause, so limitation here is not absolute in the way it is for a civil suit. And under Section 20(2) no appeal lies at all from an order made by the DRT with the consent of the parties.
There is a further trap in Section 27(1B). A defendant who agrees to pay the amount specified in the recovery certificate and obtains a stay of recovery proceedings on that basis forfeits the right to appeal against the DRT’s order. A settlement negotiated at the Recovery Officer stage can therefore close off the appeal without anyone saying so expressly.
The DRAT pre-deposit under Section 21
Section 21 is the provision that ends most borrower appeals. Where the appeal is preferred by a person from whom the debt is due, the DRAT shall not entertain it unless that person deposits fifty per cent of the amount of debt due from him as determined by the DRT under Section 19. The proviso allows the DRAT, for reasons to be recorded in writing, to reduce the amount, but not below twenty-five per cent.
The 2016 amendment changed this provision twice over. The headline figure came down from seventy-five per cent to fifty per cent, which helped borrowers. At the same time the earlier power to “waive or reduce” was replaced with a power only to reduce to not less than twenty-five per cent, which removed complete waiver. The floor is now statutory.
The courts have been firm about this. In Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548 the Supreme Court held there is an absolute bar on entertaining the appeal unless the condition precedent is satisfied. In Union Bank of India v. Rajat Infrastructure Pvt. Ltd. the Court held that the DRAT cannot dispense with the deposit entirely and that a High Court cannot direct otherwise. An application for reduction has to be made and argued on recorded reasons. It is not granted as a matter of course, and it does not extend the thirty days.
Two points work in the appellant’s favour. The deposit is a condition of the appeal being entertained rather than a payment towards the decree: in Axis Bank v. SBS Organics Pvt. Ltd. the Supreme Court held that the amount deposited under Section 18 of the SARFAESI Act is neither a secured asset nor a secured debt, and its fate depends on the outcome of the appeal. And Section 21 applies only to a person from whom the debt is due, so a bank appealing an adverse DRT order faces no pre-deposit at all.
The SARFAESI route: Section 18
Where the appeal is against a DRT order on a Section 17 application, Section 18 of the SARFAESI Act governs. The period is thirty days from receipt of the DRT’s order, and a fee is prescribed, with the proviso permitting different fees for a borrower and for a person who is not the borrower.
The deposit here is computed differently. No appeal is entertained unless the borrower has deposited fifty per cent of the amount of debt due from him as claimed by the secured creditor or as determined by the DRT, whichever is less. The DRAT may, for reasons to be recorded in writing, reduce that to not less than twenty-five per cent.
That “whichever is less” deserves attention. Where the DRT has determined a figure lower than the bank’s claim, the deposit is calculated on the lower figure. Under Section 21 of the RDB Act the base is simply the amount determined by the DRT. In matters where a borrower has a route under both statutes, the difference can be substantial.
Orders of the Recovery Officer do not go to the DRAT
This is a frequent misfiling. Under Section 30, a person aggrieved by an order of the Recovery Officer appeals to the DRT, not to the DRAT, within thirty days from the date on which a copy of the order is issued to him. Section 30A then requires a deposit of fifty per cent of the amount of debt due as determined by the Tribunal, and unlike Section 21 there is no proviso permitting reduction.
Challenges to attachment, to a sale notice, to a proclamation, to the conduct of an auction, or to an attachment or freeze of a bank account therefore belong before the DRT in the first instance. Only the DRT’s order on that appeal travels up to the DRAT.
DRAT court fee and form of the appeal
The fee for an appeal under Section 20 is prescribed by Rule 8(2) of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994 (G.S.R. 815(E) dated 16 November 1994), on the amount of debt due:
- less than ten lakh rupees: Rs 12,000
- ten lakh rupees or more but less than thirty lakh rupees: Rs 20,000
- thirty lakh rupees or more: Rs 30,000
The fee is payable by crossed demand draft in favour of the Registrar, or by crossed Indian Postal Order. Procedural rules are amended from time to time and registries maintain their own practice on mode of payment, so confirm the current figure and method with the DRAT registry before the draft is prepared.
On form, the memorandum of appeal is filed in triplicate with the Registrar of the DRAT having jurisdiction, accompanied by two copies of the order under appeal of which at least one must be a certified copy, a vakalatnama where an advocate is filing, an index of documents, and particulars of the drafts covering both the fee and the Section 21 deposit. The Rules also require a declaration that the same matter is not pending before any other court or tribunal.
What the DRAT can do with the appeal
Under Section 20(4) the DRAT, after giving the parties an opportunity of being heard, may confirm, modify or set aside the order appealed against. Section 20(6) records that the tribunal should endeavour to dispose of the appeal within six months of receiving it.
Section 22(1) provides that neither the DRT nor the DRAT is bound by the procedure in the Code of Civil Procedure. Both are guided by the principles of natural justice and regulate their own procedure. Section 22(2) gives them the powers of a civil court for specified purposes, including summoning witnesses, requiring discovery, receiving evidence on affidavit, dismissing for default or deciding ex parte, setting aside such orders, and reviewing their own decisions. That review power under Section 22(2)(e) is sometimes a better fit than an appeal where the complaint is an error apparent rather than a disagreement on merits.
After the DRAT
There is no statutory second appeal. Section 18 of the RDB Act bars every court and authority from exercising jurisdiction over matters within Section 17, expressly preserving only the Supreme Court and a High Court acting under Articles 226 and 227 of the Constitution. The route from a DRAT order is therefore a writ petition.
Expect resistance to any attempt to shortcut the statutory ladder. In United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 the Supreme Court criticised High Courts entertaining writ petitions where an effective statutory remedy under these recovery statutes was available, and that position has been reiterated repeatedly since. A writ that looks like an attempt to avoid the pre-deposit is unlikely to succeed.
What to do in the first week after an adverse DRT order
The thirty days are short and most of them get consumed by paperwork. Apply for the certified copy immediately and record the date it is received, because that is when the period starts. Work out the deposit figure on the correct base, which depends on whether the appeal lies under Section 20 or Section 18. Decide at the outset whether a reduction application under the proviso is being made, since the reasons have to be pleaded and supported and the application buys no extra time. If recovery is already moving, consider whether an interim order is needed alongside the appeal, and check whether anything already agreed at the Recovery Officer stage has triggered Section 27(1B).
Raizada Law Associates appears in DRT and DRAT matters for both borrowers and lenders, including appeals under Section 20 of the RDB Act and Section 18 of the SARFAESI Act, pre-deposit reduction applications, and writ petitions from DRAT orders. Our related work covers money recovery in Delhi, defending recovery suits, summary suits under Order XXXVII CPC and enforcement of recovery decrees, alongside our banking law practice and insolvency practice.
