An appeal against a Debts Recovery Tribunal's order under Section 17 of the SARFAESI Act lies to the Debts Recovery Appellate Tribunal within thirty days of receiving the order. It is not entertained unless the borrower deposits fifty per cent of the debt due — as claimed by the secured creditor or determined by the Tribunal, whichever is less.
Jurisdiction. The SARFAESI Act, 2002 and the Recovery of Debts and Bankruptcy Act, 1993 are central statutes and apply across India. The appeal lies to the Appellate Tribunal having jurisdiction over the Tribunal that passed the order, wherever the borrower lives. Section 30 of the Advocates Act, 1961 entitles an advocate to practise throughout India.
Section 18, SARFAESI Act, 2002 — Appeal to Appellate Tribunal
Bare text as it stands today, with the amendments of 2004 in place
(1) Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17, may prefer an appeal along with such fee, as may be prescribed to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.
Provided that different fees may be prescribed for filing an appeal by the borrower or by the person other than the borrower:
Provided further that no appeal shall be entertained 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 determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent. of debt referred to in the second proviso.
(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and rules made thereunder.
The second and third provisos were inserted by Act 30 of 2004 with effect from 11 November 2004. The parent Act of 1993 is now cited as the Recovery of Debts and Bankruptcy Act, 1993.
The section opens to "any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17". Two words in that phrase do the work. The order must be one of the Tribunal, and it must be made under Section 17. Neither the Section 13(2) demand notice nor the bank's letter rejecting a representation is an order of anyone; there is nothing to appeal against until the Tribunal has spoken, and an appeal filed against the bank's conduct rather than against an order goes nowhere. The person aggrieved need not be the borrower — a tenant, a co-owner or an auction purchaser whose objection the Tribunal has rejected is a person aggrieved by an order made under Section 17.
One route is often mistaken for an appeal and is not one. Section 17(5) requires the Tribunal to dispose of a securitisation application within sixty days, and in no case beyond four months. If that four-month period passes, Section 17(6) allows any party to apply to the Appellate Tribunal for a direction to the Tribunal to dispose of the pending application expeditiously. That is an application for a direction, not an appeal; it carries no pre-deposit, because the pre-deposit in the second proviso is attached to an appeal under Section 18. A borrower whose matter has been adjourned for months in a heavily loaded Tribunal is sometimes better served by that application than by waiting for an order he can appeal.
The thirty days run "from the date of receipt of the order", not from the date it was pronounced. In practice the difference is real: orders are commonly reserved and uploaded, and the certified copy reaches the borrower days later. The date of receipt should therefore be capable of proof — the application for the certified copy, the endorsement on it, the covering letter. I ask for this at the first meeting, because it is the one fact that is easy to establish on the day and almost impossible to reconstruct six weeks later.
Delay is not fatal. In Baleshwar Dayal Jaiswal v. Bank of India (Supreme Court, 5 August 2015, Civil Appeal Nos. 5924–5927 of 2015) the Court held that "delay in filing an appeal under Section 18(1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20(3) of the RDB Act read with Section 18(2) of the SARFAESI Act". The Court was careful about the source of the power: it did not rest on Section 5 of the Limitation Act, holding instead that Section 29(2) of that Act stands impliedly excluded because the power to condone is expressly incorporated in the special statute. The practical effect is the same — an appeal beyond thirty days must carry an application showing sufficient cause, and the cause must be stated in the language of fact and not of regret.
Fifty per cent, but of what is the question that decides whether the appeal is affordable. The second proviso gives two candidate figures and directs that the lower governs: the amount of debt due from the borrower as claimed by the secured creditors, or as determined by the Debts Recovery Tribunal, whichever is less. Where both figures are on the record the appellant is entitled to have the smaller of them used, and both should be placed before the Appellate Tribunal in the appeal itself rather than left to be discovered.
A securitisation application, however, tests the validity of the measures taken under Section 13(4); it is not a suit for money, and the Tribunal's order in it frequently determines no figure at all. When that happens, only the creditor's claimed amount stands on the record, and the argument shifts to what that claim actually is — the figure in the Section 13(2) notice, the figure in the statement of account, or the figure after crediting a sale already held. Borrowers who walk into the chamber in Jodhpur usually bring the notice and nothing else. The statement of account, the recovery of any part of the dues and any amount already realised from another security are what turn an unaffordable deposit into a reachable one.
Two further points are worth stating plainly. The deposit goes to the Appellate Tribunal, not to the bank — it is a condition of the appeal being entertained, not a part payment negotiated with the branch. And it is a condition of entertainment, so it has to be dealt with at the threshold; an appeal filed on the thirtieth day with the deposit left for later has not been effectively filed at all.
It cannot. The third proviso lets the Appellate Tribunal reduce the amount, "for the reasons to be recorded in writing", to not less than twenty-five per cent of the debt referred to in the second proviso. That is the whole of the discretion. In Narayan Chandra Ghosh v. UCO Bank (Supreme Court, 18 March 2011, Civil Appeal No. 2681 of 2011) the Court held that "the requirement of pre-deposit under sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act", and that at best the Appellate Tribunal could have, after recording the reasons, reduced the deposit of fifty per cent to an amount not less than twenty-five per cent of the debt.
The same architecture governs an appeal in a recovery proceeding under the parent Act. Section 21 of the Recovery of Debts Act requires a deposit of fifty per cent of the debt determined under Section 19, reducible for written reasons to not less than twenty-five per cent. In Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasliwal (Supreme Court, 16 February 2021, Civil Appeal No. 538 of 2021) the Appellate Tribunal had directed a deposit on the balance amount, the High Court had waived it entirely on the view that little was really due, and the Supreme Court set that aside, holding that the High Court does not have the power to waive the pre-deposit in its entirety, and fixing twenty-five per cent instead. Read together, the two judgments close the door on complete waiver from either side.
What remains open is the reduction itself, and it is not granted for the asking. Because the proviso requires reasons in writing, the application has to supply the material those reasons can be built on: what the borrower's assets actually are, what has already been realised by the secured creditor, and why the balance of convenience during the appeal favours a lower figure. An affidavit of means, prepared properly, does more work here than argument.
The second proviso conditions entertainment on a deposit by "the borrower", and Section 2(f) defines a borrower widely: any person who has been granted financial assistance by a bank or financial institution, or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted to another, and a person who becomes the borrower of an asset reconstruction company when the loan is assigned to it.
That definition is the source of the hardest conversation in this area of practice. A father or an uncle who mortgaged the family house in Jodhpur so that a younger relative could take a working-capital limit is, in the language of the Act, a borrower — he received no money, but he created a mortgage as security, and when he appeals against the order rejecting his securitisation application he carries the deposit as fully as the principal debtor does. People are entitled to know this before they take the appeal on, not after.
A person who is genuinely outside the definition is in a different position on the text. The first proviso contemplates separate fees "for filing an appeal by the borrower or by the person other than the borrower", which shows the section knows the distinction; the second proviso speaks only of the borrower. A tenant, an auction purchaser or a third party claiming independent title is therefore arguing from the words of the statute when he says the deposit is not a condition on him. It is a point that turns on who the appellant really is, and it should be pleaded in the appeal itself rather than raised at the hearing when the registry has already taken an objection.
Section 18(2) borrows the machinery of the Recovery of Debts Act, 1993, "as far as may be". The Appellate Tribunal, after giving the parties an opportunity of being heard, may pass such orders as it thinks fit confirming, modifying or setting aside the order appealed against (Section 20(4)), and it is to send a copy of every order to the parties and to the Tribunal below (Section 20(5)). The appeal is to be dealt with as expeditiously as possible, with an endeavour to dispose of it finally within six months of receipt (Section 20(6)). Neither Tribunal is bound by the Code of Civil Procedure; both are guided by the principles of natural justice and regulate their own procedure, including where they sit (Section 22(1)).
Nothing in Section 18 suspends what the bank has already done. Filing the appeal does not restore possession, does not stall a sale already notified and does not by itself protect the property. Interim protection has to be asked for, on the appeal's own merits, and asked for at the time of filing rather than after the auction date is published.
This is the commonest question at the Principal Seat in Jodhpur, and the answer has been consistent for many years. Article 226 is not excluded, but in United Bank of India v. Satyawati Tondon (Supreme Court, 26 July 2010) it was held that the High Court "will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person", a rule applied with greater rigour where the dues of banks and financial institutions are concerned. Where the grievance is an order under Section 17, the effective remedy is the appeal under Section 18, and the pre-deposit is a part of that remedy, not an obstacle to it. Kasliwal makes the position sharper still: a High Court cannot waive the deposit in its entirety, so the writ petition does not even carry the borrower past the condition he was trying to avoid. The civil court is closed more firmly — Section 34 of the SARFAESI Act takes away its jurisdiction over matters the Tribunal is empowered to determine and forbids any injunction against action taken under the Act.
There is one question that should be asked before any of this, and in western Rajasthan it is not rare for it to answer the whole case. Section 31(i) provides that the Act does not apply to any security interest created in agricultural land. If the security is agricultural land, the fight is not about a deposit of fifty or twenty-five per cent; it is about whether the bank had power to act under the Act at all, and the jamabandi and the khasra girdawari are the first documents to look at rather than the last.
Four things, in this order. Fix the date of receipt of the order and keep proof of it. Obtain the statement of account and set the creditor's claimed figure against whatever figure the Tribunal's order records, because the lower of the two is what the deposit is calculated on. Prepare the application for reduction with the material behind it, not as a paragraph at the end of the memorandum of appeal. And check whether the secured creditor has lodged a caveat under Section 18C — if it has, it is entitled to notice, and the appeal will not be heard ex parte however urgent the auction date looks.
The stage before this one — the securitisation application itself, the forty-five days and what a stay requires — is set out in How is a Section 17 application filed in the DRT?. The earlier stages are in SARFAESI Section 13(2) notice: what a borrower can actually do, possession through the District Magistrate in Section 14 and the Magistrate's order, and the auction stage in Can a bank auction of my property be stopped?; the same ground in Hindi, written for the Rajasthan borrower, is in SARFAESI नोटिस धारा 13(2): बैंक कब्ज़ा और DRT में बचाव. Both Acts are central statutes; consultation by telephone or video is available to borrowers and guarantors outside Rajasthan, and how a consultation is arranged is described on the consultation page.