SARFAESI Act, 2002 / Remedies and appeals

Section 18 of the SARFAESI Act, 2002: Appeal to Appellate Tribunal

Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 provides a statutory appeal against an order of the Debts Recovery Tribunal (DRT) under Section 17. The appeal is heard by the Debts Recovery Appellate Tribunal (DRAT). It sets out the filing period, fees, mandatory borrower pre-deposit and governing procedure.

Key provisions: The appeal must ordinarily be filed within 30 days of receiving the DRT order. A borrower's appeal cannot be entertained without the prescribed pre-deposit: 50% of the debt claimed by the secured creditor or determined by the DRT, whichever is less, reducible by the DRAT for recorded reasons to not below 25%.

Section 18(1): Who can appeal and within what time?

Any person aggrieved by an order of the DRT made under Section 17 may prefer an appeal to the DRAT, accompanied by the prescribed fee, within 30 days from the date of receipt of the DRT order. The right is not confined to borrowers; other persons affected by the order may also appeal, subject to the statutory requirements applicable to them.

The first proviso permits different prescribed appeal fees for a borrower and for a person other than a borrower. The relevant tribunal rules and applicable filing requirements should be checked before lodging an appeal.

Mandatory borrower pre-deposit under Section 18

The second proviso to Section 18(1) requires a borrower to deposit with the DRAT 50% of the debt due, calculated on the lower of (a) the amount claimed by the secured creditor and (b) the amount determined by the DRT. Under the third proviso, the DRAT may, by reasons recorded in writing, reduce that amount, but not below 25% of the relevant debt.

This is a statutory condition for entertaining a borrower's appeal, not merely a discretionary court fee. Requests for reduction should identify the relevant debt figure and the grounds supporting a reduction within the statutory range. Whether a particular appellant is a "borrower", and how amounts already recovered or deposited are to be accounted for, depends on the applicable law and facts.

Section 18(2): Procedure before the DRAT

Except as otherwise provided by the SARFAESI Act, the DRAT is to dispose of the appeal, as far as practicable, according to the provisions of the Recovery of Debts and Bankruptcy Act, 1993 (formerly titled the Recovery of Debts Due to Banks and Financial Institutions Act, 1993) and the rules made under it. The statutory reference to the 1993 enactment must be read with its subsequent renaming and amendments.

Practical steps in a Section 18 appeal

  1. Obtain the DRT's complete order and ascertain the date of its receipt.
  2. Identify the grounds of challenge and prepare the appeal, supporting documents and applicable fee.
  3. For a borrower, calculate the statutory debt benchmark and arrange the required pre-deposit, or seek a reasoned reduction subject to the 25% floor.
  4. File before the jurisdictionally competent DRAT within the statutory time and seek interim relief separately where justified.

Relationship with Sections 13 and 17

Section 13(4) permits specified enforcement measures by a secured creditor, including taking possession of secured assets subject to the Act. Section 17 provides a DRT remedy to a person aggrieved by such measures, generally within 45 days of the measure. Section 18 provides the further statutory appeal against the DRT's order; it is not ordinarily the first forum for challenging a bank's enforcement measure.

Legislative history

Section 18 was amended by Act 30 of 2004, Section 12. The amendments concerning the prescribed appeal fee and pre-deposit reflect the changes recorded in the statutory legislative notes, with the respective commencement dates of 21 June 2002 and 11 November 2004 indicated in those notes. Section 18A separately addresses validation of certain fees levied before the 2004 amendment.

Official legislation and tribunal resources

For authoritative and updated statutory wording, consult India Code (Government of India), the e-Gazette of India, and the DRT and DRAT official portal. These official resources should be used to confirm the current text, rules, fees and tribunal filing arrangements.

This article explains the statutory framework for general information; the outcome of any appeal depends on the applicable law, tribunal practice and case-specific facts.