Last Updated on January 9, 2026 by Satish Mishra

Pre-deposit in DRT appeals (Debts Recovery Tribunal) under the SARFAESI Act generally requires depositing 50% of the debt due, as claimed or determined, to file an appeal with the Appellate Tribunal (DRAT), but recent Supreme Court rulings clarify this isn’t mandatory for procedural orders; only substantive orders (like final liability) attract the deposit, and no pre-deposit is needed if the debt is fully recovered or the appeal challenges the sale price.

In an appeal filed before DRAT, appellants were required to first deposit a pre-deposit amount of 50% of the amount in question. Appellants challenged the same requirement before the High Court were appellants pleaded that the amount in question is a very huge amount and almost 70% of which is already be recovered by an auction sale. And since an amount greater than the requirement is already recovered the appellants may be allowed to file the appeal before DRAT. After going through all the facts and laws high court allowed the petition and ordered the DRAT to waive off the requirements for the particular matter.

Key Provisions & Nuances

Statutory Basis: Section 18 of the SARFAESI Act mandates a pre-deposit for appeals against DRT orders.
Amount: 50% of the debt amount (as claimed by the creditor or determined by the DRT, whichever is less).
Purpose: Introduced as a condition precedent to appeal, intended to prevent frivolous appeals.

When Pre-Deposit is NOT Required

Procedural Orders: Appeals against interim or procedural orders (not final liability) do not require pre-deposit, per Supreme Court interpretation.
Debt Fully Recovered: If the bank has already recovered the entire debt (including surplus from auction), no pre-deposit is needed.
Challenging Sale Price: If the appeal challenges the sale of assets, the amount in the sale certificate is considered, not the original debt, for the deposit calculation

Supreme Court’s Stance

The Court has emphasized a nuanced approach, differentiating between substantive and procedural orders, making the pre-deposit requirement flexible for non-substantive matters.

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M/s Sidha Neelkanth Paper Industries Pvt. Ltd. and Anr. vs. Andhra Bank and Ors.

M/s Sidha Neelkanth Paper Industries Pvt. Ltd. and Anr. vs. Andhra Bank and Ors. is before the Debts Recovery Appellate Tribunal, Delhi. This appeal revolves around the mandate of pre deposit that Section 18 of The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (SARFAESI Act) had established.

Until following appeal the appellants were put on a hold, and the tribunal had declined to entertain their previous appeals until they pay the pre-deposit fees. It was the Hon’ble High Court directing the DRAT to let the appellants bypass the payment of pre deposit which the tribunal, in this appeal, adhered to.

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FACTS OF THE CASE

In Debts Recovery Appellate Tribunal, Delhi.
M/s Sidha Neelkanth Paper Industries Pvt. Ltd. and Anr being the Appellants and Andhra Bank and Ors being the Respondents.
Decided on 11 March 2020.
The appellants had taken debt of Rs.16.61 crore from the bank, whereas through the auction sale, the respondent had realized an amount of Rs. 12.80 crores. Miscellaneous appeal No.467/2019 was filed by the appellants against the final order passed by the DRT in its Securitisation Application (S.A.) No.264/2013 under Section 17(1) of the SARFAESI Act, while Miscellaneous Appeal No.398/2019 had been filed by the same appellants/securitisation applicants against a miscellaneous order in the same Securitization Application. In order to maintain appeal before DRAT, the aggrieved borrower/appellants had to make a pre-deposit of 50% of the amount of debt in question. The appellants sought to get the benefit of sale proceeds of its mortgaged property towards compliance of the requirement of pre deposit. When an appeal was filed against some miscellaneous order passed by the DRT in the same S.A., the appellants approached the Hon’ble High Court where it was claimed that since a substantial amount of the dues of the bank stood recovered from the sale of the mortgaged property, no pre-deposit was required to be made. The Hon’ble High Court disposed of that writ petition, directing DRAT to entertain the appeals according to the law. Challenge in the appeal therein was to the auction dated 05.12.2018. It is the case that the petitioner argued that the total amount due and payable by the petitioner was Rs. 16.61 crores,, which is far above the 50 % pre-deposit.
The appellants wanted the tribunal to hear their case without compelling them to pay the pre deposit fees.The contention of the learned counsel for the petitioner, In the Hon’ble High Court, which the tribunal referred to, was that the condition of pre-deposit in these circumstances, over and above the sale price received by the Bank will in fact lead to an undue enrichment in the hands of the Bank, when the substantial amount of the loan stands liquidated by virtue of the auction.
The issue here was that, the amount due and payable to the respondents, by appellants was Rs.16.61 crores and with respondents already having realized an amount of Rs. 12.80 through an auction dated 05.12.2018. crores, which is far above the 50 % pre-deposit, was it really necessary to pay the pre deposit?

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ORDER

With the order of the High Court directing the DRAT to hear the appeal of the petitioner without insisting on a pre-deposit of 50 % as a precondition to hearing the appeal, DRAT agreed to entertain the said appeals.

JUDGEMENTS CITED

The Tribunal referred to the order of the Hon’ble High Court, which mentioned the following cases

Srishti Arogyadham Pvt. Ltd. Vs. Punjab National Bank and Anr. with identical material facts The Division Bench of this court in the said judgment, relying upon several judgments of the Supreme Court and the High Courts( Akash Ganga Airlines Vs. DRAT, Allahabad, 2015 SCC Online All 8084. | S.R. Forging Ltd. Vs. UCO Bank, 2013 SCC Online P&H 3902.) came to the conclusion that a pre-deposit in these circumstances will be wholly unjustified.

Also Read- DRT Chandigarh Procedure

FINDINGS

The Tribunal gave a nod on the direction of the Hon’ble High Court to entertain and hear the appeal of the appellants without requiring them to make any pre-deposit, and observed that the appeals have also to be entertained and heard on merits since this Tribunal is bound by the order of the Hon’ble High Court. In view thereof, the tribunal need not consider some judgments of other High Courts which had been cited at the bar by the learned counsel for the bank and the auction purchaser in support of their submissions that appellants in both these appeals still have to make a pre-deposit. The Tribunal is bound to follow the judgment of its jurisdictional High Court. The fact-situation at the time when the Hon’ble High Court had passed the direction and at present remain the same as the appellants are claiming the benefit of sale proceeds of its mortgaged property for being considered towards compliance of the condition of pre-deposit. In view of the aforesaid, both the appeals will now stand entertained and will be heard on merits.

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CONCLUSION

The High court after referring to several judgements, came to a conclusion that with the respondents realizing an amount much greater than the 50% of the debt, the purpose of Section 18 of SARFAESI Act was satisfied and the DRAT can entertain the appeal without a compelling the appellants to pay the pre deposit. The DRAT in consideration to the direction of the Hon’ble High Court agreed to entertain the same without a pre deposit.

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Post Written by – Research Team of LegalSeva (LawFirm) of Satish Mishra Advocate. Responses from Google’s AI Overview included in Post.

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