Section 18 SARFAESI: Appeal to the Appellate Tribunal

The Section 17 order is not the last word. Section 18 gives a second tier: an appeal to the Debt Recovery Appellate Tribunal against the DRT's order. It is a full appeal, open on facts and law, and available to the borrower and the secured creditor alike, but a borrower's appeal is guarded by a mandatory pre-deposit. This note sets out who may appeal and when, the scope of the appeal, and the deposit that gates it.

1. Who May Appeal, and When

Figure 1: The second tier within thirty days

• Any person aggrieved. Any person aggrieved by an order of the DRT under s.17 may appeal, so both the borrower and the secured creditor may use it.
• Within thirty days. The appeal must be preferred within thirty days from the date of receipt of the DRT's order, a tighter period than the forty-five days for a s.17 application.
• To the DRAT. The appeal lies to the Debt Recovery Appellate Tribunal having jurisdiction over the DRT that passed the order (Topic 37)
• Procedure per the RDB Act. Except as SARFAESI itself provides, the appeal is dealt with under the Recovery of Debts Act and the rules made under it.

2. The Scope of the Appeal

Figure 2: A full appeal, not a narrow review

• A full second tier. The s.18 appeal is a full appeal: the DRAT may review the DRT's findings on both facts and law, not merely a point of law.
• The creditor may appeal too. It is not only the borrower's remedy; a secured creditor aggrieved by a DRT order restoring possession to the borrower may also appeal.
• But the deposit binds the borrower. A borrower appellant must make the pre-deposit; a secured creditor appealing is not under that bar (Topic 39)
• Not a fresh enforcement challenge. The appeal tests the DRT's order, it does not reopen the enforcement afresh beyond what was before the DRT.

3. The Pre-Deposit Gate

Figure 3: No borrower's appeal without the deposit

• Appeal filed in thirty days. The borrower or the creditor prefers the appeal to the DRAT within the thirty-day period from receipt of the order.
• Pre-deposit required. A borrower's appeal is not entertained without the mandatory pre-deposit the Act requires, which the DRAT cannot waive entirely (Topic 39)
• Then heard on merits. Once the deposit is made, the DRAT hears the appeal on the facts and the law, and may confirm, modify or set aside the DRT's order.
• Beyond the DRAT. From the DRAT's order the only recourse is a writ to the High Court under Articles 226 and 227, exercised sparingly (Topic 37)

4. Frequently Asked Questions

Who can appeal under Section 18 and within what time?

Under Section 18, any person aggrieved by an order of the Debt Recovery Tribunal under Section 17 may appeal to the Debt Recovery Appellate Tribunal within thirty days from the date of receipt of the order. The remedy is available to both the borrower and the secured creditor, so a creditor aggrieved by a DRT order that restored possession to the borrower may appeal just as the borrower may appeal an order upholding the enforcement. The appeal is a full one, in which the DRAT may review both the facts and the law. Except where SARFAESI provides otherwise, the appeal is governed by the procedure under the Recovery of Debts Act. A borrower's appeal is entertained only on the mandatory pre-deposit.

Is the pre-deposit required of everyone who appeals under Section 18?

No. The mandatory pre-deposit under Section 18 binds a borrower appellant. A secured creditor appealing an order of the Debt Recovery Tribunal, for instance an order restoring possession to the borrower, is not required to make the deposit, because the condition is directed at the borrower who seeks to stall the enforcement. The borrower must deposit fifty per cent of the amount of debt due, as claimed by the secured creditor or determined by the DRT, whichever is less, which the DRAT may reduce to not less than twenty-five per cent for reasons recorded in writing but cannot waive altogether. Without the deposit, the borrower's appeal is not entertained.

5. Related Topics

• Topic 39: Section 18 Pre-Deposit. The deposit a borrower must make to appeal.
• Topic 36: Powers of the DRT under Section 17. The order appealed from.