Appeals Before Debt Recovery Appellate Tribunal (DRAT): Legal Guide
No judicial decision is infallible. An order passed by a Debt Recovery Tribunal (DRT) may not have properly appreciated the facts, evidence or legal issues in controversy. A DRT order can have serious consequences for borrowers, guarantors, mortgagees, companies, banks, financial institutions and other parties. It may grant financial relief, direct recovery against secured assets, uphold guarantees, enable eviction, or decide an application under Section 14 of the SARFAESI Act.
An appealable order by a DRT invites statutory appellate review before the Debt Recovery Appellate Tribunal (DRAT). This guide provides an overview of legal aspects related to DRAT appeals.
Table of Contents
- Appeals Before Debt Recovery Appellate Tribunal (DRAT) Overview
- Who Can File An Appeal Before the DRAT?
- Understanding Appeals Before the DRAT
- Appeals Under SARFAESI Act
- Appeals Under Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI)
- What Are The Steps To File An Appeal Before DRAT?
- Detailed Review Of The Original DRT Record
- Identify Sustainable Grounds For Appeal
- Drafting of Memorandum of Appeal or Review Petition
- Applications for Condonation of Delay & Limitation
- Interim Applications before DRAT
- DRAT Pre-Deposit Applications
- Commercial Strategy & Settlement
Appeals Before Debt Recovery Appellate Tribunal (DRAT) Overview
Legal Foster collaborates with lawyers throughout India who have experience appearing and arguing DRAT appeals. Our recommended advocates review the relevant DRT order, facts of the case and evidence before advising on appeal options.
Legal aspects to consider when filing a DRAT appeal include:
Who Can File An Appeal Before the DRAT?
Whether a party has the right to appeal depends on the underlying statute and nature of the DRT order. For example, borrowers have the right to appeal certain orders passed under the SARFAESI Act. Debt Recovery Appellate Tribunal constituted under SARFAESI ACT has jurisdiction to entertain appeals only against orders passed by Debt Recovery Tribunals under Section 17 of SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act).
Understanding Appeals Before the DRAT
The DRAT examines whether the DRT passed the order with jurisdiction and appreciated the relevant evidence. It also considers whether the law was applied correctly.
Grounds of appeal in DRAT usually focus on legal error. It is not enough to say that the DRT “came to the wrong decisionâ€. Some common grounds include incorrect interpretation of law, ignoring key evidence, reliance on irrelevant or insufficient material, denial of opportunity of hearing, jurisdictional error and unsustainable findings.
Appeals Under SARFAESI Act
Appeals under SARFAESI Act are covered under Section 18.
The SARFAESI Act allows an appeal to be filed before the Debt Recovery Appellate Tribunal (DRAT) against orders passed by the DRT under Section 17.
What is the time limit to file an appeal under SARFAESI?
Such appeals must be filed within 45 days from the date of communication of the DRT order.
Where can an appeal against DRT order under SARFAESI be filed?
The appeal should be filed before the Debt Recovery Appellate Tribunal.
Does any deposit is required to be submitted along with appeal against DRT order under SARFAESI Act?
The borrower is required to make a deposit of 50% of the debt due or of the amount determined by DRT (whichever is less) along with filing the appeal against DRT order.
Appeals Under Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI)
Appeals under RDDBFI are covered under Section 20 of RDDBFI Act.
Section 20 covers appeals from orders passed by Debt Recovery Tribunal. An appeal against such orders lies to the Debt Recovery Appellate Tribunal constituted under section 8 within the time prescribed in this section.
What is the time limit to file an appeal under RDDBFI?
Appeal shall be heard and disposed of by the Appellate Tribunal within a period of six months from the date of filing of the appeal.
Where can an appeal against RDDBFI order be filed?
Such appeals are filed in Debt Recovery Appellate Tribunal.
Does any deposit is required to be submitted along with appeal against RDDBFI order?
The person liable to pay the amount of debt shall deposit twenty-five percent of the debt due.
If the appellant is the person from whom the amount of debt is due, then a copy of the appeal shall be served on such person and he shall deposit fifty percent of the debt determined by the Tribunal under section 19.
The Appellate Tribunal may for reasons to be recorded in writing reduce the amount of such deposit, but not below twenty-five percent of the debt due.
What Are The Steps To File An Appeal Before DRAT?
Learn more about the steps involved in filing an appeal before DRAT from the video below:
Detailed Review Of The Original DRT Record
Appeal preparation starts with reviewing the full record before the DRT. The lawyer needs to understand the pleadings, documents, evidence and arguments exchanged before the DRT issued its order.
Documents often reviewed while advising on DRAT appeals include:
Identify Sustainable Grounds For Appeal
Appeals should be based on sustainable grounds. Agreement with the DRT “ratio†or law “applied†is not a ground of appeal.
Typical grounds of appeal include:
Drafting of Memorandum of Appeal or Review Petition
Legal Foster connects clients to lawyers that can assist with drafting DRAT appeals. An appeal memorandum should accurately state the facts and parties, preserve grounds of appeal and requested relief.
Lawyers will help with:
Drafting an appeal requires careful study of facts, evidence, statute and case law. Meetings may be required to clarify the facts and discuss legal strategy. No advocate can guarantee that the DRAT will allow the appeal or grant interim relief.
Applications for Condonation of Delay & Limitation
DRAT appeals have limited periods under applicable statutes. It is important to calculate limitation as soon as possible after receiving the DRT order.
If you delay until the last day of limitation, you may not have sufficient time to review the DRT record, assess pre-deposit requirements or craft sustainable grounds. Lawyers should be consulted immediately after receiving an adverse DRT decision.
When the appellate limitation period expires, you may need a condonation of delay application. Such applications must come with a truthful explanation for the delay. Supportive documentary evidence should be attached if available.
Condonation of delay is not guaranteed. DRAT has discretion to reject delayed appeals.
DRAT Pre-Deposit Applications
DRAT appeals are subject to mandatory pre-deposit for borrowers and other parties from whom money is due. The Appellate Tribunal cannot hear the appeal until the prescribed amount is deposited.
The applicant can file an application to reduce the deposit amount to a minimum of 25%.
You cannot request waiver of pre-deposit. At best, the Tribunal can reduce the pre-deposit amount to 25%. Applications therefore should be framed with 25% as the minimum goal.
Interim Applications before DRAT
While appeals are pending, the DRAT has power to provide interim relief. An appeal does not automatically stay the DRT order.
For example, a borrower could file an application restraining the bank from taking recovery action. If the DRT order permits eviction, the appellant may request suspension of the removal order.
Relief is not automatic and the facts must support granting interim relief. The parties should read all correspondence and comply with DRAT instructions.
Commercial Strategy & Settlement
Filing a DRAT appeal does not prevent settlement. Borrowers may still negotiate repayment, settlement or loan modification with the secured creditor.
Legal assistance with settlement includes drafting or reviewing:
