DRAT Pre-Deposit Waiver / Reduction Section 18 SARFAESI & Section 21 RDB Act Guide 2026
A borrower may have strong grounds to appeal an order made by the Debt Recovery Tribunal (“DRT”). One question that may stop such an appeal right at the doorstep relates to pre-deposit before the Debt Recovery Appellate Tribunal (“DRAT”).
Needless to say, that issue looms large where the debt is of a crore or more.
If the DRT orders possession or auction against a borrower under SARFAESI, the borrower may prefer an appeal to DRAT under Section 18. Before DRAT can reach the merits, the statutory pre-deposit requirement would arise.
A borrower or guarantor may face a similar issue if DRT has made a debt determination under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (“RDB Act”) in an Original Application. He would then seek DRAT’s intervention to challenge the debt determination and would encounter Section 21.
Clients refer to the resulting application as a “DRAT pre-deposit waiver application”.
That terminology requires some fine-tuning from a legal standpoint.
As things stand now, where pre-deposit is required by statute, DRAT cannot ordinarily reduce the amount to nil. The default position is 50%. The statute allows DRAT to reduce the pre-deposit amount to as low as 25%.
Pursuant to Section 18 SARFAESI, the borrower needs to deposit 50% of the debt due, as claimed by the secured creditor or as determined by DRT (whichever is lower). DRAT has the discretion to lower the pre-deposit amount to 25% for reasons to be recorded.
As per Section 21 RDB Act, any person against whom debt is determined as due by DRT under Section 19 needs to deposit 50% of such debt with DRAT. DRAT can condone part of the amount but cannot go below the 25% floor.
Litigants continue to talk about “waiver” because they apply to DRAT for waiver of part of the 50% amount. As per an order passed by the Supreme Court on 9 April 20 26, a borrower is free to deposit 25% and seek waiver of remaining 25%. It will be for DRAT to dispose of that application on merits. Statutorily, the bottomline cannot be reduced below 25%.
Appellants need to be aware of the difference between waiver and reduction of pre-deposit amount from 50% to 25% while planning an appeal.
BK Singh Advocate and DRT Advocates handle DRAT appeals and assistance with DRAT pre-deposit calculations, reduction applications, SARFAESI matters and RDB Act appeals along with related interim-relief matters throughout Delhi NCR and other parts of India, subject to the jurisdiction of the forum.
Why DRAT Pre-Deposit Matters in India in 2026
Pre-deposit is not just another box-ticking exercise on your appeal form.
It can decide whether your statutory appeal will even be heard. For a corporate borrower with ₹10 crore due, “50%” translates to ₹5 crore. Depositing even the statutory floor amount could mean parting with ₹2.5 crore.
If your stressed enterprise is already subject to enforcement action, these numbers impact your liquidity position for settlements, working capital, and your ability to actually follow through on any appellate relief you may obtain.
A homebuyer borrower would face exactly the same issue on a smaller scale. Maybe their residence already went to auction at DRT. Maybe their earnings from a side business have dried up. But still, the DRT order mandating sale needs to be challenged ASAP.
Financial hardship doesn’t magically exempt you from the statutory requirement.
That’s why I advise my clients to analyze pre-deposit at the same time they start drafting their appeals.
You (or your lawyer) should first figure out:
- Is this appeal under Section 18 SARFAESI or Section 20 RDB Act?
- Do you, as appellant, even fall within the category of persons who have to make a pre-deposit?
- What sums up legally constitute the “debt” for purposes of calculation?
- Should you seek pre-deposit of 50%, or ask the appellate tribunal to reduce the amount to 25%?
- Do auction proceeds (or earlier recoveries) count against the deposit amount?
- Do you also need emergency interim relief?
In one of my appeals, the Supreme Court clarified the calculation in its 20 June 2026 order on SREI Infrastructure Finance Ltd. vs. Tata Sons Ltd. & Ors. The Court confirmed past rulings on how to treat auction amounts, and permitted the appellant to argue why the prescribed percentage should be reduced from 50% to 25%, as the law allows.
BK Singh Advocate generally approaches pre-deposit as an appellate threshold issue, rather than an afterthought once the appeal is already drafted.
Quick Facts About DRAT Pre-Deposit
- Deposit Requirements
- 50% deposit condition ordinarily applies under Section 18 SARFAESI before the appeal is entertained.
- DRAT has the power to waive the requirement of Section 18 deposit to an extent that it is not less than 25%.
- Section 21 RDB Act requires a similar deposit of 50% of the debt as determined under Section 19.
- Section 21RDB Act also allows the appellate tribunal to waive the said deposit to an extent that it is not less than 25%.
- There is no scope for statutory waiver of the pre deposit condition where this provision is applicable.
- Issues determining “debt due” under Section 18 becomes complicated where both possession & auction are being challenged.
- Proceeds from auction cannot be regarded as borrowed property of the borrower for purposes of pre deposit where he is challenging the said auction.
What Is DRAT Pre-Deposit?
Pre-Deposit is the statutory amount that certain Appellants are required to deposit with their Appeal for it to be heard by the Debt Recovery Appellate Tribunal ("DRAT").
It is NOT court fee.
Neither is it automatically a voluntary amount towards settlement.
Think of Pre-Deposit as a statutory amount required for appeals.
Two sections deal specifically with pre-deposit:
Section 18 of the SARFAESI Act, 2002
AND
Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 .
Both have a 50%-to-25% structure, but the language is slightly different.
And that slight difference is KEY.
Which Law Applie Section 18 SARFAESI or Section 21 RDB Act?
POINT 1. Know what proceeding the appeal is FROM.
| APPEAL | PROCEEDING |
|---|---|
| Section 18 SARFAESI | Section 17 SARFAESI application |
| Section 21 RDB Act | Typically Section 19 Original Application |
PERSON APPELLANT IS
Deposited against
Realizes on Appeal
| Deposit structure | Section 18 SARFAESI | Section 21 RDB Act |
|---|---|---|
| Starting deposit | 50% | 50% |
| Minimum after reduction | Minimum 25% | Minimum 25% |
| Amount of relevant debt | Secured creditor can claim or as DRT determines, whichever is lower. | Amount of debt as determined by DRT under Section 19 |
No full waiver. No waiver if proviso applies.
Typically a Section 18 appeal is from an Order of the DRT dealing with possession, auction, sale etc. of enforcement action taken under SARFAESI.
Typically a Section 20 RDB Act appeal is from an Order of the DRT in a bank’s recovery proceeding.
Section 21 then provides for deposit BEFORE filing an appeal under RDB Act.
Mixing these two up can lead to a significant over-deposit.
How Much Can DRAT Reduce the Pre-Deposit?
Let us take 50% as the starting point (Statutory).
Minimum is 25%.
Let us assume the relevant debt for computing deposit u/s 18 or 21 is Rs.2 crore.
Normal amount u/s 18 or 21 would be Rs.1 crore.
After maximum statutory reduction allowed by DRAT, the borrower would be depositing Rs.50 lakh.
An application for reduction is not an Excel sheet calculation exercise.
The applicant must justify why DRAT should exercise its discretion in favour of the borrower.
Section 18 itself mandates reasons to be recorded in writing.
Section 21 is also in pari materia.
The borrower therefore can’t claim 25% as if it were a right.
Tribunal has to hear the application and pass an order.
BK Singh Advocate can file the request for reduction along with the appeal so that finance and merits issues are argued nicely.
How Should a DRAT Pre-Deposit Reduction Application Be Drafted?
Begin with the statute.
Find out if application is under :
Section 18 SARFAESI ;
or
Section 21 RDB Act.
Compute from the appropriate debt.
Additional parts of a professional application include:
Status of Appellant
Identify whether applicant is borrower/guarantor/corporate debtor/other person. .
Order of DRT
Identify order under appeal.
Amount of Debt
Demonstrate (claimed/determined) debt under the relevant provision.
50% Floor
Demonstrate starting calculation statutorily.
Seek Reduction
If applicable, request reduction to 25%.
Reasons
Narrate facts that call for an exercise of discretion.
Payments/Recoveries
Detail payments/recoveries that bear legally on calculation.
Auction Status
If applicable, mention whether auction has been accepted/resisted/challenged.
Documents
Cite documents that support the case instead of stating facts.
Prayer
Request DRAT to discretionarily reduce the amount as allowed.
Stay clear.
What Documents Should Support a Pre-Deposit Reduction Request?
Reduce ments application should normally be supported by contemporaneous documents relied on for calculation/reasons etc.
Checklist would be :-
- Order of DRT;
- Certificate of Recovery if any;
- Notice under Section 13(2);
- Application under Section 17;
- Pleadings before DRT;
- notice of auction;
- certificate of sale;
- bank statements;
- receipts/payment etc. ;
- proof of amount appropriated;
- OTS correspondence;
- audited accounts;
- Balance sheet;
- bank statements;
- cash- flow;
- board resolutions;
- proof of closure of business/utility of difficulty (if any) relied upon;
- documents received on other recoveries received;
- Orders received from DRAT / Court before;
documents relied upon to support any urgent interim-relief sought.
Do not upload financial documentation just because it makes it look bulky.
Each annexure must be relied upon for proving some material proposition.
As DRT Advocates would prepare document checklist for each case since record required for calculation under Section 18 would be different from Section 21 application.
When Should You Consult a DRAT Lawyer?
Orders from Debt Recovery Tribunal (“DRT”) are not very often challenged in appellate forums, unless:
- DRT has rejected a Section 17 application under SARFAESI; OR
- DRT has issued an unfavorable Section 19 recovery order;
- Certificate of Recovery has been passed; OR
- The bank has already auctioned out the property; OR
- The borrower would like to challenge that auction;
- Sale proceeds have been realized; OR
- Debt amount under Section 18 is disputed; OR
- Debt amount in Section 21 is challenged; OR
- The borrower is unable to pay 50% because;
- he needs a reduction to 25%; OR
- Limitation is about to expire; OR
- An urgent interim stay is needed; OR
- Appellant may not actually be within the category of borrowers legally eligible for pre deposit; OR
- Guarantor is disputing that he comes within the ambit of the condition; OR
- Multiple secured properties have been sold; OR
Set off of earlier payments is required to be credited.
Mr. BK Singh Advocate can review such DRT order, Statutory pathway, Deposit amount required and the Relief sought prior to finalizing your appeal.
How DRT Advocates Can Help with Pre-Deposit Reduction
Appeals under SARFAESI & Recovery Of Debts Due To Banks And Financial Institutions Act can be handled by DRT Advocates.
Appeal from Order of Debt Recovery Tribunal passed under Section 18
Work involved can consist of spotting the appropriate debt, interpreting Section 13(2) numbers, order of DRT, auction details, sale certificate & whether Appellant comes in definition of borrower or not.
Appeal from Order passed under Section 21
Focus would now shift to order of DRT and Recovery Certificate.
Services provided by BK Singh Advocate includes :
- Reviewing DRAT Appeal ;
- Calculating pre deposit amount;
- Filing application for reduction ;
- Preparing statement of financial-hardship;
- Calculating auction considerations ;
- Determining any prior recovery;
- Filing application for Condonation of delay;
- Filing application for interim stay;
- Drafting Appeal;
- Preparing record;
- Facing objection from registry ;
Appeal hearings.
25% reduction cant be assured by anyone.
DRAT has statutory powers.
We can only help you place the correct legal calculation along with facts before the court instead of asking for “totally waive off”.
Frequently Asked Questions
1. What is DRAT pre- deposit?
DRAT pre-deposit refers to the statutorily mandated amount which certain appellants are required to deposit prior to having their appeal entertained.
Under which sections of the law does DRAT pre-deposit commonly arise
Section 18 SARFAESI and Section 21 RDB Act.
2. Can DRAT waive the pre-deposit amount completely?
As a general rule, where there is a statutory requirement for pre-deposit, complete waiver cannot be granted.
Sections 18 SARFAESI and 21 RDB Act have what statutory floor?
25%.
3. What is the usual DRAT pre- deposit percentage?
Statutorily speaking, 50% is the starting point.
DRAT has the discretion to reduce the amount to 25%, depending on the provision at hand and reasons recorded.
4. Can a borrower file an appeal with DRAT and deposit only 25%?
No.
25% is the minimum amount that DRAT will allow. It is not an amount that can be automatically deposited in every case
A specific application to reduce the deposit must be filed along with reasons supporting the reduction.
5. What does “waiver of pre- deposit” mean after the 2026 Supreme Court order?
In SREI Infrastructure finance Limited Vs. Pine Labs Limited and Others (Civil Appeal No. 595 of 2026 decided on 25 April 2026), the Supreme Court ordered that the borrower should deposit 25% and seek waiver of the remaining balance amount of 25%.
However, that does not mean that the statutory pre-deposit amount can be waived to 0%. DRAT can reduce the amount that is required to be deposited by the borrower. BK Singh Advocate would draft such relief by referring to a reduction of the required 50% pre-deposit amount to the allowable floor of 25%.
6. What is Section 18 SARFAESI pre-deposit?
Under Section 18 SARFAESI, a borrower will usually have to deposit 50% of the amount of debt due (as claimed by the secured creditor or as determined by the DRT, whichever is less) with DRAT.
DRAT has the discretion to reduce this amount to 25%.
7. What is Section 21 RDB Act pre- deposit?
Section 21 requires a pre-deposit of 50% of the debt determined by the DRT under Section 19.
DRAT has the discretion to reduce this amount to no less than 25%.
8. Is Section 18 pre- deposit same as Section 21 pre- deposit?
No.
Both provisions have a 50%-to-25% structure. However, Section 18 computes the relevant “debt due” differently from how Section 21 computes the amount due under Section 19.
Caution should be exercised to determine the correct statute under which the appeal is filed before any pre-deposit amount is calculated.
9. Can the amount received from auction be treated as Section 18 pre- deposit?
No. This is especially true in cases where the borrower is contesting the auction proceedings themselves.
Recently, in April 2026 the Supreme Court reaffirmed this stance.
10. Can financial hardship be a reason to reduce pre-deposit to 25%?
Yes. Financial hardship can be included in a request to reduce the pre-deposit amount.
However, just stating that the borrower is experiencing financial hardship will not be enough for DRAT to allow a reduction to 25%. BK Singh Advocates can draft the application for reduction by attaching financial documents, details of recovery obtained by the bank, and other facts relevant to the case instead of making a blanket statement about hardship.
11. Does the borrower have to deposit 50% of the claimed debt amount before even filing the appeal with DRAT?
No. The statute says that the appeal shall not be “entertained” unless the deposit condition is met.
How the appeal is actually processed by DRAT is subject to their directions. However, a borrower should not expect to have their merits heard if they file an appeal without making the required deposit.
12. Can a guarantor also ask DRAT to reduce the pre- deposit amount?
Yes. If the guarantor is within the scope of the statutory language requiring pre-deposit and the guarantor is the party appealing the DRT order.
The relevant provision should be checked along with the extent of the guarantor’s liability and the language of the DRT order before performing any calculations.
13. If I am an auction purchaser, do I have to make a Section 18 pre-deposit (like a borrower)?
Just because you, as the auction purchaser, decide to appeal the DRT order does not automatically mean that Section 18’s pre-deposit condition will apply.
The status of the person filing the appeal and nature of the DRT Order should always be considered.
14. If a bank is filing an appeal with DRAT, does it have to deposit 50% of the claimed debt amount?
Banks do not normally have to make a deposit under provisions which are specifically directed at the borrower or the person from whom the debt is due.
The deposit fee for creditors filing appeals with DRAT and the pre-deposit requirements for borrowers are separate issues.
15. Can payments made prior to the DRT order reduce the amount I have to deposit under Section 21?
Actual payments credited against the debt may be considered when determining what amount is still due.
This will depend on how the DRT calculated the debt due and what was mentioned in the Recovery Certificate.
BK Singh Advocate can help you go through the adjudicated debt amount as well as any payments and appropriations made before calculating your base deposit amount.
16. Can the High Court waive off the DRAT pre- deposit on the grounds that the borrower has no money?
The borrower not having any money does not automatically grant them a constitutional right to have the statutorily mandated pre-deposit waived.
Courts have been known to warn parties from attempting to use the High Court as a parallel forum to simply sidestep statutory remedies in order to avoid making pre-deposits.
17. Is the pre-deposit refunded to me after the DRAT appeal is over?
Yes. Under Section 18 SARFAESI, the pre-deposit amount will usually be refunded to you after the appeal is disposed of or withdrawn.
This is subject to the amount being attached by the bank, agreed to by you (appropriation) or encumbered by another legal direction.
Axis Bank Ltd. vs. SBS Organics Pvt. Ltd. is the Supreme Court case that explained this principle.
18. Will DRAT automatically send the deposited amount to the bank?
The mere act of you depositing money with DRAT does not mean that the bank can automatically receive that money.
What happens to the deposit is subject to DRAT’s orders, your consent or another legal process affecting the money.
19. Does filing a pre- deposit with DRAT automatically stay the auction/recovery proceedings?
No, they are two separate issues.
Filing for a pre-deposit does not automatically grant you a stay of the auction or recovery proceedings.
A specific request for stay or interim-relief should be filed along with the DRAT appeal if the auction, issuance of Recovery Certificate or actual possession is imminent or already underway.
20. What are the things I should check before filing a DRAT pre- deposit reduction application?
Check to see what statute applies to your appeal, who is filing the appeal, what the DRT order says, how the debt is calculated, if any payments have been made which would reduce the amount of debt due, if any proceeds were received from an auction, if Section 13(2) damages are relevant to your case, if you have financial records to support a claim of hardship, if your appeal is barred by limitation, and whether you need urgent interim-relief to protect your rights before the appeal is heard.
BK Singh advocates can assist you in reviewing all of these issues before filing your application for reduction of the pre-deposit amount with DRAT.
Final Thoughts
DRAT pre-deposit waiver / reduction is often misinterpreted.-
Start with what is safe and do NOT ask :-
“Can we get entire deposit waived?”
Instead ask:-
“What statutory deposit is applicable to this appeal? Can DRAT lower it to the statutorily permissible minimum?”
Appeals under Section 18 SARFAESI act – Normal starting position is deposit of 50% of the debt due as claimed by the secured creditor/determined by DRT (whichever is less) which DRAT can lower to 25%.
Appeals under RDB Act governed by Section 21 – Normal starting position is deposit of 50% of debt determined u/s 19 ( again reducible to not less than 25%)
Entire waiver is normally not available within the statutory framework in which these provisions were drafted.
See also order of Supreme Court dated April 20.26.
Allowing pre deposit waiver to extent of 25% and taking deposit of 25%. Borrower can apply to set aside balance 25% on ground, giving reasons for request. DRAT will then deal with application on merits.”
Auction proceeds need special attention
If borrower is disputing the auction itself, proceeds of auction cannot be treated as belonging to borrower for purpose of pre-deposit
BK Singh Advocate and DRT Advocates help clients file DRAT pre deposit reduction requests, SARFAESI appeals under Section 18, RDB Act appeals under Section 20 , Deposits u/s 21, Auction Related disputes, Recovery Certificates and related appellate work from Delhi NCR to other Indian jurisdictions depending on the jurisdiction of the competent tribunal and facts.
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