RDDBFI Section 21: Deposit of amount of debt due for filing appeal (Pre-deposit)

Deposit of amount of debt due for filing appeal (Pre-deposit)

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

Where an appeal is preferred by any person from whom the amount of debt is due to a bank or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal fifty per cent of the amount of debt so due from him as determined by the Tribunal under section 19:

Provided that the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to not less than twenty-five per cent of amount of such debt so due to be deposited under this section.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Appeal to DRAT Sec 20 DRT Order Sec 19 Appellate Tribunal Sec 2(a)

Legal Commentary & Landmark Judgments: Section 21

Section 21 mandates a statutory pre-deposit of 50% of the debt determined by the DRT as an indispensable condition precedent for filing an appeal before the DRAT.

Appellate Remedies & Forum: Where an appeal is preferred by any person from whom the amount of debt is due to a bank or financial institution, Section 21 mandates that the appeal shall not be entertained unless such person has deposited with the Appellate Tribunal 50% of the amount of debt so due from him as determined by the DRT under Section 19.
Appellate Tribunal: The Appellate Tribunal may, for reasons recorded in writing, reduce the deposit to not less than 25%.

Deposit cannot be waived completely.

Key Landmark Precedents:

Axis Bank v. SBS Organics Pvt. Ltd. (2016) 12 SCC 18: Held that pre-deposit under Section 21 is a condition precedent for hearing an appeal; upon dismissal of the appeal, the deposited sum does not automatically become the property of the bank, but must be dealt with according to DRAT directions.
Kotak Mahindra Bank Ltd. v. Ambuj A. Kasliwal (2021) 3 SCC 549: The Supreme Court authoritatively held that the DRAT has no power to reduce the pre-deposit below 25%, and the High Court under Article 226 cannot grant complete waiver of this statutory mandate.

Legal Commentary:

Section 21 prevents debtors from filing frivolous appeals to delay execution of Recovery Certificates. The strict 25% to 50% cash deposit filter ensures that only bona fide appellants can invoke appellate remedies.