DEBT RECOVERY TRIBUNAL

I. Introduction to DRT

Established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act)
Reconstituted and renamed under the Recovery of Debts and Bankruptcy Act, 1993
Aim: To provide a specialized, speedy mechanism for banks and financial institutions to recover loans exceeding ₹20 lakhs.

II. Legal Framework Governing DRT

Recovery of Debts and Bankruptcy Act, 1993
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002
DRT (Procedure) Rules, 1993
Relevant RBI guidelines and judicial precedents

III. Structure of DRT and DRAT

Debt Recovery Tribunal (DRT) – First-level forum
- Headed by a Presiding Officer (PO) (equivalent to a District Judge)
Debt Recovery Appellate Tribunal (DRAT) – Appellate forum
- Headed by a Chairperson (equivalent to a High Court Judge)

IV. Jurisdiction of DRT

Monetary jurisdiction: Claims exceeding ₹20 lakhs
Territorial jurisdiction based on location of bank branch, borrower, or mortgaged property
Handles cases filed by:
- Banks
- Financial institutions
- Asset Reconstruction Companies (ARCs)
- Debtor disputes under counterclaims

V. Key Issues and Proceedings in DRT

Filing of Original Application (OA)
- Filed by banks/financial institutions
- Must include statement of account, loan agreement, demand notice, etc.

Written Statement by Borrower
- Borrower/defendant must file their reply and counterclaims within prescribed time

Adjudication and Recovery Certificate
- DRT issues a Recovery Certificate (RC) directing Recovery Officer to recover dues

Role of Recovery Officer
- Executes RC through:
  - Attachment and sale of movable/immovable property
  - Arrest and detention
  - Appointing a receiver

Injunctions and Stays
- DRT has powers to grant interim relief
- Courts may be approached only in exceptional circumstances due to Section 34 of SARFAESI Act (bar of civil court jurisdiction)

VI. SARFAESI-Related Proceedings Before DRT

Section 13(4) of SARFAESI Act allows secured creditors to take possession of assets without court intervention
If borrower challenges the possession, they must file under Section 17 of SARFAESI Act before the DRT

VII. Common Legal Issues in DRT Cases

Improper service of demand notice
Violation of natural justice
Disputes on loan amount or interest
Illegal possession under SARFAESI
Delay in filing of OA or appeals
Improper valuation of mortgaged property
Challenge to classification as NPA (Non-Performing Asset)

VIII. Appeals and Review

Appeals from DRT orders lie with Debt Recovery Appellate Tribunal (DRAT) under Section 20
Appellant must deposit 75% of the debt due (waivable at tribunal’s discretion)
No second appeal lies beyond DRAT, but constitutional remedies under Articles 226/227 can be invoked in High Court

IX. Recent Legal Trends and Developments

Digitization of DRT filings and e-courts
Reduction in pendency through fast-track measures
RBI guidelines on One-Time Settlement (OTS) and restructuring
Courts emphasizing borrower’s right to be heard before possession

X. Role of Legal Professionals

Drafting and filing of OAs and SARFAESI petitions
Representation before DRT and DRAT
Advising on pre-litigation settlement, restructuring, or IBC alternatives
Assisting in execution and enforcement of Recovery Certificates

XI. Alternatives to DRT Proceedings

Insolvency and Bankruptcy Code (IBC) proceedings (especially for corporate debtors)
Arbitration, if applicable under the loan agreement
Civil suits in case of personal guarantees or non-financial disputes (if DRT jurisdiction does not apply)

XII. Challenges in DRT System

Overburdened tribunals and staff shortage
Delays in execution of Recovery Certificates
Inadequate infrastructure for digital case management
Lack of awareness among borrowers and small businesses

XIII. Conclusion

The DRT system plays a vital role in India’s financial and legal ecosystem by enabling timely debt recovery for lenders. With rising NPAs and stricter banking norms, efficient handling of DRT cases—through proper legal strategy and compliance—is crucial for both creditors and borrowers

Frequently Asked Questions

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1. What is a Debt Recovery Tribunal (DRT)?

A DRT is a specialized tribunal set up by the Central Government to facilitate the speedy recovery of debts owed to banks and financial institutions under the Recovery of Debts and Bankruptcy Act, 1993.

2. Who can file a case before the DRT?

Only banks and financial institutions can file applications before DRTs for recovery of debts exceeding ₹20 lakhs. However, borrowers and guarantors may defend themselves and also file counterclaims.

3. What is the minimum amount for filing a case before the DRT?

The minimum debt amount must be more than ₹20 lakhs (as per the latest threshold fixed by the Central Government) for a bank or financial institution to approach DRT.

4. Can a borrower file a complaint in the DRT?

Yes. Under the SARFAESI Act, if a borrower is aggrieved by the bank’s action (such as possession or auction of assets), they can approach the DRT under Section 17 of the Act.

5. What is the process of recovery through DRT?

The bank files an Original Application (OA) before the DRT.
The DRT issues notice to the borrower to file a Written Statement.
After inquiry, the DRT passes a Recovery Certificate (RC), which is executed by a Recovery Officer.
Property may be attached, sold, or other recovery methods may be used.

6. What role does the Recovery Officer play?

The Recovery Officer is responsible for executing the Recovery Certificate issued by the DRT. They can:

Attach movable and immovable assets
Conduct auctions
Order arrest or detention (in extreme cases)
Appoint receivers

7. Can DRT stop the bank from taking possession under SARFAESI?

Yes, the DRT can issue interim reliefs or stay orders if the borrower proves a prima facie case of illegality or procedural violations by the bank.

8. What is DRAT? Can I appeal against a DRT order?

DRAT (Debt Recovery Appellate Tribunal) is the appellate body for challenging DRT orders.

Appeals must be filed within 30 days.
The appellant must deposit 75% of the debt amount (can be waived or reduced by the DRAT).

9. Can a person approach civil court in DRT-related matters?

No. Section 34 of the SARFAESI Act bars civil court jurisdiction in matters that fall under the purview of DRT. Only writ petitions in High Courts or SLPs in Supreme Court are permitted in exceptional cases.

10. How is DRT different from the Insolvency and Bankruptcy Code (IBC)?

DRT focuses on debt recovery by secured creditors (banks/FIs) against individual borrowers or non-corporate entities.
IBC deals with insolvency resolution and liquidation, especially for corporate debtors through NCLT (not DRT).

11. What kind of properties can be attached by DRT?

Both movable and immovable properties of the borrower and guarantor can be attached or auctioned, including:

Residential or commercial real estate
Bank accounts
Vehicles
Shares and other securities

12. Is legal representation allowed in DRT?

Yes. Parties are entitled to be represented by advocates. Many cases involve detailed pleadings, documentation, and hearings.

13. Can a settlement be made during DRT proceedings?

Yes. Borrowers and banks can mutually agree on an One-Time Settlement (OTS) or enter into a compromise, which can be recorded before the tribunal.

14. How long does DRT usually take to decide a case?

Although the Act mandates disposal within 180 days, in practice, due to backlog and procedural delays, it may take 1–2 years or more depending on the complexity and region.

15. What happens after the Recovery Certificate is issued?

The Recovery Officer executes the certificate by:

Serving demand notices
Attaching and auctioning assets
Recovering dues from third parties holding funds or assets of the borrowe