Banking & Finance - DRT Practice
In keeping with international trends of assisting financial institutions in rapidly and efficiently recovering bad debt, the Government of India has established thirty-three [33] Debt Recovery Tribunals and five [5] Debt Recovery Appellate Tribunals around the country. The Debt Recovery Tribunals are established throughout the country. Some cities have many Debt Recovery Tribunals. New Delhi and Mumbai, for example, have three Debt Recovery Tribunals each. Both Chennai and Kolkata have two Debt Recovery Tribunals. A single Debt Recovery Tribunal is established in Ahmedabad, Allahabad, Aurangabad, Bangalore, Chandigarh, Coimbatore, Cuttack, Ernakulum, Guwahati, Hyderabad, Jabalpur, Jaipur, Lucknow, Nagpur, Patna, Pune, Ranchi, and Vishakhapatnam.
This depends upon the number of cases in a city and accordingly the number of Debt Recovery Tribunals are constituted.
We practise law before the Debt Recovery Tribunals (DRT) and the Debt Recovery Appellate Tribunals (DRAT). Most of the time, we represent borrowers against whom banks have begun recovery procedures and SARFAISI steps have been taken. The tribunal (DRT & DRAT) is administered by and formed under the Recovery of Debts and Bankruptcy Act (RDB Act) of 1993, with the sole goal of ensuring prompt adjudication and recovery of debts owed to banks and financial institutions.
Recovery of Debts and Bankruptcy Act (RDB Act), 1993
The RDB Act of 1993 establishes Debts Recovery Tribunals (DRTs) with original jurisdiction and Debts Recovery Appellate Tribunals (DRATs) with appellate jurisdiction for the expedited adjudication and recovery of debts owed to banks and financial institutions, insolvency resolution and bankruptcy of individuals and partnership firms, and related matters. The Act seeks to protect the interests of banks and financial organisations as lenders while not deterring borrowers. The Tribunals have not yet begun hearing insolvency and bankruptcy cases because the relevant provisions are not yet in effect.
The Act applies to debts of Rs.20 lakh or more owed to banks, financial institutions, or a consortium of them.
Where a bank or financial institution has to recover any debt from any person, it may make an
application under section 19 of the Recovery of Debts and Bankruptcy Act to the Tribunal within
the local limits of whose jurisdiction—the branch or any other office of the bank or financial
institution is maintaining an account in which the debt claimed is outstanding.
If a person is dissatisfied with an order issued or considered to be made by a Tribunal under this
Act, he or she may file an appeal with an Appellate Tribunal having jurisdiction in the matter
under Section 20 of the Recovery of Debts and Bankruptcy Act.
If an appeal is filed by any person from whom a debt is owed to a bank, a financial institution, or a consortium of banks or financial institutions, such appeal will not be heard by the Appellate Tribunal unless such person has deposited 50% of the amount of debt owed to him as determined by the Tribunal under section 19. Given that the Appellate Tribunal may, For reasons to be recorded in writing, lower the amount to be deposited by such amount as is not less than twenty- five percent of the amount of such debt so owing] to be deposited under this section.
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI Act), 2002
The SARFAESI Act of 2002 aims to regulate the securitisation and reconstruction of financial assets, as well as the enforcement of security interests, and to establish a central database of security interests created on property rights and related topics. The Act has streamlined the recovery procedure for banks and selected financial institutions for recovering secured loans from borrowers without the involvement of courts from the outset. Borrowers can file applications before the Debts Recovery Tribunals (DRTs) against actions taken under this Act to enforce security interests, with the Debts Recovery Appellate Tribunals (DRATs) having appellate jurisdiction over such cases. The Act applies to circumstances where the security interest for the repayment of any financial asset exceeds Rs.1 lakh and the amount payable is 20% or more of the principal amount plus interest. The Act does not apply to any security interest created in agricultural land or to specific properties that are not subject to attachment under particular specified Acts.
WE also assist our customers on partnership, agency, and distributorship agreements, as well as recovery and insolvency issues. We have extensive experience dealing with matters connected to:
- 1. Complaints under section 138 of N.I. Act,
- 2. Summary suit under Order XXXVII of CPC to be filled before Civil Court which includes Civil Judge, District Judge and High Court as the case may be depending upon pecuniary jurisdiction,
- 3. Ordinary civil suit for recovery of money and damages,
- 4. Representation before Arbitration Tribunal,
- 5. Petitions u/s 9 of the Arbitration and Conciliation Act,
- 6. Petition u/s 34 of the Arbitration and Conciliation Act,
- 7. Insolvency procedure before NCLT under Insolvency and Bankruptcy Act and Companies Act,
- 8. Winding up petition before NCLT,
- 9. Consumer Cases before District Consumer Court, State Consumer Commission and National Consumer Commission
- 10. Recovery proceeding under section 19 of RDDBFI Act, before Debt Recovery Tribunal
- 11. Debt recovery matters before DRT / DRAT under SARFAISI Act and RDDBFI Act.
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