Debt Recovery Tribunal

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Due to the growing number of nonperforming assets and debt issues in the banking system, the RDDBFT Act and SARFAESI Act were established in India. This article will discuss the debt recovery tribunal, RDDBFT, SARFAESI, the composition of DRT, its importance, jurisdictions, problems faced by the DRT, and the procedure for filing applications.

What are Debts Recovery Tribunals (DRTs)?

Debts Recovery Tribunals (DRTs) and Debts Recovery Appellate Tribunals (DRATs) were established under the Recovery of Debts due to Banks and Financial Institutions Act (RDDBFI Act), 1993.
Debts Recovery Tribunals helps in speedy adjudication of disputes and recovering debt from the customers of the banks and other financial institutions. Any order passed by the DRT can be appealed before the Debt Recovery Appellate Tribunals (DRATs). Before filing an appeal, the appellant is required to deposit 75% of the amount of debt due, as determined by the DRT.
Debts Recovery Tribunal is empowered to go beyond the Civil Procedure Code to pass comprehensive orders. It can also hear counterclaims, cross-suits, and allow set-offs. It functions on the principles of natural justice. Hence, they are not bound by the principles laid down by the Civil Procedure Code. Instead, they have the power to regulate and work according to their regulations.
After hearing the matter, the Debt Recovery Tribunal issues an order and passes a Recovery Certificate stating the amount to the borrower to the bank or financial institution. Then, the Recovery Officer executes a Recovery Certificate as per the procedure laid down under the Act.

Composition of DRT

The Government has the power to set up one or more Debts Recovery Tribunals. Therefore, all the powers, jurisdiction, and authority of DRTs are decided by the Central Government.
Currently, there are 39 Debts Recovery Tribunal (DRTs) and 5 Debts Recovery Appellate Tribunals (DRATs) in India.
Places that have DRATs are Allahabad, Chennai, New Delhi, Kolkata, and Mumbai.
Places with DRTs are Ahmedabad, Allahabad, Aurangabad, Bangalore, Chandigarh, Chennai, Coimbatore, Cuttack, Ernakulam, Guwahati, Hyderabad, Jabalpur, Jaipur, Kolkata, Lucknow, Madurai, Mumbai, Nagpur, New Delhi, Patna, Pune, Vishakapatnam, and Ranchi.
Each DRT is presided by a Presiding Officer who is equivalent to District Judge. Each DRAT is presided by a Chairperson who is equivalent to High Court Judge. The Central Government appoints the Presiding Officer and Chairperson by a notification.

Where is DRT applicable?

Debts Recovery Tribunals applies to:

  • All states in India except for the State of Jammu and Kashmir
  • Where the amount of disputed loans or debt is above Rs 20 Lakhs,
  • When the banks and financial institutions file the recovery application.
  • No courts other than the Supreme Court and High Court have the power to adjudicate the debt recovery matters.

What is the importance of DRT?

Debts Recovery Tribunal helps in speedy recovery of debts due and quick implementation of the order of the tribunals.

Debts Recovery Tribunals also help restore the unpaid amount from Nonperforming assets (NPAs) (NPAs are loans or advances for which principal or interest payment has not been paid for a period of 90 days) may be declared by the banks under RBI guidelines.

What are the documents required to file an application?

The documents required for making an application for recovery of debts are as follows:

  • A detailed statement of debts due and the circumstances for such debts due,
  • All the documents mentioned in the application
  • Crossed bank draft (demand draft) or Indian Postal Order for the application fee
  • Index of the documents to be given.
  • Document authorizing the agent or legal representative to represent the applicant.

Application Fee

All the applications should be made by paying the applicable fee in the following manner:

  • A crossed Bank draft taken in favour of the Registrar or at the respective Registrar’s office.
  • A crossed Indian Postal Order taken in favour of the Registrar and Central Post Office of the concerned Tribunal.

How to file an application before the Debt Recovery Tribunal?

Procedure for applying:

  • The application should be made before the Registrar where the bank or financial institution is situated.
  • Such application has to be made in the prescribed format by the applicant himself or through his agent or authorized legal representative.
  • The application can be submitted by post.
  • On receiving the application, the concerned officer will approve the application by endorsing its signature.
  • After approving the application, the Registrar would verify and register the application by issuing the Original Application (OA) number and summon.
  • The Registrar would send a copy of the application to all the respondents.
  • The respondent would then file a written statement of his defence to the application within a month from receipt of the application.
  • After hearing both the parties, the Tribunal may pass such interim or final order as it deems fit.
  • Such interim order would restrict the respondent from transferring or disposing of the property without prior permission of the Tribunal.
  • After hearing both the parties, the Tribunal may, within thirty days, pass a final order.
  • A Recovery Certificate would be issued within 15 days from the final order and forward to the Recovery Officer.
  • The Tribunal may further direct conditional attachment of the whole or any part of the respondent’s property if the respondent fails to pay the amount prescribed by the Tribunal.
  • The Tribunal may also appoint a receiver to defend in the suit and manage the respondent’s property.
  • After issuing a Recovery Certificate against a company, the Tribunal may order to distribute the sale proceed of the company among its secured creditors and close the Debt Recovery Tribunal Application.

How to file an Appeal against Recovery Officer?

The respondent can file an appeal against the order of the Recovery Officer within 30 days from the date when the order was passed. Such appeal has to be resolved within six months. Such appeal can be made before the Debts Recovery Appellate Tribunal (DRATs).

To file an appeal, the appellant has to deposit 50% of the amount ordered by the Tribunal. However, the said amount can be reduced up to 25% at the discretion of the Chairperson.

What are the problems faced by the Debts Recovery Tribunals?

In the initial enactment stage, the Debts Recovery Tribunals played a pivotal role in recovering a large number of nonperforming assets. However, the Tribunal faced a laidback when it came to large and powerful borrowers.

  • The problems such as asset-liability mismatch, lack of liquidity, and long-term blocking of assets had led to the setback of the Debts Recovery Tribunals.
  • The borrowers also used delaying tactics to escape, such as claims pending the civil courts against the lenders,
  • Other peripheral problems like dues of workmen against a company, state dues, and other non-secured creditors dues, etc.
  • Overburdened of cases which have led to delay in redressing the cases.

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002

Due to the persistent problems faced by the banks and financial institutions in recovering the debts, Debts Recovery Tribunal had to be amended. Therefore, the Central Government enacted the SARFAESI Act in 2002.

Under this Act, the banks and financial institutions are empowered to recover the secured assets without the court’s intervention by giving notice to the borrower. Suppose the borrower fails to comply with the notice. In that case, the bank or financial institution can take possession of the secured asset and the right to transfer the asset.

Therefore, the Debts Recovery Tribunals consider both the RDDBFI Act and the SARFAESI Act while dealing with complex commercial issues.


The Recovery of Debts dues to Banks and Financial Institutions (RDDBFI) Act has established Debts Recovery Tribunals (DRTs) for a speedy recovery of loans by filing Original Applications (OAs). The aggrieved person can file an appeal against the order of the DRTs before the Debts Recovery Appellate Tribunals (DRATs). The SARFAESI Act, 2002, was enacted to make more stringent laws that could help recover debts from borrowers. This Act allowed the lenders to take possession of the secured assets of the borrower on their failure to repay the debts only by giving prior notice. The DRTs deal with the RDDBFI Act and SARFAESI Acts to resolve the disputes relating to the recovery of debts due.


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