DEBT RECOVERY

TRIBUNAL
 Introduction to Debt recovery tribunal
 Debt Recovery Tribunal (DRT) is a specialized judicial body established under the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act).
 a committee was formed in 1981 under chairmanship of Mr. T Tiwari and established debt recovery
tribunals (DRT’S). It was setup to deal with exclusively with recovery process of financial sector
through summary procedure.
 The primary purpose of DRT is to facilitate the expeditious recovery of outstanding debts owed to
banks, financial institutions, and other specified entities.
 DRTs have jurisdiction over cases involving the recovery of debts exceeding a specified threshold,
which is currently set at Rs. 20 lakhs (may vary by country or region).
 They handle cases related to non-performing assets (NPAs), loan defaults, recovery of dues, and
enforcement of security interests.
 DRTs are intended to provide a speedy and cost-effective forum for resolving debt recovery disputes
and play a crucial role in promoting a healthy banking system and financial stability.
 The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
(SARFAESI) act, of 2002 is also enforced by DRT.
 Establishment and Structure
 DRTs were established in India under the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (RDDBFI Act).
 The number of DRTs has increased over time to cater to the growing demand. As of now, there are 39
DRTs in India.
 DRTs are located across various cities and regions to ensure accessibility and convenience for the parties
involved in debt recovery cases.
 The composition of the tribunal benches typically includes a Presiding Officer, who is a judicial officer
appointed by the central government.
 The Presiding Officer of a DRT is generally a retired district judge or a person with equivalent judicial
experience.
 Each DRT is supported by administrative staff, including Registrar, Recovery Officers, and other
personnel, responsible for assisting in the functioning of the tribunal.
 The administrative control of DRTs is exercised by the Debts Recovery Tribunal Principal Bench located
in New Delhi.
 The Debts Recovery Appellate Tribunal (DRAT), an appellate body, is also established to hear appeals
against the orders passed by the DRTs.
Jurisdiction and powers
 DRTs have jurisdiction over matters related to the recovery of debts due to banks, financial
institutions, and specified entities.
 Enforcement of Security Interests: DRTs have the power to adjudicate cases related to the
enforcement of security interests, such as mortgages, pledges, hypothecation, or any other security
provided by the borrower.
 Orders for Debt Recovery: DRTs can pass orders for the recovery of debts, including the amount to
be recovered, the mode of recovery, and the timeframe for compliance.
 Attachment and Sale of Properties: DRTs have the authority to order the attachment and sale of
properties or assets of the defaulting party to realize the debt amount.
 Interim Orders and Injunctions: DRTs can issue interim orders, injunctions, or other necessary
directions to safeguard the interests of the parties during the pendency of the case.
 Execution of Decrees: DRTs can execute the decrees passed by them for the recovery of debts
through various means, such as attachment of bank accounts, salary deductions, or sale of properties.
 Contempt Proceedings: DRTs can initiate contempt proceedings against any person who disobeys
their orders or interferes with the administration of justice.
 Assistance to the Tribunal: DROs assist the DRT in the recovery
process and enforcement of orders issued by the tribunal.

Execution of Decrees: DROs are responsible for executing the

decrees passed by the DRTs for the recovery of debts.
Role of debt
recovery Recovery Proceedings: DROs initiate and carry out recovery
proceedings as per the directions given by the DRTs.

officers Asset Identification and Evaluation: DROs identify the assets of the
defaulting party, evaluate their value, and take necessary steps to
recover the debt from those assets.

Attachment and Sale of Properties: DROs have the authority to

attach and sell the properties or assets of the defaulting party to
realize the debt amount.
 Appeal and review
 The decisions made by DRTs can be appealed to higher appellate bodies, providing a mechanism
for review and redressal.
 The first level of appeal lies with the Debts Recovery Appellate Tribunal, which is an appellate
body established under the RDDBFI Act.
 DRAT has the authority to hear appeals against the orders passed by the DRTs within its
jurisdiction.
 DRAT is headed by a Chairperson, who is a retired Judge of a High Court, along with other
members as deemed necessary.
 Generally, the appeal to DRAT must be filed within 30 days from the date of the order passed by
the DRT.
 If a party is dissatisfied with the decision of DRAT, they can further appeal to the High Court
within the jurisdiction where the DRT is located.
 he appeal to the High Court must be filed within the prescribed time limit, typically within 60 days
from the date of the order of DRAT.
 In exceptional cases, where there are substantial questions of law or important legal issues
involved, parties can file appeals to the Supreme Court of the country.
 The appeal to the Supreme Court must be filed within the specified time limit prescribed by the
Challenges and issues faced by debt
recovery tribunal
 Backlog of Cases: DRTs often face a significant backlog of cases,
resulting in delays in the resolution of debt recovery disputes and
prolonged litigation.
 Lack of Infrastructure: Insufficient infrastructure, including limited
courtrooms, staff, and resources, can impede the efficient functioning of
DRTs and contribute to delays.
 Legal Complexity: Debt recovery cases can involve complex legal issues,
interpretation of various laws and acts, which may pose challenges for
both the DRTs and the parties involved.
 Enforcement of Orders: The enforcement of orders passed by DRTs can
be challenging, especially when it comes to identifying, valuing, and
recovering assets or properties to satisfy the debt.
 Procedural Delays: Procedural delays, such as frequent adjournments,
inadequate documentation, and multiple hearings, can prolong the resolution of
cases and increase the burden on DRTs.
 Lack of Awareness: There is often a lack of awareness among the general public
about the existence and functioning of DRTs, leading to underutilization of the
tribunal's services and delays in seeking redress.
 Capacity and Training: DRTs may face challenges related to the capacity and
training of personnel, including judges and staff, impacting the efficiency and
effectiveness of the tribunals.
 Limited Recovery Success: Despite the efforts of DRTs, the recovery of
outstanding debts may not always be successful, particularly in cases where the
defaulting party lacks sufficient assets or resources.
 Cooperation of Parties: The cooperation of parties involved in debt recovery
cases, including borrowers, guarantors, and financial institutions, is crucial for
smooth proceedings, and lack of cooperation can hinder the process.
Recent development under DRT
 Strengthening of DRTs: Efforts have been made to strengthen the functioning
of Debt Recovery Tribunals. This includes the appointment of additional
members and support staff to expedite the disposal of cases.
 Digital Transformation: DRTs have undergone digital transformation to
streamline processes and improve efficiency. Online filing of cases, e-auctions,
and electronic communication have been implemented to reduce paperwork
and enhance transparency.
 Insolvency and Bankruptcy Code (IBC): DRTs play a crucial role in
resolving insolvency cases. With the implementation of the Insolvency and
Bankruptcy Code, 2016, DRTs have been empowered to handle corporate
insolvency cases, enhancing their jurisdiction and effectiveness in debt
recovery.
 Time-bound Disposal: There is a renewed focus on time-bound disposal of
cases to expedite the recovery process. DRTs have been instructed to adhere to
strict timelines for the disposal of cases and minimize delays.
 E-Auction of Assets: DRTs have embraced e-auction platforms to sell mortgaged assets
and properties of defaulting borrowers. These online auctions promote transparency,
wider participation, and better realization of the asset value.
 Expanding Jurisdiction: DRTs have been given additional powers to deal with cases
involving financial institutions, non-banking financial companies (NBFCs), and other
entities involved in the financial sector, enabling them to resolve a broader range of debt
recovery matters.
 Recovery Certificate Enforcement: DRTs have been actively working towards
enforcing recovery certificates issued by them. These certificates enable creditors to
recover their dues by attaching and selling the defaulter's properties.
 Specialized DRT Benches: To address specific categories of cases effectively,
specialized DRT benches have been set up. These benches specialize in handling cases
related to small and medium enterprises (SMEs), banking and financial sector disputes,
and other specific sectors.
 Alternate Dispute Resolution: DRTs encourage parties to opt for alternate dispute
resolution mechanisms like mediation and conciliation to settle their disputes amicably,
thereby reducing the burden on the judicial system and facilitating faster resolution.