Debts Recovery Tribunals, DRT Structure and Processes of Recovery

Debts Recovery Tribunals, DRT Structure and Processes of Recovery

The Debts Recovery Tribunal (DRT) is a specialized forum established in India for the speedy recovery of debts due to banks and financial institutions. The DRTs operate under the jurisdiction of the Debts Recovery Appellate Tribunal (DRAT) and the jurisdiction of the High Court.

The DRT has the following structure:

  1. President: A judicial officer appointed by the central government
  2. Members: Administrative and technical members appointed by the central government

The DRT process is as follows:

  1. Filing of a claim: A bank or financial institution can file a claim in the DRT if they are unable to recover a debt from a borrower.
  2. Issuance of summons: Upon the filing of a claim, the DRT will issue a summons to the borrower to appear before the tribunal and contest the claim.
  3. Hearing: The DRT will hold a hearing, where both the bank or financial institution and the borrower can present their case and evidence.
  4. Order: Based on the hearing, the DRT will issue an order, which could be in favor of the bank or financial institution, directing the borrower to repay the debt, or in favor of the borrower, dismissing the claim.
  5. Appeal: Either party can file an appeal against the DRT order in the DRAT within a specified time frame.

Note: The DRT process is governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Debts Recovery Tribunals Processes of Recovery

The process of recovery through Debts Recovery Tribunals (DRTs) in India involves the following steps:

  1. Filing of a claim: The bank or financial institution files a claim in the DRT for recovery of a debt.
  2. Issuance of summons: The DRT issues a summons to the borrower, directing them to appear before the tribunal and contest the claim.
  3. Hearing: Both the bank or financial institution and the borrower present their case and evidence during the hearing.
  4. Order: Based on the hearing, the DRT issues an order, directing the borrower to repay the debt or dismissing the claim.
  5. Execution of the order: If the order is in favor of the bank or financial institution, they can move forward with the execution of the order, which involves recovering the debt from the borrower. This can be done through various methods such as attachment of assets, sale of assets, or garnishing of wages.
  6. Appeal: Either party can file an appeal against the DRT order in the Debts Recovery Appellate Tribunal (DRAT) within a specified time frame.

Note: The DRT process of recovery is governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and is aimed at providing a speedy and efficient mechanism for the recovery of debts by banks and financial institutions.

Recovery Process & Enforcement Of Security Interest In India

The recovery process and enforcement of security interest in India is governed by the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

The process of recovery and enforcement of security interest under SARFAESI Act is as follows:

  1. Issuance of Demand Notice: The bank or financial institution issues a demand notice to the borrower, informing them of their default and giving them an opportunity to pay the overdue amount within 60 days.
  2. Issuance of Notice of Intention to Enforce Security Interest (NIESI): If the borrower does not pay the overdue amount, the bank or financial institution can issue a NIESI, informing the borrower of their intention to enforce the security interest.
  3. Attachment of Assets: The bank or financial institution can attach the assets pledged as security for the loan, such as immovable property, machinery, or stock-in-trade.
  4. Sale of Assets: The attached assets can be sold through public auction or private treaty to recover the overdue amount.
  5. Appointment of Authorized Officer: The bank or financial institution can appoint an authorized officer to take possession of the attached assets and manage the sale process.
  6. Appeal: The borrower can file an appeal against the NIESI or the sale of assets in the Debts Recovery Tribunal (DRT) within 45 days of receipt of the NIESI.

Note: The SARFAESI Act provides a simplified and expeditious mechanism for banks and financial institutions to recover their debts and enforce their security interests without the intervention of courts.

Debts Recovery Tribunal (DRT) – Application Procedure

The procedure for filing a claim in the Debts Recovery Tribunal (DRT) in India is as follows:

  1. Preparation of the claim: The bank or financial institution preparing the claim must ensure that they have all the necessary documents, including the loan agreement, security documents, and evidence of default by the borrower.
  2. Filing of the claim: The bank or financial institution files the claim in the DRT where the borrower resides or carries on business.
  3. Payment of fees: The bank or financial institution must pay the prescribed fees for filing the claim, which can vary based on the amount of the claim.
  4. Issuance of Summons: Upon filing the claim, the DRT will issue a summons to the borrower, directing them to appear before the tribunal and contest the claim.
  5. Service of Summons: The summons must be served on the borrower in a manner specified by the DRT rules.
  6. Hearing: The DRT will hold a hearing, where both the bank or financial institution and the borrower can present their case and evidence.
  7. Order: Based on the hearing, the DRT will issue an order, which could be in favor of the bank or financial institution, directing the borrower to repay the debt, or in favor of the borrower, dismissing the claim.

Note: The DRT process is governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and is aimed at providing a speedy and efficient mechanism for the recovery of debts by banks and financial institutions.



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