Aegis Legal is one of the best Debt recovery litigation firm in Delhi India which has very extensive practice of debt recovery, Debt Recovery Tribunal (DRT) cases, SARFAISI RDDBFI cases, Appeal against order of DRT or Recovery Officers before debt recovery appellate tribunal across India.
DRT stands for Debt Recovery Tribunal, while DRAT stands for Debt Recovery Appellate Tribunal. Both are established under the Recovery of Debts and Bankruptcy Act (RDB Act) of 1993. DRTs adjudicate debt recovery cases, while DRATs hear appeals against DRT decisions.
The main objective of Debt Recovery Tribunals (DRTs) is to provide a specialized and expedited mechanism for recovering debts due to banks and financial institutions. They were established to streamline the process of recovering money owed to these institutions, offering a quicker and more efficient alternative to the traditional civil court route.
Appeals against the order of Debt Recovery Tribunal (DRTs) is done under Debt Recovery Appellate Tribunal.
- Challenges of Bad Loans: Non-performing assets and bad loans cause a lot of trouble for banks in India. This became so severe before 1993, that civil courts used to take more than a year to solve these cases.
- RDDBFI Act 1993: In response to the crisis, Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Act was enacted in 1993 , leading to the establishment of the Debt Recovery Tribunals (DRTs).
- SARFASI Act 2002: To smoothen the function of DRTs, an act known as the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFASI) Act was passed in 2002.
What Are Debt Recovery Tribunals?
- Intro: Debt Recovery Tribunals are quasi-judicial bodies set up under section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to adjudicate and recover debts due to banks and financial institutions.
- Composition: It consists of the Presiding Officer qualified to work as a District Judge.
- Tenure: He is appointed for tenure of 5 years by the central government and can hold office till the age of 65 years. Recovery officers may be appointed to assist him.
- Jurisdiction:
Section 18 of the RDDBFI act bars all other courts apart from the Supreme and High courts from adjudicating matters relating to debt recovery.
- In other words, the High Court or Supreme Court can only pursue relief against the order passed by the DRAT.
• Objective of Debt Recovery Tribunals
o To provide a speedy and expensive forum for banks and Financial Institutions to recover their dues from borrowers who have defaulted on their loans.
- Appeals: Appeals against the orders passed by DRTs lie before the Debts Recovery Appellate Tribunals (DRAT).
- Total DRT and DRATs: 39 Debt Recovery Tribunals (DRTs) and 5 Debt Recovery Appellate Tribunals (DRATs) are functioning nationwide. A presiding officer and a chairperson respectively head each DRT and DRAT.
- Operational Limit: In 2017, DRTs were empowered to handle cases with claims of Rs 10 lakh or more. In 2018, this limit was raised to Rs 20 lakh, aiming to reduce the pendency of cases and enhance efficiency.
Functions of Debt Recovery Tribunals
- To adjudicate and recover debts due to banks and financial institutions.
- Within 6 months, it has to resolve the claim.
- Within 45 days of the judgement, an appeal against the order of the DRT can be made in the DRAT.
- To enforce security interests created in favour of banks and financial institutions.
- To pass orders for the sale of secured assets of borrowers.
- To pass orders for the arrest and detention of borrowers in certain cases.
- DRTs are empowered to examine their own decisions.
Benefits of Debt Recovery Tribunals
- Speedy disposal of cases: DRTs are mandated to dispose of cases within six months from the application filing date.
- Normal Applications: 180 days is the standard timeframe for DRTs to resolve cases filed through the “normal application” route.
- Securitisation Applications: DRT aims to resolve the cases from 60 days to 4 months if the cases are registered under the SARFASI act.
- Inexpensive forum: The fees charged by DRTs are significantly lower than those charged by regular courts.
- Specialised forum: DRTs have expertise in dealing with cases involving the recovery of debts from borrowers.
At present there are 39 DRTs and 5 DRATs which are currently working across the country. Each DRT and DRAT are headed by a presiding officer and a chairperson respectively.
Both DRT and DRAT operate by the notion of natural justice. Both the forums are endowed with the same authority as any civil court. DRT also has only one member, who is called the Chairperson. The chairperson should be qualified to be the judge of the Hon’ble High Court and he should be a member of Legal Service. He can have a term of five years and can serve in the position until 65 years of his age.
Aegis Legal is one of the best Debt recovery litigation firm in Delhi India which has very extensive practice of debt recovery, Debt Recovery Tribunal (DRT) cases, SARFAISI RDDBFI cases, Appeal against order of DRT or Recovery Officers before debt recovery appellate tribunal across India.
The founder partner of the firm Mr A K Singh advocate is known as noted Commercial litigation lawyer of India, who leads commercial & debt recovery practice of the firm. Under his guidance the firm has been engaged in much high-profile commercial litigation across India.
