Debt Recovery Tribunal (DRT)

Debt Recovery Tribunal (DRT) is a quasi-judicial body established in India under the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI Act), 1993. DRTs are dedicated forums to adjudicate and resolve disputes related to the recovery of debts due to banks and financial institutions from borrowers. Here are detailed notes on the Debt Recovery Tribunal (DRT):

1. Establishment of DRT:

  • The Debt Recovery Tribunal was established to provide a time-bound and efficient mechanism for the recovery of debts by banks and financial institutions.
  • The Government of India established various DRTs across the country, and they operate under the administrative control of the Ministry of Finance.

2. Jurisdiction:

  • DRTs have jurisdiction over cases involving recovery of debts exceeding a specified threshold, as prescribed by the Central Government.
  • DRTs can hear cases related to loans and advances given by banks and financial institutions, including NPAs.

3. Powers and Functions:

  • DRTs have the authority to adjudicate and decide on matters related to the recovery of debts.
  • They can hear and determine claims of banks and financial institutions against borrowers and issue recovery certificates.

4. Filing of Applications:

  • Banks and financial institutions can file applications before the DRT for the recovery of debts from defaulting borrowers.
  • Borrowers can also file counter-claims or objections against such applications.

5. Appeal and Review:

  • Parties dissatisfied with the DRT’s decision can file an appeal before the Debt Recovery Appellate Tribunal (DRAT).
  • The DRAT hears appeals against the orders of DRTs and has the power to confirm, modify, or set aside the DRT’s decision.
  • Further appeals can be filed before the High Court and, in some cases, before the Supreme Court of India.

6. Recovery Certificate:

  • If the DRT is satisfied that the borrower owes a debt to the bank or financial institution, it issues a recovery certificate.
  • The recovery certificate empowers the bank or financial institution to recover the debt as arrears of land revenue.

7. Recovery Process:

  • Once the recovery certificate is issued, the bank or financial institution can proceed with the recovery process, including attachment and sale of the borrower’s assets.

8. Debt Recovery Tribunal Act (DRAT):

  • The functioning and procedure of DRTs are governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the rules made thereunder.
  • The Act also provides for the establishment of the Debt Recovery Appellate Tribunal (DRAT) to hear appeals against the orders of DRTs.

9. Time-Bound Resolution:

  • One of the key objectives of establishing DRTs is to ensure the time-bound resolution of debt recovery cases.
  • The Act mandates that DRTs dispose of cases expeditiously.

10. Legal Representation:

  • Borrowers and banks are allowed to be represented by legal counsel before the DRT.
  • This ensures a fair and just hearing of the case.

In summary, the Debt Recovery Tribunal plays a significant role in providing a specialized forum for the expeditious recovery of debts due to banks and financial institutions. It serves as an essential mechanism for resolving disputes related to loan recovery and contributes to the effective management of non-performing assets in the Indian banking system.