Overview of Debt Recovery

Tribunal
 OBJECTIVE
 DRT is constituted under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ( ‘Act’)
providing speedy recovery for Banks and Financial Institutions unlike civil court and other forums.
 Debt Recovery Tribunal (hereinafter referred as ‘DRT’) is a specially created forum for fast and
speedy recovery of debts due to Banks and Financial Institutions.
 It is stipulated that DRT is to decide the Application as expeditiously as possible and endeavour
should be made to dispose the Application within 180 days from the receipt of Application.
 CONSTITUTION OF DRT

 DRT is constituted by the Central Government under Section 3 of Act to exercise the power
and jurisdiction as conferred by this act.
 The Central Government may also specify the area where such DRT shall exercise its
jurisdiction.
COMPOSITION OF DRT
Presiding
Officer

Recovery Officer
Staff of
Tribunal Registrar

Assistant Registrar
 1. Presiding Officer
Presiding Officer

Term
Appointment Qualification
The PO shall hold office for a
The PO is appointed by A person who is or has been
period of 5 years from the
Central Government. The or qualified to be a District
date of his appointment or
Central Government may Judge shall only be
attainment of 65 years
also authorise any other PO appointed as a PO.
whichever is earlier. He/she
or Judicial Member of a DRT is eligible for reappointment.
other than DRT to discharge
the function of PO of DRT.
 2. Recovery Officer
a) Appointment
 The Central Government shall provide the DRT with one or more ROs.
b) Duties
 ROs discharge their functions under the general superintendence of the PO. Primary duty of RO is to
execute the Recovery Certificate issued by PO after hearing the Original Application.
 No objection to the Recovery Certificate on any ground shall be entertained by the RO and has got no
power to decide any legal question arising out of the final order, at the time of execution of the final
order.
 He shall make recovery by any of the modes as provided by Chapter V of the Act.
 3. Registrar
a) Appointment
 The Central Government shall provide the DRT with Registrar.
b) Duties
 The Registrar is custodian of record of the DRT as well as of the seal of the DRT. Seal of DRT can be
used only under authority of Registrar in normal course or upon a specific direction by PO of the
DRT only.
 The Registrar has authority to receive all documents/applications on behalf of DRT and will examine
them so that the same conforms to the Rules/Regulations of the DRT.
 He/she may direct any party before DRT for carrying out necessary amendment in the documents or
for payment of proper Court fees and may fix date of hearing before PO.
 4. Assistant Registrar

a) Appointment
 The Central Government shall provide the DRT with Assistant Registrar to whom the powers and
duties of the Registrar may be delegated.
b) Duties
 The Assistant Registrar of the DRT shall assist the Registrar in the work relating to the Registry and
Administration of the DRT.
 JURISDICTION OF DRT AND BAR OF
JURISDICTION
 As per Section 17 of the Act DRT shall exercise the jurisdiction, powers and
authority to entertain and decide applications from the Banks and Financial
Institutions for recovery of debts due to such Banks and Financial Institutions.
 1. Territorial Jurisdiction
According to Rule 6 of the
Rules, OA shall be filed by
the Applicant with the
Registrar within whose
jurisdiction:

i.The Applicant is i.The cause of

functioning as a i.The Borrower, or each of
Bank or Financial the Borrowers where there
Institution for the are more than one, at the
time being, or time of making application,
actually and voluntarily
resides, or carries on
business, or personally
works for gain, or
i.Any of the Borrowers action, wholly
where there are more than or in part,
one, at the time of making arises.
the application, actually and
voluntarily resides, or
carries on business, or
personally works for gain, or
 2. Pecuniary Jurisdiction

i.The amount of debt due i.The Central Government

to any Bank or Financial may by notification
Institution or to a specify those cases not
consortium of Banks or being less than one lakh
Financial institutions is (Rs.1 Lakh) to be
more than ten lakhs (Rs. decided by DRT.
10 Lacs) rupees.
 Bar of Jurisdiction

 No court or other authority shall have, or be entitled to exercise, any

jurisdiction, powers or authority (except the Supreme Court and the High
Court exercising jurisdiction under Articles 226 and 227 of the
Constitution) in relation to the matters specified in section 17 of the Act.
 PROCEEDING BEFORE DRT
Proceeding

Original Application Procedure

Documents
Relief and
Filing of to Format of
Interim
OA accompany Application
Relief
OA
 1. Original Application
a) Filing of Original Application
 The Applicant/Applicants(Joinder of Applicants under Section 19(2) of the Act) may file an OA as per
Rule 4 of the Rules under Section 19 of the Act to the Registrar within whose jurisdiction his case falls.
 OA may be presented either in Person or by his Agent or by duly authorised Legal Practitioners to the
Registrar or may sent by registered post addressed to registrar.
 OA shall be presented in two (2) sets, in a paper book along with an empty file size envelope bearing
full address of the Borrower/Guarantor/Corporate Guarantor (commonly referred hereinafter as
‘Borrowers’)
 If the number of Borrowers are more than one, then sufficient number of extra paper-books together
with empty file size envelopes bearing full address of each of the Borrower shall be furnished by the
Applicant.
 Every OA shall be accompanied by the true copies of the document on which the Applicant relies.
 A copy of the OA and paper book shall be served on each of the Borrower as soon as they are filed, by
registered post.
b) Documents to accompany OA
i. OA under Section 19 of the Act shall be accompanied by a paper book containing:
 A statement showing details of the debt due from a Borrower and circumstances under which
such debt has become due; and shall also disclose details of the case and decision in that case
which is sought to be reviewed; (statement of account duly certified by bank under the Banker’s
Book of Evidence;
 All documents relied upon by the Applicant and those mentioned in the OA;
 Demand draft/Indian Postal Order representing the application fee;
 Index of Documents.
ii. The documents referred above shall be neatly typed in double space on one side of the paper,
duly attested by a senior officer of the Bank or Financial Institution, as the case may be, and
numbered accordingly.
iii. Where the parties to the suit or proceedings are being represented by an agent, documents
authorising him to act as such agent shall also be appended to the OA.
iv. Provided that where an OA is filed by legal practitioner, it shall be accompanied by a duly
executed Vakalatnama.
c) Format of Application

 Every OA as given in Rule 4 of the Rules shall be filed as per Form-I

annexed to the Rules. The format as provided is annexed herewith as
Annexure-1.
d) Relief
Banks and Financial Institution under each of the loan facility would file OA before DRT seeking the following
final reliefs:
i. To issue a Joint and Several Decree and a Recovery Certificate of recovery in favour of the
Bank/Financial Institution and against the Borrowers, for an amount due along with cost, pendent lite
and future interest and other charges at the contractual rates on the footing of the compound interest till
realization in full;

ii. Order for the auction sale of secured assets (including project, participating interest (PI), receivables,
movable assets, monies, cash flows, etc.) that are secured with the Applicant Bank/Financial Institution
towards the realization/ satisfaction of the decretal amount;

iii. Order that the decretal amount be recovered from the other assets and properties of Guarantor,
Corporate Guarantor under the Corporate Guarantee;
iv. In case debt, could not be recovered or fully satisfied by either of the above procedure the Applicant
may also claim sale of any other property of the borrower whether Tangible or Intangible, Movable or
Immovable.

v. Grant such other directions and/or reliefs as the Hon’ble Tribunal may deem fit and proper to meet
the ends of justice.

vi. Award costs of the present Application in favour of the Applicant.

e) Interim Relief
Banks/Financial Institutions under each of the loan facility would file OA before DRT seeking the following
interim reliefs:
i. Direct Borrowers to furnish security for an amount of equivalent to the due amount;

ii. Restrain the borrowers, their agents, employees, attorneys, representatives, successors, assigns etc.
from selling, disposing of or creating any third-party interest or creating any charge and/or
encumbrance in any manner over the entire assets secured under the entire transaction documents;

iii. Restraining the Borrower, guarantor and corporate guarantors from paying dues of any unsecured
creditors, borrowing or availing of facilities from other Banks/Financial institutions, from paying
remuneration to managerial personnel.
iv. The Applicant apprehends that the above secured properties and receivables, PI, monies may not be
sufficient to satisfy its claim, hence the borrowers be restrained by way of an interim ex-parte order from:

 contracting any financial liability direct or contingent, or

 altering its share capital, or
 transferring, alienating or otherwise dealing with, or disposing off and/or creating any
fresh encumbrance including modification of existing charge with ROC, in any manner,

all their movable, immovable, tangible and intangible properties (whether owned through itself
or subsidiaries or tenanted and whether in single name or jointly with any other persons)
including vehicles, Bank lockers, Bank Accounts, Fixed Deposit Receipts, Demat Accounts, LIC
policies, Mutual Fund Schemes, Shares and Securities, hypothecated stocks, shares, Life
Insurance Policies, Mutual Funds, Bonds, plant & machinery, spares and consumables etc.
wherever lying and any other properties and assets belonging to them including beneficiary
interests without prior permission of this Hon’ble DRT;

v. Pass an ex-parte ad interim order directing the Borrowers to file a comprehensive affidavit of
their assets both in India as well as in foreign countries along with documentary evidence;
vi. Direct the Borrowers to disclose the list of PI and receivables due to it from third parties and direct
such third parties to deposit and/or attach such receivables with Court or route it directly to the
Applicant or any other account as may be directed by this Hon’ble DRT;

vii. Restraining the Borrowers from travelling and leaving the Jurisdiction of DRT or country as the same
will hamper and obstruct the recovery process initiated by the Applicant Bank and the Borrowers be
directed to deposit their passports before the Hon’ble Tribunal;

viii. Attachment of the whole or such portion of the Properties as claimed by the Applicant;

ix. Grant permission to the Applicant Bank to publish the Interim Order passed by the Hon’ble Tribunal,
in public interest, in leading English, Hindi or vernacular newspapers having wide publication;
x. Pass any other Order(s) as this Hon'ble DRT may in the facts and circumstances of the present case
deem fit and proper, in the interest of justice.
 Publication of the name of borrower/guarantors
Where Borrowers defaults in repayment of loan a Bank/Financial Institution may publish its/their
names or make a public disclosure of the names of the defaulters in the local newspaper.
 Publication of Photograph of defaulter – With respect to publication of photograph of
defaulters different High Courts have divergent views:
 In favour – Madras High Court in Mr. K J Doraiswamy vs The Assistant General Manager, State
Bank of India Erode Branch & Ors., upheld Bank's right to publish the photograph of a borrower who
had defaulted on repayment of a loan along with details of the property that had been pledged as
security for the loan.

 In favour – Madhya Pradesh High Court in Ku. Archana Chauhan v. State Bank of India, Jabalpur
held that publication of photographs of the borrowers cannot be said to be impermissible mode.
Action cannot be said to be arbitrary or illegal in any manner. It cannot be said to be defamatory
publication.
 Against – Calcutta High Court in Ujjal Kumar Das & Anr. V/s State Bank of India & Ors. held that
publication of photographs in newspapers, magazines etc. not being permissible under any
rule/notification/guideline is illegal. Moreover, the threat to publish photographs is also illegal.
 2. Procedure
After OA is filed, DRT issues summon to borrowers to show cause
within 30 days as to why relief claimed by applicant should not
be granted, the DRT may also pass ex-parte ad-interim order,
under Section 19(4) of the Act.

According to Section 19(4A) of the Act after summons are served,

except in ordinary course of business for which the Borrowers
shall be accountable, they shall not dispose of the property
without prior approval of the DRT.

Under Section 19(5) within 30 days from service of summon

borrower shall file written statement along with the documents to
bring forth his defence.

The PO may if the written statement is not filed within the

stipulated time, extend the time not exceeding 15 days.
Every pleading to be accompanied with affidavit. Affidavit
of witnesses(if any) shall also be filed simultaneously.

On receipt or failure of filing of Written Statement the

DRT shall fix a date for hearing on admission or denial by
the parties under Section 19(5A) of the Act.

If borrower makes an admission of debt due then DRT

shall order to pay such amount to the extent of admission.

As per Section 19(5B) of the Act If borrower fails to

comply with the order then DRT shall issue Recovery
Certificate(RC) to the extent of amount admitted.
 Cross Examination
Once the pleadings of
both the parties are After tendering the
complete then PO will affidavit of evidence, on
fix the date of tendering application, the PO may in
of evidences by way of the interest of justice may
allow the cross i.Section19(20)
affidavit.
examination of the ii.After hearing both
witnesses. the parties, within 30
days of conclusion of
hearing DRT may pass
such interim or final
order/Recovery
Certificate {section
19(22) of the Act}
Such order includes
payment of interest from
i.Section 19(24) the date on or before
ii.The above OA must be which payment of the
dealt expeditiously and amount, if found due, up
endeavour shall be made to the date of realization
to complete the or actual payment, for
proceedings in 2 hearings initiation of Recovery
and dispose OA within 180 proceeding before the RO
days from its receipt. under Chapter V of the
Act.
 RECOVERY PROCEEDING BEFORE RO
A. The recovery proceeding shall be dealt by RO and governed by Second and Third Schedule to the
Income Tax Act 1961 and the Income Tax (Certificate Proceedings) Rules, 1962 read with
chapter V of the Act.
B. When Recovery Certificate (RC) is issued by PO then RO may issue a notice to Certificate Debtor to
pay the amount as specified in Recovery Certificate within 15 days of such notice. If Certificate
Debtor fails to do so the RO may proceed to recover the amount by any of the following modes:
 by attachment and sale of the Borrowers movable or immovable property;
 taking possession of property over which security interest is created and appointing receiver for the
same;
 Arrest the Borrowers in civil prison;
 Appointing receiver for the management of properties of the Borrowers;
 Any other mode.
C. When the assets are realised by sale or otherwise the proceeds shall first be adjusted towards
the amount due and if their remains any balance the same shall be utilised towards any other
amount receivable and still if something remains then that shall be paid to the Borrower.
D. Once the decree/recovery certificate attains finality, the same neither can be objected nor
challenged on grounds of the correctness of the same or on any other ground before the RO.
E. If any objection is made on ground of attachment of such property in recovery proceeding which
is not liable to such attachment under the certificate, then the RO may investigate on such claim.
F. Any person aggrieved by the order of RO, may prefer an appeal within 30 days from such order to
the PO, DRT.
 APPEAL

Appeal against the

Appeal against DRAT Appeal against the order
order of RO before
in High Court. of DRT in DRAT.
PO,DRT.
 1.Appeal against the order of DRT
in DRAT(SECTION 20).

 Any person (bank or financial institution or borrower) who is aggrieved by an order of the DRT
under this act, may prefer an appeal to DRAT having jurisdiction in the matter.
 No right to appeal to the parties wherein order is passed by the DRT in pursuance of the consent
between the parties.
 Every appeal should be filed within 30 days from the date copy of order of the DRT is made
available to the appellant.
 If the DRAT is satisfied that there was sufficient cause for not filing an appeal within the
stipulated period, then DRAT may allow such appeal even after expiry of 30 days.
 Deposit of Debt due – The Borrowers shall deposit with the DRAT 50% of the debt due from him
to the Bank or Financial Institution. The DRAT may, for reasons to be recorded in writing, reduce the
amount to be deposited but which shall not be less than 25% of the debt due.
 The Supreme Court in Axis bank v. SBS Organic Private Ltd. And Ors held that an appeal before the
DRAT can be entertained only if the Borrowers deposits fifty per cent of the amount in terms of the
order passed by the Debt Recovery Tribunal or fifty per cent of the amount due from the Borrowers
as claimed by the secured creditor, whichever is less. The DRAT may reduce the amount to twenty
five percent.
 The Supreme Court in Deluxe Cotton Corporation and Ors. V. Bank of Baroda held that appeal
filed along with the application of condonation of delay in filing the appeal, was nevertheless appeal
in the eyes of law. Therefore, bar under Section 21 of the Act would, apply even at stage of
consideration of Application for condonation of delay accompanying appeal under Section 20 of the
Act.
 The appeal shall be dealt as expeditiously as possible and endeavour shall be made to dispose of
the appeal finally within 6 months from the date of receipt of appeal.
 After hearing both the parties the DRAT may as it deems fit either confirm, modify or set aside the
order made by the DRT.
 2. Appeal against the order of RO
before PO, DRT(Section 30)

 Any person (bank or financial institution or borrowers) who is aggrieved by an order of the
RO under this act, may prefer an appeal to the PO, DRT within thirty days (30 days) from the
date on which a copy of order is issued to him. (Refer Annexure-II).
 After hearing both the parties the PO, DRT may as it deems fit either confirm, modify or set
aside the order made by the RO.
 3. Appeal against DRAT Order

 Any person being aggrieved by the DRAT Order may challenge the same before High Court
under Article 226 of the Indian Constitution in a Writ Petition.
 FEW DRT CASES ABOVE RS. 100
CRORES.
i. ICICI VS HANJER BIOTECH ENERGIES PVT. LTD.
ii. ICICI VS NAFTOGAZ INDIA PVT LTD.
iii. ICICI VS SPANCO LTD.
iv. EARCL & ORS. VS BIRLA SURYA
v. EARCL VS BABA GANGARAM INVESTMENT SERVICES PVT. LTD.
vi. UCO BANK VS REI AGRO LTD.
vii. SBI VS. CONTINENTAL CONSTRUCTION LTD.
viii. SBI VS. PAN INDIA MOTORS PVT. LTD.
ix. ICICI VS. ORIENTAL TRIMEX LTD.
x. AXIS BANK LTD. V. GOLF TECHNOLOGIES PVT. LTD.
 VOCABULARY

1. Debt
 It means any liability including interest claimed as due from any person by a Bank or Financial
Institution or their consortium during the course of any business activity undertaken by the Bank
or Financial Institution under any law for the time being in force in cash or otherwise, whether
secured or unsecured, or whether payable under a decree or order of any Civil Court or otherwise
subsisting on the date of the application.
 The liability must be legally recoverable liability and will cover all those cases where liability is
secured by mortgage, charge, hypothecation or in any other manner known to law.
2. Borrower – means any person who has been granted financial assistance by any Bank
or Financial Institution or who has given any guarantee or created any mortgage or
pledge as security for the financial assistance granted by any Bank or Financial
institution.
3. Defaulter – It means non-payment of any principal debt or interest thereon or any
other amount payable by a borrower to the Bank or Financial Institution.
4. Application – It means an Original Application filed under Section 19 of the Act and
includes an "Appeal" filed under section 30(1) of the Act.
5. Applicant - Where a Bank or Financial Institution must recover any debt from any
person, it makes an application called Original Application to the DRT against such
person. According, to the Rules Applicant includes:
 Applicant means a person making an application under Section 19 of the Act;
 Also, includes an Applicant who files an appeal under section 30(1) of the Act;
 Applicant shall also include Asset Reconstruction Company;
 Financial Institution does not include Non-Banking Financial Institution.
7. Bank – For the purpose of DRT, Bank includes –
 Banking company;
 A corresponding new Bank;
 State Bank of India;
 A subsidiary Bank;
 A Regional Rural Bank;
 Asset Reconstruction Company.

8. Financial Institution – It includes:

 A public financial institution within the meaning of Section 4A of the Companies Act, 1956 (1 of
1956);
 Such other institution as the Central Government may, having regard to its business activity and
the area of its operation in India may specify.
 ANNEXURE-I
FORM-I
(See Rule 4])

APPLICATION UNDER SECTION 19 OF THE RECOVERY OF DEBTS DUE TO

BANKS AND FINANCIAL INSTITUTIONS 2[ACT], 1993

For use in Tribunal's office.........................................

Date of filing.................................................................
Date of receipt by post ...............................................
or
Registration No ............................................................

Signature

Registrar
In the DEBTS RECOVERY TRIBUNAL
(Name of the place)

Between

A B Applicant

And

C D Defendant

*Delete whichever is not applicable.

DETAILS OF APPLICATION:

1. Particulars of the applicant:

(i) Name of the applicant:

(ii) Address of registered office:
(iii) Address for service of all notices

2. Particulars of the defendant

(i) Name of the defendant:
(ii) Office address of the defendant
(iii) Address for service of all notices
3. Jurisdiction of the Tribunal:
The applicant declares that the subject matter of the recovery of debt due falls
within the jurisdiction of the Tribunal.

4. Limitation:
The applicant further declares that the application is within the limitation
prescribed in Section 24 of the Recovery of Debts to Banks and Financial
Institutions Act, 1993

5. Facts of the case:

The facts of the case are given below:

(Give here a concise statement of facts in a chronological order, each paragraph

containing as nearly as possible a separate issue, fact or otherwise)

6. Relief(s) sought:

In view of the facts mentioned in para 5 above, the applicant prays for the
following relief(s)—

(Specify below the relief(s) sought explaining the ground for relief (s) and the legal
provisions (if any) relied upon).

7. Interim order, if prayed for:

Pending final decision on the application, the applicant seeks issue of the following
interim order:

(Give here the nature of the interim order prayed for with reasons).

8. Matter not pending with any other court, etc.:

The applicant further declares that the matter regarding which the application has
been made is not pending before any court of law or any other authority or any
other Bench of the Tribunal.

9. Particulars of bank draft/postal order in respect of the application fee:

(1) Name of the bank on which drawn:

(2) Demand draft no:
or
(1) Number of Indian Postal Order(s):
(2) Name of the issuing post office:
(3) Date of issue of postal order (s);
(4) Post office at which payable:
10. Details of index:

An index in duplicate containing the details of the documents to be relied upon is

enclosed.

11. List of enclosures:

VERIFICATION

I........................son/daughter/wife of Shri......................being the .................(Name in full

and block letters) (designation) of............ (name of the company) holding a valid
power of attorney from..............(name of the company) do hereby verify that the
contents of paras 1 to 11 are true to my personal knowledge and belief and that I
have not suppressed any material facts.

Signature of the Applicant.

Place:
Date:

To
The Registrar,
..........................................
..........................................
 ANNEXURE-II
FORM III
(Refer rule 4)

APPEAL UNDER SECTION 30(1) OF THE RECOVERY OF DEBTS DUE TO BANKS

AND FINANCIAL INSTITUTIONS ACT, 1993 (51 OF 1993)

For use of Tribunal's office ......................

Date of filing ......................
Date of Receipt by post ......................
Or
Registration No. ......................
Signature
Registrar

IN THE DEBTS RECOVERY TRIBUNAL

..................................
(Name of place)

Between

................................ Appellant(s)/Judgment-Creditor(s)
and
.............................. Respondent(s)/Judgment-Debtor(s)

Details of appeal:

(I) Particulars of the Appellant(s)

(i) Name of the appellant:
(ii) Address of the Registered office of the appellant:
(iii) Address for service of all notices:

(II) Particulars of the respondent(s):

(i) Name(s) of respondent:
(ii) Office address of the respondent:
(iii) Address for service of all notices:

(III) Jurisdiction of the Tribunal:

The appellant declares that the subject matter of the appeal falls within the
jurisdiction of the Tribunal.
(IV) Limitation:
The appellant declares that the appeal is within the limitation as prescribed in
section 30(1) of the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (51 of 1993).

(V) Facts of the case:

(Give here a concise statement of facts and grounds of appeal against the specific
order of Recovery Officer, in a chronological order)

(VI) Relief(s) sought:

In view of the facts mentioned in paragraph V above, the appellant prays for the
following relief(s).
(Specify below the relief(s) sought explaining the grounds of relief(s) and the legal
provisions (if any) relied upon).

(VII) Interim order, if prayed for--

Pending final decision on the appeal the appellant seeks issue of the following
interim order:
(Give here the nature of the interim order prayed for with reasons)

(VIII) Matter not pending with any other Court, etc.:

The appellant further declares that the matter regarding which this appeal has
been made is not pending before any Court of law or any other authority or any
other Tribunal(s).

(IX) Details of index - An index in duplicate containing the details of the documents
to be relied upon is enclosed.

(X) List of enclosures:

VERIFICATION

I ................... (name in full block letters) son/daughter/wife of .................. holding a

valid power of attorney from ..................... (Name of the company) do hereby verify
that the contents of para I to IX are true to my personal knowledge and belief and
that I have not suppressed any material fact(s).

Signature of the Applicant

Place:
Date:
To
Registrar
Debts Recovery Tribunal
………………………………..