Debts Recovery Tribunals and Appellate Tribunals(DRT & DART)

Debts Recovery Tribunals and Appellate Tribunals(DRT & DART) in India updated up to Sep. 2018

1. THE DEBT RECOVERY TRIBUNAL
(DRT)
(NPA MANAGEMENT POLICY HOBC 110/221 DT. 06/02/2017)
.
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Presented By,
Abinash Kr. Mandilwar
Chief Manager & Faculty Member,
Staff Training College, Bhopal

2. DEBT RECOVERY TRIBUNAL
❖DRTisspecialquasi-judicialforumsestablishedunder
RecoveryofDebtsduetoBanksandFinancialInstitution
Act,1993forspeedyrecoveryofloans.
❖TheActcomeintoeffectfrom24June1993.
❖Presently39DRTinIndia.
❖TheActisapplicablethroughoutIndia,exceptJ&K.
❖DRTisestablishedonlyforBanks&FinancialInstitutions.
❖AsperSection31onestablishmentofaDRTnoCivilCourt
oranyotherauthorityistoheartheproceedingofeligible
cases.(notapplicableforHighCourt&Supremecourt).
❖AllexistingcasesarealsotobetransferredtoaDRT.
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3. DRT STRUCTURE
❖DRTisheadedbyPresidingOfficerisintherankof
DistrictJudge.PresidingOfficerisappointedbyCentral
Govt.for5years&maximumage62years.
❖OneRegistrartotakecareofadministrativematters.
CentralGovt.providethetribunaloneormorerecovery
officer.
❖DRThasTerritorialJurisdiction.
❖DRTjurisdictioncoversRecoveryofDebtsduetoofbanks
andFIswithamountofRs.20.00lakh(Changedfrom
notificationofMinistryofFinancedated6
th
September,
2018.EarlieritwasRs.10.00lakh)ormore(Central
GovernmentcanreducetheamounttoRs.1lakh).
❖Ifanotherbankhasaclaimagainstthesameperson,then
thatbankcanjointhecasebeforethefinalorderis
passedsubjecttoseparatefees[Section19(2)].3

4. DEBT RECOVERY APPELLATE TRIBUNALS
(DRAT)
➢AnypersonaggrievedbyorderpassedbyDRTmayappeal
toDRATwithin45daysoforderreceived.
➢DRATisheadedbyChairPersonisintherankofHigh
CourtJudgeisappointedbyCentralGovt.for5years&
maximumage65years.
➢Forfillingappeal,asperSec.21ofDRT50%oftheamount
tobedepositedbytheappellant.ChairPersonmayreduce
upto25%ofthedepositamount.
➢Atpresent5DRATsatMumbai,Delhi,Kolkata,Chennai&
AllahabadareinIndia.
➢TheRecoveryOfficerisempoweredtorequirethedebtor
todeclareonaffidavittheparticularsofhisoritsassets.
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5. PLACE OF FILING APPLICATION
Theapplicationshallbefiled
bytheapplicantwiththe
Registrarwithinwhose
jurisdictiontheapplicantis
functioningasabankor
financialinstitution,asthe
casemaybe,fortimebeing.
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6. PROCEDURE FOR FILING APPLICATION IN DRT
➢Anapplicationshallbepresentedinthe
prescribedPerforma.
➢Applicationcanbefilledonline.
➢Presentedbytheapplicantinpersonorby
hisagentorbyaauthorisedlegal
practitioner.
➢PresentedtotheregistraroftheBench
withinjurisdictionhiscasefallsorshallbe
sentbyregisteredpostaddressedtothe
Registrar.
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7. PROCEDURE FOR FILING APPLICATION
➢Ifsentbypostshallbedeemedtohave
beenpresentedtotheRegistrartheday
onreceivingdate.
➢Theapplicationshallbepresentedin
foursets.
➢Anemptyfilesizeenvelopbearingfull
addressoftherespondent.
➢Envelopsbearingfulladdressofeachof
therespondentsshallbefurnishedby
theapplicant.
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8. DOCUMENTS REQUIRED
Everyapplicationshallbeaccompaniedbyapaperbook
containing–
a.AstatementshowingdetailsoftheDebtduefrom
aRespondentandthecircumstancesunderwhichsuch
adebthasbecomedue.
b.Alldocumentsrelieduponbytheapplicantand
thosementionedintheapplication.
c.DetailsofcrossedBankDraftorIndianPostalOrder
representingtheapplicationfee.
d.Indexofthedocuments.
Wherethepartiestothesuitorproceedingsarebeing
representedbyanagent,documentsauthorisinghimto
actassuchagent/VakalatnamaincaseofanAdvocate
shallalsobeappendedtotheapplication.
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9. APPLICATION FEE
➢Everyapplicationshallbeaccompanied
withfeeprovidedinsub-rule(2).
➢Feemayberemittedeitherintheform
ofcrosseddemanddraftdrawnin
favouroftheRegistrarandpayableat
theRegistrarsofficeissituated.
➢Feemayberemittedthroughacrossed
IndianPostalOrderdrawninfavourof
theRegistrarandpayableinCentral
PostOfficeofthestationwherea
Tribunalislocated.
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10. PRESENTATION & SCRUTINY OF APPLICATION
➢Theregistraror,asthecasemaybe,
theofficerauthorizedbyhim,shall
endorseoneveryapplicationthedate
onwhichitispresentedordeemedto
havebeenpresentedunderthatrule
andshallsignendorsement.
➢Ifonscrutinytheapplicationisfound
tobeinorder,itshallbeduly
registeredandgiveaserialnumber.
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11. PROCEDURE AT DRT
➢RegistrarofDRTisresponsiblefortheOverall
Administrationofthetribunal.
➢HegivesOriginalApplication(OA)numberand
issuessummon afterscrutinisingthe
application.
➢Heservesacopyoftheapplicationandpaper
bookoneachoftherespondents.
➢Therespondentmayfile4completesets
containingthereplytotheapplicationalong
withdocumentswithin1month(orextended
timeallowedbythetribunal)ofitsreceipt.
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12. PROCEDURE BEFORE FILING THE CASE
BEFORE DRT
(NPA MANAGEMENT POLICY HOBC 110/221 DT. 06/02/2017)
❖Sellpledgedgoodsaftersendingreasonable
noticetotheborrower.
❖Inthecaseofhypothecatedgoods,take
possessionoftheassets,andsellthemaftergiving
themduenotice.
❖InthecaseofLICpolicies,surrendersuchpolicies
andappropriatethesurrendervaluetowardsthe
loanaccount.
❖Set-offthecreditbalanceinanycurrent/savings
account and/orTDRsinthename/softhe
Borrower/sorGuarantor/s,priortofilingasuit.12

13. PROCEDURE BEFORE FILING THE
CASE BEFORE DRT
❖Proceedsofsecuritiessuchasshares,debentures,NSC,
MutualFundSecuritiesshouldberealisedandbeadjusted
againsttheoutstandings.
❖Ensurethatdocuments/securitiesareenforceableagainst
borrowers/guarantors.
❖Don'tsimplyhandoverfilestoAdvocatesforfilingRecovery
ApplicationbeforetheDRT.
❖Brieftheadvocateproperlybyprovidingadetailed
narrative/write-upandbydiscussingindetailtheconductofthe
account,documentsobtainedfromtimetotime,securities
createdandotherrelevantinformationrelatingtotheaccount.
❖Perusethedraftapplicationtocheckthecorrectnessofevery
facts,figuresandrelevantdetailsstatedinthedraftapplication.
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14. PROCEDURE BEFORE FILING THE
CASE BEFORE DRT
❖Afterchecking thecorrectnessofthedraft
application,theBranchshouldsendthedraft
applicationtotheCompetent Authorityfor
approvalalongwiththecopyofthememorandum
accordingapprovalforlegalactionintheaccount
andcopyofthenarrative/write-upprovidedearlier
totheadvocatealongwiththelistofdocuments.
❖Aftergettingapproval fromtheCompetent
Authority,theBranchshoulddiscusswiththe
advocateaboutthechanges/observationsmadeby
theappropriateauthoritywhileaccordingapproval
andfinalisetheApplicationforrecoveryofupdated
duesoftheBank.
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15. PROCEDURE WHILE FILING THE CASE IN DRT
❖TheRecoveryApplication,intheprescribed
format,completeinallrespectsshouldbefiled
withtheDRTwithinareasonabletimefromthe
dateoftheAppropriateAuthorityaccordingapproval
forlegalaction.
❖RecoveryApplicationshouldcontaindescriptionof
allrelevantdocumentsandsecuritieschargedtothe
Bank.
❖WhilefilingRecoveryApplication,Xeroxcopiesof
documentsonlyneedbegiventotheAdvocates.
❖OriginalDocumentsshouldberetainedwiththe
BranchtillDRTrequiresthesame.
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16. PROCEDURE WHILE FILING THE CASE IN DRT
❖Interimreliefssuch asinjunctionagainst
properties, attachment beforejudgement,
appointmentofReceiver,RecoveryCertificatefor
admittedduesshouldbeprayedasarule.
❖AccountExtractsshouldbeproducedandcertified
aspertheprovisionsofBankersBooksEvidence
Act andbeannexed totheRecovery
Application.
❖PenalInterestshouldnotbecompounded.
❖Costsforpreservingthesecuritiespriorto
filingsuitandduringthependencyofthesuit
shouldbeclaimed.
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17. AFTER FILING THE CASE BEFORE DRT
❖IftheRecoveryApplicationfilediscompleteinall
respects,ORTgivesaserialnumber;issues
summons to borrowers/guarantors called
defendants.
❖Servingofsummonsisveryimportantforquick
disposalofthecaseandtheBranch/Advocate
shouldtakemaximumcaretoseethatsummonsare
servedwithinaperiodofonemonth.
❖Ifsummons areservedonthedefendants,
proceedingscommencewithevidencebywayof
affidavitsfiledbythebankfollowedbycross-
examinationofBank'switnessesandviceversa
followedbyargumentsendingupinRecovery
CertificatesinfavouroftheBank.
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18. AFTER FILING THE CASE BEFORE DRT
❖Evidence byway ofaffidavitsasaforesaid,
clarifications/documentsrequiredbyDRTshouldbefiled
intimeandnoadjournmentshouldbesoughtonthis
score.Replytocounter-claimsraisedbytheborrower/s
shouldbefiledwithoutdelay.
❖Defendants'attempttotakeadjournmentonvarious
groundsincludingthattheircompromise proposalis
pending considerationbeforetheBankshouldbe
opposedbytheBank'sAdvocate.
❖TheDRThasthepowerstoorderarrestanddetention
incivilprisonofthosedefendantswhodoesnotobeythe
ordersoftheDRT.WherevertheordersoftheDRTare
disobeyedbythedefendant,theBranchshouldinstruct
theBank'sAdvocatetopleadforarrestanddetention
ofsuchdefendant.
❖
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19. EXECUTION OF RECOVERY CERTIFICATES
❖RecoveryOfficerofDRTexecutesRecoveryCertificates(RCs)
issuedbyPresidingOfficerofDRT.
❖SuccessfulexecutionofRCdependsuponproperdetailsof
assetsbeingsuppliedbytheBranchtotheRecoveryOfficer.
❖Branch/Zoneshouldascertaintheassetdetailsbymaking
localenquiriesandbyperusingtheIncomeTax/Wealth
Returns,CBD23etc.oftheborrowers/guarantors.
❖Branch/ZoneshouldsupplytheAssetsdetailswithinone
monthoftheissuanceoftheRC.
❖UnderSection28(4A)oftheDRTAct,theRecoveryOfficercan
orderanyjudgementdebtortodeclareonaffidavithis
assets.Branchmustmoveapplicationforsuchanordertoget
fulldetailsofassets.
❖WhereverAdvocatesareengaged, theNodalOfficer/
RepresentativeoftheBranch/Bankshouldcloselymonitorwith
theAdvocateforthepurposeofexecutingtheRC.
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20. EXECUTION OF RECOVERY CERTIFICATES
❖Adjournments soughtbyjudgment debtors
(defendants)shouldbeopposed unlessthere
isaletterinwritingtothateffectfromthe
CompetentAuthority.
❖WheretheJudgmentDebtorisentitledtoany
sharesorDebenturesinanyCompanyorhas
depositsinanyotherBankorCompany,theBank
shouldinitiate"Garnishee"proceedings.
❖IneachZone,anofficerhasbeenidentified
asDRTLiaisonOfficerpursuanttoMinistry
Guidelines.ThesaidLiaisonOfficershouldvisit
DRTeverydayandreportabouttheprogressof
thecasesbeforeDRTonthatdaytotheZonal
Office.
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21. EXECUTION OF RECOVERY CERTIFICATES
❖TheAssetRecoveryDepartment/LegalDepartmentat
differentlevelsshouldkeepacompletetrackrecordofthe
casesbeforeDRTandIfanylegalcomplicationarisesin
guidingtheZones,theAssetRecoveryDepartment,can
takeupthematterwiththeLegalDepartmentconcerned
forappropriateguidance.
❖TheRecoveryOfficerhasgotthepowerunderSection25
oftheDRTActtorecovertheamountundertheRCby
arrestanddetentionoftheJudgmentDebtors.
❖Wherever theBranch isconvinced thatthe
judgementdebtor,thoughhavingmeans,isintentionally
avoidingtomake payment,thebranchmay,after
obtainingpermissionfromtheAuthoritywho had
authorizedfilingofRecovery Application,file
ApplicationbeforetheRecoveryOfficerforarrestand
detentionofthedefaultingjudgmentdebtor.
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22. PROCEDUREAT DRT
➢Therespondentshallalsoendorseonecopyof
thereplyalongwithdocumentstothe
applicant.
➢Ifthedefendantadmitsapartoftheliability,
thebankcanrequestDRTforpassingInterim
Orderfortheadmittedamount&pursuethe
balancedues.
➢ThePresidingOfficerisresponsiblefor
orderingInjunctionorStayforappointmentof
Commissioner/Receiver/forissuanceofa
garnisheeorderorforpassingordersfor
attachmentbeforejudgment. 22

23. PROCEDURE AT DRT
➢ThePresidingOfficerfinallyissuesRecoveryCertificate
andsendsittoRecoveryOfficer(R.O.)forexecution.
➢TheRecoveryOfficershall,onreceiptoftheRecovery
certificate,issuenoticetoCertificateDebtors,giving15
daystimeforpaymentoftheamountspecifiedinthe
RecoveryCertificate.
➢Ifthedefendantfailstopaytheamount,Recovery
Officerwillproceedtorecovertheamountbyanyoneor
moreofthemodes,whicharedetailedbelow:-
A.AttachmentandsaleofMovable/ImmovablePropertyof
thedefendant.
B.ArrestandDetentionofthedefaulter:
C.AppointmentofReceiver:
D.ClosingofDRTApplication:Afterfullrecoveryofbank
dues,applicationisclosedbyR.O.
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24. APPEAL AGAINST RO AND DRT
➢AppealagainstorderofRecoveryOfficerto
DRTcanbemadewithin30daysofdateof
order.
➢TheTribunalshavetodecidetheclaimwithin
sixmonths.
➢TheappealagainstthedecisionofDRTcan
bemadewithin45daysonlytoDRAT.
➢Forfillingappeal,asperSec.21ofDRT50%
oftheamounttobedepositedbythe
appellant.ChairPersonmayreduceupto
25%ofthedepositamount.
➢TheDRAT’sdecisionconclusive.
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