Having a debt-recovery dispute but the courts are not paying much-needed heed, do not worry, India has it all covered. The Debt Recovery Tribunal (DRT) is a tribunal that specialises in such disputes. It was made possible by the Recovery of Debts due to the Banks and Financial Institutions Act (RDDBFI), 1993. Through DRT, banks, financial organisations, and private citizens can acquire past-due debts from debtors. The lender has the right to contact the DRT and start collections if a borrower defaults on a loan or other obligation. The debt can be sold, the borrower's assets can be attached, and the DRT has the power to force the collection of the debt. DRT proceedings are often shorter and emphasise cost recovery more than those in ordinary civil courts. This article will deal with the proceedings of the Debt recovery tribunal in detail.
Contents:
- Origins of DRT
-
Legalities about DRT
- Validity/Legitimacy
- Jurisdiction
- Pecuniary Jurisdiction
- Composition
- Procedure for applying with DRT
- Conclusion
The aggrieved parties (creditors) initially had only one remedy. That is the time-consuming and lengthy court proceedings. Setting up a quasi-judicial body was suggested in 1981 but it was only after liberalisation and the report of the Narasimham Committee (1991). The Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993 was enacted. The act subsequently led to the formation of the Debt Recovery Tribunal.
Legalities about DRT:
Validity/Legitimacy- The Delhi High Court declared the RDDBFI to be unconstitutional and a danger to judicial independence, leading it to be abolished in 1995. However, once the RDDBFI was modified in 2000 and 2002, the Supreme Court permitted DRTs to stay in operation. The Supreme Court affirmed these modifications as valid, and DRTs are currently able to function legally.
Jurisdiction- The DRT has jurisdiction under Section 17 of the RDDBFI Act. As per section 18 of the said act, only the Supreme Court and High Court can adjudicate these matters with their writ jurisdiction, no other court in India has any jurisdiction to entertain cases of debt recovery.
Pecuniary Jurisdiction- To recover debts valued at more than Rs. 10 lakhs, the DRTs may be approached for any remedy. If the sum is less than the figure specified above, banks and other financial entities must file a civil lawsuit under the Civil Procedure Code (CPC).
Composition- The RDDBFI Act's Section 4 states that the Tribunal would have just one member, known as the "Presiding Officer," who will be chosen by the Central Government and notified of their appointment. The PO must be eligible to serve as a District Judge and be appointed for five years or until they become sixty-two, whichever comes first.
Procedure for applying with DRT:
- STEP 1- The process begins with the applicant, also the aggrieved party, to apply. This can be done in two ways, either through direct application or the SARFAESI route. If the applicant chooses the first of the two ways, then he will have to make the application through DRT by paying the pre-determined fees. All the requirements for filing this application are stated in Section 19 of the RDDBFI Act. The second method lays down a process of solving the matter without any involvement of courts or councils.
- STEP 2- The applicant will serve the defendant with an affidavit that will be issued by the DRT Registrar or any other official designated by the Presiding official. Summon/Notice may also be delivered via fax or email with the registrar's approval.
- STEP 3- Within one month of the notice's due date, the defendant must file for the reply. Counterclaims may only be filed by the defendant during the initial hearing. After that, DRT's approval would be needed. In any proceedings, the counterclaim will have the same effect as a countersuit.
- STEP 4- If the defendant confesses his liability, the Presiding Officer will issue an order directing him to make the requisite payment within 30 days of the DRT order date. If the defendant tries to back out of his commitment at that point, the Presiding Office has the right to demand that the parties to him submit an affidavit verifying any facts that the DRT wants to be read aloud during the hearing.
- STEP 5: The next step involves the DRT to pass any interim order as may deem fit as per Section 19(12) of the Act of 1993. The DRT also has the authority to confine or detain the person if he chooses to not comply with the orders. The final verdict has to be passed within 30 days after the oral submissions are submitted by both the parties.
- Step 6: After weighing the reasons presented by both sides, DRT would provide a final decision within thirty days after the hearing. DRT shall provide a recovery certificate to the recovery officer within fifteen days of the judgment date. The ruling of the civil court and the RC will both be equally enforceable.
- STEP 7- Within 30 days of the Debt Recovery Tribunal's (DRT) ruling being made, the aggrieved party may submit an appeal to the Debt Recovery Appellate Tribunal (DRAT), which has the authority to hear the case. Nevertheless, if the DRT's decision was made with both parties' approval, then an appeal will not be considered.
Conclusion:
India has been facing the problem of the overburdening of courts for a long time now and the Debt recovery tribunal is a great precedent for various other matters. The tribunal ensures speedy justice and makes sure the financial stability is maintained. The procedure might seem to be overwhelming in the first instance but it is made stringent because the subject matter demands so. The Vijay Mallya Debt case and the Nirav Modi Scam case are famous instances highlighting the success of these tribunals across the country.
About the Author
Anju S Nair
Legal Researcher | LLB, MA English| Corporate Lawyer | Business Enthusiast | Founder & CEO at iLawbook.