Debt Recovery Tribunal (DRT): Jurisdiction, Procedure and Appeals Explained

What Is the Debt Recovery Tribunal?

Debt Recovery Tribunals (DRTs) are specialized quasi-judicial bodies established under the Recovery of Debts and Bankruptcy Act, 1993 (formerly known as the Recovery of Debts Due to Banks and Financial Institutions Act). DRTs were created to provide banks and financial institutions with a fast-track forum for the recovery of debts exceeding ₹20 lakh, bypassing the delays associated with regular civil courts.

Jurisdiction of DRT

DRTs have jurisdiction over applications by banks and financial institutions for recovery of debts of ₹20 lakh and above, applications by borrowers under Section 17 of the SARFAESI Act challenging actions of secured creditors, applications under Section 19 of the RDDB Act for recovery of debts, and counter-claims by defendants arising out of the same transaction.

The DRT at the location where the cause of action arises, or where the defendant resides or carries on business, or where the branch of the bank or financial institution is situated, has jurisdiction to entertain the application.

Procedure Before DRT

The procedure before DRTs is designed to be simpler and faster than regular civil court proceedings. Applications are filed in the prescribed form with relevant documents and fees. The Tribunal issues summons to the defendant who must file a written statement within 30 days. The DRT may pass interim orders including attachment of property and injunctions. Evidence is recorded, and arguments are heard before the Tribunal passes its final order.

Recovery Certificate and Execution

Upon passing a recovery order, the DRT issues a Recovery Certificate specifying the amount due. The Recovery Officer attached to the DRT executes the certificate through attachment and sale of property, arrest and detention of the debtor, and appointment of receiver. The Recovery Certificate has the same force as a decree of a civil court.

Appeals to DRAT

Appeals against DRT orders lie to the Debt Recovery Appellate Tribunal (DRAT) within 30 days. The appellant must deposit 50% of the amount determined by the DRT as a precondition for the appeal being heard (this can be reduced to 25% by the DRAT in special circumstances). Further appeals lie to the High Court under Article 226/227 of the Constitution on grounds of jurisdiction and procedural irregularity.