How Banks and NBFCs Select Panel Counsel for SARFAESI, DRT and IBC Work

Indian banks, non-banking financial companies, and asset reconstruction companies depend heavily on outside counsel for recovery, SARFAESI enforcement, Debt Recovery Tribunal proceedings, IBC representation at the NCLT, and Section 138 cheque-dishonour portfolios. Empanelment with strong outside counsel is one of the more consequential procurement decisions a financial institution's general counsel makes — the difference between competent and indifferent panel counsel often shows up in recovery rates, litigation timelines, and the institution's overall NPA management efficiency.

This article explains how Indian financial institutions actually evaluate and onboard panel counsel, what the standard empanelment process looks like, and what bank or NBFC general counsel typically look for when selecting outside counsel for recovery and insolvency work. The framing throughout is from the institutional buyer's perspective.

Why Panel Counsel Selection Matters Substantively

The empanelment decision is not a procurement formality. The substantive consequences of getting it wrong are material:

• **Recovery rates suffer.** Procedural lapses in SARFAESI Section 13 notices or DRT pleadings create defensive openings that competent borrowers' counsel exploit. Recovery that should have completed in eighteen months stretches to three years.
• **Litigation timelines extend.** Counsel who do not maintain pre-hearing discipline create avoidable adjournments. At forums like the DRT and NCLT, where cause-list management is itself contested, panel counsel weaknesses translate directly into matter-life elongation.
• **Settlement leverage diminishes.** Strong panel counsel create real settlement pressure on counterparties; weak panel counsel are seen as a sign that the institution lacks litigation appetite, and counterparties calibrate their negotiating positions accordingly.
• **Regulatory and audit exposure.** Where recovery work is poorly documented or procedurally weak, internal audit, statutory audit, and regulatory inspections flag deficiencies. The institution's compliance position weakens.

For these reasons, sophisticated financial institutions treat panel counsel selection as a substantive procurement decision, not a clerical empanelment exercise.

The Standard Empanelment Framework

Most Indian banks, NBFCs, and ARCs follow some version of the following empanelment framework. Specifics vary by institution, but the architecture is broadly consistent:

Stage 1 — Initial Identification

Counsel are identified through internal referral networks (general counsel of peer institutions, prior engagement experience, in-house team familiarity), public information about forum specialisation (DRT and DRAT order archives, NCLT cause lists, published practice profiles), and external research where required. Many institutions also accept direct enquiries from chambers seeking empanelment, subject to subsequent due-diligence verification.

Stage 2 — Conflict Screen

Before substantive discussion, the institution requires a conflict-screening response from the chambers. Conflicts arise where the chambers represent borrowers, operational creditors, or co-lenders with overlapping exposure. A chambers' conflict-management discipline — its ability to identify and disclose conflicts proactively — is itself a screening criterion. Chambers that respond with vague or evasive conflict positions are typically not advanced.

Stage 3 — Capability Assessment

Once conflict-clear, the institution assesses substantive capability across the relevant mandate areas:

• Forum tenure (years of regular appearance at the relevant tribunal)
• Statute familiarity (depth of work under SARFAESI Act 2002, RDDB Act 1993, IBC 2016, NI Act 1881)
• Procedural discipline (track record on pleadings quality, evidence management, hearing-readiness)
• Bandwidth (chambers' team size relative to expected matter volume)
• Escalation availability (Senior Partner accessibility for complex or high-value matters)

The capability assessment can be informal (a structured conversation) or formal (RFP-style document with scored responses), depending on institution and matter scale.

Stage 4 — Engagement Terms

Engagement letters are negotiated covering scope, fee structure, reporting cadence, escalation protocols, conflict-management framework, and termination provisions. Sophisticated institutional engagement letters are not boilerplate — they typically reflect specific lessons from the institution's prior counsel relationships.

Fee structures vary by mandate type:

• **Matter-fee structures** for individual SARFAESI Section 13 enforcement, DRT OAs, IBC Section 7 admissions, and Section 138 prosecutions
• **Retainer structures** for institutional clients with predictable monthly volumes
• **Hybrid structures** combining a base retainer with matter-specific success components, structured to comply with the BCI's prohibition on success-only fees
• **Per-appearance fees** for forum-based work where matter pacing is unpredictable

Bar Council of India norms govern fee structures for advocates; engagement letters reflect those norms.

Stage 5 — Panel Onboarding

Most institutions have a standard panel-onboarding process. This typically involves KYC documentation, policy attestations (anti-bribery, code of conduct, data protection), background-check disclosures, GST registration confirmation, and integration with the institution's legal management software for matter tracking. Panel placement typically completes within four to six weeks of initial enquiry.

Stage 6 — Matter Allocation

Active panel counsel receive matter allocations based on geography, mandate area, complexity, and counsel availability. Sophisticated institutions track counsel performance over time — recovery rates, timeline efficiency, settlement outcomes — and reallocate work based on demonstrated performance.

What Bank and NBFC General Counsel Actually Look For

Beyond the formal framework, what do GCs at financial institutions substantively evaluate when selecting panel counsel? Discussions with general counsel across Indian financial institutions surface several recurring themes.

Forum Specialisation, Not Generalist Practice

The clearest signal that distinguishes strong panel counsel from generalist firms is forum specialisation. Counsel who appear at the DRT Delhi every working day understand the bench's preferences, the registrar's procedural patterns, the average pace of hearings, and the practical realities of evidence management in a tribunal setting. Generalist firms — even prominent ones — without sustained DRT presence cannot replicate this.

The same is true at the NCLT. The Principal Bench at Delhi has its own approach to Section 7 admissions, threshold disputes, limitation arguments, and resolution-plan adjudication. Counsel who have appeared regularly understand which arguments land with which benches, which procedural shortcuts are tolerated, and how to position evidentiary materials for maximum effect.

Statute Depth, Not Statute Familiarity

Most commercial-litigation firms claim familiarity with SARFAESI, the RDDB Act, and the IBC. The substantive question is whether counsel can engage with the framework at depth — Section 13(2) notice content requirements, the implications of various Supreme Court pronouncements on the Mobilox Innovations test, the post-2023 IBBI amendments to the personal-guarantor regime, the limitation framework under Section 18 of the Limitation Act applied to acknowledgement-of-debt scenarios.

Depth shows up in pleadings quality, in oral arguments at admission hearings, and in the substantive sophistication of opinion-counsel work. Generalist familiarity shows up as adequate but unremarkable representation. Banks with sophisticated GCs distinguish between the two.

Procedural Discipline

Procedural lapses cost institutions recovery. Strong panel counsel maintain pre-hearing discipline — pleadings filed on time, evidence indexed properly, bench-readiness consistent. Weak panel counsel cause adjournments, lose interim applications on procedural grounds, and require institutional in-house teams to monitor work intensively. The procedural-discipline signal is one of the most predictive of overall counsel quality, and is something institutions can verify through prior-engagement reviews.

Bandwidth and Senior-Partner Access

Mandate volumes for institutional clients are substantial. A panel relationship requires the chambers to have actual capacity — junior counsel for routine work, senior counsel for complex matters, and Senior Partner availability for the most consequential matters. Chambers that present a strong Senior Partner but provide associate-level execution on most matters disappoint institutional clients quickly. Banks watch for the gap between sales-pitch and execution-reality.

Reporting Discipline

Institutional clients require structured reporting — weekly status updates on active matters, monthly portfolio reviews, escalation alerts where adverse outcomes are likely, and clean documentation for internal audit. Chambers that cannot deliver structured reporting create work for the institution's in-house team and lose panel preference over time. Reporting discipline is a process, not a deliverable, and chambers that have built it into their operations distinguish themselves.

Conflict-Management Discipline

The willingness and ability to identify and disclose conflicts proactively is one of the strongest signals of long-term institutional reliability. Chambers that try to retain instructions despite emerging conflicts may produce one strong representation, but lose the institutional relationship over time. Sophisticated institutional clients value chambers that decline work where conflicts arise — that discipline correlates strongly with reliability across the broader engagement.

Mandate Areas Where Outside Counsel Matters Most

Within institutional recovery and insolvency portfolios, certain mandate areas particularly reward strong outside counsel:

SARFAESI Section 13 Enforcement

Section 13(2) demand notices, Section 13(4) possession actions, and Section 14 District Magistrate applications form the backbone of institutional secured-creditor recovery. The framework is procedurally intensive. Notices that lack required content (specific demand details, consequences statement, time-to-respond formulation) create defensive grounds for borrowers. Possession actions that fail Section 14 procedural requirements similarly create challenges. Panel counsel with deep Section 13 procedural discipline materially outperform generalist counsel.

DRT Original Applications

Original applications under the RDDB Act 1993 require substantive pleadings — facts, cause of action, limitation position, security particulars, and prayer formulation. Strong DRT pleadings anticipate borrower defences and pre-empt them. Weak pleadings invite procedural adjournments and substantive amendment applications that delay recovery. Panel counsel who routinely draft DRT OAs build a quality of pleadings that distinguishes their work from less-experienced counsel.

DRAT Appeals and Pre-Deposit Strategy

Appeals under Section 18 of the RDDB Act before the DRAT have a substantive teeth — the seventy-five per cent pre-deposit requirement (or such lower amount as the DRAT may direct on application). The pre-deposit framework shifts settlement leverage materially post-award; counsel who understand how to structure pre-deposit arguments and waiver applications create disproportionate value for institutional clients.

IBC Section 7 Admissions

Section 7 applications by financial creditors at the NCLT are among the highest-leverage tools in institutional recovery. A successful admission triggers Section 14 moratorium, halts borrower operations, and creates substantive resolution pressure. The framework requires precision — debt particulars, default record, threshold-amount compliance, limitation position, and alignment with the IBBI Model Application Form. Panel counsel with specific Section 7 admission experience deliver substantially better outcomes than generalist counsel.

Personal Guarantor Insolvency under Section 95 IBC

The personal-guarantor framework against promoters of corporate debtors has matured substantively after the 2023 IBBI amendments. Section 95 applications, interim moratorium under Section 96, repayment plan adjudication, and post-discharge enforcement form an increasingly important institutional recovery pathway. Counsel familiar with the framework's procedural and substantive nuances are increasingly important to financial-creditor portfolios.

Wilful Defaulter Declarations

Wilful-defaulter declarations under the RBI Master Direction require structured representation in identification-committee proceedings, review-committee hearings, and post-declaration enforcement. Procedural fairness is central — the substantive integrity of the declaration process determines whether the declaration survives subsequent writ challenge before the High Court. Panel counsel handling wilful-defaulter advocacy with attention to procedural fairness substantially reduce post-declaration writ exposure.

Section 138 NI Act Portfolios

For institutional clients with significant cheque-dishonour volumes, panel counsel handling Section 138 prosecutions efficiently is operationally important. Statutory notice timing, complaint filing within the statutory window, evidence-led trial discipline, Section 143A interim compensation applications, and Section 147 compounding negotiations all materially affect overall portfolio recovery rates.

OTS, Restructuring and Settlement Documentation

One-time settlement letters, structured restructuring agreements, and settlement-deed drafting form an underappreciated but operationally important part of panel counsel work. Documentation that survives subsequent challenge — drafting that anticipates future enforcement scenarios — distinguishes panel counsel. Settlements that unravel subsequently create substantial institutional cost; settlements drafted with foresight create lasting value.

Common Empanelment Mistakes Institutions Make

Discussions with sophisticated institutional GCs surface several recurring empanelment mistakes:

Selecting on volume rather than depth. Large generalist firms with substantial overall litigation work are sometimes selected based on perceived bandwidth, even where their forum-specific recovery work is shallow. The result: institutional matters get associate-level execution rather than Senior Partner attention.

Underweighting procedural discipline. Procedural quality is harder to assess in pre-engagement diligence than substantive quality. Institutions that focus on substantive credentials without verifying procedural discipline through reference checks frequently end up with counsel who underdeliver on day-to-day execution.

Inadequate engagement-letter discipline. Boilerplate engagement letters that do not reflect specific institutional requirements create downstream friction. Strong engagement letters specify reporting cadence in detail, define escalation triggers clearly, and set out conflict-management frameworks that bind both parties.

Insufficient performance tracking. Institutions that do not track counsel performance over time — recovery rates, timeline efficiency, settlement outcomes — cannot reallocate work to higher-performing counsel. The empanelment decision is a static moment; counsel-performance management is an ongoing process.

Conflict-management inattention. Institutions that allow counsel to retain work despite emerging conflicts create risk for themselves. Strong empanelment frameworks include explicit conflict-disclosure obligations and escalation processes for borderline cases.

How Unified Chambers Approaches Institutional Engagements

Unified Chambers And Associates handles institutional recovery, SARFAESI, DRT, DRAT, NCLT IBC, and Section 138 work for banks, NBFCs, asset reconstruction companies, and co-operative banks. The chambers' approach to institutional engagement reflects the framework above:

• **Conflict-screening discipline** at the engagement-letter stage with proactive disclosure where conflicts emerge during ongoing engagements
• **Written engagement letters** specifying scope, fee structure, reporting cadence, escalation protocols, and termination provisions
• **Senior Partner availability** for high-value or complex matters; junior team support for routine matters with structured supervision
• **Forum specialisation** — Senior Partner Advocate Subodh Bajpai's primary court of practice is the Delhi High Court, with regular appearances at DRT Delhi, DRAT, NCLT Delhi, NCLAT, and District Courts across the National Capital Region
• **Statute depth** across SARFAESI Act 2002, RDDB Act 1993, IBC 2016, NI Act 1881, MSMED Act 2006, and the Companies Act 2013
• **Structured reporting** tailored to the institution's internal MIS — weekly active-matter status reports, monthly portfolio reviews, escalation alerts where required
• **BCI-compliant fee structures** — matter-fee, retainer, or hybrid; no contingency or success-only fees

Empanelment enquiries from financial institutions are received through the chambers' direct intake. Initial conflict-screening responses are typically returned within two business days. The chambers' institutional-counsel page at subodhbajpai.in/for-banks-nbfcs sets out the empanelment process in detail.

Closing — The Empanelment Decision Reframed

The empanelment decision is fundamentally a decision about institutional risk management. Strong panel counsel reduce recovery friction, compress litigation timelines, create settlement leverage, and produce documentation that survives subsequent challenge. Weak panel counsel do the opposite — and the cost shows up in recovery rates and portfolio NPL aging metrics over time.

Institutional GCs who treat empanelment as a substantive procurement decision — assessing forum specialisation, statute depth, procedural discipline, bandwidth, and conflict-management capability — generally outperform their peers in recovery outcomes. Institutions that treat empanelment as a clerical exercise generally underperform.

The framework outlined in this article reflects how sophisticated Indian financial institutions actually run the empanelment process today. For chambers seeking institutional engagement, the framework also functions as a quality benchmark: chambers that meet the criteria above tend to retain institutional relationships over time. Chambers that do not, do not.

For specific empanelment enquiries or further discussion of the framework, contact the chambers through subodhbajpai.in/contact or visit the institutional-counsel page. Related reading includes SARFAESI Act Explained — A Practical Guide to NPA Resolution, Debt Recovery Tribunal Guide, Personal Guarantor Insolvency in India, and the legal glossary on key statute-grounded definitions.