Keeping in line with the international trends on helping financial institutions to recover their bad Debt quickly and efficiently, the Government of India has constituted thirty three [33] Debt Recovery Tribunals and five [5] Debt Recovery Appellate Tribunals across the country. The Debt Recovery Tribunals are located across the country. Some cities have more than one Debt Recovery Tribunal located therein. Like New Delhi and Mumbai have three Debt Recovery Tribunals. Whereas, Chennai and Kolkata have two Debt Recovery Tribunals each. And only a single Debt Recovery Tribunal is constituted at Ahmedabad, Allahabad, Aurangabad, Bangalore, Chandigarh, Coimbatore, Cuttack, Ernakulum, Guwahati, Hyderabad, Jabalpur, Jaipur, Lucknow, Nagpur, Patna, Pune, Ranchi and Vishakhapatnam. This depends upon the number of cases in a city and accordingly the number of Debt Recovery Tribunals are constituted.
We practice law before DRT - The Debts Recovery Tribunals and DRAT Debts Recovery Appellate Tribunals as well, since last 15 years. Most of the time, we appear for borrowers against whom recovery procedure is instituted by the banks and measures of SARFAISI is taken. The tribunal (DRT & DRAT) is governed and was established under the Recovery of Debts and Bankruptcy Act (RDB Act), 1993 with the specific objective of providing expeditious adjudication and recovery of debts due to Banks and Financial Institutions.
Recovery of Debts and Bankruptcy Act (RDB Act), 1993
The RDB Act, 1993 provides for establishment of Debts Recovery Tribunals (DRTs) with original jurisdiction and Debts Recovery Appellate Tribunals (DRATs) with appellate jurisdiction, for expeditious adjudication and recovery of debts due to banks and financial institutions, insolvency resolution and bankruptcy of individuals and partnership firms and connected matters there with. The Act aims to safeguard the interest of banks and financial institutions as lenders, while not discouraging borrowers. The Tribunals have not yet commenced taking up insolvency resolution and bankruptcy matters as the related provisions are not yet in force.
Jurisdictions:
The Act is applicable to cases where the amount of debt due to any bank or financial institution defined under the Act or a consortium of banks or financial institutions is Rs.20 lakh or more.
Where a bank or a financial institution has to recover any debt from any person, it may make an application under section 19 of the Recovery of Debts and Bankruptcy Act to the Tribunal within the local limits of whose jurisdiction—the branch or any other office of the bank or financial institution is maintaining an account in which debt claimed is outstanding, for the time being; or the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or the cause of action, wholly or in part, arises.
If any person is aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter under section 20 of the Recovery of Debts and Bankruptcy Act..
IN the case, if an appeal is preferred by any person from whom the amount of debt is due to a bank or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal 50% of the amount of debt so due from him as determined by the Tribunal under section 19: Provided that the Appellate Tribunal may, for reasons to be recorded in writing, reduce the amount to be deposited by such amount which shall not be less than twenty-five per cent. of the amount of such debt so due] to be deposited under this section.
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI Act), 2002
The SARFAESI Act, 2002 aims to regulate securitization and reconstruction of financial assets and enforcement of security interest and to provide for a Central database of security interests created on property rights and for connected matters therewith. The Act has simplified the recovery procedure for banks and specified financial institutions for recovery of secured debts from borrowers without intervention of Courts at the first stage. Borrowers can file applications in the Debts Recovery Tribunals (DRTs) against action taken for enforcement of security interest under this Act, with the appellate jurisdiction for such applications lying with the Debts Recovery Appellate Tribunals (DRATs).The Act is applicable to cases where security interest for securing repayment of any financial asset is more than Rs.1 lakh and the amount due is 20% or more of the principal amount and interest thereon.
The Act is not applicable to any security interest created in agricultural land and certain properties not liable to attachment under some specified Acts.
WE also advise to our clients on partnership, agency and distributorship arrangements, recovery and insolvency amongst others. We have very rich experience in dealing the matter relating to:
- Complaints under section 138 of N.I. Act,
- Summary suit under Order XXXVII of CPC to be filled before Civil Court which includes Civil Judge, District Judge and High Court as the case may be depending upon pecuniary jurisdiction,
- Ordinary civil suit for recovery of money and damages,
- Representation before Arbitration Tribunal,
- Petitions u/s 9 of the Arbitration and Conciliation Act,
- Petition u/s 34 of the Arbitration and Conciliation Act,
- Insolvency procedure before NCLT under Insolvency and Bankruptcy Act and Companies Act,
- Winding up petition before NCLT,
- Consumer Cases before District Consumer Court, State Consumer Commission and National Consumer Commission
- Recovery proceeding under section 19 of RDDBFI Act, before Debt Recovery Tribunal
- Debt recovery matters before DRT / DRAT under SARFAISI Act and RDDBFI Act.
