DEBT RECOVERY TRIBUNAL | MANAGEMENT OF IMPAIRED ASSETS

DEBT RECOVERY TRIBUNAL | MANAGEMENT OF IMPAIRED ASSETS

DEBT RECOVERY TRIBUNAL (DRT) AND DRAT

Before the 80’s or 90’s, Indian banks had no access to any system which could recover dues from the borrowers. It was in 1981 that the Tiwari committee observed the legal and other difficulties which were faced by the banks and Financial Institutions (FIs) and then suggested that some special Tribunal should be set up to recover the banks and financial Institution’s dues.

As a result, in the year 1993, the RDDBFI Act (the Recovery of Debts due to Banks and Financial Institutions Act, 1993) was enacted to set up DRTs & DRATs all over India. 

At present, there are about 39 DRTs and 5 DRATs operating in India. 

OBJECTIVE OF DEBT RECOVERY TRIBUNAL (DRT)The Debt Recovery Tribunals (DRT) are providing expeditious adjudication & help in the recovery of debts due to banks and FIs. To file a case in DRT, the minimum amount due to banks and financial institutions should be more than Rs.20,00,000.00

COMPOSITION OF DRT

It is headed by a person who is referred to as the presiding officer. This presiding officer is someone who is qualified to be appointed as a district judge. The term of the presiding officer is as below: 

• Term: 5 years
• Till he/she attains the age of 62 years

Recovery officers are appointed by the government as it is deemed fit to assist the presiding officer.

DEBT RECOVERY APPELLATE TRIBUNAL (DRAT)

DRAT hears the appeals against DRT orders. 

Any person or entity who is aggrieved by DRT’s orders have to make an appeal within 45 days of receipt of the order. And it should be noted that DRAT will not accept any such appeal unless and until the person deposits 75% of the amount due (as determined by DRT) has been deposited. 

Both the tribunals (DRT & DRAT) run on the principle of natural justice and exercise is same powers as are exercised by any Civil Court.

COMPOSITION OF DRAT

It is headed by a person who is referred to as Chairperson of the Appellate Tribunal. He or she is someone who is qualified to be appointed as a judge of high court and is a member of legal service as well as having held the office of presiding officer for a minimum of three years.

The term of Chairperson of the Appellate Tribunal is as below: 

• Term: 5 years (also eligible for re-appointment)
• Till he/she attains the age of 65 years

PROCEDURE OF TRIBUNALS 

• Before a bank can file an application to recover the loan amount, it has to take into account the jurisdiction and the cause of action. 
• Describe the fees, proper documents and evidence has to be attached with the application. 

Note: In a situation, if the case has been transferred from Civil Court to the tribunal, then no fresh piece is required to be paid (because of the effect of law). 

• DRT, to prevent defendants from transferring their properties, con pass interim orders. 
• DRTs have full powers to pass like civil courts comprehensively. 

Note: Limitation act is applicable for DRT cases, so, banks also have to consider the limitation act.

DEBTS RECOVERY TRIBUNAL (DRT) – IMPORTANT FEATURES

Debt recovery appellate tribunals are established by the central government to exercise jurisdiction, powers, and authority to entertain the appeals against the order made by the Adjudicating Authority under Insolvency and Bankruptcy Code, 2016. CG can establish one or more DRATs.

Composition of Tribunal: It consists of one person referred to as the presiding officer as mentioned above, who will be appointed by the central government.

The staff of Tribunal: DRT is provided with one or more recovery officers and other officers as well as employees which the central government will think fit. These officers and employees will discharge their duties under the general superintendence of the presiding officer.

Removal: The heading offices of other tribunals or Appellate Tribunal cannot be removed from their offices unless an order has been made by the central government on the basis of proven misbehavior or incapacity after a proper inquiry has been made. 

Jurisdiction of Debts Recovery Tribunal: It has jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.

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Recovery: Debt recovery tribunals are a special type of courts which helps in recovering dues of banks as well as Financial Institutions. 

Act: These are established under RDDBFI Act 1993. All rules and regulations under this act are applicable all over India except in the state of Jammu and Kashmir. 

A preceding officer heads the Debt Recovery Tribunal and is assisted by recovery officers. 

Type of Cases: The cases that can be filed with DRTs & DRATs cannot be far from the normal civil courts. And once the case has been decided in favor of the bank or the financial institution, a recovery certificate is issued by the DRT. 

The recovery officer has the power to attach which helps in the recovery of dues by executing the order that has been passed by the Debt Recovery Tribunal.

Appeal against Order of Recovery Officer: One can always appeal against the order of a recovery officer to the debt recovery tribunal within 30 days of the order date. 

Appeal against Order of DRT: One can file an appeal against the order that has been passed by the DRT to the DRAT with the head of the Appellate Tribunal. 

The Appeal is required to be made within 45 days of receiving the order. An appeal would be entertained only if 75% of the judgment amount has been deposited unless waived or reduced by the chairperson of DRAT. 

Fee: Fee structure for filing cases with DRT is as below:

So, this is all about the DRT & DRAT which has helped in recovering dues of banks so far.