Debt Recovery Tribunals (DRTs)

About

It is a quasi-judicial body formed under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 to facilitate recovery of loans by banks and financial institutions to the customers.

Orders of the Debt Recovery Tribunal are appealable before the Debts Recovery Appellate Tribunal.

Objective

The objective of the Debt Recovery Tribunal is to ensure recovery of borrowed money from debtors which are due to banks and various financial institutions.

Role

Their role is limited to settling the claims and ensuring recovery of the balance amount related to non-performing assets as categorised by the banks.

Powers

Debt Recovery Tribunal has powers of the District Court for any claims relating to the recovery of Debts.

The following are its major functions:

Enforcing laws: The DRT enforces the Recovery of Debt and Bankruptcy Act of 1993 and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act of 2002.

Hearing applications: The DRT can hear applications from banks and financial institutions to recover loans. 

Issuing orders: The DRT can pass orders that are comprehensive and go beyond the Civil Procedure Code (CPC). 

Summoning people: The DRT can summon and enforce the attendance of people, and examine them on oath. 

Requiring documents: The DRT can require the discovery and production of documents.

Receiving evidence: The DRT can receive evidence on affidavits. 

Issuing commissions: The DRT can issue commissions to examine witnesses or documents. 

Reviewing decisions: The DRT can review its own decisions.

Passing interim orders: The DRT can pass interim orders to restrict a defendant from transferring or disposing of their property.

Composition

The Debt Recovery Tribunal consists of Presiding and Recovery officers.

Application

The Debt Recovery Tribunal Act is applicable in entire India including Jammu & Kashmir after article 370 of the constitution has been made ineffective.

The act is applicable for a due amount above Rs. 20, 00,000.

The act is also applicable even if the preliminary application for Debt recovery had been filed only by Banks and Financial Institutions.

Appeals

Aggrieved parties from DRT can appeal against the decision of DRTs before the Debts Recovery Appellate Tribunal (DRAT).

Enforcement

At present, 39 Debts Recovery Tribunals (DRTs) and 5 Debts Recovery Appellate Tribunals (DRATs) are functioning across the country. Each DRT and DRAT are headed by a Presiding Officer and a Chairperson respectively.

PRACTICE QUESTION

Q.Consider the following statements about the “Debt Recovery Tribunals” :

1. It is a quasi-judicial body formed under the Insolvency and Bankruptcy Board of india.
2. Their role is limited to settling the claims and ensuring recovery of the amount related to non-performing assets as categorised by the banks.
3. The Debt Recovery Tribunal Act is applicable in entire India except Jammu & Kashmir.

How many of the above statements is/are correct?

A. Only one

B. Only two

C. All Three

D. None

Answer: A

Explanation:

Statement 1 is incorrect:

It is a quasi-judicial body formed under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 to facilitate recovery of loans by banks and financial institutions to the customers.

Orders of the Debt Recovery Tribunal are appealable before the Debts Recovery Appellate Tribunal.

Statement 2 is correct:

Their role is limited to settling the claims and ensuring recovery of the balance amount related to non-performing assets as categorised by the banks.

Statement 3 is incorrect:

The Debt Recovery Tribunal Act is applicable in entire India including Jammu & Kashmir after article 370 of the constitution has been made ineffective.

The act is applicable for a due amount above Rs. 20, 00,000.

The act is also applicable even if the preliminary application for Debt recovery had been filed only by Banks and Financial Institutions.

Aggrieved parties from DRT can appeal against the decision of DRTs before the Debts Recovery Appellate Tribunal (DRAT).