What Is the Debt Recovery Tribunal (DRT)?

A bank sends papers headed “Debt Recovery Tribunal” instead of “District Court”, and the first question is always whether this is a real court and what it can do to you. The Debt Recovery Tribunal, almost always shortened to DRT, is a tribunal created by Parliament under the Recovery of Debts and Bankruptcy Act 1993 to decide recovery claims brought by banks and notified financial institutions. It is not a civil court, it does not run on the Code of Civil Procedure, and for the cases it covers the civil court is barred from hearing the matter at all.

Two limits explain most of what people need to know. The debt claimed must be Rs 20 lakh or more, and only a bank, a notified financial institution, a consortium of them, or an asset reconstruction company that has taken over the loan by assignment can bring the claim. A private lender, a supplier or a relative who lent money cannot file in a DRT, whatever the sum involved.

The statute, and why its name changed

The Act was passed in 1993 as the Recovery of Debts Due to Banks and Financial Institutions Act. The 2016 amendment renamed it the Recovery of Debts and Bankruptcy Act 1993, and both names still appear in orders, textbooks and search results. It is the same statute, usually called the RDB Act.

The reason it exists is ordinary. Bank suits for money were sitting in civil courts for a decade or more. Parliament’s answer was a forum with narrow subject matter, evidence largely on affidavit, and its own execution machinery attached, so a decree did not then have to travel to a separate execution court and start again.

The pecuniary floor was raised from Rs 10 lakh to Rs 20 lakh by a Central Government notification in 2018. Below that figure even a nationalised bank has to sue in the ordinary civil court, which surprises branch officials as often as it surprises borrowers. We look at that dividing line in detail in our guide to choosing between the DRT and the civil court.

The two kinds of case a DRT hears

Most people think of the Debt Recovery Tribunal only as the place a bank goes to sue. That is half of it.

The bank’s own recovery claim. Filed under Section 19 of the RDB Act, it is called an Original Application, or OA, not a suit. The bank files against the borrower and against every guarantor it wants to hold liable. Filing is electronic through the eDRT portal, with hard copies following as the registry directs.

A borrower’s challenge under SARFAESI. Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 allows any person aggrieved by a measure taken under Section 13(4) to apply to the DRT. This is how a borrower contests possession of a mortgaged house, shop or factory, or an auction of it. Here the Rs 20 lakh floor does not apply. A Section 17 application lies whatever the loan amount, and it must be filed within 45 days of the measure complained of. If that is your position, read what the SARFAESI Act does to a borrower and count your dates before anything else.

A borrower cannot walk into a DRT and start an independent case of his own outside Section 17. What he can do is defend the OA and raise a counterclaim inside it. Sections 19(6) to 19(11) of the RDB Act allow a set-off and a counterclaim, and the tribunal decides both in the same proceeding. That is the route for a borrower who says the bank charged interest the sanction letter did not permit, sat on an insurance claim, or refused to release a security it had agreed to release.

Who sits in the tribunal, and which one hears your case

A DRT is headed by a single Presiding Officer, who must be qualified to be a District Judge. There is no bench of two. Appeals go to the Debts Recovery Appellate Tribunal, the DRAT, headed by a Chairperson qualified to be a High Court judge, with each DRAT supervising a group of tribunals.

Territorial jurisdiction under Section 19 is wider than that of a civil suit. The bank may file where the defendant resides or carries on business, where the cause of action arose wholly or in part, or, after the 2016 amendment, where the branch maintaining the account is located. In practice a loan disbursed from a Jabalpur branch is pursued at DRT Jabalpur even after the borrower has moved to another state. We act in these matters before DRT Jabalpur and the DRAT. Where the bank has picked an inconvenient forum, the objection is worth taking at the first hearing, because it gets harder to raise once the case has moved on.

How a case actually moves

Stage	What happens	Time the Act contemplates
Original Application	Bank files under Section 19 with the loan file, statement of account and interest working	Not fixed
Summons	Issued to the borrower and every guarantor, with a direction to disclose assets	Registry timelines
Written statement	Defence filed by the borrower and the guarantors	30 days, extendable by 15 in exceptional cases
Evidence	Filed on affidavit by both sides; cross-examination only if the tribunal permits it	Part of the 180-day endeavour
Final order	Tribunal decides the amount due, including interest	Endeavour to dispose of the OA in 180 days
Recovery Certificate	Issued to the Recovery Officer for the amount found due	On the final order

The word to notice in that table is “endeavour”. The Act asks the tribunal to try to finish in 180 days. Contested cases rarely do. Service on guarantors at scattered addresses, interlocutory fights over documents, and periods when a Presiding Officer’s post lies vacant are the ordinary reasons a file takes two years instead of six months.

Because evidence goes in largely by affidavit, the case is front-loaded. The bank’s annexures and the borrower’s written statement do most of the work. A defence that is vague about the statement of account is a defence that loses quietly, without any dramatic moment in court.

The Recovery Officer, where money actually changes hands

Winning the OA produces a Recovery Certificate. Executing it is a separate proceeding before the Recovery Officer, an officer of the tribunal, and this is where much of the real fighting happens.

The Recovery Officer can attach and sell movable and immovable property, appoint a receiver over property or a business, and in defined circumstances order arrest and detention of the defaulter. Third parties who claim rights in an attached property file their objections here. So do borrowers who say the property attached is exempt from sale or belongs to someone else. An order of the Recovery Officer can be carried in appeal to the Presiding Officer of the tribunal.

The tribunal also has teeth before judgment. On the bank’s application it can restrain a defendant from transferring property, order attachment before judgment where it is satisfied assets are being moved to defeat recovery, and appoint a receiver. Selling or mortgaging assets after summons are served rarely helps a borrower and usually makes his position worse.

Appeal, and the money you have to find first

An appeal against a DRT order lies to the DRAT within 30 days of receipt of the order.

The feature that shapes every appellate decision is the pre-deposit. Under Section 18 of the SARFAESI Act, a borrower appealing an order passed in a Section 17 case must deposit 50 percent of the debt due, which the DRAT may reduce for reasons recorded in writing but not below 25 percent. There is no power to waive it altogether. Section 21 of the RDB Act imposes a comparable pre-deposit on a borrower appealing a determination of debt in an OA. On a determination of Rs 2 crore, an appeal therefore starts with arranging at least Rs 50 lakh.

Price this in from the first hearing rather than after judgment. It decides whether to contest the OA to the finish, press a counterclaim, or open one-time settlement talks while the case is still pending.

Limitation, the point most files get wrong

The Limitation Act 1963 applies to proceedings before a Debt Recovery Tribunal. For an ordinary money claim the period is three years, running from the date of default, not from the date the account was classified a non-performing asset.

What extends it is documentary. A written acknowledgement of the debt signed before the three years expire, under Section 18 of the Limitation Act, starts a fresh period. So does a part payment, under Section 19. Balance confirmation letters, revival letters and one-time settlement proposals all do this work, which is why banks chase signatures on them, and why a borrower should read carefully anything he is asked to sign during recovery talks. Where the claim is framed as enforcement of payment out of mortgaged immovable property, a longer period applies, so the answer depends on how the bank has pleaded its case.

What a DRT will not do for you

• It does not decide title disputes over property between private parties. Those belong to the civil court, and we deal with them in our real estate and property practice.
• It does not grant a stay simply because a case has been filed. Interim protection has to be applied for and argued, and it usually comes with conditions.
• It does not sit in judgment over the bank’s commercial decision to recall a loan. It tests legality and quantum.
• It does not replace insolvency. A financial creditor with a default of Rs 1 crore or more may instead move the NCLT under Section 7 of the Insolvency and Bankruptcy Code 2016, and once a corporate insolvency process is admitted the moratorium under Section 14 of the Code stops DRT and SARFAESI action against the company.

Our work concentrates on banking and debt recovery, and you can read how we handle it on our DRT and debt recovery page.

This article is general information about the law and not legal advice on any specific matter. The periods under the RDB Act and the SARFAESI Act are short and depend on the exact dates written on your papers. If summons or a notice has reached you, please use our contact page to discuss your own facts.