Recovery of

Money under
DRT
By: Priyanka Kushwah
Subject Matter Expert
Legal Edge After College
• Recovery Debts and Bankruptcy Act,
1993
• Why RDB was Created? Introduction
• In the event where the borrower fails
to repay loan amount or any part
thereof which also includes unpaid
interests and other charges and/or
debt becomes Non-Performing Asset
(NPA)
• Courts were overburdened with
large numbers of regular cases
• The Government of India in 1981 constituted
a committee headed by Mr T. Tiwari, this
committee suggested a quasi-judicial setup
exclusively for banks and financial
institutions and Summary Procedure.
• Again in 1991, a committee was set up
under Mr Narashmam, which endorsed the
view of the Mr T. Tiwari Committee.
• Pursuant to which Government of India
enacted the RDB Act.
Who can recover money from DRT under
RDDBFI Act
Insolvency

Firms &
Company Individuals

NCLT DRT

NCLAT DRAT
Final Appeal: Supreme
Court
 Debt Recovery in India
Objectives
• DRT is constituted under Recovery of Debts due to Banks and
Financial Institutions Act, 1993, providing speedy recovery for banks
and financial institutions unlike civil court and other forum.
• Debt Recovery Tribunal (hereinafter referred as DRT) is a specially
created forum for fast and speedy recovery of debts due to Banks and
Financial Institutions.
• It is stipulated the DRT is to decide the application as expeditiously as
possible and should be made to dispose the application within 180
days from the receipt of Application.
DRT- Structure
• DRT is headed by presiding officer is
in the rank of district judge.
• Presiding officer is appointed by
Central Government for 5 years and
maximum age 62 years.
• One Registrar to take care of
administrative functions.
• Tribunal has one recovery officer.
• DRT has Territorial Jurisdiction.
• Total 39 DRT in India.
• DRT jurisdiction covers Recovery of
Debts due to banks and Financial
Institution with amount of 20 lakh. It is
changed from 10 lakh dated 6th
September 2018.
• Central government can reduce the
amount to 1 lakh.
• If another bank has a claim against the
same person, then that bank can join the
case before the final order is passed
subject to separate fees (Section 19(2)).
• Recovery Officer: Require the debtor to
declare on affidavit the particulars of his
or its assets.
 DRAT
• Debt Recovery Appellate Tribunals (DRAT) Structure
• Any person aggrieved by order passed by
DRT may appeal to DRAT within 45 days of
order received.
• DRAT is headed by the chairperson is in the
rank of High Court judge and appointed by
central government for 5 years or
maximum age 65 years.
• There are 5 DRAT- Mumbai, Delhi, Kolkata,
Chennai & Allahabad.
• 50% of amount to be deposited by
appellant before filing an appeal (section
21). Chairperson may reduce it up to 25%.
Recovery of Debts and
Bankruptcy Act, 1993
(27 August 1993)
 - Earlier: Recovery Of Money Under The Recovery Of Debts Due To
- Title Banks And Financial Institution Act, 1993. (2019)
- Extent - Whole India after 2019.
- Came into force 24th June 1993
Section 1 -Commencement - Initial amount: 10 Lakh. Changed in 2018.
- Application - 20 lakh or central Govt can reduce to 1 lakh

- Section 2(d)- Bank

- Section 2(e) Banking Company
- Section 2(g) Debt
- Section 2(ga) Debt Securities
Section 2 Definitions - Section 2(h) Financial Institution
- Section 2(ha) Financial Lease
- Section 2(jb) Property
- Section I(b) Security Interest
- Central Govt Establishes one or more Tribunal
- Number of Tribunal decided by Central Govt
Establishment of - Adjudicating Authority of Tribunal conferred under Insolvency
Section 3
Tribunal and bankruptcy Code. (section 179)
- Central Govt also specifies the area.

- One Presiding officer appointed by Central Government.

- Presiding Officer of any other Tribunal can also discharge similar
Composition of function. (in addition)
Section 4
• (d) “bank” means—
(i) banking company;
(ii) a corresponding new bank;
(iii) State Bank of India;
(iv) a subsidiary bank; or
(v) a Regional Rural Bank;
4[(vi) a multi-State co-operative bank;]

• (e) “banking company” shall have the meaning assigned to it in clause (c) of section
5 of the Banking Regulation Act, 1949 (10 of 1949)

• (c) “banking company” means any company which transacts the business of
banking 4 [in India]; Explanation.—Any company which is engaged in the
manufacture of goods or carries on any trade and which accepts deposits of money
from the public merely for the purpose of financing its business as such
manufacturer or trader shall not be deemed to transact the business of banking
within the meaning of this clause
• [(g) “debt” means any liability (inclusive of interest) which is claimed as due from any person 7[or
a pooled investment vehicle as defined in clause (da) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956)] by a bank or a financial institution or by a consortium of
banks or financial institutions during the course of any business activity undertaken by the bank
or the financial institution or the consortium under any law for the time being in force, in cash or
otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or
order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting
on, and legally recoverable on, the date of the application 1[and includes any liability towards
debt securities which remains unpaid in full or part after notice of ninety days served upon the
borrower by the debenture trustee or any other authority in whose favour security interest is
created for the benefit of holders of debt securities or;]]

• (h) “financial institution” means—

(i) a public financial institution within the meaning of section 4A of the Companies Act, 1956
• (1 of 1956);
• 2[(ia) the securitisation company or reconstruction company which has obtained a certificate of
registration under sub-section (4) of section 3 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);]
• 1[(ib) a debenture trustee registered with the Board and appointed for secured debt securities;]
(ii) such other institution as the Central Government may, having regard to its business
• activity and the area of its operation in India, by notification, specify
• [(ha) “financial lease” means a lease under a lease agreement of tangible asset, other than
negotiable instrument or negotiable document, for transfer of lessor's right therein to the lessee for
a certain time in consideration of payment of agreed amount periodically and where lessee
becomes the owner of the such assets at the expiry of the term of lease or on payment of the
agreed residual amount, as the case may be;]

• [(jb) “property” means—

(a) immovable property;
(b) movable property;
(c) any debt or any right to receive payment of money, whether secured or unsecured; (d)
receivables, whether existing or future;
• (e) intangible assets, being know-how, patent, copyright, trade mark, licence, franchise or any
other business or commercial right of similar nature, as may be prescribed by the Central
Government in consultation with Reserve Bank;]

• (lb) “security interest” means mortgage, charge, hypothecation, assignment or any other right, title
or interest of any kind whatsoever upon property, created in favour of any bank or financial
institution
 Qualifications for
Section 5 appointment as District Judge
presiding officer

Term of Office of - 5 Years or 65 Years of age

Section 6 - Eligible for reappointment
Presiding Officer

- Governed under Tribunal Reforms Act 2021:

- Qualifications, appointment, term of office, salaries and
Conditions of service allowances, resignation, removal and the other terms and
Section 6A conditions of service
of Presiding Officer
- Before Finance Act 2017

- One Recovery Officer

Section 7 Staff of Tribunal - Other Officers
- Under Superintendence of Presiding Officer
 - Chairperson of any other Appellate Tribunal can also
discharge similar function. (in addition)
- The Central Government may authorise the
Section 8 Appellate Tribunal Chairperson of one Appellate Tribunal to discharge also
the functions of the Chairperson of other Appellate
Tribunal.

Composition of Appellate - One Person: Chairperson of the Appellate Tribunal

Section 9 - Appointed by Central Government
Tribunal

- Qualified to be a judge of High Court

0r
Qualification of - has been a member of the Indian Legal Service and has
held a post in Grade I of that service for at least three
Section 10 chairperson of Appellate years
Tribunal Or
- has held office as the Presiding Officer of a Tribunal for
at least three years.

Term of Office of 5 Years or 70 Years of age

 Staff of Appellate - The provisions of section 7 (except those relating to
Section 12 Recovery Officer) shall, so far as may be, apply to an
Tribunal Appellate Tribunal

- As may be Prescribed by Central Government.

Salary, Allowances and - Not to be varied to his disadvantage after
Section 13 conditions of service of appointment.
presiding officers
- vacancy due to resignation or removal.
- Removal grounds: Misbehaviors or incapacity
Section 14 Vacancies (Section 15)
- Except Temporary absence
- Central Govt Appoint
- Presiding officer or Chairperson may resign to Central
Government by notice in writing
- continue to hold office until the expiry of three months
from the date of receipt of such notice or until a person
duly appointed as his successor enters upon his office or
until the expiry of his term of office, whichever is the
 - Governed under Tribunal Reforms Act 2021:
Qualifications, terms - qualifications, appointment, term of office, salaries and
allowances, resignation, removal and the other terms and
Section 15 A and conditions of conditions of service
service of Chairperson - Before Finance Act 2017

- No order of CG appointing PO or Chairperson shall be

called in question in any manner, and no act or
proceeding before a Tribunal or an Appellate Tribunal
Section 16 Orders by DRT or DRAT shall be called in question in any manner on the ground
merely of any defect in the constitution of a Tribunal or an
Appellate Tribunal.
- decide applications from the banks and financial
institutions. Not LLPs. For DRT
SECTION 17 Jurisdiction, Power and - For DRAT appeals against any order made, or deemed to
have been made, by DRT.
(Chapter II) Authority of Tribunals - o entertain appeals against the order made by the
Adjudicating Authority under Part III of the Insolvency and
Bankruptcy Code, 2016.
- Control over DRT
- Recording the annual confidential reports of Presiding
Officers.
- Seek information relating to pending cases before DRT
Power of Chairperson of - Convene meetings of PO.
Section 18 Bar of Jurisdiction - On other Courts
- Exception: SC & HC under Article 226 & 227
- Exception: Multi State co-operative Bank (Multi
State Co-operative Societies Act 2002)

Section 19 Application to the - Within local limits of bank/branch, where

Tribunal defendant resides, where any of the
defendant resides (in case of more then
one), where the cause of action arise.
- Withdrawal of Application: Within 30
days (prior permission of DRT)
- If DRT deny permission then such order
shall be recorded.
- Bank joining an already going on suit
between an individual & other Bank before
final order is passed.
Section 19 - Every applicant in the application shall provide following
documents:
(i) state particulars of the debt secured by security interest over
properties or assets belonging to defendant.
(ii) if the estimated value of securities is not sufficient to satisfy
the debt claimed, state particulars of any other properties or
assets owned by any of the defendants

(iii) if the estimated value of such other assets is not sufficient

to recover the debt, seek an order directing the defendant to
disclose to the Tribunal particulars of other properties or assets
• - If any application filed before the Tribunal for recovery of any debt is settled prior to the commencement
of the hearing before that Tribunal or at any stage of the proceedings before the final order is passed, the
applicant may be granted refund to the fees paid by him
• On receipt of application, the Tribunal shall issue summons with following directions to the
defendant—
(i) to show cause within thirty days of the service of summons as to why relief prayed for should not
be granted;
(ii) direct the defendant to disclose particulars of properties or assets other than properties and
assets specified by the applicant
(iii) to restrain the defendant from dealing with or disposing of such assets and properties disclosed,
pending the hearing and disposal of the application
- The defendant, on service of summons, shall not transfer by way of sale, lease or otherwise
except in the ordinary course of his business any of the assets over which security interest is
created and other properties and assets specified or disclosed, without the prior approval of the
Tribunal
- Tribunal shall not grant such approval without giving notice to the applicant bank or financial
institution to show cause as to why approval prayed for should not be granted
- The defendant shall within a period of thirty days from the date of service of summons, present a
written statement of his defence including claim for set-off (Presiding Officer may extend the period
for 15 days).
- In case of non-compliance of any order made, he Presiding Officer may, by an order, direct that the
person or officer who is in default, be detained in civil prison for a term not exceeding three months
Section 19A Recovery applications, - application or written statement or any other pleadings and
documents and written the documents in the electronic form and authenticated with
statements in electronic digital signature
form -summons, notice or communication or intimation may be
served in electronic form.
- Any interim or final order passed by the Tribunal or Appellate
Tribunal displayed on the website of such Tribunal or Appellate
Tribunal shall be deemed to be a public notice
- application made to Tribunal for exercising the powers of the
Adjudicating Authority under the Insolvency and Bankruptcy
Code, 2016

Section 20 Appeal to the Appellate - Within 30 days

Tribunal - To be dispose off in 180 days

Section 21 Deposit of amount of - When Appeal is by debtor

debt due, on filing appeal - 50% of the amount to be deposited
- DRAT can reduce it to 25% but have to record the reasons in
writing
Section 22 Procedure and - Not to be bound with the procedure laid down by
powers of the the Code of Civil Procedure, 1908, but shall be
Tribunal and the guided by the principles of natural justice.
Appellate Tribunal - Have same powers as are vested in a civil court
under the Code of Civil Procedure, 1908 like
summoning and enforcing the attendance of any
person and examining him on oath, requiring the
discovery and production of documents, receiving
evidence on affidavits, issuing commissions for the
examination of witnesses or documents, reviewing
its decisions, dismissing an application for default or
deciding it ex parte, setting aside any order of
dismissal of any application for default or any order
passed by it ex parte.
- Any proceeding before the Tribunal or the
Appellate Tribunal shall be deemed to be a judicial
proceeding
 Adjudicating Authority of DRT under IBC
• Section 179 of the IBC, 2016 (Adjudicating Authority for individuals and
partnership firms). According to the IBC, DRT is the adjudicating authority
for individuals, partnerships, and proprietorship firms and has been given a
variety of responsibilities.

• According to subsection (2) of section 179, the Debt Recovery Tribunal

shall have jurisdiction to hear and determine:
1.Any claim made by or against the individual debtor.
2.Any suit, proceeding, or other action brought by or against the individual
debtor.
3.A question of priorities or any other question, whether of facts or law,
arising out of or in relation to insolvency and bankruptcy of the firm or
individual debtor under this Code.
Section 22A Uniform procedure for Across all DRT & DRAT
conduct of proceedings

Section 23 Right to legal Tribunal may authorise one or more legal

representation and practitioners or any of its officers to act as
Presenting Officers Presenting Officers and every person so authorised
by it may present its case before the Tribunal or
the Appellate Tribunal.

Section 24 Limitation The provisions of the Limitation Act, 1963 apply to

an application made to a Tribunal.
Section 25 Modes of Recovery Officer shall, on receipt of the copy
recovery of debts of the certificate proceed to recover the
amount of debt specified in the certificate by
one or more of the following modes,
namely:—
(i) proceed to recover the amount of debt
specified in the certificate by one or more of
the following modes, namely:—
(ii) appointing receiver for such property and
to sell the same
(iii) arrest of the defendant and his detention
in prison
(iv) appointing a receiver for the management
of the movable or immovable properties
Section 26 Validity of certificate - It shall not be open to the defendant to dispute before the
and amendment Recovery Officer the correctness of the amount specified in
the certificate, and no objection to the certificate on any
thereof other ground shall also be entertained by the Recovery
Officer.
- The Presiding Officer shall intimate to the Recovery Officer
any order withdrawing or cancelling a certificate or any
correction made by him
Section 27 Stay of proceedings - Although the certificate is issued to Recovery Officer he
under certificate and Presiding Officer, may by an order, grant time for payment of
the amount,.
amendment or - provided the defendant makes a down payment of not less
withdrawal thereof than twenty-five per cent. of the amount specified in the
recovery certificate
- Defendant also have to give an unconditional undertaking
to pay the balance within a reasonable time, which is
acceptable to the applicant
- Recovery Officer have to stay the proceedings until the
expiry of the time so granted. But if defendant commits any
default Recovery Officer shall take steps for recovery of
remaining amount of debt due and payable.
Section 28 Other modes of recovery - If any amount is due from any person to the
defendant, the Recovery Officer may require
such person to deduct from the said amount.
- The Recovery Officer may, at any time or
from time to time, by notice in writing,
require any person from whom money is due
or may become due to the defendant to pay
so much of the money as is sufficient to pay
the amount of debt due from the defendant
- A copy of the notice shall be forwarded to
the defendant at his last address known to
the Recovery Officer
- Every person to whom a notice is issued
under this sub-section shall be bound to
comply with such notice, and, in particular,
where any such notice is issued to a post
office, bank, financial institution, or an
insurer, it shall not be necessary for any pass
Section 28 - Any claim respecting any property in relation to which a notice under this sub-
section has been issued arising after the date of the notice shall be void as
against any demand contained in the notice.
- Where a person to whom a notice under this sub-section is sent objects to it by
a statement on oath that the sum demanded or the part thereof is not due to the
defendant or that he does not hold any money for or on account of the
defendant, then, nothing contained in this sub-section shall be deemed to
require such person to pay any such sum or part thereof, as the case may be, but
if it is discovered that such statement was false in any material particular, such
person shall be personally liable to the Recovery Officer
- The Recovery Officer may, at any time or from time to time, amend or revoke
any notice under this sub-section or extend the time for making any payment in
pursuance of such notice.
- The Recovery Officer shall grant a receipt for any amount paid in compliance
with a notice issued under this sub-section, and the person so paying shall be
fully discharged from his liability to the defendant to the extent of the amount so
paid.
 - Any person discharging any liability to the defendant after the receipt of a
notice under this sub-section shall be personally liable to the Recovery Officer
to the extent of his own liability to the defendant
- If the person to whom a notice under this sub-section is sent fails to make
payment in pursuance thereof to the Recovery Officer, he shall be deemed to
be a defendant in default in respect of the amount specified in the notice and
further proceedings may be taken against him
- The Recovery Officer may apply to the court in whose custody there is money
belonging to the defendant for payment to him of the entire amount of such
money, or if it is more than the amount of debt due, an amount sufficient to
discharge the amount of debt so due.
- The Recovery Officer may, by order, at any stage of the execution of the
certificate of recovery, require any person, and in case of a company, any of its
officers against whom or which the certificate of recovery is issued, to declare
on affidavit the particulars of his or its assets.
- The Recovery Officer may recover any amount of debt due from the
defendant by sale of his movable property
Section 29 Application of certain - As if the said provisions and the rules referred to the amount of
provisions of Income- debt due under this Act instead of to the Income-tax:
tax Act

Section 30 Appeal against the - Within thirty days from the date on which a copy of the order is
order of Recovery issued to him, prefer an appeal to the Tribunal.
Officer - After giving an opportunity to the appellant to be heard, and
after making such inquiry as it deems fit, confirm, modify or set
aside the order made by the Recovery Officer

Section 30A Deposit of amount of - 50% of the amount

debt due for filing
appeal against orders of
the Recovery Officer

Section 31 Transfer of pending - Every suit or other proceeding pending before any court
cases. immediately before the date of establishment of a Tribunal shall
stand transferred on that date to such Tribunal
- nothing in this sub-section shall apply to any appeal pending
- the court shall forward the records of such suit or other
Section 31A Power of Tribunal to issue - Where a decree or order was passed by any court before
certificate of recovery in the Act and has not yet been executed, then, the decree-
case of decree or order holder may apply to the Tribunal to pass an order for
recovery of the amount.
- On receipt of an application the Tribunal may issue a
certificate for recovery to a Recovery Officer.

Section 31B Priority to secured - The rights of secured creditors to realise secured debts
creditors due and payable to them by sale of assets over which
security interest is created, shall have priority and shall be
paid in priority over all other debts and Government dues
including revenues, taxes, cesses and rates due to the
Central Government, State Government or local authority.
Section 32 Chairperson, Presiding
Officer and staff of
Appellate Tribunal and
Tribunal to be public
servants
Section 33 Protection of action taken - Against the Central Government or against 6[the Presiding
in good faith Officer of a Tribunal or the Chairperson of an Appellate
Tribunal] or against the Recovery Officer for anything which
Section 34 Act to have overriding effect

Section 35 Power to remove difficulties - By Central Government

- No such order shall be made after the expiry of the period of three
years from the date of commencement of this Act.

Section 36 Power to make rules. - The salaries and allowances and other terms and conditions of
service
- The procedure for the investigation of misbehaviour or incapacity
-The form in which an application may be made under section 19
- The fee for filing application
-The rate of fee to be refunded to the applicant
- The period for filing written statement
- The fee for obtaining copy of the order of the Tribunal
- The fee for obtaining copy of the order of the Tribunal
- The form in which an appeal may be filed before the Appellate
Tribunal
- The rules of uniform procedure for conducting the proceedings
before the Tribunals
- The other mode of recovery
- Before Parliament for 30 days
Section 37 Repeal and saving