What is the Debt Recovery Tribunal?

Banks and financial institutions are a safer way of obtaining loans in case of financial needs, to avoid exploitation by private individuals as used to happen years ago. However, once the loan is dispersed, even such banks and institutions need a way to recover the money in case of defaulters who do not repay the amount within a given time frame. For such cases, there is a Debt Recovery Tribunal which resolves disputes pertaining to debt recovery. The DRT and Debt Recovery Appellate Tribunal (DRAT) were established after the enactment of the Recovery Of Debts And Bankruptcy Act, 1993 and Recovery of Debts Due to Banks and Financial Institutions. (Amendment) Act, 1995. 

Who heads the DRT?

Coming to the composition of the Debt Recovery Tribunal, there is a Presiding Officer who is appointed by the Central Government and qualified to be a District Judge. 

Who can file a case under DRT?

Usually the banks and financial institutions apply to the DRT under the provisions of the Act in case of Non-Performing Assets. The DRT of appropriate jurisdiction needs to be approached where the defendant resides or carries out its business. Application under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act of 2002 can also be made before the DRT. In case of debtor’s failure to discharge the debt and securities’ inability to discharge the same, the creditors may also approach the DRT with an application. 

Debt Recovery Matters

Disputes of Rs 10 lakh or more are decided by the DRT and those below the given amount are decided by the Civil Courts of appropriate jurisdiction. For lower amounts, the Central Government may direct certain cases to be decided by the DRT. In case of debtors who have been involved in legal matters before the Debt Recovery Tribunal, experts at Online Legal Query assist with the documentation and representation before the DRT to safeguard the financial interests based on specific facts and applicable laws.