Debt Recovery Tribunals (DRT) provide quick and effective adjudication in the debt recovery

of banks and other financial institutions. These are established under the provisions of the
Recovery of Debt and Bankruptcy Act 1993. DRTs are quasi-judicial institutions. The appeals
against orders of DRTs are heard by DRATs (Debt Recovery Appellate Tribunals). Currently,
39 DRTs and 5 DRATs are functioning in the country.
What is Debt Recovery Tribunal DRT?
A Debt Recovery Tribunal DRT functions as a quasi-judicial statutory body established under
the Recovery of Debt and Bankruptcy Act 1993. Its purpose is to adjudicate cases and
facilitate the recovery of loans from banks and financial institutions. In 2020, the Indian
Government raised the minimum limit for filing cases under DRTs to 20 lakh rupees. The
Presiding Officer, appointed by the Central Government, heads the Debt Recovery Tribunal
DRT. Appeals against DRT orders can be made to the Debt Recovery Appellate Tribunal
(DRAT), which a Chairman heads. Financial institutions and banks file loan recovery
applications with the DRT having jurisdiction over the debtor's residence or business
location. During adjudication, the DRT possesses powers akin to a District Court.
Additionally, the Debt Recovery Tribunal (DRT) has recovery officers responsible for
executing the orders it issues.
Background of Debt Recovery Tribunal
Before the enactment of the Recovery of Debt and Bankruptcy Act-1993, debt-related cases
were filed in the Civil Courts. These cases were decided according to the provisions of the
CPC (Civil Procedure Code). These used to take several years to resolve the case. Moreover,
there was a lot of pendency in the cases. It would lead to unnecessary delays in the recovery
of debts by the Banks.
Observing these issues in the system, in 1981, a committee headed by Mr. T. Tiwari was
appointed. It was tasked with recommending reform measures in this system. The committee
observed that the Courts were already burdened with regular cases. This leads to the
treatment of loan recovery cases as other ordinary cases. Hence, the problems of pendency
and delay are arising. Amond different recommendations of the committee, one was the
establishment of tribunals (quasi-judicial bodies) that would only handle the recovery cases.
It took a decade to accept the recommendations and establish such a body. The Recovery of
Debt and Bankruptcy Act-1993 was introduced to solve the issue of delay and pendency. The
legislation was brought after the 1991 Economic liberalisation of the Economy.
Jurisdiction of Debt Recovery Tribunal DRT
Debt Recovery Tribunals (DRTs) have the authority to consider applications from banks and
financial institutions seeking the recovery of owed debts. Banks can submit applications to
the Tribunal within the geographical boundaries where the defendant resides or conducts
business. The Act explicitly prohibits all other courts, except the Supreme Court and High
Court, from adjudicating matters pertaining to debt recovery.
Features of DRT
 o The Debt Recovery Tribunal (DRT) is established to settle cases to restore the unpaid
amounts of the NPAs (Non Performing Assets). The Banks declare these as per RBI
guidelines.
o Under Section 4 of the Recovery of Debt and Bankruptcy Act-1993, the DRT shall
have only one member (called Presiding Officer).
o The notification of the Central Government shall appoint him.
o The Presiding Officer of one Tribunal can also preside over other Tribunals if
the Central Government authorizes it.
o The Presiding Officer will have a term of 5 years or till the age of 65 years,
whichever is earlier. He shall be eligible for reappointment.
o He should be qualified enough to be the District Judge.
o For cases of recovery of debt greater than 20 Lakh Rs, Banks, and Financial
Institutions can approach the DRT.
o For amounts lower than this, Banks and Financial Institutions approach the
Civil Courts.
o DRT and DRAT need to maintain the Principles of Natural Justice.
o However, they can regulate their own procedures. For this, they are not bound
by the CPC (Civil Procedure Code) provisions.
o One does not need a degree in Law to argue cases before the DRT.
o DRTs are mandated to resolve the cases within 6 months.
o The appeals against the orders passed by DRT can be made before a DRAT
within 45 days of such judgment.
o In the case of the SARFAESI Act, the time duration to dispose of the cases is
60 days to 4 months.
o The appeals before the Appellate Tribunal (DRAT) shall be disposed of within
6 months from the receiving date.
o Before approaching the DRAT against the order of DRT, the aggrieved party needs to
deposit 75% of the amount fixed by the order.
o The Centre can appoint one or more Recovery Officers as an employee of the
Tribunal.
o They will discharge their duties under the superintendence of the Presiding
Officer of the DRT.
Powers and Functions of DRT
o A Debt Recovery Tribunal DRT is empowered to enforce the provisions of the
Recovery of Debt and Bankruptcy Act-1993 and the SARFAESI (Securitization and
Reconstruction of Financial Assets and Enforcement Of Security Interests) Act 2002.
 o DRT gets the authority to entertain debt recovery-related applications from financial
institutions and banks from section 17 of the Recovery of Debt and Bankruptcy Act-
1993.
o While deciding the cases, the Debt Recovery Tribunal (DRT) acts as a District Court.
o It can pass orders for complete justice that are comprehensive and even go
beyond the Civil Procedure Code (CPC).
o Section 18 of the Recovery of Debt and Bankruptcy Act-1993 imposes restrictions on
all the Courts from adjudicating on debt recovery-related matters except the Supreme
Court and High Courts.
o It means that relief against the orders of DRAT can only be given by the
Supreme Court and High Courts.
o Supreme Court, in its judgment, has specified that the DRT and the DRAT have
jurisdiction strictly confined to those cases that are mentioned in Section 17 of the
Recovery of Debt and Bankruptcy Act-1993.
o Thus the Debt Recovery Tribunals (DRTs) cannot decide over the cases like
property rights, succession issues, issuance of receipts, etc.
o Section 17A was inserted in the act by an amendment in 2000. It specifies the powers
of the Chairperson of the DRAT. Its general powers include.
o Superintendence and control of Tribunals under his jurisdiction.
o Reviewing the ACRs (Annual Confidential Reports) from various Presiding
Officers.
o Direct Tribunals to present the status of cases under both the RDB Act and the
SARFAESI Act.
o Review the performance of Presiding Officers.
o Organise meetings with Presiding Officers.
o Recommend disciplinary action against Presiding Officers to Centre through
his report in case of misconduct or incapacity.
Concerns Related to DRT
o One of the significant issues with the Debt Recovery Tribunal (DRT) is a large
number of pendency and slow resolution of cases.
o According to the World Bank report, it takes nearly 4.3 years in India to
resolve insolvency-related cases under old laws.
o More than 1.6 lakh cases were pending in various DRTs across India till
February 2022.
o Procedural Bottlenecks: the Supreme Court held that the jurisdiction of the DRTs is
strictly limited to Section 17 of the Act.
 o Thus, related matters like succession, KYC issues, issuance of receipts, etc.,
are taken up by Civil Courts. This leads to unnecessary delay.
o DRTs are overburdened by the ever-increasing cases.
o At the time of inception, it was conceptualized that at any point in time, the
average number of cases handled by any DRT would be around 30. But in
reality, in major cities, this number went to more than 4000 cases per DRT.
o As per reports, the average loan recovery rate of the DRTs is just around 25%.
o At present, there are only 39 DRTs and 5 DRATs across India. These are insufficient
in number to handle a large number of cases.
Measures towards Correcting DRT
As corrective measures related to the issues faced by the Debt Recovery Tribunals (DRTs),
the Government amended the Recovery of Debt and Bankruptcy Act-1993 in 2016.
Following are the significant changes brought in the act:
o The retirement age of the Presiding Officers has been increased from 62 to 65 years.
And that of the Chairpersons of DRATs is increased from 65 to 67 years.
o The amended act empowers the Central Government to establish a uniform procedure
for all the DRTs and DRATs across India.
o Banks are authorized to file cases in Tribunals having jurisdiction over the area of the
Bank’s branch where the debt is pending.
Conclusion
The Debt Recovery Tribunals (DRTs) have helped Banks and other Financial Institutions
somewhat to solve the problem of NPAs (Non-Performing Assets). But these Tribunals are
also facing the same problems earlier faced by regular Courts. These include pendency of
cases, low recovery, delay in resolution, etc. There need to be more DRTs and DRATs
established in the country. The Recovery Officials and other staff need to be well-trained and
equipped for better execution.