1) The document discusses the recovery of debts owed to banks and financial institutions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 2) It outlines the jurisdiction and processes of Debt Recovery Tribunals and Appellate Tribunals, including the filing of applications, issuance of summons, orders for interim relief and payment of debts. 3) Secured creditors are also allowed to enforce security interests and take possession of secured assets without court intervention if default occurs. Rights of appeal are provided to aggrieved persons.

1. VALLIAMMAI PALANIAPPAN
Intern @ Banking Laws Division,
Chennai Law Associates
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2. Recovery amount below Rs. 10 lakhs -- heard @ Civil Courts
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3.  Applies only when – amount due -- >10 Lakh rupees ( S. 1(4) )
 A tribunal – jurisdiction to entertain & decide applications ( S.17(1) )
from banks & Financial Institutions
 An Appellate Tribunal – jurisdiction to entertain appeals (S.17 (2) )
against Tribunal’s order
 Bar of jurisdiction – No court other than
SC exrecising jurisdiction under Art.32
&
HC exercising jurisdiction under Art. 226, 227 ( S. 18 )
shall have jurisdiction, power or authority
in relation to matters specified in S.17
both civil and
criminal
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 Bank or Financial Institution– may make an application to tribunal
within local limits of whose jurisdiction
 defendant resides & carries on business for personal gain
 Cause of action arises ( S.19(1) )
 If two banks or FIs – has filed application against same person,
then,
the later bank or FI may join the former
at any stage before final order ( S.19(2) )
 These applications – shall be dealt with as expeditiously as possible
&
shall be disposed finally
within 180 days
from the date of its receipt. ( S.19(24) )
 On receipt of application – Tribunal shall issue summons
requiring defendant to show cause
within 30 days of service of summons
as to why the relief prayed should not be granted.
(S.19(4) )

5.  At/Before first hearing,
defendant shall present a written statement of his defense ( S.19(5) )
 Defendant -- may present a written statement
containing particulars of the debt
sought to be set off ( S.19(6) )
 such Written statement – has same effect as a plaint in cross suit ( S.19(7) )
 defendant – may claim in respect of a cause of action accruing to him – by way
of counter claim against the claim of applicant ( S.19(8) )
Such counter claim – has same effect as cross suit ( S.19(9) )
Applicant – is at liberty to file a written statement
in answer to
the counter-claim of the defendant ( S.19(10) )
 If applicant feels – claim raised – not to be disposed of
by way of counter-claim,
but in an independent action
then,
the applicant may apply to the Tribunal for an order
that such counter-claim may be excluded ( S.19(11) )
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6.  Tribunal – may make Interim Order against defendant
to restrain him
from transferring, alienating or otherwise dealing with,
or disposing of, his property & assets
without prior permission of Tribunal. ( S.19(12) )
 If Tribunal finds – defendant, with intent to obstruct or delay or frustrate
the execution of any order of recovery of debt,
 is about to dispose property (whole or part)
 is about to remove property (whole or part) from local limits of jurisdiction
 is likely to cause damage to or by misuse of property, or create third party interest
then,
Tribunal may direct
either to furnish security
or to appear & show cause
why he should not furnish security ( S.19(13)(1) )
 If defendant fails to -- Tribunal may
order attachment of property ( whole or part) ( S.19(13)(2) )
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7.  Where appears to be just and convenient,
Tribunal may, by order
Appoint a receiver, before or after grant of certificate
 remove any person from possession or custody
 commit the same to custody of receiver
 confer powers upon receiver – bring & defend suits in courts
or
file & defend applications before Tribunal
 appoint Commissioner for preparation of inventory of properties
of defendant or for sale ( S.19(18) )
In case of disobedience of order made by Tribunal
under sub-sections (12), (13) and (18) ,
Tribunal may order
-- properties of such person to be attached
may also order
-- such person to be detained in civil prison
for a term not exceeding 3 months ( S.19(17) )
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8.  Tribunal, after giving both an opportunity of being heard,
-- pass Interim Order or final order,
including order for payment of interest ( S.19(20) )
Both will be sent a copy of every order passed by Tribunal ( S.19(21) )
 On the basis of order of Tribunal ,
Presiding officer-- shall issue ‘certificate of recovery’– to Recovery
Officer ( S.19(22) )
Where Tribunal is satisfied – property is situated
within local limits of jurisdiction of two or more Tribunals,
-- may send copies of ‘Certificate Of Recovery’ for execution
to such other Tribunals ( S. 19(23) )
Provided,
where Tribunal to which COR was sent for execution
finds – has no jurisdiction to comply with
– shall return to Tribunal which issued.
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9.  Where certificate of recovery
issued against a company registered under
the Companies Act, 1956,
Tribunal may order –
sale proceeds of such company to be distributed
among its secured creditors
in accordance with the provisions of section 52C9A of
the Companies Act, 1956
and to pay surplus, if any, to Co.
( S.19(19) )
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10. APPEAL TO APPLELLATE TRIBUNAL :
 to be filed within a period of 45 days from receipt of
copy of order made by Tribunal
However,
may also entertain an appeal after expiry of the said 45 days
if there was a sufficient cause
for not filing within given time ( S.20 (3) )
 for appeal preferred by defendant – deposit 75% of amount due ( S.21)
 Order of Tribunal made with consent of parties – not appealable ( S.20 (2) )
 shall be dealt as expeditiously as possible
&
to be disposed of finally within 6 months from receipt of appeal (S. 20 (6) )
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11.  Tribunal & Appellate Tribunal – shall not be bound by Civil Procedure Code, 1908
– but shall be guided by principles of Natural justice ( S. 22(1) )
 FUNCTIONS : power in respect of matters namely,
(a) summoning and enforcing the attendance of any person
and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default
or any order passed by it ex parte;
(h) any other matter which may be prescribed. ( S. 22(2) )
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12.  any proceeding before Tribunal/AT ,
-- deemed to be a judicial proceeding
within meaning of S.193 & 228
&
for purpose of S.196 of IPC
-- deemed to be a civil court
for all purposes of S.195
&
chapter XXVI of Criminal Procedure Code ( S. 22(3) )
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INDIAN PENAL CODE (IPC) :
193. Punishment for false evidence
228. Intentional insult or interruption to public servant sitting in judicial
proceeding
196. Using evidence known to be false
CRIMINAL PROCEDURE CODE :
195.Prosecution for contempt of lawful authority of public servants, for
offences against public justice and for offences relating to documents
given in evidence.

13.  Any security interest created in favour of any secured debtor – may be
enforced by such creditor – without intervention of Court/Tribunal
(S. 13 (1) )
 If borrower under liability to secured creditor under security agreement
--makes default in repayment of
secured debt or any installment
&
-- his A/C classified as NPA ,
then,
secured creditor may -- require the borrower (by notice in writing) to
discharge his liabilities in full within 60 days from date of notice.
failing which,
secured creditor – shall be entitled to exercise rights
under sub-section (4) ( S. 13(2) )
 No borrower , after receipt of notice – shall transfer by way of sale, transfer or
otherwise, any of the secured assets referred to in notice – without prior written
consent of secured creditor ( S.13(13) )
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14. Secured creditor – may take recourse to one or more of the following measures
to recover his secured debt, namely:-
 take possession of secured assets
 take over management of secured assets
 appoint person(manager) to manage secured assets
 requiring the person who acquired any of the secured assets from borrower
& from whom any money is due – to pay the money sufficient
to pay secured debt ( S. 13(4 ) )
 secured creditor – entitled to proceed against guarantors/ sell pledged assets
without taking any of the above measures ( S. 13(11) )
 Any payment made by ----- to secured creditor --- shall give valid discharge
as if he has made payment
to borrower S.13(5) )
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15.  Transfer after taking possession/ take over of management
under sub-section (4)
by secured creditor or by manager on behalf
------ transferee shall have all rights, as if
the transfer has been made by owner ( S. 13(6) )
Expenses incurred by secured creditor,
against any action taken against borrower
– recovered from borrower
 expenses incurred firstly,
 dues secondly, ( S. 13( 7) )
 If expenses incurred – received by secured creditor – before date fixed for
sale/transfer ,
--- secured asset shall not be sold/transferred
& no further steps be taken ( S. 13(8) )
 In case of financing of a financial asset
by more than 1 secured creditor
or
joint financing of a financial asset by secured creditors,
no secured creditor – be entitled to exercise rights conferred in sub-section(4)
unless agreed by secured creditors
representing not less than 3/4th in value of amount outstanding ( S. 13(9) )
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16.  Secured creditor, not fully satisfied with sale proceeds of secured assets
– may file application to DRT having jurisdiction for recovery of balance
amount from borrower
( S.13(10) )
RIGHT TO APPEAL S. 17
 person aggrieved by any of the measures taken by Secured creditor
in sub-section(4) of S.13 ,
---- may prefer an appeal to DRT
within 45 days
from date of measure been taken. ( S.17(1) )
 Appeal preferred by borrower – only when deposit of 75% of claim amount
in notice has been made
However,
DRT may reduce the amount to be deposited ( S.17(2) )
 to be disposed of in accordance
with provisions of RDDB Act,1993 ( S.17(3) )
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17.  person aggrieved by order of DRT under S.17,
-- may prefer an appeal to Appellate Tribunal
within 30 days from receipt of DRT’s order (S.18(1) )
Appellate Tribunal shall dispose of the appeal – in accordance with
the provisions of RDDB Act, 1993 (S.18(2) )
APPEAL TO APELLATE TRIBUNAL :
S.18
 No civil court – shall have jurisdiction – to entertain any suit/proceeding
in respect of matters
which a DRT/Appellate Tribunal is empowered to
CIVIL COURT NOT TO HAVE
JURISDICTION :
S.34
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18. Mardia Chemicals v. UOI
• constitutional validity – upheld
• s. 17(2) – was struck down as unconstitutional
 RAVEENDRAN NAIR v. the authorized
officer
• interest rates – fixed at 6-7%
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19. 27/06/2015
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