The document discusses the Debt Recovery Tribunal (DRT) system in India for recovering debts owed to banks and financial institutions. It provides an overview of the objectives, research methodology, introduction and definitions related to DRTs. It notes that while DRTs were intended to provide a faster recovery process than civil courts, in practice many cases are still delayed. Suggestions are made to improve the functioning and efficiency of DRTs such as increasing accountability, staffing, and establishing timelines for case disposal.

1. DEBT RECOVERY TRIBUNAL
SIGNIFICANCE AND THE LIMITS
Presented By –
Vikas Yadav
IILMU/PG/2020/L313

2. OBJECTIVES OF THE DISSERTATION
• The main objective of this paper is to study the remedies available for banks in
the DRTs.
• An in depth study on the functioning of the DRT is made here. Reasons for the
establishment for the Debt Recovery Tribunal and the issues that the Tribunal
faces are subjected to study and to suggest an alternative mechanism or
improvement to deal with issues and problems pertaining to its efficiency.
• This study also attempts to suggest methods to ensure speedy recovery
proceedings.

3. RESEARCH METHODOLOGY
• The purpose of this study is to understand the functions of a Debt Recovery Tribunal and the
methods banks use in recovering assets –in case the loan is categorized as a Non-Performing Asset.
Both primary and secondary data has been used in this regard. Primary data was indispensable since
the details concerning regular tasks of the Tribunal and how the system actually works, had to be
collected with the help of questions.
• Primary data is collected using different methods - Observation, Interview and Questionnaire. Of
this, the interview method has been given impetus, since the information collected firsthand from
the stakeholders of the Tribunal forms a very important part of all the information gathered.
• Secondary sources of data were used to obtain official information and statistical figures.
Secondary data was equally important to convey how the Tribunal can function.

4. INTRODUCTION
• This act may be called the Recovery of Debt Due to Bank and Financial Institutions Act-
1993.
• It was formed on the recommendations of Tiwari Committee report (1981).
• It was formed to ease the pressure on the civil courts which were already burdened with
numerous cases.
• It Shall be Deemed into forced from 24th June 1993.
• The provisions of this Act shall not apply where the amount of debt due to any bank or
financial institution or to a consortium of banks or financial institutions is less then twenty
lakh rupees or such other amount as the Central Government may, by notification, specify.

5. OBJECTIVE
• Debt Recovery Tribunal is constituted under Recovery Of Debts Due to Banks And
Financial Institutions Act,1993 providing speedy recovery for Banks and Financial
Institutions unlike civil courts and other forums.
• Debt Recovery Tribunal is a specially created forum for fast and speedy recovery
of debts due to Banks and Financial Institutions.
• It is stipulated that DRT is to decide the application as expeditiously as possible
and endeavour should be made to dispose the Application within 180 days of the
receipt of Application.

6. IMPORTANT DEFINITIONS
• “Appellate Tribunal” means an Appellate Tribunal established under sub-section
(1) of Section 8.
• “Application” means an application made to a Tribunal under Section.19.
• “Debt” means any liability (inclusive of interest) which is claimed as due from any
person by a bank of a financial institution or by a consortium of banks or financial
institutions during the course of any business activity.
• “Recovery Officer” means a Recovery Officer appointed by the Central
Government for each Tribunal under sub-section (1) of section 7.

7. INTRANSIGENCE
• The Delhi High Court declared the impugned Act as unconstitutional as it eroded the
independence of the judiciary and was irrational, discriminatory, unreasonable, arbitrary and was
hit by Article 14 of the Constitution.
• The Act lowered the authority of the High Court i.e. matter above Rs 10 lakhs were only to be
filed in the Tribunal but not High Court.
• The Act eroded the independence of the judiciary since the jurisdiction of Civil Courts had been
truncated and vested in the Tribunal.
• Later on the Act was corrected and whatever lacunae or ailments existed had now been taken out
by the said Amending Act and with the outlining of more Rules.

8. COMPOSITION OF TRIBUNAL
• A Tribunal shall consist of one person only (hereinafter referred to as the
Presiding Officer) to be appointed by notification, by the Central Government.
• A person shall not be qualified for appointment as the Presiding Officer of a
Tribunal unless he is, or has been, or is qualified to be, a District Judge.
• Notwithstanding anything contained in sub-section (1), the Central Government
may authorize the Presiding Officer of one Tribunal to discharge also the
functions of the Presiding Officer of another Tribunal.

9. PROCEDURE OF TRIBUNALS
• Where a bank or a financial institution has to recover any debt from any person, it
may make an application to the Tribunal within the local limits of whose
jurisdiction.
• Where a bank or a financial institution, which has to recover its debt from any
person, has filed an application to the Tribunal under sub- section (1) and against
the same person another bank or financial institution also has claim to recover its
debt, then, the later bank or financial institution may join the applicant bank or
financial institution at any stage of the proceedings, before the final order is
passed, by making an application to that Tribunal.

10. PROCEDURE OF APPEAL
• Where an appeal is preferred by any person from whom the amount of debt is
due to a bank or a financial institution or a consortium of banks or financial
institutions, such appeal shall not be entertained by the Appellate Tribunal unless
such person has deposited with the Appellate Tribunal seventy-five per cent of
the amount of debt so due from him as determined by the Tribunal under section
19:
• Provided that the Appellate Tribunal may, for reasons to be recorded in writing,
waive or reduce the amount to be deposited under this section

11. MODES OF RECOVERY OF DEBTS
• The Recovery Officer shall, on receipt of the copy of the certificate under sub-
section (7) of section 19, proceed to recover the amount of debt specified in the
certificate by one or more of the following modes, namely:
• (a) attachment and sale of the movable or immovable property of the defendant;
• (b) arrest of the defendant and his detention in prison;
• (c) appointing a receiver for the management of the movable or immovable
properties of the defendant.

12. OTHER MODES OF RECOVERY
• Where a certificate has been issued to the Recovery Officer under sub-section (7)
of section 19, the Recovery Officer may, without prejudice to the modes of
recovery specified in section 25, recover the amount of debt by any one or more
of the modes provided under this section.
• 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 amount of debt due
from the defendant under this Act and such person shall comply with any such
requisition and shall pay the sum so deducted to the credit of the Recovery
Officer.

13. THE PRESENT SCENARIO
• A greater part of use made with the DRT gets extended for over a year, generally the run for a few
years, a considerable lot of the cases have been live for over three years.
• There is a scarcity of staff in DRTs which results in slow working of DRTs and because of shortage
of staff, there is a delay in every case to deal with which results possible delay of ending up of
cases.
• While there are 33 DRTs, there are just five Debt Recovery Appellate Tribunals in the country.
"There is surely a requirement for a more prominent number of DRTs.
• The framework that was planned is obviously not working. Likely, there ought to be an input
component and individuals engaged with DRTs ought to be urged to bring up the spaces of agony.

14. SUGGESTIONS
• The functioning of DRTs needs to improve to ensure banks are able to recover their existing loans
and offer fresh advances at cheaper rates... In the current scheme of things, there is no mechanism in
place to ensure that the tribunal disposes the case in a timely manner. There is a strong need to bring
in more accountability for the DRT.
• High courts do not have proper jurisdiction over the Debt Recovery Tribunal in the states. But a
writ petition can be filed in High Courts against the orders of the Debt Recovery Tribunal. DRTs
does Need to have more accountability to any public office.
• More and eligible staff has to be selected by finance ministry , timely appointments has to be made
to ensure the proper functioning of the tribunal . ministry has appoint only those persons who has a
proper knowledge of the law regarding recovery.

15. SUGGESTIONS
• Some cities have more than one Debts Recovery Tribunals. New Delhi, Chennai, Kolkata and
Mumbai have three Debts Recovery Tribunals. Ahmedabad and Chandigarh have two Debts
Recovery Tribunal (DRT) each. So there is a need of DRTs in that states and there also where there
is need of more DRTs.
• The government has to make time bound disposal of a case and get this ready by a proper
amendment in the act by adding a clause in the act and make it a law. Even though the time for
appeal is given in the act for six months but it has to be followed strictly by the tribunals.

16. CONCLUSION
• DRTs is that weapon in the hands of banks to recover its money in a proper way thus DRTs hold up
a place in the Indian banking system which can’t be replaced. From the study it has been ascertained
that the cases get delayed inordinately in the Debt Recovery Tribunal much against the spirit and
motives of its very establishment. Banks have expressed their dissatisfaction with the system that
was instituted to ensure speedy recovery. The number of claims in litigation is quite large and
changes should be made urgently to revamp the existing model. Unless the system is overhauled,
the rate of pendency at the tribunal will rise unrestrained. Such a state of affairs will seriously put
the banking system in doldrums.