Image source -

This article is written by Adv. Mahesh Sitaram Dhannawat.

What is DRT?

Indian banks and financial institutions had since long been suffering to recover debts and enforce securities from the defaulters. As the procedure regarding such recovery was erratic and extremely cumbersome, the Narasimham Committee of 1991 recommended the setting up of Special Tribunals like DRTs (Debt Recovery Tribunals) and DRATs (Debt Recovery Appellate Tribunals), in order to streamline such processes. The Committee’s recommendation led to the enactment of Recovery of Debts Due to Banks and Financial Institutions Act (“RDDBFI”) 1993, from which DRTs and DRATs derive their authority to adjudge on debt recovery matters. Since its inception, we have 39 DRTs and 5 DRATs functioning in the country.

DRT’s Legitimacy

In 1995, the Delhi HC struck down RDDBFI, due to its unconstitutional nature which compromised the independence of judiciary. However, the SC allowed DRTs to function, if amendments are made to the existing Act of RDDBFI. Therefore, the government made subsequent amendments to RDDBFI in 200 and 2002, to which the SC gave its nod of being constitutional. Thus, in the present scenario DRTs function in a constitutional manner.

Download Now

Composition of DRTs

Under 4 of the RDDBFI Act, the Tribunal shall be comprised of only one member (“Presiding Officer”), who shall be appointed by the Central Government upon notification. Upon authorisation of the Central government, the Presiding Officer (“PO”) of one Tribunal may also discharge functions of Presiding Officers of another Tribunal. The PO shall be appointed for a term of 5 years or 62 years of age, whichever is earlier and shall be qualified as a District Judge.

Extent and scope of DRTs

Pecuniary limit under DRTs and the procedure

The DRTs can be approached for recovery of debts which are more than Rs. 10 lakhs in value. For lower amounts than the above-mentioned value, the banks and financial institutions (“creditors”), need to approach a civil court under CPC (Civil Procedure Code). However, the Act warrants that for other amounts more than Rs. 1 lakh, the Central government can direct certain cases to be adjudged by DRTs. Furthermore, SARFAESI Act, also specifies certain amounts pertaining to different cases, which can be taken up by the DRTs.

Now, 22(1) mandates the DRTs and the DRATs to be governed by the principles of natural justice. In pursuance of such principles, they possess the powers to regulate their own procedure and not be bound by the one laid down in CPC. Moreover, in order to argue cases in DRTs, a law degree is not required.

Jurisdiction of DRTs

Under 17 of the RDDBFI Act, DRT has the authority to entertain any application from banks and financial institutions, in order to recover loans for such banks and financial institutions. DRAT being the Appellate Tribunal shall have the jurisdiction to entertain appeals against any order made by a DRT under the Act. However, Supreme Court has adjudged that DRT and DRAT cannot decide upon cases like succession rights of property, issuance of receipts, etc. Its jurisdiction is strictly confined only to cases mentioned in 17 of the Act.

Now, under 18 of the Act, other courts are barred to look into matters of debt apart from Supreme Court and High Court, who derive their authority from Article 226 and 227 of the Constitution. This provision is in line with the L Chandra Kumar’s judgment which states that Tribunals are only supplementary to High Courts and not a substitute for them.

The Process of DR

The Application Route

Under 19 of the RDDBFI Act, the conditions are laid down as to under which DRT one has to file an application. Such an application can be filed by a bank or a financial institution to a DRT, that has the jurisdiction, and where the defendant either resides or carries out his business. Moreover, an application can also be filed with a DRT, if the cause of action arises wholly or partly within the limits of the jurisdiction. Along with the application, the prescribed needs to be paid. 


An application to the DRT can also be made under the Securitisation and Reconstruction for Enforcement of Security Interest Act (SARFAESI), 2002. Under SARFAESI, the secured creditor takes possession of the securities of the debtors, when he fails to discharge all his liabilities. However, there occurs a case, wherein the securities are not able to discharge of the entire debt. Under these circumstances, the creditors have an option of filing an application to the DRT for recovery of the remaining dues. Moreover, under 17 of the SARFAESI Act, the borrowers can also appeal to the DRTs against the creditor’s findings.

Procedures to be followed post-filing an application

DRTs and DRATs are adjudicated by summary proceedings, in order to expediate the court proceedings. Under 19(12) of the Act, the DRT has the powers to proclaim an interim order against the borrower in order to restrict him from disposing or transferring any property belonging to him without the prior permission from the Tribunal. Moreover, the DRT can go to the extent of detaining the borrower for a period of maximum 3 months for any disobedience of an order or breach of any order issued under 19(12), 19(13) or 19(18) of the RDDBFI Act.

When an application is made under the normal application route, then the time frame to complete the case is 180 days. However, if the application is made to the DRT under the SARFAESI Act, then the cases are needed to be disposed off within 60 days to 4 months. If the time duration gets exceeded then under 16 of the SARFAESI Act, either party can appeal to DRAT to direct the DRT to dispose of the pending application.

Under 19(4), the application made to a DRT warrants summons to be issued to the defendant to show cause within 30 days as to why the prayed relief should not be granted. The defendant must turn in a written submission, for which extra time can be granted by the Tribunal. A defendant can also file a counter-claim against the complainant with respect to the alleged sum of money, but only in the first hearing, except also in cases where the Tribunal explicitly grants such permission.

Based on the DRTs order, the Presiding Officer shall issue a certificate to the Recovery Officer to recover the debt amount, which has been specified in it, The Recovery Officer may attach, sell or appoint a receiver for the management of the defendant’s property, in order to recover the debt. Moreover, the DRTs also possess the power to obtain a police warrant to arrest the defendant in these cases.

Procedure for DRAT

India currently houses only 5 DRATs which are located in Mumbai, Delhi, Kolkata, Chennai and Allahabad. Now, under 20(3) of the RDDBFI Act, an appeal with the DRAT needs to be filed within a period of 45 days, from the date on which the copy of the order of the Tribunal is received by him. However, the provisio to 20(3) states that the Appellate Tribunal may also allow an appeal after the expiry of 45 days, if there is sufficient cause to indicate that the appeal could not have been filed earlier. It is pertinent to note that DRAT can also be approached in case of an interim relief to be obtained on interim application or miscellaneous application, which form a part of the original applications.

DRATs are deemed to be expensive, such that aggrieved party is required to deposit 75% of the amount determined by the order of the DRT. In case the matter is routed through the SARFAESI Act, the deposit limit is 50% of the amount claimed by the creditor. These exorbitant deposits often deter the defendants from appealing to the DRATs.

Change in DRTs post IBC

The Insolvency and Bankruptcy Code, 2016 (“IBC”) was brought about by the government in order to unify the legal framework on bankruptcy and insolvency issues. IBC consolidated various laws relating to insolvency by amending close to 11 laws, including Companies Act, 2013, RDDBFI 1993, SARFAESI, 2002. It also did away with various old laws like Presidency Towns Insolvency Act, 1909, Sick Industrial Companies Act, 1985, etc. 238 of the IBC gave an overriding effect over the other laws. 

Changes/Amendments to the RDDBFI Act after IBC are specified in the 5th Schedule of IBC and are as follows:

  1. The title has been amended to also include bankruptcy of individuals and partnership firms into its ambit, rather than being merely limited to banks and financial institutions.
  2. Under 3 sub-section 1(A) was added which claimed that the Central Government would have the power over the number of DRTs and its benches as it may deem necessary.
  3. 8 was amended, so as to entitle DRAT here appeal matters against orders made by Adjudicating Authority under Part III of IBC.
  4. 17 was amended so that DRTs have circuit sittings in all district headquarters. Moreover, DRTs an DRATs were granted powers and jurisdiction to entertain applications as under Part III of IBC.

Distinction between the two forums

  1. The first basic point of difference between the two tribunals is that DRT is regulated by SARFAESI Act and its Parent Act i.e. the DRT Act, on the other hand NCLT is regulated by the Companies Act and IBC. 

2. Secondly, the very nature of the relief provided by these bodies is different. While NCLT concerns itself with liquidation and bankruptcy proceedings, DRT is more focussed on debt recovery. 

3. Thirdly, NCLT provides remedy sought to companies in case of default in payment of debts that are both operational and financial which gives both banks and financial institutions the right to approach NCLT for the recovery of loan amount. 

Since all commercial transactions entered into businesses come under the ambit of operational debts. companies choose the convenient forum i.e. NCLT for the initiation of insolvency recovery process instead of filing a suit in civil court. On the other hand, DRTs can only help in facilitating the recovery of amounts of financial nature i.e. dispute resolution between customers and banks. It does not have jurisdiction to entertain any other cases. 


The present law involving the code still faces confusion as the presence of more than one available forum is tested by implementation of law. The disposal rate of DRTs is alarming as they are unable to reduce the pending cases. The existence of many company related legislations with respect to recovery of debt mandates and asks for interpretation. A delay in disposal of cases due to overlapping proceedings is worrisome. The interplay of rules of the Code, the SARFAESI Act and the DRT Act remains unresolved. Simultaneous proceedings before the civil court, the DRT and the NCLT for recovery of the same debt is contributing to an inefficient insolvency regime. 

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.


  1. The post is good but not correct as per new rules. Pecuniary jurisdiction has been increased from 20 lakhs and non banking institutions are now also covered like private funders like India Bulls etc. Adv. Mahesh Sitaram Dhannawat has written this post on November 30, 2020 where the changes were already made. So the author has failed to put forward the current regime under DRT Law.


Please enter your comment!
Please enter your name here