DRT and DRAT — what they do

The Debts Recovery Tribunal constituted under the Recovery of Debts and Bankruptcy Act, 1993 has exclusive jurisdiction over recovery of debts above ₹20 lakh by banks and financial institutions. For Rajasthan, the DRT is at Jaipur. Appeals go to the DRAT at Allahabad/Delhi. The DRT also exercises jurisdiction over SARFAESI applications under Section 17 by borrowers challenging the bank’s enforcement.

SARFAESI process and borrower defence

The SARFAESI Act, 2002 empowers a secured creditor to enforce security interest non-judicially. Steps: (i) classification of account as NPA per RBI norms; (ii) Section 13(2) notice giving 60 days; (iii) Section 13(4) measures — taking possession, appointing receiver, taking over management; (iv) sale by public auction under Section 13(8) read with the SARFAESI Rules. Borrower’s sole judicial remedy is Section 17 application before the DRT within 45 days.

OA / RC proceedings before DRT

For unsecured debts and where SARFAESI does not apply, banks file an Original Application (OA) under Section 19 of the RDDB Act before the DRT. After admission, the Tribunal can pass interim orders for attachment of property under Section 19(13), issue summons, take evidence and pass a Recovery Certificate. The certificate is executed by the Recovery Officer under Section 25 — comparable to a decree-holder’s remedy under Order XXI CPC.

Common borrower-side reliefs

Stay on possession; setting aside of valuation; reduction of demanded amount on grounds of inflated interest or wrongful charges; one-time settlement (OTS) negotiations; restructuring under RBI MSME OTS scheme; setting aside of auction sale on grounds of inadequate notice, undervalued reserve price, or failure to follow SARFAESI Rules; condonation of delay; conversion to live account.

DRAT and beyond

Appeal to DRAT under Section 18 SARFAESI / Section 20 RDDB requires pre-deposit of 25%–50% of debt amount; DRAT can waive part on hardship. Further remedy is a writ before the High Court under Article 226 in cases of jurisdictional error or violation of natural justice, but not on merits. Supreme Court intervention is via SLP under Article 136.