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DRT Procedure

The document outlines the procedure followed in the Debt Recovery Tribunal (DRT) in Mumbai, India. It involves 18 steps, beginning with sending a legal notice to the defaulter and ending with the DRT passing an order allowing or dismissing the original application. If allowed, the DRT issues a recovery certificate to begin recovery proceedings, which involve steps like attachment and sale of the defendant's property. Appeals can be made to the Appellate Tribunal against DRT orders. The document also provides details about the establishment of DRTs in India to help banks recover debts over Rs. 10 lakhs through an independent forum.

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PINAZ DHAN PARDIWALA
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11K views7 pages

DRT Procedure

The document outlines the procedure followed in the Debt Recovery Tribunal (DRT) in Mumbai, India. It involves 18 steps, beginning with sending a legal notice to the defaulter and ending with the DRT passing an order allowing or dismissing the original application. If allowed, the DRT issues a recovery certificate to begin recovery proceedings, which involve steps like attachment and sale of the defendant's property. Appeals can be made to the Appellate Tribunal against DRT orders. The document also provides details about the establishment of DRTs in India to help banks recover debts over Rs. 10 lakhs through an independent forum.

Uploaded by

PINAZ DHAN PARDIWALA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 7

PROCEDURE OF DEBT RECOVERY TRIBUNAL, MUMBAI.

In DRT, the procedure of the Tribunal is narrated below in the following


stages:
1) Sending of Legal Notice under Sec. 19 of DRT to the concerned
defaulters.
2) Filling of Original Application (O.A) in DRT.
3) Lodging No. (O.A) + (Interim Application, if any)
4) For Removal of Objections.
5) O.A No.
6) For Interim Relief – Interim Affidavit placed before Presiding
Officer (P.O)
7) Summons & Show Cause Notice (annex interim relief order)
8) Summons to be returned to DRT / Bank.
9) Summons to be sent to the Defendants along with O.A., Show
Cause Notice & Interim Relief (I.R) order copy.
(a) Summons when served.
(b) Summons when not served.
(a) Summons when served.
If summons is served, the Defendant appear & file
their Vakalatnama & on next date for filing Written
Statement of the Defendant.
(b) Summons when not served.
When summons is returned with remark “Left”, “Not
Known”, “Door Closed” etc, then Application for
substituted service by paper publication of Summons.
The Application is then allowed by the Registrar.

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On next date, Affidavit for filing substituted service by
paper publication along with newspaper cutting of
publication.
And for filing Written Statement on next date.
10) If the Defendant asks for inspection of the original documents
then one date is given for inspection of documents.
11) First date of hearing before the P.O. for Trial.
12) For filing Compilation of Documents by the Applicant. The copy
to be served to Defendant.
13) In Compilation of Documents - original documents + claim
affidavit.
14) For say of the Defendants – i.e., Defendant’s Claim Affidavit.
15) If the Defendant files any Application for stay then the
Applicant has to file the Reply for the stay application & the
matter is heard by the P.O. & appropriate order is passed i.e.,
either application for stay is allowed or rejected.
16) For final hearing of O.A. (Oral Arguments)
17) For Passing Order.
i) O. A. Allowed.
ii) O.A. Dismissed.
In case of Dismissal of O.A., then file DRAT Appeal against
DRT order.

i) If O. A. Allowed :-
Then after 2 or 3 months, DRT issues Recovery Certificate
(R.C), then the R.C. Proceeding begins. The R.C.Proceeding is
as follows :

Page 2 of 7
Recovery Proceeding No.
Issue Demand Notice by Applicant to Defendants.
Summons to be served. (Summons served / not served procedure
is the same as in O.A.)
Attachment Warrant (If the property is mortgage) &
For list of assets (If property is not mortgaged)
(To search the assets of the Defendant, then an Affidavit
mentioning the details of the property has to be submitted in DRT,
and then the property mentioned in the Affidavit is attached and
Sold)

The Attachment Warrant is issued to the Applicant & the same is


served to the Defendants. If the Warrant is served, then the
property will be attached as per the procedure & if the Warrant is
not served, then the Applicant has to file the Affidavit along with
Application for substituted service of the Attachment Warrant.
Then comes the Affidavit of Publication and only after the
publication the service is completed.
The next step is for Valuation & Possession of the property by the
DRT. The DRT appoints valuators. After the valuation, the DRT
takes the physical possession / the symbolic possession of the
property.

The next stage is the Sale Proclamation :-

Notice of sale proclamation (NSP) is issued.


(NSP follows the same procedure of Attachment Warrant)
After NSP – Fixing of Sale Program.
DRT – Gives the sale date, details of Auction etc., & to personally
serve on the defendants & also publish the same in the newspaper.
Page 3 of 7
Then the property is sold by Auction.
Then the Applicant is liable to collect the R. P. Amount & the
surplus is refunded to the Defendants by the DRT.

Then the Recovery Proceedings is Closed.

XX===========XX

Debt Recovery Tribunal (DRT) (In Detail)

There was an immense overload on the Indian legal system since the
recovery of many unpaid debts, due to banks or financial institutions,
was being held up, indefinitely. This resulted in the loss of a substantial
amount of revenue and finance. Keeping the above in mind, it was
thought that an independent forum was needed to deal with debts of
these types. Thus, in 1993, the 'Recovery of debts due to Banks and
Financial Institutions Act' was passed. The Act, however, imposes a
limitation and states that only those debts which are in excess of Rs. 10
lakhs would come under its purview. The Central Government had
proposed an amended in the said Act wherein the pecuniary jurisdiction
for filing the DRT proceedings to be increased from Rs. 10 Lakhs to Rs.
20 Lakhs. However, the aforesaid amendment has been stayed by the
Hon’ble High Court of Rajasthan and till the time the matter is decided
before the said High Court, DRT will accept the proceedings to be filed at
Rs.10 lakhs & more. This is, totally, in keeping with the intentions of the
makers of the Act.

Page 4 of 7
Steps involved in the recovery of debts due to banks and financial
institutions:

1. Application to the Tribunal: The bank, which stands to recover loans


and other debts, shall initiate the procedure, by, first, forwarding an
application alongwith a court fee, to the Tribunal.

2. Issue of Summons: Summons will be issued by the DRT to the


defendants asking them to show cause within 30 days of the service of
summons why the reliefs should not be granted.

3. Appearance of Defendants.

a) If Defendants appear the matter will be posted for written statement.

b) If the Defendant does not appear after service of summons, the matter
will be placed before Presiding Officer for passing the necessary orders.
(the Defendants will be set ex-parte and the matter will be posted for
affidavit in lieu of evidence of Applicant by the Presiding Officer, since the
Registrar does not have powers to pass any orders)

4. Evidence Posting: Once the Defendants file written statement, the


matter will be posted for the evidence of the parties before Presiding
Officer.

a) Evidence of Applicant by way of affidavit. Cross-examination may be


permitted only if the Presiding Officer of DRT is of the view that cross-
examination is indeed necessary.

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b) Evidence of Defendants by way of affidavit. Cross-examination may be
permitted only if the Presiding Officer of DRT is of the view that cross-
examination is indeed necessary

5. Arguments.

6. Pronouncement of Orders: Where a decree or order has been passed


by a court before the commencement of the Recovery of Debts to Banks
and Financial Institutions (Amendment) 2000 and has not yet been
executed, then, the decree holder may apply to the Tribunal to pass an
order for recovery of the amount. On receipt of this application, the
Tribunal may issue a certificate of recovery to the Recovery Officer.

7. Recovery Certificate: On receipt of a certificate, the Recovery Officer


shall proceed to recover the amount as if it was a certificate in respect of
a debt recoverable under this Act. The Recovery Officer can take
following steps for recovery of amount mentioned in the Recovery
Certificate:

a) Attachment and sale of moveable or immovable property of the


Defendant.
c) Appointing a receiver for management of movable or immovable
properties of Defendant.

8. Appeal to the Appellate Tribunal: Any person aggrieved by an order


made, or deemed to have been made, by a Tribunal under this Act, may
prefer an appeal to an Appellate Tribunal having jurisdiction in the
matter within a period of forty-five days from the date on which a copy of
the order made. 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

Page 6 of 7
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 percent of the amount of debt so


due from him as determined by the Tribunal under Section 19. However,
the Appellate Tribunal, with reasons recorded in writing, can waive or
reduce the amount to be deposited under this section.

** ==========================**

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