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DebtsRecoveryTribunalLaws&procedures.

Laws&Procedureof

DebtsRecoveryTribunal
InIndia
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LawsofTheDebtsRecoveryTribunal
The Debts Recovery Tribunal have been
constituted under Section 3 of the Recovery of
Debts Due to Banks and Financial Institutions Act,
1993. The original aim of the Debts Recovery
Tribunal was to receive claim applications from
Banks and Financial Institutions against their
defaulting borrowers. For this the Debts Recovery
Tribunal (Procedure) Rules 1993 were also drafted.
While initially the Debts Recovery Tribunals did
perform well and helped the Banks and Financial
Institutions recover substantially large parts of their
non performing assets, or their bad debts as they
are commonly known, but their progress was
stunted when it came to large and powerful
borrowers. These borrowers were able to stall the
progress in the Debts Recovery Tribunals on
various grounds, primarily on the ground that their
claims against the lenders were pending in the
civil courts, and if the Debts Recovery Tribunal
were adjudicate the matter and auction off their
properties irreparable damage would occur to them.

ImportantOrders
onNPAs
themortgagesandseeifthe
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not.
SimultaneousProceedingscan
goonbeforeBanking
Ombudsmanaswellasbefore
theDebtsRecoveryTribunal
Simultaneousproceedingscan
goon
IntransferredmatterstheDebts
RecoveryTribunalmaycontinue
withtheproceedingsfromany
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AcooperativeBankisnot
requiredtogobeforetheDebts
RecoveryTribunalsforthe
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members.
Auctioningauthoritieslikethe
DebtsRecoveryTribunals
shouldensurethatthebestprice

ReadCitations

Apart from the above big lacunae, there were a


number of short comings too. The dues of work
men against a company, the State dues, and the
dues of other non secured creditors all got
enmeshed before the Debt Recovery Tribunals. As
if these were not sufficient, there was clash of
jurisdiction
between
the
Official
Liquidators
appointed by the High Courts and the Recovery
Officers of the Debts Recovery Tribunals. The
Official Liquidator, an appointee of a superior
authority, took into his possession all the properties,
which actually belonged to secured creditors who
before the Debts Recovery Tribunal. The High
Courts also took umbrage on the activities of the
Recovery Officers who away the entire amounts
and paid off to the banks leaving nothing for the
other claimants, including the work men. All these
and other issues lead to drastic amendments to the
Recovery of Debts Due to Banks and Financial
Institutions Act by means of an amending
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DRT2 Kolkata
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DRT Lucknow
DRT Madurai
DRT1 Mumbai
DRT2 Mumbai
DRT3 Mumbai
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DRT2 New Delhi
DRT3 New Delhi
DRT Patna
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DRT
Vishakapatnam
DRT Ranchi

DebtsRecoveryTribunalLaws&procedures.

notification in the year 2000.


While the amending notification of 2000 did bring
in some amount rationalization in the jurisdiction of
the Debts Recovery Tribunal, yet it was not
sufficient to coax the big borrowers to acquiesce
to the jurisdiction of the Debts Recovery Tribunal
easily. The lenders continued to groan under the
weight of the Non Performing Assets. This led to
the enactment of one more drastic act titled as
the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interests Act,
also called as SRFAESI Act or SRFAESIA for
short.
This new Act, the SRFAESI Act, empowered the
lenders to take into their possession the secured
assets of their borrowers just by giving them
notices, and without the need to go through the
rigors of a Court procedure. Initially this brought
in lot of compliance from borrowers and many a
seasoned defaulter coughed up the Bank dues.
However the tougher ones punched whole in the
new Act too. This led Supreme court striking
down certain provisions and allowing the borrowers
an adjudicatory forum before their properties could
be taken over by the lenders.
And the adjudicatory forum turned out to be the
Debts Recovery Tribunal. The Debts Recovery
Tribunal now deal with two different Acts, namely
the Recovery of Debts Due to Banks and
Financial Institutions Act as well as the
Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interests Act. While
the aim of the both the Acts is one and the
same, but their route is different.

The Debts Recovery Tribunal have to deal with


extraordinary complex commercial laws within the
narrow ambit of the two laws. Over the years
the Debts Recovery Tribunals have evolved into
fine bodies with lot of expertise. There is a
plethora of judgments from the Supreme Court as
well as the various High Courts which have paved
the way of the Debts Recovery Tribunals to chart
their courses. The Debts Recovery Tribunal of
India have become model institutions for many a
country to follow.
To know more about the laws and procedures
before the Debts Recovery Tribunal, various
notifications, judgments, citations and other guide
lines that are available in matters connected with
the Debts Recovery Tribunal, we request you to

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DebtsRecoveryTribunalLaws&procedures.

go to our main site, viz: BankDRT.com. We are


sure you will get all the information that you
would need.

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