Introduction
With rising non-performing assets (NPAs) in the banking sector, Debt Recovery Tribunals (DRTs) have become a crucial forum for resolving loan defaults. While banks use DRTs to recover dues, borrowers also have legal rights and remedies. This blog explains what DRT is, how it functions, and the legal options available to borrowers facing recovery actions under the SARFAESI Act, RDDBFI Act, or banking contracts.
What is a Debt Recovery Tribunal (DRT)?
The Debt Recovery Tribunal (DRT) is a specialized judicial body established under the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993, to expedite debt recovery cases.
Key Features of DRT:
✔ Handles cases involving debts of ₹20 lakhs or more
✔ Follows summary procedures for faster resolution
✔ Has jurisdiction over banks, NBFCs, and financial institutions
✔ 39 DRTs and 5 DRATs (Appellate Tribunals) exist in India (as of 2024)
Common Cases Heard by DRT
✅ Loan recovery applications by banks/NBFCs
✅ SARFAESI Act enforcement (secured loan recovery)
✅ Mortgage & hypothecation disputes
✅ Borrower objections under Section 17 of SARFAESI
✅ Appeals against auction sales or property seizure
Key Laws Governing DRT Proceedings
- RDDBFI Act, 1993 – Establishes DRTs for debt recovery.
- SARFAESI Act, 2002 – Allows banks to seize secured assets without court intervention.
- Insolvency & Bankruptcy Code (IBC), 2016 – Overlaps in cases involving personal guarantors.
Rights of Borrowers in DRT Proceedings
Borrowers have legal protections under Indian law:
1. Right to Fair Hearing (Natural Justice)
- DRT must hear the borrower before passing orders.
- Ex-parte orders (without hearing) are illegal.
2. Right to File Objection under SARFAESI (Section 13(3A))
- Borrower can object within 15 days of receiving a SARFAESI notice.
- Bank must reply with a reasoned order.
3. Right to Appeal under SARFAESI (Section 17)
- Borrower can challenge possession notice, auction, or loan recall.
- Must be filed within 45 days before DRT.
4. Right to Stay on Auction/Possession
- DRT can grant interim relief to stop auction/bank actions.
5. Right to Redeem Property
- Borrower can repay dues and reclaim property before final auction.
6. Right to Legal Representation
- Borrower can hire a lawyer, submit evidence, and cross-examine bank officials.
Legal Remedies Available to Borrowers
A. File Application under Section 17 (SARFAESI)
✔ Challenge illegal possession/auction of property.
B. Request Interim Relief
✔ Seek a stay order to halt recovery actions.
C. Negotiate One-Time Settlement (OTS)
✔ DRT encourages settlements or loan restructuring.
D. Appeal to DRAT (Debt Recovery Appellate Tribunal)
✔ If DRT order is unfair, appeal to DRAT within 30 days.
💡 Note: Requires 25% deposit (may be reduced to 50% by tribunal).
E. File Writ Petition in High Court (Article 226)
✔ If fundamental rights are violated, approach High Court.
Landmark Judgments Protecting Borrowers
- Mardia Chemicals Ltd. v. Union of India (2004) – SC ruled borrowers must get a fair hearingbefore dispossession.
- Transcore v. Union of India (2006) – SC held SARFAESI & DRT powers are complementary.
- J. Rajiv Subramaniyan v. Pandiyas (2014) – DRT can grant equitable relief even after symbolic possession.
Tips for Borrowers Facing DRT Action
⚠ Never ignore a SARFAESI notice (13(2) or 13(4))
⚠ Consult a lawyer immediately
⚠ Maintain all loan records, repayment proofs, and bank communications
⚠ Request a copy of the valuation report if property is auctioned
DRT Case Status & Resources
🔹 Official DRT Portal: https://drtonline.gov.in/
🔹 SARFAESI & RDDBFI Acts: https://legislative.gov.in
🔹 Supreme Court Orders: https://main.sci.gov.in/
Conclusion
DRT proceedings are not one-sided—borrowers have strong legal rights to challenge unfair bank actions. If you face loan recovery, auction threats, or illegal possession, timely legal action is crucial.
Need Help? Contact Us!
B S Makar, Advocate
📞 +91-9878131111 | 🌐 www.makarlaws.com
📍 Practicing in Punjab & Haryana High Court
✔ Expert in DRT Appeals, SARFAESI Disputes & Financial Litigation
Act now—protect your rights and property! 🚀