DRT Court: What Is a DRT, Which Cases Can Be Filed, and What Is the Minimum Amount?
In India, DRT means Debts Recovery Tribunal. It is a specialised tribunal created primarily to deal with disputes and recovery proceedings involving debts owed to banks and financial institutions. The DRT system was established under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) with the objective of providing a specialised and relatively speedy mechanism for adjudicating and recovering debts due to banks and financial institutions. The Department of Financial Services currently states that 39 DRTs and 5 Debts Recovery Appellate Tribunals (DRATs) are functioning across India.
A DRT is therefore not simply another name for an ordinary civil court. Its jurisdiction is created by specific financial-recovery laws, principally the RDB Act and, in a different but closely connected context, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The DRT can exercise the powers and jurisdiction specifically assigned to it by these laws.
Under the RDB Act, banks and financial institutions can approach the DRT by filing an Original Application (OA) for recovery of debts due to them. Section 17 of the Act gives the Tribunal jurisdiction to entertain and decide applications from banks and financial institutions for recovery of such debts. In practical terms, this commonly covers situations in which a borrower has defaulted on a bank or financial-institution loan and the lender seeks an adjudication and recovery order.
The types of financial disputes that can therefore come before a DRT include substantial loan-recovery claims involving banks and financial institutions. These may arise from business loans, working-capital facilities, term loans, secured lending and other credit facilities where a debt is legally recoverable. The precise maintainability of an application depends on the nature of the claim, the parties involved, the amount claimed, limitation and the statutory jurisdiction of the Tribunal.
An important point is that the DRT is not ordinarily a forum where an individual simply files an ordinary money-recovery case against another individual merely because money is owed. The statutory jurisdiction under the RDB Act is principally concerned with applications by banks and financial institutions for recovery of debts. Section 17 specifically describes the Tribunal’s jurisdiction in terms of applications from banks and financial institutions for recovery of debts due to them.
The DRT also has an important role under the SARFAESI Act. This is where the position can become particularly important for borrowers. When a secured creditor takes measures under SARFAESI to enforce security—for example, taking possession of secured property or proceeding toward sale—the borrower or another person affected by the statutory measures can approach the DRT under Section 17 of the SARFAESI Act. Government material similarly explains that while banks approach the DRT for recovery proceedings, borrowers, guarantors and other aggrieved persons can approach the DRT against qualifying action taken by a bank under SARFAESI.
This means that there are broadly two different situations in which people commonly encounter the DRT. In one, a bank or financial institution approaches the DRT seeking recovery of a qualifying debt. In the other, a borrower or another affected person approaches the DRT challenging measures taken under the SARFAESI framework. These proceedings should not be confused with one another because their statutory basis and procedural requirements are different.
What Is the Minimum Amount for a DRT Case?
For a recovery application by a bank or financial institution under the RDB Act, the current pecuniary threshold is ₹20 lakh. The Central Government increased the threshold from ₹10 lakh to ₹20 lakh through a notification dated 6 September 2018. The notification states that the RDB Act would not apply where the amount of debt due to a bank or financial institution, or a consortium of banks or financial institutions, is less than ₹20 lakh.
Therefore, if a bank is seeking to institute an ordinary debt-recovery application under the RDB Act, ₹20 lakh is the important statutory threshold. A claim below ₹20 lakh ordinarily does not fall within the DRT’s RDB Act recovery jurisdiction merely because it is a bank loan. The Government has also confirmed that the pecuniary jurisdiction of DRTs was increased from ₹10 lakh to ₹20 lakh so that the tribunals could focus on higher-value recovery cases.
There is, however, an important legal distinction that is often missed when people say that “the minimum DRT case is ₹20 lakh.” That statement is too broad. The ₹20-lakh threshold relates to the DRT’s debt-recovery jurisdiction under the RDB Act. It should not automatically be applied to every type of proceeding that may come before a DRT.
For example, SARFAESI proceedings under Section 17 are a separate statutory route. A borrower or other aggrieved person challenging measures taken by a secured creditor under SARFAESI may have a remedy before the DRT even though the amount involved is below ₹20 lakh. The SARFAESI framework and the RDB Act should therefore be examined separately before concluding that a particular matter is or is not maintainable before a DRT. The statutory rules and the particular nature of the bank’s action are important.
The distinction can be illustrated simply. Suppose a bank claims that a borrower owes ₹50 lakh and wants recovery of that debt. Since the amount exceeds ₹20 lakh, the RDB Act’s DRT recovery mechanism may be relevant, subject to all other legal requirements. On the other hand, if a borrower is challenging a specific SARFAESI possession or enforcement measure, the question is not simply whether the debt is above ₹20 lakh; the court or tribunal would have to examine the relevant provisions of the SARFAESI Act and the legality of the measure being challenged.
DRT proceedings can also involve secured assets and disclosure of property. The RDB Act contains provisions requiring an applicant seeking recovery to provide particulars of secured debts and the estimated value of securities, and, where appropriate, information concerning other assets of the defendant. The Tribunal can issue directions concerning disclosure and protection of assets during the proceedings.
The DRT system also has an appellate structure. Orders of a DRT can generally be challenged before the Debts Recovery Appellate Tribunal (DRAT), subject to the applicable statutory conditions. The Department of Financial Services identifies DRATs as the appellate tribunals associated with the DRT system.
For borrowers, one of the most important practical points is that receiving a DRT or SARFAESI proceeding should not be treated as equivalent to an ordinary civil suit. The statutory deadlines, documents, objections, limitation issues, security documents, account statements, notices and recovery measures can all be significant. In a SARFAESI matter especially, the date and legality of each statutory notice or enforcement step can become important.
DRT is a specialised tribunal dealing principally with bank and financial-institution debt recovery and related statutory proceedings. Under the RDB Act, the important current monetary threshold for a bank or financial institution’s recovery application is ₹20 lakh. But ₹20 lakh is not a universal minimum for every proceeding before a DRT, because DRT jurisdiction also arises under other legislation, particularly SARFAESI, where borrowers and other aggrieved persons can challenge qualifying enforcement measures.
If a particular case involves a home loan, mortgage, business loan, personal guarantee, SARFAESI possession notice, auction notice, or bank recovery notice, the applicable DRT remedy can be different. The exact amount of the outstanding debt, the type of lender, whether security exists, the statutory notice issued and the dates involved are all relevant to determining the appropriate proceeding.
India has 39 Debts Recovery Tribunals (DRTs): DRT-1 Ahmedabad, DRT-2 Ahmedabad, DRT Allahabad, DRT Aurangabad, DRT-1 Bengaluru, DRT-2 Bengaluru, DRT-1 Chandigarh, DRT-2 Chandigarh, DRT-3 Chandigarh, DRT-1 Chennai, DRT-2 Chennai, DRT-3 Chennai, DRT Coimbatore, DRT Cuttack, DRT-1 Delhi, DRT-2 Delhi, DRT-3 Delhi, DRT Dehradun, DRT-1 Ernakulam, DRT-2 Ernakulam, DRT Guwahati, DRT-1 Hyderabad, DRT-2 Hyderabad, DRT Jabalpur, DRT Jaipur, DRT-1 Kolkata, DRT-2 Kolkata, DRT-3 Kolkata, DRT Lucknow, DRT Madurai, DRT-1 Mumbai, DRT-2 Mumbai, DRT-3 Mumbai, DRT Nagpur, DRT Patna, DRT Pune, DRT Ranchi, DRT Siliguri, and DRT Visakhapatnam.
