DRT and DRAT: Key Differences Under Indian Debt-Recovery Law
The Debt Recovery Tribunal (DRT) and the Debt Recovery Appellate Tribunal (DRAT) are two different levels of the statutory tribunal system created under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). The simplest way to understand the relationship is this: DRT is the original adjudicating forum, while DRAT is the appellate forum. The DRT generally hears the debt-recovery case in the first instance, whereas the DRAT hears appeals against orders passed by the DRT.
The DRT’s principal function is to adjudicate applications for recovery of debts due to banks and financial institutions. Section 17 of the RDB Act gives the Tribunal jurisdiction, powers and authority to entertain and decide such applications. In practical terms, a bank or financial institution seeking recovery of a qualifying debt may approach the DRT rather than pursuing an ordinary civil suit, subject to the applicable statutory requirements.
The DRAT, on the other hand, is an Appellate Tribunal. Its principal function is to hear appeals against orders made by the DRT. Section 20 of the RDB Act expressly provides that a person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal having jurisdiction, subject to the conditions prescribed by the Act.
This means that the two forums occupy different stages of litigation. If a bank files a recovery application against a borrower, the matter may initially be decided by the DRT. If a party is aggrieved by the DRT’s order, the statutory appellate remedy is ordinarily before the DRAT. Therefore, a party does not normally choose between DRT and DRAT as two alternative first-instance courts; DRAT is principally concerned with appellate jurisdiction.
There is also a significant difference in the type of order each forum ordinarily considers. The DRT can determine the debt-recovery dispute at the original stage and pass appropriate orders under the RDB Act. The DRAT examines the challenged DRT order and may, under Section 20(4), confirm, modify or set aside the order appealed against.
One of the most important practical differences concerns limitation for filing an appeal. Section 20(3) provides that an appeal to the DRAT is to be filed within 30 days from the date on which the copy of the DRT order is received. The DRAT can entertain an appeal filed after that period if it is satisfied that there was sufficient cause for the delay.
Another major distinction concerns the pre-deposit requirement. Under Section 21 of the RDB Act, where the appeal is filed by a person from whom the debt is due to a bank or financial institution, the appeal is generally not entertained unless the appellant deposits 50% of the amount of debt due as determined by the DRT. The DRAT has power, for reasons to be recorded in writing, to reduce the required deposit, but the reduction cannot bring it below 25% of the debt so determined.
For example, suppose a DRT determines that a borrower owes a bank ₹1 crore. If the borrower wants to appeal against that DRT order before the DRAT, the statutory framework generally requires a deposit of ₹50 lakh. The DRAT may reduce this requirement for recorded reasons, but the deposit cannot ordinarily be reduced below ₹25 lakh under Section 21. The precise calculation and applicability of the provision must, however, be examined against the actual order and statutory circumstances.
The DRT and DRAT are both creatures of statute. The RDB Act contains separate provisions for the establishment and composition of Tribunals and Appellate Tribunals. Sections 3 onward deal with the establishment and institutional framework of the DRT, while Section 8 and subsequent provisions provide for the Appellate Tribunal.
Their procedural powers are also broadly connected. Section 22 provides that the DRT and DRAT are not bound by the procedure laid down by the Code of Civil Procedure, 1908, but are guided by the principles of natural justice and have specified powers similar to those of a civil court for matters such as summoning persons, requiring production of documents, receiving evidence on affidavits, issuing commissions and reviewing decisions.
The difference can therefore be expressed very simply: DRT = original proceedings; DRAT = appeal against DRT orders. DRT determines the debt-recovery dispute at the first tribunal level, while DRAT reviews the challenged decision within its appellate jurisdiction.
It is also important not to confuse DRAT with the High Court or the Supreme Court. The DRAT is a specialised statutory appellate tribunal created under the RDB Act. Its jurisdiction is governed by the legislation establishing it, and further judicial remedies may be available depending on the nature of the order, statutory provisions and the particular circumstances of the case.
A further point of practical importance is that the RDB Act expressly deals with the relationship between the Tribunal and Appellate Tribunal and other legal remedies. Section 18 contains a bar concerning the jurisdiction of courts in matters falling within the statutory framework, subject to the provisions of the Act. Consequently, when a debt-recovery dispute involves proceedings under other statutes such as the SARFAESI Act or insolvency proceedings under the IBC, the precise statutory jurisdiction and appellate remedy must be examined rather than assuming that every dispute involving a bank automatically belongs before the DRT or DRAT.
DRT decides; DRAT hears the appeal. The DRT is where the original debt-recovery proceeding is adjudicated, while the DRAT is the appellate forum for challenging an eligible DRT order. A DRT matter is therefore not automatically a DRAT matter; it reaches the DRAT when an appeal is properly filed against an order of the DRT, subject to limitation, pre-deposit and other statutory requirements.
For a lawyer dealing with a particular case, the most important questions are therefore: what order has the DRT passed, when was the order received, who is filing the appeal, what is the amount of debt determined by the DRT, whether Section 21 applies, and whether any separate remedy under SARFAESI, IBC or another statute affects the case. Those facts determine the appropriate procedural route.
