In this presentation, we have discussed about DRT & DRT's. Their history. What are their importance.

2. DRT and
DRAT has
been of
immense help
to the bank
and the
borrower.
By
Group 7

3. DRT Act is Recovery of Debts due to banks and financial institutions Act,
1993. Basically, Banks and other financial institutions were facing problem in
recovering the loan and advances given to the people. Due to which the need of this
act was arise. Because of the difficulties faced by banks and other financial
institutions the Committee of financial Services realized that there is need to
establish the Tribunal which will help the banks to recover its bad loans with the
legal procedure. So, in 1981 the committee examined various problems faced by the
banks in recovering loans so they realized the fast need of some special Act to handle
all such problems. That’s why they decide to introduce the bill in Parliament In 1993
for recovery of Debt. The Recovery of Debt Due to Banks and Financial institutions
Bill (RDBBFI) was passed in the both houses of parliament in year 1993 and the Act
came into force.
What is
DRT?
Debt Recovery Tribunals

4. DRT is controlled over by a Presiding Officer, who is qualified to be a
District Judge and is appointed by notification by Central Government for a term of 5
years. The central Government may also authorize another presiding officer of a
DRT other than discharging the function of a presiding officer of a DRT. Presently
there are 39 DRTs all over the country. All lawful debts( secured and unsecured)
come under the jurisdiction of DRT.
It applies to all over India except for State of Jammu and Kashmir.
It applies where the amount of debt due should be Rs. 20,00,000/- and above.
It applies when the original application for recovery of Debts is filed only by Banks
and Financial Institutions.
Applicability of the Act

5. What is
DRAT?
A person or entity aggrieved by orders of the DRT can appeal against its
orders to Debt Recovery Appellate Tribunal (DRAT). The DRAT will not entertain the
appeal until such person deposits the 75% of the amount of debt so due determined
by the DRT. In this article, we look at the Debt Recovery Tribunal Act, in detail.
The appeal against an order of Recovery Officer to DRT can be requested within 30
days from the date of order.
The Tribunals have to resolve the claim within six months.
The appeal against the judgment of DRT can be made within 45 days only to
DRAT(Debt Recovery Appellate Tribunal).
For filling lawsuit, as per Section 21 of the tribunal the 50% of the fund to be
deposited by the appellant and the Chair Person may reduce it up to 25% of the
deposit amount.
India currently houses only 5 DRATs which are located in Mumbai, Delhi,
Kolkata, Chennai and Allahabad. DRAT has the power of a CIVIL COURT while hearing
the appeal. An appeal against the order of DRAT can be entertained by the High Court
under certain circumstances.

6. Banks and financial institutions were experience considerable difficulties in
recovering loans and enforcement of securities charged with them. The existing
procedure for recovery of debts due to the banks and financial institutions had blocked a
significant portion of their funds in unproductive assets, the value of which deteriorates
with the passage of time. The Committee on the Financial System headed by Shri M.
Narasimham has considered the setting up of the Special Tribunals with special powers
for adjudication of such matters and speedy recovery as critical to the successful
implementation of the financial sector reforms. An urgent need was, therefore, felt to
work out a suitable mechanism through which the dues to the banks and financial
institutions could be realized without delay.
Why DRT &
DRATs?

7. To prevent banks from Non-performing assets and various types of Debt.
To help to reduce the amount of NPA’s by aiding through this Act.
Easy and procedural recovery of Debt from borrowers.
To improve the financial position of the banks.
Main
Objectives

8. CHENNAI 16 JUNE 2021 21:29 IST
Chief Justice Sanjib Banerjee and Justice Senthilkumar
Ramamoorthy made the observations while dismissing a writ petition
filed by a guarantor who had furnished his property as security for a
bank loan of ₹55 lakh in 2006. The judges directed the petitioner to pay
costs of ₹20,000 each to State Bank of India (SBI) and the auction
purchaser of the property for having made them face multiple legal
proceedings since 2010.
The borrower failed to repay the loan and the bank began
issuing notices since August 2007. Finally, a sale notice was issued in
October 2010 deciding to auction the property in November 2010. “In
between, there was a one-time settlement offer that was made by the
bank but the borrowers, true to form, played ducks and drakes with the
secured creditor after depositing a paltry amount,” the Division Bench
Example

9. CHENNAI 16 JUNE 2021 21:29 IST
Thereafter, the property was sold for ₹2.07 crore in the auction and the
bank returned ₹80 lakh to the petitioner after deducting the principal
loan amount along with interest. However, the petitioner refused to
receive the money and approached the Debt Recovery Tribunal (DRT)
challenging the auction sale on the ground that the property had been
undervalued and sold for a song and therefore the sale must be
nullified.
The DRT ruled in favour of the petitioner in 2015. “However, the order
of such Tribunal dated April 8, 2015 is trifle short on reasons, if there are
any reasons to be found therein at all,” the Division Bench said. The
Bench further held that the Debt Recovery Appellate Tribunal (DRAT)
had, in March this year, rightly reversed the DRT’s 2015 order and hence
the present petition challenging the DRAT’s order could not be
entertained.
Example

10. So, in conclusion banks can recover their NPA’s with the help of DRT Act. In this
case the defendant is also failed to make payment of loan and interest amount to
bank. So recovery of debt tribunal help the bank to recover the amount. In the
judgment of court, it is decided that the amount which is due by loan is recovered
through the proper procedure of the court and bank can recover the amount of their
debt by sale the property of Defendant. As DRT act was enacted only to protect the
banks from the non-performing assets and provide them a good redressal
mechanism which help them to recover their amount.
So, We can conclude that DRT and DRAT has been of immense help to the
bank. Sometimes DRT and DRAT helps the borrowers also.
Conclusio
n