Indian Law: The Purpose of Debt Recovery Tribunals

The Indian government has established Debt Recovery Tribunals, under the Indian law. These were formed to help financial institutes/Banks, to recover their bad debts, in a quick and efficient manner. The recovery of bad loans has turned into a big issue, affecting the profits of banks and government’s revenues too. Debt recovery tribunals are a judicial body, established under the Recovery for Debts Due to Banks and Financial Institutions, Act, 1993.

India has 33 debt recovery tribunals (called as DRTs) and 5 debt recovery appellate tribunals. A DRT is constituted in a state, depending on number of cases. Some cities in India have more than one Debt Recovery Tribunal. However, there are many states, which do not have a DRT. The Banks and Financial institutes in such states have to approach the authorized DRT of other states. The territorial jurisdiction of some DRTs can be very broad.

Indian Law: Functioning of Debt Recovery Tribunal

Indian law mandates that each DRT is headed by a Presiding Officer. The Presiding Officer is either a District or Sessions Judge. He is the sole judicial authority who passes the judicial orders. However, he is assisted by number of other subordinate officers.

Each DRT consists of two Recovery Officers. They are assigned tasks by the Presiding Officer. However, you can appeal against the orders passed by a Recovery Officer, before the tribunal’s Presiding Officer.

A DRT is authorized to pass orders like a Civil Court. It can hear cross suits, counter claims and allow set-offs. However, it cannot entertain claims of deficiency of services or breach of contract or criminal negligence on the part of the bank/financial institute.

The DRT records evidence in the form of affidavit. Further, cross examination is allowed only, if the tribunal opines that it will help in delivery of justice. An insignificant cross-examination may be refused.