Debt Recovery Tribunal

From Justice Definitions Project

What is

Debt Recovery Tribunals are quasi-judicial bodies that were established by the Central government under the Banks and Financial Institutions (RDDBFI) Act, 1993[1] to facilitate the recovery of debts. They are supervised by Debt Recovery Appellate Tribunals (DRATs).

These tribunals have the jurisdiction to entertain a wide variety of claims, relating to any secured or unsecured liabilities alleged to be due to banks and financial institutions.[2]The pecuniary minimum for cases over which such tribunals have jurisdiction is Rs. 20 lakh.[3]

Historical Evolution of Debt Recovery Tribunals

Before the establishment of these tribunals in 1993, the recovery of debts was pursued in civil courts.

Legislative History

A 1981 committee headed by Mr. T. Tiwari was set up by the RBI to study the phenomenon of corporate sickness.[4] It also noted that debt recovery cases were treated as ordinary cases, which was a problem in the context of the fact that courts were already burdened with regular cases. It therefore recommended the establishment of special tribunals, i.e., a quasi-judicial setup, exclusively for banks and financial institutions, that would use a summary procedure to quickly dispose off debt recovery cases. It also provided broad outlines for the constitution and functioning of the Special Tribunals.

These findings and recommendations were backed by another committee chaired by Mr. Narasimham in 1991 (i.e., the Narasimham-I Committee). This committee went a step further and proposed the formation of quasi-judicial debt collection agencies to expedite debt recovery.[5]

All these suggestions were given effect to in the RDDBFI Act, which established an adjudicative mechanism as well as a system for debt collection. This is evidenced by the statement of objects and reasons, which notes that lakhs of cases involving debts amounting to Rs.5622 crores (due to Public Sector Banks) and Rs.391 crores (due to financial institutions) “prevents proper utilisation and recycling of the funds for the development of the country.”[6]

The first DRT was established in Calcutta on 27th April 1994.

Judicial Pronouncements

The constitutionality of the RDDBFI Act was challenged on the ground that it violated Article 14 of the Constitution and exceeded the parliament’s legislative competence.[7] The Supreme Court dismissed this and upheld the Act’s validity. It held that “while Articles 323A and 323B specifically enable the legislature to enact laws for the establishment of tribunals, the power of the parliament to enact a law constituting a tribunal such as a banking tribunal is not taken away in relation to the matter specified therein.” Moreover, it held that in exercising its legislative competence, the parliament can offer a mechanism for recovering payments owed to banks and financial institutions.

However, the Supreme Court has in another case also noted that the jurisdiction of these tribunals is limited to the narrow scope defined in Section 17 of the Act.[8] They cannot encroach upon the jurisdiction of civil courts in matters concerning succession rights, monitoring and enforcing KYC rules, issuing receipts, etc.


The first Amendment, implemented by the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 1995 (28 of 1995) extended the retirement age of a Presiding Officer (now chairperson).[9]

The second Amendment was implemented by the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 (1 of 2000).[10] It made some notable changes:

  1. Changed the terminology ‘Presiding Officer’ to ‘Chairperson’
  2. Expanded the definition of ‘debt’ to include judgement debts created by an arbitral award
  3. Inserted section 17A, granting a Chairperson of a DRAT general powers of superintendence over DRTs, as well as the power to transfer cases between DRTs
  4. Provided a detailed procedure of debt recovery in section 19.

The third Amendment was effected by the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2016 (44 of 2016).[11] It made a few notable changes in the following regards:[12]

  1. expeditious disposal of recovery applications;
  2. electronic filing of recovery applications, documents and written statements; and display of interim and final orders of the DRTs and DRATs on their website;
  3. priority to secured creditors in repayment of debts over all claimants;
  4. debenture trustees as financial institutions; and
  5. empowering the Central Government to provide for uniform procedural rules for conduct of proceedings in the Debts Recovery Tribunals and Appellate Tribunals.

Legislative Framework

Organizational Structure of DRTs[13]

Organizational structure.png

Provisions Relating to Members of DRTs

  • Appointment: Tribunal members are appointed by the Central Government by notification.[14]
    • The Debts Recovery Tribunal (Procedure for Appointment as Presiding Officer of the Tribunal) Rules, 1998[15] requires all appointments to be made through a committee consisting of the chief justice of India, three secretaries of the government of India (finance, law, and the department of financial services) and a representative of the governor of the Reserve Bank of India.
  • Qualification: A tribunal member must be qualified to be a district judge,[16] i.e., he must have been an advocate/pleader for at least 7 years and be recommended by the High Court for appointment.[17]
  • Tenure: 5 years from the date of assuming office, or until the attainment of 62 years of age, whichever is earlier.[18]
  • Salaries/Allowances: To be prescribed by the government.[19]
  • Removal: By notice in writing. They can also be removed on the ground of proven misbehaviour or incapacity by the Central government, after an inquiry made by the High Court.[20]

Procedural Framework

The Tribunals’ procedure is prescribed by the Central Government in the Debt Recovery Tribunal (Procedure) Rules, 1993.[21] According to these rules when read with the Act, the procedure for debt recovery is as follows:

  • Banks need to make an application to the DRT which has jurisdiction in the region in which the bank operates and pay the required fees.[22]
  • The defendant shall present a written statement of his defense before the first hearing and set up a counter-claim during the hearing.
  • The Tribunal may, after giving the applicant and the defendant an opportunity to be heard, pass such interim or final order.
  • The interim order passed against the defendant can restrict him from disposing or transferring his property without the prior assent of the Tribunal.
  • DRT after hearing both the parties and their submissions would pass the final judgment within 30 days from hearing. DRT will issue a Recovery Certificate within 15 days from the date of judgment and pass on the same to the Recovery Officer.
  • The Tribunal may direct the conditional attachment of the whole or any portion of the property specified by the applicant.
  • The Tribunal may also appoint a receiver and confer him all powers to defend the suit in the court and to manage the property.
  • Where a certificate of recovery is issued against a company registered under the Companies Act, 1956 the Tribunal may order the sale proceeds of such company to be distributed among its secured creditors.
  • Recovery Officers are tasked with the execution of the final decree and are empowered to conduct public auction to realize the debt amount.[23]

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002,[24] complements the RDFBI in this regard. Borrowers can file applications in the DRTs against action taken for enforcement of security interest under this Act. The Act is applicable to cases where security interest for securing repayment of any financial asset is more than Rs.1 lakh and the amount due is 20% or more of the principal amount and interest thereon.[25]

It has been held that the withdrawal of an action pending before the tribunal under RDDBFI, 1993 is not a prerequisite for resorting to SARFAESI, and that the SARFAESI provides a remedy additional to the RDDBFI that is not ‘inconsistent’ with it.[26]

Distribution of Benches

As of February 2024, there are 39 Debt Recovery Tribunals (DRTs) and 5 Debt Recovery Appellate Tribunals (DRATs) established in India.[27]

The territorial jurisdiction of each DRT is determined by the Central notification that established them.[28]

Status of Digitization

The e-DRT project has been implemented in all DRTs and DRATs. It provides access to e-filing, e-payment of fees, cause list generation and a case information system that enables viewing of case status, orders and judgments[29] (on

The features of e-DRT are as follows:[30]

  • Mechanism and guidelines for paperless filing (“e-filing”) of Original Application (OA), Securitization Application (SA) and other miscellaneous applications across the country
  • Provision of necessary information regarding how to use online features of e-DRT Software
  • The e-filing system can be used by any Agent (Authorized Legal Practitioner) who has enrolled to practice in the Bar Council of any State in India or by any Petitioner in Person to file cases before DRT or DRAT

The main and supplementary causelists (provided in html format, but also retrievable in .pdf, .doc and .xlx formats on provide case number, case name, time of commencement of hearings, and information about the appearing advocate. Some tribunals add remarks to highlight the quantum of the claim pending adjudication.

Hearings are conducted in hybrid form, and all causelists contain a video conferencing link. The Ministry of Finance has issued directions mandating hybrid hearings to comply with the directions of the Supreme Court.[31]


Information disposal data on individual Debt Recovery Tribunals is not publicly available. However, a consolidated statement is published in the annual report of the Department of Financial Services.[32]

Disposal data.png

Research that Engages with DRTs

RBI Working Group on the Functioning of Debt Recovery Tribunals

Based on the recommendations of the Second Narasimham Committee Report, the Reserve Bank had constituted a Working Group in March 1998 to review the functioning of Debt Recovery Tribunals (DRTs) and to suggest measures for their effective functioning (Chairman: Shri N.V. Deshpande).[33]

In its Final Report, it recommended certain legislative amendments to the RDBFI Act and measures to improve the functioning of DRTs. The recommendations were forwarded to the Government for consideration. In September 1998, the banks were advised, inter alia, to take steps to ensure expeditious recovery procedure at DRTs.

It noted the problem of pendency and stipulated that the presiding officer of DRT should not have more than 30 cases on board on any given date and there should not be more than 800 cases pending before it any given point of time.

Research Publications

Centre for Public Policy Research, ‘A Study on the Effectiveness of Remedies Available for Banks in a Debt Recovery Tribunal: A Case Study on Ernakulum DRT’[34]

This publication notes issues faced by litigants in a DRT, such as pendency (delay of 2-3 years), shortage of staff, a proliferation of stay orders and adjournments.

It suggests providing for accountability measures (such as reporting of disposal data), timely appointment of staff by the Ministry of Finance, closer examination of stay petitions, appointment of an additional Presiding Officer, and legal provisions to ensure time-bound disposal of cases.

CUTS Centre for Competition, Investment and Economic Regulation, ‘Consolidated Project Report on Regulatory Impact Assessment in Indian Financial Sector’[35]

This report took into account the situation between 2013-15 and noted that inadequate capacity and accountability mechanisms in DRTs have led to delays in decision making and consequent recovery of due amounts. It estimated an opportunity cost of around ₹35,000 crore owing to delay in debt recovery (of up to four years) on a consolidated basis (DRT Act and SARFAESI Act). It also noted that low debt recovery has also resulted in credit risk premium of around 300 basis points, resulting in high cost of funds.

It noted that the legislative framework was characterized by short-term fixes, not a comprehensive strategy to manage high non-performing assets, improve debt recovery, and prevent recurring of this episode in future.

It suggested an increase in the monetary threshold for claims (which was implemented in 2018), establishment of 24 new DRTs, provision of technical members, constitution of independent advisory body to recommend candidates to fill vacancies of DRTs, and a stipulation of additional cost for grant of adjournment at increasing rate (0.1 percent of matter) beyond reasonable number. It also suggested SARFAESI-specific legislative changes.

Sujata Visaria, ‘Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India’[36]

This study uses a micro dataset on project loans to show that the establishment of the new DRTs causes loans with high overdues to improve repayment. The paper notes that tribunals reduced delinquency for the average loan by 28 percent. They also lowered the interest rates charged on larger loans, holding constant borrower quality.

This suggests that the speedier processing of debt recovery suits can lower the cost of credit – that is to say, the establishment of DRTs leads banks to charge lower interest rates on new project loans than it otherwise would have.

Prasanth Regy, Shubho Roy and Renuka Sane, ‘Understanding judicial delays in India: Evidence from Debt Recovery Tribunals’[37]

The authors note that although Debt Recovery Tribunals were set up to wrap up the debt recovery process within 180 days, empirically, judicial delay can be observed in their proceedings as well. They use a novel strategy using micro-data, such as the date and content of orders as well as the factors impacting adjournments, rather than macro-data such as disposal rates, to study the phenomenon of judicial delay.

They find that the average case takes 2.7 years to be disposed off, mostly due to avoidable trial failures and adjournments sought by borrowing parties (petitioners). They explain this by referring to firstly, petitioners’ preference to settle matters outside of court, and secondly the perverse incentives instituted for lawyers who are billed on the basis of hearings. Finally, they note that administrative issues in the tribunal itself may cause delays, and suggest reforms to reduce pendency that target all of these stakeholders.

Pavithra Manivannan, Susan Thomas, and Bhargavi Zaveri Shah, ‘Helping litigants make informed choices in resolving debt disputes’[38]

The authors investigate the factors that they believe would impact litigant decision-making across 3 courts in Bombay, including the Debt Recovery Tribunal. Their study focusses on the following questions:

  1. How likely is it to get a first hearing in the first year from filing the case in the court?
  2. How likely is it that the matter will get disposed in the first year from the filing of the case?
  3. How many hearings are most likely to take place in the first year from the filing of the case?

They conclude that there is a 96% chance that a case filed in the DRT would be heard within a year of its filing, a 17.3% chance of disposal with an average of expected hearings set at 2.7. Their data shows that the DRT performs better in these metrics than the High Court, but worse than another special tribunal, the NCLT.

Renuka Sane, ‘Estimating the Potential Number of Personal Insolvency Cases at the DRT’[39]

This article examines the likely load on DRTs due to the notification of personal insolvency sections of the IBC by asking three questions with respect to personal loans from the banking channel in India:

  1. What is the spread of personal loans across districts in India?
  2. How many cases are likely to emerge on account of defaults?
  3. How well prepared are the DRTs to handle these cases?

It focusses on the number of loan accounts (potential insolvencies) rather than the value of credit outstanding. It notes that districts with a high concentration of loan accounts (barring the seven in the top 20) have DRTs, but it also points out that they shoulder heavy case-loads.

Moreover, it notes and provides suggestions for the potential challenges of including personal insolvencies within the IBC due to the nature of the cases, which is different from ordinary cases at DRTs.


Pendency of cases has been noted in the research publications above as well as the Supreme Court.[40]

The appointment process has been questioned on the ground of non-independence – it has been argued that the DRT lacks independence because the government nominees in the appointment process may overrule the judicial nominee.[41] Moreover, the Finance Ministry playing a dual role in providing support staff to DRTs and regulating the public sector banks that are the bulk of litigants at DRTs is also a potential cause of concern – i.e., blurring of executive and judicial nature of a tribunal – that has been noted by the Supreme Court.[42]

Moreover, these Tribunals sometimes face administrative issues like a lack of space, electricity and other basic resources due to a lack of support from the Finance Ministry. [43]The lack of manpower, adequate infrastructure and resources was also noted by the Supreme Court, who directed the Union to provide information about remedial steps.[44]

Way Forward

The Finance Ministry is exploring further amendments to the RDBFI Act to solve the problem of pendency and has directed banks and financial institutions to leverage the e-auction platform, currently under development, for listing and auction of properties.[45]

  1. S.3, Banks and Financial Institutions (RDDBFI) Act, 1993
  2. S. 17 (1) r/w Definition of debt in s. 2 (g), Recovery Of Debts And Bankruptcy Act, 1993
  6. Statement of Objects and Reasons, RDBFI Act
  7. Union of India & Anr. vs. Delhi High Court Bar Association & Ors 2002 (4) SCC 275
  8. Standard Chartered Bank vs. Dharmendra Bhoi, (2013) 15 SCC 341
  14. S. 4 (1), RDDBFI Act
  16. S.5, RDBFI Act
  17. Article 233, Constitution of India
  18. S.6 RDBFI Act
  19. S. 7 (3), RDBFI Act
  20. S.15, RDBFI Act
  22. S.19, RDBFI Act
  23. S.25-28, RDBFI Act
  26. Transcore v. Union of India, AIR 2000 SC 712.
  28. S. 3 (2), RDBFI Act
  40. Centre for Public Interest Litigation vs. Housing and Urban Development 2017 (3) SCC 566
  42. L. Chandra Kumar v. Union of India AIR 1997 SC 1125
  44. Centre for Public Interest Litigation vs. Housing and Urban Development 2017 (3) SCC 566
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