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  • From Archive


    Title ::Bank Officers should carefully examine the title deeds being deposited by them: DRT-2 Chennai.

    Brief ::
    A strange case came up before the Hon’ble DRT-2 Chennai when two Banks staked lien over one and the same property and both of them produced ‘original’ title deed to the one and the same property. The DRT carefully sieved through the data and held one of them to be custodian of the original title deed and other to be a fake. The DRT advised bank officers to be extremely careful while accepting title deeds for disbursal of loans against them.

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    Title :: DRTs cannot adjudicate any claim of the bank.

    Brief ::
    DRTs cannot decide any and every claim of a bank. The Bank’s claim must be within the meaning of the word ‘debt’ as defined in the RDB Act. If the claim does not satisfy the definition of ‘debt’, the DRTs are denuded of their jurisdiction to hear such claims and the Banks must be advised to approach the civil courts.

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    Title :: When documents are challenged, DRT must seek expert evidence.

    Brief ::
    Debts Recovery Tribunals must base their decision on judicious considerations only and not on presumptions and conjectures. Where the document produced by the defendant is challenged and denigrated as being forged, views of experts should be taken to arrive a judicious decision.

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    Title :: DRTs can fix rate of interest.

    Brief ::
    The Debts Recovery Tribunals ( DRT ) have the powers to fix rate of interest during the period the case was pending before it and till the time of collection of the suit amount. In exercise of this power it can grant a rate of interest for the period under litigation which if fair and reasonable.

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    Title :: Financial jurisdiction of DRT does not change with the change of amount adjudicated.

    Brief ::
    The Debts Recovery Tribunals (DRT) can hear claims of Banks only if the amount claimed is Rs. 10 lakhs and above. However the DRT will not loose jurisdiction of a case, if after adjudication the DRT decrees for a amount lesser than Rs. 10 lakhs.

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    Title :: Conscious absenteeism from proceeding before DRT uncondonable

    Brief ::
    An ex-parte order of the Debts Recovery Tribunal (DRT) cannot be set aside on the ground of irregularity in the service of summons, if the party –appellant had knowledge of the proceedings before the DRT.

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    Title :: The DRT must adjudicate the claim of the applicant only.

    Brief ::
    The Debts Recovery Tribunal (DRT) must confine its decision only to the pleadings made by the applicant. The DRT should not go into the pleadings of respondents/ defendants and adjudicate their claim for apportioning of the sale proceeds of assets secured to the applicant.

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    Title :: Limitation for enforcing foreign judgments before DRTs is 3 years

    Brief ::
    The Debts Recovery Tribunals can enforce orders and judgments issued by foreign Courts for the recovery of debts due between a Bank and its borrower in that country. On the basis of such a judgment the DRT can issue a Recovery Certificate. However, the applicant or judgment creditor bank has to file an application before the DRT within a period of three years from the date of judgment. The period of limitation cannot be extended irrespective of the conduct of the parties during the period.

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    Title :: Indian Evidence Act not applicable to DRTs

    Brief ::
    Debt Recovery Tribunals (DRTs) are meant to be fast track courts and supposed to regulate their proceedings based on the principles of Natural Justice. They are not bound down by the rigors of the Civil Procedure Code. This is particularly so in matters relating to cross examination of witness and deducing evidences before the DRTs. However many defendant counsels take recourse of demanding cross examination of witnesses as a precondition for filing their counter affidavits which is not acceptable before the DRTs.

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    Title :: DRTs fume at pleas for cross examination as delaying tactic.

    Brief ::
    As a matter of rule Debts Recovery Tribunals ( DRT ) do not tolerate delays. DRTs look down upon every tactic aimed at delaying proceedings. While dismissing such applications most DRTs also impose exemplary penalties/costs. The plea for cross-examination of witnesses is one such tactic which the defence counsels have flogged on and on to death resulting in DRTs looking down upon it as a cheap tactic for delaying the enviable.

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    Title :: No harm if DRT accepts 2nd statement of defense in transferred matters.

    Brief ::
    DRTs should not reject 2nd statement merely because the party has already filed one before the civil Court, particularly when the Act empowers the DRT to continue the proceedings from any stage it deems fit. Such requests should be considered from all angles before any order is passed.

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    Title :: Co-op Banks out of DRT net

    Brief ::
    Cooperative Banks are not ‘Banks’ within the meaning of the DRT Act and are not governed by the Recovery of Debts Due to Banks and Financial Institutions (RDB) Act, 1993. Banking is only incidental to their main activity of cooperation amongst their members, and in addition, the State cooperative acts were self contained and had provisions for speedy and efficacious remedies.

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    Title :: DRT cannot ask the lessee to pay more than the indenture amount.

    Brief ::
    An order of the Debts Recovery Tribunal directing Lessee to pay an higher amount than what the lessee had agreed to pay to the lessor-debtor of the Bank is legally invalid. The lessee’s liability to the Bank cannot exceed the amount agreed to in the lease agreement.

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    Title :: Appeal to DRT under SRFAESI Act to be charged as per DRT Rules:: SC

    Brief ::
    The Supreme Court (SCI) has ruled that fee payable for filing an application to Debts Recovery Tribunal ( DRT ) challenging actions of authorized officer under SRFAESI Act should be as per DRT Procedure Rules.

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    Title :: Proceedings before DRT is no bar for other proceedings to go on.

    Brief ::
    The relation between a banker and a borrower has many facets and multiple agreements for performances of various activities. Return of money by a borrower is just one of them, for which proceedings before the Debts Recovery Tribunal (DRT) either under the RDB Act or the SRFAESI Act is envisaged. That part, disputes between a banker and a borrower on other aspects of their agreement are neither barred by the RDB Act nor limited by the DRT. They can go on simultaneously, without one infringing upon the other.

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    Title :: No special clauses for tenants in DRT Act

    Brief ::
    The Recovery of Debts Due to Banks & Financial Institutions Act ( RDB Act ), or the Debt Recovery Tribunal Procedure Rules ( DRT Rules ) do not have any special provisions in them for the tenants. A query often raised relates to the provisions protecting the rights of the tenants of a building , whose owner has mortgaged the property to a Bank. The complexity of the issue can be gauged by the fact that all the parties before the Tribunal are either confused over the issue, or have opinions at variance with each other.

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    Title :: Strong message from DRT Mumbai - Exercise Powers with Responsibility.

    Brief ::
    Provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SRFAESIA) have given the lenders a lot of powers to recover the amounts lent by them. But these powers have to be exercised with responsibility. They cannot be used loosely, without application of mind, vindictively, or arbitrarily. Lenders who do not use these provisions with due responsibility are liable to be penalized. And DRT Mumbai did just that.

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    Title :: Jurisdiction of a Recovery Officer - cannot transgress that of the DRT.

    Brief ::
    The territorial jurisdiction of a Recovery Officer of a Debt Recovery Tribunal (DRT) cannot go beyond the territorial jurisdiction of the DRT. The Recovery Officer of a DRT should limit his operations within the territorial limits of the DRT with which he is attached. In case the Recovery Certificate entrusted to him refers to a property that is outside the territorial jurisdiction of the DRT, then the Recovery Officer should return the Recovery Certificate to the Presiding Officer for passing suitable orders.

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    Title :: Adjournments before DRTs should be a rarity.

    Brief ::
    If the Debt Recovery Tribunals were to grant adjournments like it is done in the civil Courts, then the very purpose of setting up of the Debt Recovery Tribunals would be defeated. The Tribunals are required to adjudicate and dispose of claims of Banks and Financial Institutions within one hundred and eighty days of their being filed before the DRTs. The mantra is "expedious disposal" of cases. Hence the parties before the Tribunal should go well prepared to the Tribunal and not seek adjournments unless it is absolutely essential, or totally unavoidable. It is good for all the parties too.

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    Title :: DRTs cannot be expected to grant adjournments merely for the asking.

    Brief ::
    The very purpose of constituting exclusive bank Debt Recovery Tribunals (DRT) is to expediously settle claims of the Banks and Financial Institutions. The Debt Recovery Tribunals should dispose off cases within six months of being filed before them. The DRTs cannot be expected to grant adjournments merely for the asking. The parties to a case, especially the respondents should therefore go before the DRTs well prepared and not ask for adjournments without any adequate reasons.

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    Title :: Recovery Officer of a DRT is bound by Schedule II of the Income Tax Act

    Brief ::
    Can a Recovery Officer of a Debt Recovery Tribunal exercise powers outside the II Schedule of the Income Tax Act? Does Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act empower the Recovery officer to ignore limitations imposed upon him under the II Schedule of the Income Tax Act? Well no. And the Kerala High Court has said so too.

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    Title :: The Recovery Officer of a DRT cannot arrest a lady defaulter.

    Brief ::
    The Kerala High Court has held that the Recovery Officer of a Debt Recovery Tribunal does not have powers to arrest and or detain a woman defaulter in a civil prison. It has held that since the Recovery Officer has to work within the provisions of Income Tax Act, as made applicable to the Recovery Of Debts Due to Banks and Financial Institutions Act, a woman defaulter cannot be arrested by the Recovery Officer.

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    Title :: Powers of DRTs are limited where Companies are under liquidation.

    Brief ::
    After the Hon'ble Supreme Court's landmark judgment in the case of it was generally believed that the role of Company Judge and Official Liquidator got truncated. One thought that all that remained for the official liquidator to do, if any thing he could do, was the disbursal of amounts to the unsecured creditors, that is if any thing remained, after being appropriated by the Banks and Financial Institutions coming through the Recovery Officers of the Debt Recovery Tribunals.

    The Supreme Court had held in the case of that Recovery of Debts Due to Banks and Financial Institutions Act 1993 was a special Act as compared to the Companies Act. Even if Companies Act was also considered to be a special Act, then the Recovery of Debts Due to Banks and Financial Institutions Act 1993 being a latter act as compared to the Companies Act superseded it. That being the case, the jurisdiction of the Companies Court was ousted in so far as the secured claims of Banks and Financial Institutions were concerned, as the Debt Recovery Tribunals had full powers to decide such claims.

    In a subsequent judgment the Hon'ble Supreme Court has clarified that the over riding effect of Section 19(18)(e) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, vis:viz Section 446 of the Companies Act has been held as being limited only to the extend of taking inventories of the defendants before the Debt Recovery Tribunals in respect of such companies which are under liquidation.

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    Title :: The DRT Commissioner has right of way over the Official Liquidator

    Brief ::
    The official liquidator appointed by the High Courts and the Commissioners appointed by the Debt Recovery Tribunals function in a narrow corridor of law and were bound to tread upon each other's feet. With both of them eyeing the same properties to satisfy the claims made before them, the Company Law and the Recovery of Debt Due to Banks and Financial Institutions Act needed to be reconstructed so as to permit functioning of both the authorities in their respective spheres of law, and none of the provisions of either law becoming redundant.

    On considering various provisions of Recovery of Debts Due to Banks and Financial Institutions Act, vis:viz the Companies Act, the Supreme Court has held that in so far as the powers of the Commissioner appointed by the Debt Recovery Tribunal is concerned, it supersedes the powers of the Official Liquidator appointed by the High Courts in relation to the secured assets and properties mortgaged to the Bank or Financial Institutions, by the company under liquidation.

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    Title :: Proceedings can go on in Consumer Court as well as in DRT

    Brief ::
    Consumer Court`s have a jurisdiction independent of the Debt Recovery Tribunals. The consumer courts are bound to hear complaints of the parties and decide the matter on merits irrespective of the fact that the same parties were locked in a litigation before the Debt Recovery Tribunal, and the Tribunal has already passed a decree against the complainant. The issue before the Tribunal was different from what is before the Consumer Courts. Where there is allegation of deficiency of services against the Banks it is the duty of the Consumer Courts to hear the complaints of the consumer`s against without being enamored by the orders passed by the Debt Recovery Tribunals. Merely because an order has been passed by the Debt Recovery Tribunal it does not mean that Consumer Court cannot hear a matter within its own domain.

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    Title :: Consumer Court are not forums over DRTs

    Brief ::
    Consumer Courts can hear a matter between the same parties in whose case the Debt Recovery Tribunal has already decided the claim of the Bank The issue before the Tribunal is different from what is before the Consumer Courts. The Tribunal decides about the dues of the defaulters to the Banks. Whereas the Consumer Courts have to decide the loss suffered by the complaint because of negligence or deficiency of services of the Banks. However, the Consumer Court cannot take the amount decreed by the Tribunal against the complainant as part of the loss suffered by him. This is because, the Consumer Court is not a appellate Forum for the Debt Recovery Tribunal.

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    Title :: BANKING OMBUDSMAN & DRT ACT ARE DIFFERENT AND EXCLUSIVE –Proceedings between two parties based on the same facts can go on simultaneously before the two forums.

    Brief ::
    An issue based on the same facts of the case and between the same parties can go on simultaneously before the Debt Recovery Tribunal as well as before the Banking Ombudsman. This is because the scheme of Banking Ombudsman is totally different from that of the Debt Recovery Act and the Tribunals constituted under it. Both of them are exclusive to one and another and do not have any overlapping jurisdictions. Therefore, a dispute between two parties, and, arising out of the same facts, could be pending before the Banking Ombudsman as well as the Debt Recovery Tribunal. Proceedings can take place simultaneously in both the forums without one coming in the way of another.

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