(Recovery of Debts due to banks and Financial Institutions Act- RDDB & FI Act)
• The establishment of Debt Recovery Tribunals for recovery of bank and financial institution dues was recommended by initially by Narasimham Committee followed by Tiwari Committee.
• The Act got the approval (assent) of the President of India on 27.8.1993.
• This Act was amended many times over the past 15 years. The period of amendments are given below:
(i) The Recovery of Debts Due to banks and Financial Institutions (Amendment) Act, 1995 (28 of 1995).
(ii) The Recovery of Debts Due to banks and Financial Institutions (Amendment) Act, 2000 (1 of 2000)
• DRTs have been established mainly for providing a simple and summary procedure to banks for recovery of their dues in accordance with the principle of natural justice. It acts as a court of appeal for recovering of shortfall in dues which remain unpaid after exercising banks right under other laws like SARFAESI, 2002. Third advantage of establishing DRTs is to help banks seek recourse in it to recover unsecured dues of Rupees 10 lakh and above.
• Government of India has the powers to establish DRTs. It has the powers to establish one or more Debt Recovery Appellate Tribunals (DRAT) by notification.
• Composition of DRT: DRTs are having a small organizational structure with one Presiding Officer (PO), and one or more Recovery Officers beside by lean secretarial staff.
• Tenure of PO: The period for which Presiding Officer is appointed in DRT is for 5 years from the date on which he starts his office.
• Normally the Presiding Officer should be a person who qualifies to be District Judge. In case of DRAT, the Chairperson should qualify to be member of Indian Legal Service (experience minimum 1-3 years),or Judge of High Court or Presiding Officer of DRT for 3 years.
• The Proceeding of DRT and DRAT are governed by (i) principle of natural justice, (ii) rules of civil procedure code (section 22 (2) of CPC, 1908).
• The jurisdiction of DRTs is not dependent on the location of charged property – movable or immoveable, of defendant. Section 19(1) of RDDB & FI Act, 1993 provide that bank may file an application to the Tribunal where defendant resides at the time of making application or carry on business or where the cause of action, wholly or partly arise.
• Fees: Rule 7(1) and 7(2) of the RDDB & FI Act, 1993 lays down the procedure of filing application and fees to be deposited. The fee can be sent through crossed DD on a nationalized bank or through Indian Postal Order favouring Registrar.
• The fee structure is:
If debt due is Rupees 10 lakh, fee is Rs.12,000/=.
If debt is above Rs.10 lakh, fee is Rs.12,000/= plus Rs.1000/= for every Rs.1 lakh of debt or part thereof subject to maximum of Rs.1,50,000/=
For review application, fee is 50% of fee paid