DRT Proceedings — Complete FAQ

Who can file an Original Application before the DRT?

Under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, any "bank" or "financial institution" as defined under Section 2 of the Act can file an Original Application (O.A.) before the DRT for recovery of debts exceeding ₹20 lakhs. The definition of "bank" includes scheduled commercial banks, co-operative banks, and regional rural banks. "Financial institutions" includes SIDBI, NHB, NABARD, EXIM Bank, and NBFCs specifically notified by the Central Government. Individual creditors, partnership firms, companies, and other entities that do not fall within the statutory definition must pursue recovery through ordinary civil courts unless they qualify under other special statutes such as the IBC.

What is the limitation period for DRT proceedings?

The Limitation Act, 1963 applies to proceedings before the DRT in the same manner as it applies to suits in ordinary civil courts. The period of limitation for recovery of money under an agreement is generally 3 years from the date the debt becomes due and payable (Article 37 of the Limitation Act). However, each written acknowledgment of liability by the borrower (such as a balance confirmation letter) or each part payment creates a fresh limitation period from the date of such acknowledgment or payment. Banks must maintain meticulous records of acknowledgments to preserve their right to sue. The Supreme Court has consistently held that the limitation question must be examined carefully before filing.

What is Section 19(7) of the RDDB Act — Interim Relief?

Section 19(7) of the RDDB Act empowers the DRT to grant interim orders for the purpose of preventing frustration of any decree or order that may be passed in the O.A. This includes power to issue: (a) injunctions restraining the defendant from transferring, alienating, or dealing with the secured asset; (b) appointment of a receiver; (c) attachment of the defendant's property before final adjudication. Critically, the DRT can grant such interim orders even before service of summons on the defendant — this prevents defendants from dissipating assets upon receiving notice of impending DRT proceedings. For large NPA accounts, obtaining an ex-parte interim attachment immediately upon filing is standard practice.

Can a Recovery Certificate be executed outside the DRT jurisdiction?

Yes. A Recovery Certificate (RC) issued by a DRT can be transmitted to the Recovery Officer of any other DRT where the judgment debtor has assets. Section 29 of the RDDB Act empowers the Recovery Officer to take action including attachment and sale of movable and immovable properties, arrest and detention of the judgment debtor, appointment of receiver, and recovery of money from garnishees (third parties who owe money to the judgment debtor). The RC has nationwide enforcement capability — unlike ordinary civil court decrees which require execution proceedings in each jurisdiction separately.

What is the DRAT pre-deposit requirement for filing an appeal?

Section 21 of the RDDB Act requires a person (defendant/borrower) who appeals against a DRT order to the DRAT to first deposit 50% of the debt amount with the DRAT. However, the DRAT has discretion to waive or reduce this pre-deposit amount if the appellant can demonstrate genuine financial hardship. The Supreme Court has clarified that this discretion must be exercised judiciously and not in a manner that renders the appellate remedy illusory. Banks appealing against DRT orders do not face this pre-deposit requirement — it applies only to defendant-appellants.

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