Ni r maUni versi t y I nst i t ut eofLaw
I X Seme mest erB. Com.LL. B. ( Hons. ) Cour se
Repor tofFi el dVi si tof DebtRecover yTr i bunal
Asapar tofCl i ni calTr ai ni ng Fort heAcademi mi cyear( 201516)
Prepar ed& Submi mi t t edBy Mohi tMi t t al
11BBL059
Tabl eofCont ent
Sr .No
Subj ect
PageNo.
1
Pr ef ace
3
2
Ac knowl e dgement
4
3
I nt r oduct i on: Br i ef about t he Debt Recov er y
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Tr i bunal 4
Rol eandFunc t i onofDRT
7
5
PowerandFunct i onoft heDRT
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6
Br i e fr epor t i ng oft he cas es at t e nded & obser v ed
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dur i ngt heFi e l dVi s i t 7.
Obser v at i onsoft heFunct i oni ngoft heDRTCourt
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Experi enceduri ngt heFi el dVi si t 8.
Concl usi on
12
2
Preface
Thi sr epor ti san out comeoft heFi el dVi si toft heDebtRecov er yTr i bunal , Ahme dabad f ort hes t udent sofni nt h semes t er .Themai n cons t i t ue nt sof t hepr oj ectaret here porton casesobser vedatt heDRTdur i ngt hevi si t ,I havet r i edmybestt odoj ust i cewi t h myact i vi t i esand puti ti n bl ack and whi t ewi t ht hes ameeffor tasIdi di tdur i ngt hev i si t .
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Date:3rd Oct ,2015
Name& Si gnat ur e
Acknowl edgment
Iwo ul dfir s t l yl i ket ot hankt heI ns t i t ut eofLa w,Ni r maUni v e r s i t yf o rg i v i ngme such an opport uni t yt ounder got hefiel d vi si ti nt heDebtRecov er yTri bunal dur i ngt heni nt hSemes t er .
Iwoul dl i ket oexpr essmypr of oundgrat i t udef ort hepr oj ectgui dancet oAsst . Pr o f .Shai l j aTr i pat hiwhohass oabl yg ui de dusi nt hi sfie l dv i s i t .
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I am t hankf ulf or t he gui dance and f or pr ovi di ng nec es sar yi nf or mat i on r e g ar di ngt hepr o j e c tandal s of o rt he i rs uppo r tdur i ngt hefie l dv i s i t .
Ihavet ri ed t ocoveral lt heaspect soft hefiel d vi si tand ever ycar ehasbeen t aken t omaket her eportf aul t l ess.Ihavewr i t t en t her eporti n myown wor ds andi ft her ei sanyerr orwi t hr espectt ot hecases,t hent heyar emi neonl y .
I NTRODUCTI ON:BRI EFABOUT DEBT RECOVERYTRI BUNAL DebtRecover yTri bunal s( DRT)areaspeci alpur posequasij udi ci alcour t st hat areest abl i shed f orkeepi ng i nl i ne wi t ht he i nt er nat i onalt r ends on hel pi ng financi al i nst i t ut i ons r ecov er t hei r bad debt s qui ckl y and effici ent l y ,t he Gover nmentofI ndi ahasconst i t ut edt hi r t yt hr eeDebt sRecover yTri bunal sand fiveDebt sRecov er yAppel l at eTri bunal sacr osst hecount ry .TheGove r nmentof I ndi a had es t abl i shed si x ne w DRT i n 2014 par t i cul ar l y at Chandi gar h, Bengal ur u,Er nakul um,Dehr adun,Si l i gur i ,andHyder abad.
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TheDebt sRecov er yTr i bunal( DRT)enf or cespr ovi si onsoft heRecov er yofDe bt s Due t o Banks and Fi nanci alI ns t i t ut i ons ( RDDB&FI )Act , 1993 and al so Sec ur i t i z at i on and Rec ons t r uct i on ofFi nanci alAss e t s and Enf or ce mentof Sec ur i t y I nt er es t s ( SARFAESI ) Act , 2002 and Debt s Rec ov e r y Tr i bunal ( Pr ocedur e)Rul es1993.
Under t he Re co v er y of Debt s Due t o Banks and Fi nanc i al I ns t i t ut i ons ( RDDB&FI )Act ,1993 banksc an appr oacht heDebt sRec ov er yTr i bunal( DRTs ) wher eas,under Se cur i t i z at i on and Re cons t r uct i on ofFi nanci alAsse t s and Enf or cementofSecur i t yI nt er est s( SARFAESI )Act ,2002borr ower s,guarant or s, andot heranyot herper sonaggri ev edbyanyact i onoft hebankordebt or scan appr oacht heDebt sRecoveryTri bunal( DRT)f orr ecoveri ngt hei rcl ai ms.
Debt sRecover yTri bunalarel ocat edacr osst hecount ry .Someci t i eshavemor e t han oneDebt sRec ov er yTr i bunal s.Ne w Del hi ,Chennai ,Kol kat aandMumbai hav et hr e eDebt sRec ov er y Tr i bunal s.Ahme dabad and Chandi g ar h hav et wo Debt s Recov er y Tr i bunal ( DRT) . One De bt s Recov er y Tr i bunal has bee n const i t ut ed at Al l ahabad, Aur angabad, Bangal or e, Coi mbat or e, Cut t ack, Ear nakul am, Guwahat i , Hyder abad, Jabal pur , Jai pur , Luc know, Madur ai , Nagpur ,Pat na,Pune,Vi shakapat nam andRanchi .
EachDebt sRecov er yTri bunal( DRT)i spr esi dedove rbyaPr esi di ngOfficer .The Pr esi di ngOfficeri sgener al l yequi val entt ot herankofDi st .& Sessi onsJudge. A Pr es i di ng Office rofa Debt sRecov er y Tr i bunali sass i s t ed by a numbe rof office r s ofot herr anks,butnone oft hem nee d nec es sar i l y hav ea j udi ci al bac kgr ound.Ther e f or e ,t hePr esi di ngOffic erofa Debt sRecov er y Tr i bunali s 6
t he sol e j udi c i al aut hor i t y t o hear and pass any j udi c i al or der . Eac h Debt sRecov er yTr i bunalhas t wo Recov er yOfficer s.Thewor k amongs t t heRec ove r yOffice r sofa Debt sRec ove r yTr i bunal( DRT)i sal l ocat ed by t he Pre si di ngOffice roft heTr i bunal .Though t heRec ov er yOffice roft heTr i bunal nee dnotbeaj udi ci alOffice r ,butt heor der spasse dbyaRec ov er yOffice rar e j udi c i ali n nat ur e,andar eappeal abl ebef or et hePr esi di ngOffic eroft heDebt s Recov er yTr i bunal( DRT) .
Appeal s ag ai ns tor der s pas sed by Debt s Re cov er y Tr i bunal( DRT)l i e be f or e Debt sRecoveryAppel l at eTri bunal( DRAT) .Aspersubsect i on ( 3)ofsect i on 20, oft heRecov er yofDebt sDuet oBanksand Fi nanci alI nst i t ut i onsAct ,1993, appealhast obefil edwi t hi n45daysf r om t hedat eonwhi chacopyoft heor der aggr i ev edhasbee n pass edordeemedt ohavebee n passe d byt heTr i bunali s r ecei ved. But , Appeal s fil ed af t er t he expi ry of sai dl i mi t at i on per i od as cont ai nedunderSubsect i on ( 3)ofsect i on 20oft heRecover yofDebt sDuet o Banks and Fi nanci alI ns t i t ut i ons Act ,1993,shoul d be acc ompani ed by a pe t i t i o nt oc ondo net hede l a ywi t hr e qui s i t ef e e ,whi c h wi l lbec o ns i de r e d fir s t byt heTr i bunalbef or et hemai nappeali st akenup.
Ther e ar e fiv e Debt s Recov er y Appel l at e Tr i bunal( DRATs)l ocat e di n t he count r y .One Debt s Rec ov er y Appel l at e Tr i bunal( DRAT)i sl ocat ed eac h at Del hi ,Al l ahabad,Mumbai ,Chennaiand Kol kat a.A Debt sRec ove r yAppel l at e Tr i bunal ( DRAT) conduct s ci r c ui t si t t i ngs i n di ffe r ent ci t i e s wher e Debt s Re c ov e r yTr i bunal( DRT s )i sl o c at e do v e rwhi c hi thasappe l l at ej ur i s di c t i o n.
TheDebt sRecov er yTr i bunal( DRT)i sf ul l yempower ed t opasscompr ehens i v e or der s and can t r ave lbey ond t he ci vi lproc edur e Code t or endercompl et e 7
j us t i ce.A De bt sRecov er yTr i bunal( DRT)can hearc r osssui t s,count e rcl ai ms and al l ow se to ffs.Howev er ,a Debt s Rec ov er y Tr i bunal( DRT)cannothear cl ai msofdamagesordefici encyofser vi cesorbr each ofcont r actorcr i mi nal negl i genceon t hepartoft hel ender s.I n addi t i on,aDebt sRecover yTri bunal ( DRT)cannotexpr essan opi ni on beyondi t sdomai n,ort hel i stpendi ngbef or e i t .
ROLE & FUNCTI ON OF DRT 1 I nI ndi an Bankv .ABS Mar i nePr oduct s ,I ndi an Bankasked f orasui tfil edby
ABS Mar i ne i nt he Cal cut t a Hi gh Cour tt o be t r ansf e r r e dt ot he DRT.The Supr emeCour thel dt hatsuc h an i ndependentsui tfil edbyaborr owercoul d notbet r ansf er r edt ot heDRTwi t houthi sconsent ,si ncehi sri ghtt oappr oach a ci vi lcour tc annotbe t aken away . Then i n anot hercas e ofSBIv .Ranj an Chemi cal sLt d2. ,t heSupr emeCour thel dt hati t spowert ot r ansf erasui tdi d notdependon t heconsentoft hepart i es.Theconcernt hatt hi sdeci si on r ai sed i st hatt heDRTmaybeunabl et ohandl esui t swhi chi nvol vec ompl exques t i ons ofl aw orf act ,andt hatt heBankcoul dpr ev entaborr owerf r om appr oachi nga ci vi lcour tt or esol vet hesequest i onsbymer el yfil i ngacl ai mi nt heDRT.The DRT has summar y pr oce edi ngs and has t r adi t i onal l y been consi der ed i l l equi pped t o consi dercl ai ms l i ke mi sr epr esent at i on orf r aud,whi ch r equi r e cr ossexami nat i onofwi t nesses.
1 (2006) 5 SCC 72 2 (2007) 1 SCC 97 8
POWERSAND FUNCTI ONSOFTHEDEBTRECOVERYTRI BUNAL: •
Cust ody of t he r ec or ds of t he Appel l ant Tr i bunal s hal lbe wi t ht he Regi st r arand havecan exer ci seot herf unct i onsasareassi gned t ohi m under t hes er ul es or t hr ough Pr es i di ng Office r by se par at e or der i n wr i t i ng.
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Re g i s t r ars hal lal s oha v ei nhi sc us t o dyt heo ffic i alSe al . These aloft heAppe l l at e Tr i bunalshal lnotbe affixed t o any cer t i fied copy i ssued by t heTri bunalsaveundert heaut hori t yi n wr i t i ngoft he Re gi s t r a r .
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BRI EFDESCRI PTI ON OFTHECASE ATTENDED DURI NG THE FI ELD VI SI T RecoverySui ti nDRT:-Kot akMahi ndr aBankLi mi t edvs .Ram KumarJat& Or s .
Fact soft heCases: Thatt heAppl i canti s,aBanki ngcompanyabodycor por at econs t i t ut ed •
undert heCompani esAct ,1956havi ngi t s Regi s t er edOfficeat27BKC,C
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27,G Bl oc k,Bandr aKur l aCompl e x,Bandr a( E) ,Mumbai–400051. Thatt heDef endanthad i ni t i al l yappl i edf orse eki ngc r edi tf aci l i t yi nt he f or m ofCommer ci alVehi cl eLoan f r om t heappl i cantbank t o pur c hase t heTATA LPK 2518 bear i ngRe gi s t r at i on No.GJ 1 LJ 9844,whi c h was sanct i oned by t heappl i cantbank.Thedocument sgove r ni ngt het er ms and condi t i onsoft hesai dl oan wer eexecut edby t hedef endant satt he
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br anc hofficeoft heappl i cantbanksi t uat edatAshr am Road,Br anc h. Thatwhi l eseeki ngt heaf or es ai dl oan f ac i l i t y ,def e ndant sagr eed t oav ai l t he sai d cr edi tf aci l i t y on t he t er ms & condi t i ons st at ed i nt he l oan agr eementandal soagr eedt or epayi nt er estal ongwi t h ot herc harge sas
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st at edi nt hel oandocument s. Thatr e payme ntoft hesanct i oned l oan amountwast obemadebyt he def endant si n 33 i nst al l ment s of Rs. 42, 700/- each, s t art i ng f r om
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05. 07. 2013t o05. 03. 2016att her at eof21. 56% ofi nt er es tperannum. Thatl ooki ng t ot her egul ardef aul t scommi t t ed by t he def endant s,t he appl i cantbank i ssued l egalnot i cedat ed 26. 12. 2014 t ot hedef endant s, butt hede f endant sf ai l ed t o make t hepaymentand appe arbef or et he appl i c ant .
Appl i cant ’ sCont ent i ons: Thatas a r esul tofdef aul t s commi t t e d by t he def endant s on r e gul ar basi s,t heappl i c antbanki sent i t l e dt or ecov erabov ement i one dpr i nci pl e amountofRs.12, 15, 410. 70/-andont hi samountt heappl i cantbanki s 10
al soent i t l ed t or ecovert hei nt er estatt herat eof36% perannum f r om
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19. 12. 2014t i l lt hefinalpayment . Theappl i canti sal soe nt i t l edt or eal i z eout s t andi ngamountbyt hesal eof hypot hec at edTATA LPK 2518 bear i ngReg i s t r at i on No.GJ1LJ 9844,& per sonalmov abl eand i mmovabl epr oper t i esofdef endant sand t hesal e pr oceedsar eal l owedt obeappr opr i at edt owardsr ecover yofamount .
Def endant :The Ot herpar t y does notappeari nt he t r i bunalaf t e rr epeat ed s e r v i c eofno t i c eandt he r e f o r et het r i bunalpas s e st hee xpar t eor de ri nf a v oro f t heappl i cantbanks.
Devel opmenti nt heCases : f A t e rr ece i v i ngt hef av or abl eor deri nt hema t t er s, t hecasei si nt heexecut i onst agewher ebyt her ecei vi ngofficerhasaccept edt he r ecoverycert i ficat ei ssuedbyt hePr esi di ngOfficerand i ni t i at ed t heExecut i on Pr oceedi ngs.
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GENERALOBSERVATI ONSOFTHEFUNCTI ONI NG OFTHEDRT
Byl ooki ngatt heworki ngoft heI ndi an Judi ci ary ,If el tt hatt hewhol esyst em was t ai nt ed by pol i t i c ali nflue nce and cor r upt i on.Though i twas nota ne w t hi ngt oknow,butst i l lIwassurpri sed t ol ook att hi ngst hi swayi nr eal .For mostoft het i me,t hecaseswoul dbeadj our nedandf orwardedt oaf ut ur edat e. Ther ewasabs ol ut el yno senseoft i me,ort ot hepr obl emsoft hevi ct i ms .I n caseoff r es h appealsomet i mest hecour tev en doesnotheari tand wi t hout assi gni ngt her eason assi gnsf ut ur edat e.Myper sonalvi ew i st hati twasver y di scour agi nganddi sappoi nt i ngt ol ookatt hecondi t i on ofourJudi ci alSyst em. Thewor ki ngoft heCour t swassos l ow andal otofdel aycoul dbeseen i nt he pr o c e dur eofi mpar t i ngj us t i c et ot hev i c t i ms .
DRT at Ahmedabad i s pr ese ntatt he El l i sbri dge.One i n whi ch t he cour t pr oceedi ngoccur ssandot her sf orkeepi ngt her ecor dsoft hependi ngandongoi ngcases.I n consumerc our t s,t heopposi t epart i eshast opayacostofRs. 500 i ft heyf ai l st or espond i nt i meand t hi skepton i ncr easi ngi ft her ei sa f urt herf ai l ur e.UnderDRT,onl ybank& Fi nanci alI nst i t ut i onswer eal l owedt o fil eanappl i cat i on butaf t erpassi ngofSARFAESIAct ,anysecur edcr edi t orcan cl ai mt hemoneyf r om t hedebt or . I n DRT ,t he r ei sas pe e dyofj us t i c ede l i v e r y .Butt hec onc e pto fc o s tp ay i ngi n DRTi sgood asi tmandat est heopposi t epart yt or espond i nt i me,ot herwi se t heyhavet opayacost .
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Concl usi on The Debt s Recov er y Tr i bunal s per f or me d wel land hel pe dt he Banks and Fi nanc i alI ns t i t ut i o nsr e c o v e rs ubs t ant i al l yl ar g epar t so ft he s eno n pe r f o r mi ng asset sandbaddebt s.Fur t her ,t heDRTscausedani ncr easei nst at el eve lbank l endi ng,asBankst r ust ed t hatt her e' sa mechani sm i n posi t i on t or ecuper at e t he dues.Never t hel ess,i nt er estr at es arose af t ert he DRTs wer e est abl i shed and al li ssues f or cr edi t expansi on wer er esol ve d. Al t hough, cl ashes ar e i nev i t abl et heDRT has hel ped t heBanks and financi alse ct or sr ec ov erhuge l evel sofl oans,whi ch ear l i erwoul dt akeyearst or ecuper at eon accountoft he l ong ci vi lpr ocedur es .Wi t ht he enact mentoft he SARFAESIAct ,2002 ( The Sec ur i t i z at i on and Rec ons t r uct i on of Fi nanci al Ass et s & Enf or ce ment of Securi t yI nt er estAct ,2002)i ti sbecomi ngpossi bl et oensur espeedyr ecovery andi nst i lconfidencet ot heborr owert hatt heywoul dbeheardf ai r l yespeci al l y oncet heborr owerhasagood t r ackr ecor d/r el at i on wi t ht heBankasi def r om havi ngval uabl eandmarket abl esecuri t ypl edgedt ot heBank.Thesol epossi bl e r emedy t ot he Banks and Fi nanci al I nst i t ut i ons t o avoi d cl ashes i s do a compl et e due di l i gence bef oreadvanci ng l oans t o borr ower s vi z.t i t l esear ch, r esi dence ver i ficat i on et c.However ,t her ei s no di sput et ot he f actt hati si t Publ i cSec t ororPr i vat eSec t orBanki ng DRT coul d bet hef or um f orspeedy r e c ov e r yofde bt s .
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