Constitution of DRTs & DRATs:

After the constitution of Debt Recovery Tribunals (DRT) and Debt Recovery Appellate Tribunals (DRAT) under ‘The Recovery of Debts due to Banks and Financial Institutions Act, 1993” and after conferring the authority to entertain appeals from the aggrieved persons under section 17 of SARFAESI Act, 2002, Banks have gained an upper-hand in the course of recovery of their dues.  It is hard to see a Bank now going to Civil Court or facing a Civil Proceeding in-respect of recovery of their dues.  Even Consumer Courts are discouraged or not entertaining complaints from the borrowers against the Banks seeking stay-orders or discourage borrowers initiating consumer proceedings anticipating some kind of recovery proceeding by the Bank.   With a great object of speeding-up the Bank’s recovery process and to reduce their NPAs, Special Tribunals called ‘Debt Recovery Tribunals’ were constituted.  There was great opposition from the legal fraternity against the continuance of creation of Special Tribunals like National Company Law Tribunal etc. At the same time, there are professionals supporting the creation of Special Tribunals as the matters like Tax, Company issues etc. requires speedy disposal and specialist approach.   It’s a deeper issue to look at as to why Special Tribunals are not functioning as expected making the judiciary to intervene constantly either under Article 226 or 227 of Constitution of India. While some Special Tribunals are functioning well and justified, some are criticized most often.


While the Banks or the Public Financial Institutions must be very happy with the constitution of ‘Debt Recovery Tribunals’, there are many complaints from the borrowers against the functioning of ‘Debt Recovery Tribunals’ and ‘Appellate Tribunal’.  It is also true that even unscrupulous litigants tend to comment on the functioning of ‘Tribunals’ to their advantage. Again, it all mostly depends upon the mind-set or the ability of the Presiding Officer presiding a particular Tribunal. While some Presiding Officers presiding the ‘Debt Recovery Tribunal’ are appreciated, some are criticized most often.  There is a perception that the ‘Debt Recovery Tribunal’ functions as an agent institution for the Bank in the course of their recovery of dues. It is most often criticized that the Debt Recovery Tribunals support Banks irrespective of their mistakes and do not support the borrowers despite having merit in their contention.  The DRTs are not supposed to follow an elaborate procedure and they are guided by the principles laid-down by the High Courts and Supreme Court from time to time.  It is alleged that this helps the Banks to use the procedure before DRT to their advantage.  It is also known that the Bank Officials do maintain very good relation with the staff attached with the Debt Recovery Tribunals and Appellate Tribunals.  There is a glaring difference between the normal Court System and procedure; and DRT set-up.  It is also alleged that the office attached to the ‘Debt Recovery Tribunals’ try to delay the numbering of appeal papers etc. being filed by the borrowers.  Infact, the Tribunals are supposed to be public friendly as opposed Courts.  The Tribunals are not supposed to rely so much on technicalities like Courts. Looking at the practice, often, one gets an impression that Courts are public friendly now-a-days than Tribunals.

Dealing with the functioning of a particular Presiding Officer in a Case, a Bench of Madras High Court headed by Hon’ble Justice D.Murugesan & Hon’ble Justice K.K.Sasidharan, in W.P.No.11113 of 2012, reported in CDJ 2012 MHC 2971, was pleased to observe as follows:

“15. The appeal in question was preferred by the petitioner and it was numbered as Appeal No.1/2009. The third respondent was not a party to the proceeding. The third respondent in her capacity as auction purchaser filed an application in I.A.No.278/2012 to implead her as a party to the proceeding. The application was filed by Ms. Sankaran Latha, Advocate, Coimbatore, on 27 March 2012. The application was taken on file and allowed by the Debts Recovery Tribunal, Coimbatore even without ordering notice to the writ petitioner or Bank. The application in I.A.No.278/2012 does not contain any indication that before filing the said application, copy has been served on the petitioner. We are not in a position to understand as to how in a pending matter, an application could be moved by a third party without giving notice to the other side whether it be the petitioner or the respondent. Though the petitioner was not given notice in the impleading petition in I.A.No.278/2012, he was given notice in I.A.No.285/2012 filed to review the order in I.A.No.522 of 2009. The Presiding Officer ought to have issued notice to the petitioner before passing orders in the interlocutory application to implead the third respondent as a party to the appeal. There is no dispute that it is the discretion of the Court to implead a party to a pending matter, in case, for an effective adjudication of the matter, presence of such party is absolutely necessary. Even in such a case, before deciding the issue, the petitioner who was instrument in filing the application should have given due audience. The presiding officer appears to have ignored basic principles of justice.

16. This Bench has been dealing with Debts Recovery Tribunal cases for the last one year. We have come across several such illegal orders passed by the Presiding Officer, Debts Recovery Tribunal, Coimbatore. Writ petitions and Civil Revision Petitions have been preferred not only by the borrowers but also by the Banks and other financial institutions. In some cases, the Bank settled the matter with the principal borrower or guarantor. The Presiding Officer was not in favour of such settlement. This made the Presiding Officer to pass orders directing Chairman and Managing Director of the Bank to submit a report, detailing the circumstances under which the local officials settled the matter with the principal debtor. In some of the matters involving Indian Overseas Bank, the Presiding Officer permitted the borrower to auction and sell machineries and to pay the amount even without notice to the Bank. This made the Bank to file writ petitions before this Court and we have already stayed such orders. Bank would be in a position to engage a counsel at Chennai and file writ petitions and civil revision petitions. It is only the poor borrowers who have to pay the amount, ultimately along with the litigation expenses incurred by the Bank. In case the borrowers and the guarantors are affected, necessarily, they have to engage a counsel here at Madras and file appropriate applications to challenge such orders. This also would cause considerable expenses to the poor litigants.

17. There is no doubt that the Debts Recovery Tribunal, Coimbatore, is entitled to pass discretionary orders, in accordance with law. The problem is on account of passing orders violating the mandatory provisions of law. The petitioner in the present writ petition and the petitioners in other writ petitions as well as the Standing Counsel for different banks jointly made allegations against the Presiding Officer stating that he has been supporting a particular counsel and whenever the said counsel is engaged, the officer would pass favourable orders to please that counsel, flouting the legal provisions.

18. M/s Canara Bank, Kongu Nagar, Tiruppur, filed a writ petition before this Court in W.P.No.9775 of 2012 challenging the order passed by the very same Presiding Officer restraining the Bank from proceeding under the SARFAESI Act. The said order was challenged by the borrower in W.P.No.2103/2012 complaining that the original application was allowed even without permitting the borrower to file his statement. During the course of hearing of those two writ petitions, the learned counsel for the petitioner as well as the Bank made similar allegations against the Presiding Officer. While disposing of those writ petitions, we have expressed our strong displeasure in passing such orders in a hasty manner. The relevant paragraph or the order reads thus:-

“10. There is nothing on record to show that the borrowers have filed their counter in O.A.No.72 of 2011. In fact, the first hearing itself was only on 14 September, 2011. We are not in a position to understand the logic in passing such hasty orders by the Debts Recovery Tribunal, Coimbatore. In fact, we have been witnessing many such orders passed by the Presiding Officer, Coimbatore in a hasty manner and in violation of the mandatory previsions of the statute. The members of the legal fraternity time and again complained across the Bar that the Presiding Officer, Debts Recovery Tribunal, Coimbatore is in the habit of keeping the records with him till the appeal time is over and never issues the certified copy of the order before the statutory period for filing appeal. We do not want to comment anything n this, at this point of time, without giving an opportunity to the Presiding Officer to offer his remarks.

11. The impugned order clearly shows that the Debts Recovery Tribunal, Coimbatore violated all the canons of justice in his attempt to dispose of matters. We are not in a position to appreciate the course of conduct adopted by the Debts Recovery Tribunal to dispose of the original application without giving an opportunity to the parties either to file their statement or to make submissions.”

19. Factual matrix of the present case clearly indicates that the Presiding Officer allowed the impleading application filed by the third respondent without even issuing notice to the petitioner. The factum of impleading coupled with the appearance of a particular counsel made the petitioner to entertain a reasonable doubt that he would not get justice from the Presiding Officer. We are not here to examine the said issue in extensor more on account of the fact that we have not called for a report from the Presiding Officer with regard have not called for a report from the Presiding Officer with regard to such allegations. In any case, the parties have now expressed their consent to transfer the matter to Debts Recovery Tribunal, Chennai.

20. We are, therefore, of the view that interest of justice would be sub-served in case the appeal preferred by the petitioner in Appeal No.1/2009 is transferred from the file of Debts Recovery Tribunal, Coimbatore, to the Debts Recovery Tribunal, Coimbatore, to the Debts Recovery Tribunal II, Chennai.

21. The Registry is directed to transfer the records received from the Debts Recovery Tribunal, Coimbatore, directly to the Debts Recovery Tribunal II, Chennai, along with a copy of this order so as to enable the Tribunal to take up the matter and dispose of the same in accordance with law.

22. We have already extracted the submissions made before us by the counsel on either side in the present writ petition and the members of the Bar. In fact, the Bar was unanimous while making submission that the Presiding Officer, Debts Recovery Tribunal, Coimbatore, has been showing undue favour to a particular counsel and that appearance of that counsel would tilt the balance in favour of the party who has engaged the said counsel. Litigants should have a feeling that their cases are heard by the Presiding Officer without bias. Judiciary would lose its name in case parties entertain a reasonable doubt, about the integrity of the Presiding Officer. We have been seeing many such orders passed by the Presiding Officer, Debts Recovery Tribunal, Coimbatore, taking contradictory stand and passing orders in violation of the settled legal principles. Therefore, we are of the view that the matter requires consideration by the concerned authorities.

23. The Secretary, Ministry of Finance, New Delhi, and Ministry of Law and Justice, are directed to conduct an enquiry and take appropriate action the matter.”

This is only a small reference of the functioning of a particular Presiding Officer. But, infact, there were serious issues and serious allegations most often.

Why High Courts are burdened with DRT/SARFAESI matters now?

Initially, High Courts used to entertain Writ Petitions in-respect of SARFAESI proceedings. Later-on, it is complained that Bank’s recovery process gets hampered due to filing of Writ Petitions in High Courts and High Courts passing stay or adverse orders. Pursuant to the complaint or taking note of the situation at that time, there were many judgments and the judgment of Supreme Court that the High Courts should exercise restraint in respect of entertaining Writ Petitions pertaining to SARFAESI matters. During this period, many Writ Petitions were dismissed or disposed of at the admission stage itself and the High Courts were not granting any relief or stay orders as prayed by the borrowers. This practice has continued for a while though it was maintained that there can never be a complete bar on the jurisdiction of High Courts under Article 226 of Constitution of India in respect of Writ Petitions challenging SARFAESI proceedings. It was termed as ‘self-imposed restriction’.

However, in the recent past, in many cases as alleged, Banks took advantage of the powers under SARFAESI Act, 2002 and the functioning of DRTs and DRATs.  As a result, borrowers were struggling to get justice or advocate their case properly. They complain as to how the numbering of appeal papers gets delayed with the DRT, how the presiding officers will be on-leave without any effective alternative arrangement, how the Bank proceeds with the SARFAESI proceeding despite filing or pendency of an appeal under Section 17, the practice of mandating the borrowers to deposit substantial amount as a pre-condition for the grant of any stay-order, the delay and the pre-deposit condition with the DRAT. There are several issues or complaints with the SARFAESI proceedings and the functioning of DRTs and DRATs. When a borrower fails to find a place to advocate his case properly and fairly, he will have no option except approaching High Courts under Article 226 of Constitution of India. According to me, understanding the plight of borrowers in some cases in SARFAESI matters, the abuse of powers under SARFAESI Act, 2002 and the functioning of Debt Recovery Tribunals and Debt Recovery Appellate Tribunals, the High Courts do interfere with SARFAESI proceedings or the DRT proceedings now in appropriate cases. No High Court interferes with the SARFAESI proceedings initiated by the Bank or the proceedings pending before the DRT or DRAT unless there is a strong case and justification.

All these issues make the High Courts burdened with the DRT/SARFAESI matters despite having Special Tribunals called ‘Debt Recovery Tribunal’ and ‘Debt Recovery Appellate Tribunal’. It is a result of misuse or improper use of powers under SARFAESI Act, 2002 or the failure of DRTs and DRATs to provide an effective relief to the borrowers in appropriate or deserved cases.

Note: the views expressed are my personal.


V.DURGA RAO, Advocate, Madras High Court.


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  1. prasad says:

    please narrate how a borrower has to safe gaured if sarfaesi is en acted for
    3% due. As drts not taking consideration of merit. Though it is fradulent.In our case RBI rpcd gave direction to refinance,but bank took possession and trying to auction kindly give solution

    1. Madhav says:

      even of standing dues bank is never entitled to physical possession instead it’s respective asset. Get 226 remedy from high court.

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March 2024