When a bank finance turns bad and classified as NPA , the lender bank has to immediately initiate legal recourse against the borrower to recover its dues. The recovery of the dues through DRT proceedings is one of such tools available to the lender bank. The lender bank can prefer to initiate recovery proceedings through DRT (Debt Recovery Tribunal), if the dues are exceeding Rupees 10 lacs from the borrower. There is no upper monetary ceiling for filing application with DRT for interim order.
DRT Proceedings: The bank would file application before the tribunal seeking interim order for recovery of its due. The DRT sends notice to the defendants (Bank borrower/s) to show cause within 30 days, why action should not be taken against them to recover Bank’s dues. If notice could not be served for any reason, even after one or two summons, DRT would publish the notice against the defendants in the newspapers.
The DRT would pass exparte order if the defendants do not appear before the Tribunal at the time and date mentioned in the notice served to them. In case the defendants appear before the Tribunal and file reply statement through their advocate, wherever necessary an interim order will be passed by DRT. The applicant bank is required to file proof affidavit and loan documents and statements of account at DRT.
Passing of orders by DRT: The procedure of passing of orders by DRT is similar to proceedings taking place in any other court of law. There will be cross examination of Bank Manager and defendants/ defendant’s witness by opposite side lawyers. The written arguments will also be submitted by both applicant bank’s and defendant’s counsels. After perusal of arguments submitted by opposite counsels, DRT passes order on merit of the case.
Application for ‘Recovery Certificate’ and appointment of Recovery Officer: On receipt of order in its favour, the bank would files application with DRT for Recovery Certificate. The DRT issues Recovery certificate and endorses the same to Recovery Officer.
Action by Recovery Officer: The Recovery Officer issue notice to the defaulter/s and demands them to clear the dues as per Recovery Certificate issued by DRT, within 15 days from the date of notice. Recovery Officer attaches the property of the defaulters on default of payment within the notice period. The attached property would be auctioned after due notice and publication in two newspapers (one in vernacular language) and bank’s dues are recovered from the sale proceeds of the attached property.
Action for recovery of balance amount: If there is shortfall in recovery, Bank may identify the other properties of the defendants for recovery of balance amount. The Recovery Officer would proceed against such identified properties on the basis of request made by the Bank.
Closing of DRT application: Application made by the bank for recovery will be recovered by Recovery Officer after full recovery of Bank’s dues.