The Recovery of Debts and Bankruptcy Act (RDB Act), 1993 came into force on the 24th day of June 1993. It has established The Debts Recovery Tribunals (DRTs) and Debts Recovery Appellate Tribunals (DRATs) to provide expeditious adjudication and recovery of debts due to banks and financial institutions, insolvency resolution and bankruptcy of individuals and partnership firms and for other matters connected. Currently, 39 DRTs and 5 DRATs have been established according to the data of the Department of Financial Services. Before understanding the powers of DRT and DRAT, let us first understand the meaning of some important terms such as Debt and Financial Institutions.
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Meaning of Debts
Section 2 subsection (g) of the RDB Act defines “debt” as any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution during the course of any business activity undertaken by the bank or the financial institution under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee.
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Meaning of Financial Institutions
Section 2 subsection (h) of the RDB Act defines “financial institution” as
- a public financial institution within the meaning of section 4A of the Companies Act, 1956
- the securitization company or reconstruction company which has obtained a certificate of registration under sub-section (4) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
- a debenture trustee registered with the Board and appointed for secured debt securities
- Such other institutions as the Central Government may, having regard to its business activity and the area of its operation in India.
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Power of DRT
Under Chapter III, section 17 of the RDB Act, Jurisdiction, powers, and authority of DRT and DRAT is to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. The Tribunal shall have circuit sittings in all district headquarters.
An Appellate Tribunal shall entertain appeals against any order made, or deemed to have been made, by a Tribunal under RDB Act.
By the 2000 amendment, Section 17A has been inserted in the RDB Act which specifies the Power of Chairperson of Appellate Tribunal. The Chairperson of an Appellate Tribunal shall exercise general power of superintendence and control over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of Presiding Officers. He may direct the following:
- He may direct the Tribunals to furnish information relating to pending cases both under this Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, or under any other law for the time being in force, number of cases disposed of, number of new cases filed and such other information as may be considered necessary by the Chairperson;
- Convene meetings of the Presiding Officers of Tribunals periodically to review their performance.
- The Chairperson is of the opinion that an inquiry is required to be initiated against such Presiding Officer for misbehavior or incapacity, he shall submit a report to the Central Government recommending action against such Presiding Officer.
The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own motion after notice to the parties and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal.
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