The Debts Recovery Appellate Tribunal (DRAT) plays a crucial role in the Indian banking and financial recovery framework. It is a statutory body established under the Recovery of Debts and Bankruptcy Act, 1993 (earlier called the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – RDDBFI Act). Its main function is to hear and decide appeals against the decisions and orders passed by the Debts Recovery Tribunals (DRTs). DRAT acts as the appellate authority to ensure that justice is delivered in matters related to the recovery of debts owed to banks and financial institutions.
1. Introduction to DRAT
The DRAT was created to provide a speedy, efficient, and specialized forum for resolving disputes related to the recovery of debts and enforcement of securities. The Indian judicial system was burdened with a large number of recovery-related cases, so Parliament introduced a two-tier tribunal system:
- Debts Recovery Tribunals (DRTs) – the first level where recovery cases are filed and adjudicated.
- Debts Recovery Appellate Tribunal (DRAT) – the appellate body where appeals against DRT decisions are heard.
2. Jurisdiction of DRAT
The jurisdiction of DRAT is appellate in nature. It can only hear appeals from the orders passed by DRTs. The central government specifies the territorial jurisdiction of each DRAT, which may cover the jurisdiction of multiple DRTs.
- For example, the DRAT in Delhi has jurisdiction over DRTs in Delhi, Jaipur, and Chandigarh.
3. Legal Provision Governing DRAT
The role and powers of DRAT are primarily governed by:
- Recovery of Debts and Bankruptcy Act, 1993 (as amended)
- SARFAESI Act, 2002 – appeals in certain matters related to the enforcement of security interest.
Section 20 of the RDDBFI Act specifically deals with the right to appeal to DRAT.
4. Composition and Appointment
- Presiding Officer – DRAT is headed by a Chairperson appointed by the Central Government in consultation with the Chief Justice of India.
- Qualification – The Chairperson is usually a serving or retired Judge of a High Court.
- Support Staff – DRAT has registrars, clerks, and other staff to handle case management and administration.
5. Powers of DRAT
The DRAT has wide appellate powers, similar to those of a civil court, which include:
- Hearing appeals against final and interim orders passed by DRT.
- Summoning witnesses and requiring the production of documents.
- Reviewing its own orders in certain circumstances.
- Granting interim relief, including stay on the operation of DRT orders.
- Modifying, reversing, or affirming the DRT’s order.
6. Appeal Procedure before DRAT
- Filing of Appeal – Any person aggrieved by a DRT order can file an appeal to DRAT within 45 days from the date of receipt of the DRT’s order.
- Pre-deposit Requirement – As per Section 21 of the RDDBFI Act, an appellant is required to deposit 50% of the amount of debt determined by the DRT before filing the appeal. The DRAT has the discretion to reduce this amount to not less than 25% for reasons to be recorded in writing.
- Hearing – Both parties are given an opportunity to present their case.
- Final Order – DRAT passes the final order which can be enforced like a decree of a civil court.
7. Role in SARFAESI Act Appeals
Apart from the RDDBFI Act cases, DRAT also hears appeals under Section 18 of the SARFAESI Act, 2002 against the orders of DRT in matters involving the enforcement of security interest by banks and financial institutions. The pre-deposit requirement also applies here.
8. Significance of DRAT in Debt Recovery
- Ensures Fairness – Acts as a check on the decisions of DRTs to ensure justice.
- Specialized Expertise – Deals exclusively with banking and debt recovery disputes, ensuring better understanding of financial matters.
- Speedy Disposal – Designed to work faster than regular civil courts.
- Investor Confidence – Helps maintain trust in the banking and financial system by ensuring effective recovery mechanisms.
9. Difference between DRT and DRAT
| Aspect | DRT | DRAT |
|---|---|---|
| Level | First-tier tribunal | Appellate tribunal |
| Function | Hears original applications for debt recovery | Hears appeals against DRT orders |
| Head | Presiding Officer | Chairperson |
| Jurisdiction | Original jurisdiction | Appellate jurisdiction |
| Filing Requirement | No pre-deposit | Pre-deposit of 50% of debt amount (can be reduced to 25%) |
10. Final Authority
The DRAT is the final appellate forum under the debt recovery laws. Its orders can only be challenged before the High Court or Supreme Court through writ petitions or special leave petitions, not through another statutory appeal.
Conclusion
In short, the role of a Debts Recovery Appellate Tribunal (DRAT) is to function as the appellate authority to hear and decide appeals against the orders of the Debts Recovery Tribunal, ensuring a fair, specialized, and expeditious mechanism for resolving disputes related to debt recovery in India. By balancing the rights of creditors and borrowers, DRAT plays a key role in strengthening the banking and financial sector’s recovery processes.
Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.
Advocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)
Contact: 88271 22304