Banking, Finance, DRT & SARFAESI

Loans, credit facilities, defaults and recovery by banks and financial institutions.

Recovery may be pursued through civil suits, the DRT or other statutory mechanisms, depending on the lender, the amount and the security involved.

See also: Civil Litigation & Court Proceedings.

Proceedings before the Debt Recovery Tribunals.

DRTs are established under the Recovery of Debts and Bankruptcy Act, 1993 to hear applications by banks and financial institutions for recovery of debts of or above the prescribed amount.

Filing, defence and adjudication of original applications.

A bank or financial institution files an original application under Section 19 of the RDB Act. The defendant may file a written statement, set-off or counter-claim as the Act provides.

Appeals from DRT orders before the DRAT.

Appeals against DRT orders lie to the Debt Recovery Appellate Tribunal, subject to the pre-deposit requirements under the RDB Act or the SARFAESI Act, as applicable.

Secured creditor enforcement under the SARFAESI Act, 2002.

The SARFAESI Act allows secured creditors to enforce security interests without court intervention in specified cases. A person aggrieved by measures under Section 13(4) may apply to the DRT under Section 17.

See also: Property, Real Estate & RERA.

Demand notices under Section 13(2) and replies.

Before taking measures, the secured creditor issues a notice under Section 13(2) requiring discharge of liabilities within sixty days. Representations or objections by the borrower must be considered and replied to under Section 13(3A).

Possession, sale and enforcement of secured assets.

Measures under Section 13(4) include taking possession of secured assets, and the assistance of the District Magistrate or Chief Metropolitan Magistrate may be sought under Section 14.

See also: Property, Real Estate & RERA.

Rights and liabilities of borrowers and guarantors.

A guarantor's liability is generally co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, 1872, subject to the terms of the guarantee. Cheques issued towards such liabilities can raise separate issues.

See also: Cheque Dishonour & Section 138 NI Act.

Recovery certificates and proceedings before Recovery Officers.

After adjudication, the DRT issues a recovery certificate, which the Recovery Officer executes through the modes provided in the RDB Act.

Interplay between DRT, SARFAESI and IBC proceedings.

Where corporate insolvency proceedings are admitted, the moratorium under Section 14 of the IBC may affect recovery and enforcement actions against the corporate debtor.

See also: NCLT, NCLAT, IBC & Insolvency.

Writ, appeal and SLP proceedings in banking matters.

High Courts and the Supreme Court may examine banking and recovery matters in appropriate cases, although the availability of statutory remedies is a relevant consideration in writ jurisdiction.

See also: Constitutional, Writ & Administrative Law.