Debt Recovery Tribunal: What is it and how does it work?

A DRT is an independent adjudicatory body that has been created by the Debt Recovery Tribunals Act, 1999 to expedite the process of recovery of money owed to creditors by companies and individuals. A DRT hears matters related to bankruptcy, insolvency or company settlement in a speedy and cost-effective manner. Different Types Of DRTs: There are different types of DRTs in India i.e. National Company Law Tribunal (NCAT), High Courts, State Companies’ Wards and Debt Discharge Tribunals (SDTs)

What is the procedure followed in a DRT?

A DRT is an adjudicatory body that tries to settle matters related to money owed by companies or individuals. It may be bankruptcy proceedings, insolvency or other disputes. Compared to courts, DRTs are designed to be faster, less expensive and more informal, with simpler procedures and rules of evidence. They also allow more discretion for the tribunal. In cases before a DRT, both sides make their case to a panel of members, who can ask questions and make recommendations. Often, the parties work out a settlement themselves. If no agreement is reached, the tribunal issues a binding order.

How to file a case in a DRT?

DRTs can entertain various types of cases. Debt Recovery Tribunal can hear cases related to non-payment of dues, insolvency resolution, bankruptcy proceedings, etc. In case of non-payment of dues or insolvency or bankruptcy, the creditor should file a petition before the DRT. The petition must be accompanied by a certified copy of the court order that has framed the debt as a payable one. If the matter is related to insolvency or bankruptcy, the petition must also be accompanied by a certified copy of the order passed under section 238 of the Companies Act.

Features of Debt Recovery Tribunal

There are certain features of Debt Recovery Tribunal that set it apart from regular courts. - There is no jury system for DRTs. But the tribunal may have one or more presiding officers appointed by the central government. - Unlike in the conventional court system, there is no need to appoint an advocate to represent you in a DRT. You can represent yourself, which is cheaper and quicker. - There is no need for strict rules of evidence and procedure, as in regular courts. The DRTs are designed to be less formal and quicker to conclude matters. - Witnesses are usually not cross-examined in DRTs. - Parties can present their cases even without an advocate. - The tribunal is empowered to give binding orders and impose penalties. - There is no appeal against a decision of the DRT. - There are certain time limits for presenting your case.

Limitations of DRTs

The advantages, however, must be weighed against some significant limitations. - DRTs are not regular courts of law. They have been created specifically to settle certain kinds of disputes, such as those between a creditor and debtor. - DRTs have no jurisdiction over criminal matters. - DRTs cannot adjudicate over matters of a constitutional nature. - DRTs cannot deal with matters of equity, such as suits for specific performance or winding-up petitions.

Conclusion

DRTs are designed to settle disputes between debtors and creditors quickly and inexpensively, without the formality of the regular courts. The advantages of the DRT system, however, must be weighed against its limitations. While DRTs can be faster and less expensive than regular courts, they are not courts of law. They can only hear matters specifically designated for their jurisdiction.