When a bank or financial institution initiates recovery proceedings, borrowers often feel helpless and assume that losing their property is inevitable. However, Indian law provides strong remedies before the Debts Recovery Tribunal (DRT) to protect borrowers from illegal, premature, or arbitrary bank actions.
This article explains how borrowers can approach DRT, what grounds are available, and how timely legal action can save property and business.
What Is DRT and Why It Matters to Borrowers?
The Debts Recovery Tribunal (DRT) is a specialized forum established under the Recovery of Debts and Bankruptcy Act, 1993 and also hears matters under the SARFAESI Act, 2002.
Banks and NBFCs approach DRT to:
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Recover loan amounts
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Enforce security interests
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Take possession of mortgaged property
Borrowers, on the other hand, can approach DRT to challenge illegal recovery actions.
Common Bank Actions That Can Be Challenged Before DRT
Many borrowers are unaware that banks often commit procedural violations. Some common grounds include:
1. Wrongful Classification of Account as NPA
Banks must strictly follow RBI’s 90-day overdue norm. Any premature or incorrect NPA classification can be challenged.
2. Defective SARFAESI Notices
Errors in:
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Section 13(2) notice
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Section 13(4) possession notice
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Incorrect outstanding amount
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Improper service of notice
can render the entire recovery process illegal.
3. No Consideration of Borrower’s Reply
Banks are legally bound to consider objections raised under Section 13(3A) of the SARFAESI Act.
4. Violation of RBI Guidelines
Failure to follow RBI circulars on restructuring, MSME reliefs, or OTS schemes strengthens the borrower’s case.
5. Illegal Possession or Auction
Taking possession without due process or conducting auction without proper valuation is challengeable before DRT.
How to Stop Recovery Proceedings Before DRT
A borrower can file a Securitisation Application (SA) under Section 17 of the SARFAESI Act before the DRT.
Reliefs That DRT Can Grant
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Stay on possession and auction
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Restoration of property
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Quashing illegal notices
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Direction to banks to follow due process
In urgent cases, interim relief can be granted to immediately halt recovery actions.
Why Timing Is Crucial
DRT follows strict timelines. Delay in approaching DRT may:
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Strengthen the bank’s case
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Lead to auction of property
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Reduce chances of interim protection
Early legal advice can save property, business, and reputation.
Can High Court Be Approached Instead of DRT?
Generally, DRT is the primary forum. However, High Courts can be approached in cases involving:
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Jurisdictional errors
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Gross violation of natural justice
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Abuse of SARFAESI powers
Each case requires strategic legal assessment.
Conclusion: Borrowers Are Not Helpless
Bank recovery proceedings are not the end of the road. With the right legal strategy and timely action before DRT, borrowers can successfully defend their rights.
If you have received:
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SARFAESI notice
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Possession notice
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Auction notice
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DRT recovery summons
Immediate legal consultation is strongly advised.
Need Help with DRT or SARFAESI Matters?
I regularly represent borrowers before DRT, DRAT, and High Courts, challenging illegal recovery actions and securing interim protection.
📞 Contact: Advocate Ayush S. Jain, Contact No. +91 7440772911 | Mail: [email protected]
📍 Ahmedabad & Gandhinagar, Gujarat
⚖️ DRT | SARFAESI | Banking & Recovery Laws