When a bank or financial institution files a recovery case before the Debt Recovery Tribunal (DRT), borrowers often panic and feel helpless. Many believe that once a DRT case is filed, the bank will automatically recover the money or take possession of property.
This is not true.
Indian law provides multiple legal remedies to borrowers, provided timely and strategic action is taken.
If you have received a DRT summons, recovery application notice, or SARFAESI notice, this article explains your legal options and the steps you must take immediately.
What Is a DRT Case?
A DRT (Debt Recovery Tribunal) case is filed by banks or NBFCs to recover outstanding dues from borrowers under:
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Recovery of Debts and Bankruptcy Act, 1993 (RDB Act)
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SARFAESI Act, 2002
Banks usually approach DRT when:
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Loan amount exceeds ₹20 lakhs
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Borrower account is declared NPA
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Recovery through normal means has failed
Common searches by borrowers:
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Bank filed DRT case what to do
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How to fight DRT case
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DRT notice legal remedy
First Step: Do Not Ignore the DRT Notice
Ignoring a DRT notice can result in:
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Ex-parte orders against you
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Faster recovery proceedings
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Weak defence later
Once a DRT case is filed, the tribunal has power to:
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Order recovery
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Attach bank accounts
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Appoint a recovery officer
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Proceed against secured property
📌 Immediate legal response is critical.
Step 1: Examine Whether the NPA Classification Is Legal
Many DRT cases can be challenged because of wrongful or premature NPA classification, such as:
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RBI’s 90-day default norm not followed
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Incorrect calculation of overdue amount
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Payments ignored or misappropriated
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Account regularised but still treated as NPA
Courts have repeatedly held that illegal NPA classification vitiates the entire recovery process.
Step 2: Check for Procedural Violations by the Bank
Banks must strictly follow law before filing a DRT case. Common violations include:
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Defective SARFAESI notices
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No opportunity given to borrower to raise objections
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Failure to reply under Section 13(3A)
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Improper service of notices
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Violation of RBI guidelines
Such lapses can become strong grounds of defence before DRT or High Court.
Step 3: File a Detailed Reply / Written Statement Before DRT
Borrowers have the right to:
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File a written statement
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Contest the bank’s claims
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Raise factual and legal defences
A strong reply may include:
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Disputed outstanding amount
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Illegal interest or penalties
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Improper valuation of property
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Pending restructuring or settlement
📌 A poorly drafted reply can severely damage your case.
Step 4: Challenge SARFAESI Actions Under Section 17
If the bank has taken steps like:
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Symbolic or physical possession
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Auction notice
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Sale of secured asset
You can file a Securitisation Application (S.A.) under Section 17 of SARFAESI Act before DRT.
DRT has power to:
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Stay auction proceedings
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Restore possession
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Quash illegal bank actions
Step 5: Seek Interim Relief / Stay
One of the most important remedies is interim protection.
DRT may grant:
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Stay on auction
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Protection from dispossession
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Status quo orders
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Time for settlement
Without interim relief, banks may proceed with auction rapidly.
Step 6: Explore Settlement or Restructuring
Even during DRT proceedings, borrowers can seek:
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One Time Settlement (OTS)
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Loan restructuring
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Withdrawal of recovery case
Courts encourage fair settlements rather than coercive recovery.
Step 7: When Can You Approach the High Court?
Though DRT is the primary forum, High Court intervention is possible when:
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Bank action is arbitrary or illegal
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Fundamental rights are violated
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DRT lacks jurisdiction
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Natural justice principles are breached
A writ petition can be filed in exceptional circumstances.
Common Mistakes Borrowers Make
❌ Delaying legal consultation
❌ Relying on verbal assurances by banks
❌ Missing limitation periods
❌ Filing incomplete or weak pleadings
Conclusion
A DRT case is not the end of the road. With the right legal strategy, borrowers can:
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Challenge illegal recovery
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Protect property and business
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Obtain interim relief
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Secure fair settlement
Timely action makes all the difference.
Need Legal Assistance for a DRT Case?
I regularly represent borrowers and guarantors before DRT, DRAT, and High Courts, handling:
✔ DRT recovery cases
✔ SARFAESI challenges
✔ Stay on auction & possession
✔ Wrongful NPA classification matters
Advocate Ayush S. Jain
📍 Practicing before DRT & High Court of Gujarat
📞 +91 74407 72911
📧 [email protected]