The threshold and who can approach the Tribunal
The Recovery of Debts and Bankruptcy Act 1993 allows banks and notified financial institutions to file an original application before the Debts Recovery Tribunal for debts of 20 lakh rupees or above, though this figure is set by the statute and its rules and can be revised, so it is worth confirming the current threshold rather than assuming an older figure still applies. Claims below the threshold generally proceed in the ordinary civil courts instead. Only the specified categories of lender can use this forum; an ordinary private lender cannot.
The recovery certificate and the Recovery Officer
Once the Tribunal decides the original application in the lender’s favour, it issues a recovery certificate specifying the amount due. Execution then moves to a Recovery Officer attached to the Tribunal, who has powers broadly similar to a civil court executing a decree, including attachment and sale of the debtor’s property, arrest and detention in limited circumstances, and appointment of a receiver. This stage often takes as long as, or longer than, the original hearing, particularly where the debtor has few identifiable assets or disputes the valuation of secured property.
Appeal to the DRAT and the pre-deposit
A party aggrieved by the Tribunal’s order can appeal to the Debts Recovery Appellate Tribunal, but the Act requires the appellant, if it is the borrower, to deposit a percentage of the amount due under the order before the appeal is entertained, though the Appellate Tribunal has some discretion to reduce this in a deserving case, usually not below a statutory minimum. This pre-deposit requirement is meant to discourage appeals filed only to delay recovery, and it means an appeal strategy has to account for the deposit from the outset rather than as an afterthought.
Defences available to a borrower or guarantor
Common and genuinely available defences include disputing the figures relied on by the bank, particularly where interest has been compounded incorrectly or charges added without notice; showing that a guarantee was given on terms the lender later varied without the guarantor’s consent, which can discharge the guarantor to the extent of the variation; and challenging whether the debt was correctly classified and whether proper notice was given before the application was filed. These defences succeed on the facts of the account, which is why obtaining the complete loan and statement history early matters more than broad legal argument.
