Who Can File a Case Before DRT? Eligible Applicants Under the Recovery of Debts and Bankruptcy Act Explained

What Is a DRT and What Is an “OA”?

A Debt Recovery Tribunal is a quasi-judicial body established under Section 3 of the RDB Act, 1993 to provide banks and financial institutions with a fast, specialised forum for recovering defaulted loans. The RDB Act was originally called the Recovery of Debts Due to Banks and Financial Institutions Act, 1993; the 2016 amendment renamed it the Recovery of Debts and Bankruptcy Act, 1993.

An Original Application (OA) is the name given to the recovery petition that a bank or financial institution files before the DRT under Section 19 of the RDB Act. It is the starting point of most DRT litigation. After hearing both sides, the Tribunal can pass an order and issue a Recovery Certificate under Section 19(7), which is then executed by the Recovery Officer under Section 25 — attaching and selling movable and immovable property, garnishing bank accounts, and so on.

The Tribunal is not a civil court, but it has the powers of one for most practical purposes (Section 22), and civil courts are barred from entertaining suits in respect of matters which a DRT has jurisdiction to decide (Section 34).

Who Can File an OA in DRT?

The eligibility question is answered by Section 19(1) of the RDB Act, which permits an application for recovery to be made by a bank or a financial institution — or by a consortium of banks or financial institutions. Let us break this down.

1. Banks

“Banks” under Section 2(e) of the RDB Act include:

• Public sector banks and nationalised banks
• State Bank of India and its associate banks
• Private scheduled banks
• Regional rural banks
• Co-operative banks, which were brought within the definition of “bank” following the Banking Regulation (Amendment) Act, 2020

Any of these may file an OA against a borrower, guarantor or mortgagor whose liability is due and unpaid.

2. Financial institutions and notified NBFCs

“Financial institution” under Section 2(m) includes public financial institutions (such as those notified under Section 4A of the Companies Act, 1956) and any other institution or class of institutions that the Central Government notifies for this purpose. Through successive amendments and notifications, this category has been expanded to cover eligible non-banking financial companies (NBFCs).

In practice, the position for NBFCs works as follows:

• For filings under the RDB Act, an NBFC must be one that qualifies as a “financial institution” for these purposes, and the debt must be ₹20 lakh or more.
• In parallel, under the SARFAESI Act, NBFCs with an asset size of ₹100 crore or above (as per the last audited balance sheet) are entitled to enforce security interest for secured debts of ₹20 lakh or more — a threshold the Government reduced from ₹50 lakh by notification dated 12 February 2021.

3. Asset reconstruction companies (ARCs)

Because “debt” under Section 2(g) of the RDB Act expressly includes a debt that is assigned, an ARC that has acquired a stressed loan from a bank or financial institution can pursue recovery in respect of that assigned debt before the DRT, in the shoes of the original lender.

4. Consortia and assignees

Multiple lenders who have financed the same borrower jointly (a consortium or multiple banking arrangement) can file a composite OA. Similarly, any entity to whom a qualifying debt has been legally assigned, and which itself falls within the eligible categories, can maintain the application.

The ₹20 Lakh Threshold

Importantly, this threshold does not cap what the bank can ultimately recover — once an OA is validly filed, the decree/recovery certificate covers the entire amount adjudged due, including accrued interest, subject to the bank's pleaded case and the law on interest (including the principles on penal interest laid down by the Supreme Court and the enforceability of contractual interest as moderated by courts).

Can a Borrower or Guarantor File Anything Before the DRT?

This is where most readers get confused. A borrower cannot file an OA, because an OA is a recovery petition by a lender. But borrowers and guarantors are not without a remedy before the DRT. There are three recognised routes:

1. Securitisation Application under Section 17 of the SARFAESI Act

When a secured creditor (bank or notified financial institution) classifies an account as a non-performing asset and takes enforcement measures — such as a demand notice under Section 13(2), taking symbolic or physical possession, appointing a receiver, or auctioning the property — the borrower, guarantor or any person aggrieved can file a Securitisation Application (SA) before the DRT under Section 17 of the SARFAESI Act challenging those measures on grounds such as non-compliance with statutory requirements, the debt not being due, or violation of the mandatory procedures under the SARFAESI framework. The DRT is the first forum for this challenge; appeals lie to the DRAT.

2. Counter-claims under Section 19(19) of the RDB Act

Where an OA has been filed against a borrower, the defendant may set up a counter-claim against the bank or financial institution for an amount exceeding the pecuniary threshold. Such a counter-claim is treated as an Original Application in its own right and decided alongside the bank's claim. This prevents borrowers from being forced to pursue their cross-claims in a separate civil court.

3. Applications arising under Section 17 of the RDB Act (transfer from civil court)

If a bank or financial institution has sued in a civil court for recovery, and the defendant claims a set-off or makes a counter-claim exceeding the prescribed threshold, the matter is transferred to the DRT for adjudication of both the claim and the set-off/counter-claim.

Appeals to the DRAT

Against any adverse order of the DRT, an appeal lies to the Debt Recovery Appellate Tribunal (DRAT) within the time prescribed by law, subject to the statutory pre-deposit requirement — under the RDB Act, ordinarily 50% of the adjudged amount, which the DRAT may reduce to not less than 25% for recorded reasons. For SARFAESI matters, Section 18 of that Act prescribes its own timeline and deposit regime. A further challenge is possible only by way of writ before the High Court under Articles 226/227 of the Constitution or before the Supreme Court.

Who Cannot File Before a DRT

Equally important is the list of those who cannot use the DRT route:

• Private individuals lending personal funds — a money claim between two individuals goes to a civil court (a money recovery suit), not a DRT.
• Ordinary partnership firms, proprietorships and private companies acting as lenders — unless they qualify as a notified financial institution.
• Borrowers seeking to sue their bank for damages or declaratory relief as a primary claim — such disputes generally belong to the civil courts, consumer fora (where maintainable), or the DRT only through the specific routes described above.
• Claims below ₹20 lakh — these remain with the civil courts, regardless of who the creditor is.

Time Limit for Filing an OA

An OA must ordinarily be filed within three years from the date on which the right to recover the debt accrues. The Tribunal has a limited discretion to entertain a delayed application — generally up to one further year — where the applicant demonstrates sufficient cause for the delay. This is why banks compute limitation carefully from the date of default and the dates of part-payments or written acknowledgments, each of which can restart the limitation clock.

How an OA Proceeds — A Brief Overview

1. Filing: The bank files the OA before the DRT having territorial jurisdiction, with the prescribed court fee (ad valorem in most jurisdictions) and documents.
2. Summons: The DRT issues summons to the borrower/defendant along with a copy of the OA.
3. Written statement and counter-claim: The defendant files a reply (written statement), and may file a counter-claim under Section 19(19).
4. Evidence and hearing: Affidavit evidence, documents, and oral arguments. The Tribunal is guided by natural justice and is not bound by the CPC, though it generally follows its own rules and settled procedure.
5. Order and Recovery Certificate: On adjudication, the Tribunal passes an order and issues a Recovery Certificate for the adjudged amount.
6. Execution: The Recovery Officer executes the certificate by attachment and sale of property, appointment of receivers, garnishee orders, etc.

Documents the lender typically relies upon include the loan/sanction documents, executed agreement and mortgage deed, statements of account, the demand notice, proof of default, and details of the securities. A defendant should obtain and verify the statement of account at the earliest opportunity, because the figures pleaded by the bank are the foundation of the entire claim.

DRT Patna and Bihar — The Local Picture

For readers in Patna and elsewhere in Bihar:

• DRT Patna exercises jurisdiction over the State of Bihar. If the borrower or the security is located in Bihar, the OA or Securitisation Application is ordinarily filed at DRT Patna.
• Appeals from DRT Patna lie to DRAT Allahabad, which also exercises appellate jurisdiction over DRTs at Ranchi, Lucknow, Jabalpur, Dehradun and Allahabad.
• Writ petitions against DRT/DRAT orders, where maintainable, would lie before the Patna High Court under Article 226/227 of the Constitution.
• Bihar defendants frequently face simultaneous proceedings — an OA before the DRT, SARFAESI enforcement for the same or related secured assets, and occasionally insolvency proceedings — and the strategy across all forums must be coordinated, because positions taken in one forum can affect the others.

Common Mistakes and Practical Precautions

• Ignoring a DRT summons is the costliest mistake. The Tribunal can proceed ex parte, and by the time you engage, the Recovery Certificate may already be under execution.
• Not verifying the outstanding amount — interest, penal interest and charges are often pleaded aggressively; every entry must be checked.
• Missing limitation arguments — if the OA is time-barred, it must be raised at the threshold.
• Confusing the forums — an SA under SARFAESI and an OA under the RDB Act are different proceedings with different grounds, timelines and reliefs.
• Attempting parallel civil suits in breach of the Section 34 bar — these are liable to be dismissed as not maintainable.
• Assuming a guarantor has no rights — guarantors can appear, defend, file counter-claims where permissible, and challenge SARFAESI measures.

If you have received a summons from DRT Patna, a Section 13(2) SARFAESI notice, or a possession notice, timely legal intervention — well before the first hearing — materially improves your ability to defend the matter effectively.

Frequently Asked Questions (FAQs)