Laws & Procedure of
Debts Recovery Tribunal
In India
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  • Laws of The Debts Recovery Tribunal

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    The courts have discretionary powers to grant interest pendente lite and till realization. Such discretion has to be exercised properly, reasonably and on sound legal principles and not arbitrarily.

    Falling interest rates in the market should also be taken note off while granting interest pendente lite.

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    Where the right of a mortgagor to mortgage a property is challenged, and the person challenging the mortgage produces a claim anti dating the date of creating an mortgage, the Debts Recovery Tribunals should carefully examine the rival claims.

    Where the mortgagor does not produce the original title deeds for creating equitable mortgage, it is for the Bank to ensure all possible precautions including issue of public notices inviting objections to creation of mortgage against the property, filing of police complaint as well taking encumbrance certificates.

    A purchasers for value, who has taken all precautions that a prudent man can take before buying a property will have a right against any subsisting equitable mortagage which is not disclosed by the process of normal diligence.

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    Simultaneous Proceedings can go on before Banking Ombudsman as well as before the Debts Recovery Tribunal.

    Recommendations of Technical Committee cannot be enforced by the Banking Ombudsman.

    The Banking Ombudsman has no jurisdiction to compel a Bank to make further advances which as a prudent banker it might not find feasible.

    Banking Ombudsman cannot interfere with the agreement regarding repayment schedule or increase the period of moratorium of the loan.

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    On a case being transferred from the civil court, the Debts Recovery Tribunal may continue with the proceedings from any stage it may deem fit, or denovo.

    On a receipt of a case from civil Court, the Debts Recovery Tribunal may, unless grave prejudice would be caused to the opposite site, or would involve a situation in the nature of changing the character of the case itself, permit a party to file second statement of defence.

    The cross examination and recording of evidence done before the civil courts will stand.

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    A cooperative Bank is not a Bank within the meaning of RDB Act and is not required to approach the Debts Recovery Tribuanls for the recovery of its dues. A submission made before the MRTP Commission that it was a 'banking company,' does not estopp an cooperative Bank from saying now that it is not a 'banking company' within the meaning of S. 5(c) of the Banking Regulation Act, 1949. There cannot be estoppel against a statute.

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    Where there has been a obvious and manifest illegality in the conduct of an auction, the courts cannot be mute and helpless spectator. The auction has to be set aside even if there is procedural defect in filing of the suit.

    The courts should be vigilant to the bidders, and scrutinize them, particularly where there are other bidders with higher offers than the auction purchaser.

    While setting aside an auction sale, it is not open to enlarge the scope of the remanding than permitting the re auction of the property.

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    When the State Government claims that it has charge on a property which has been mortgaged with a Bank, the issues must be decided in a suit. The Debt Reocvery Tribunals and civil courts should go into the isues and take a decision whether the State has first charge over the property or not. These cannot be decided in a Writ.

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    There is no illegality if provisions of SRFAESI Act is invoked even as the Execution Petition is pending before the civil Court.

    Where the borrower has deliberately prolonged the litigation, he does not deserve even benefit of intalments.

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    Even though no Recovery Certificate has been issued, the Presiding Officer can order sale of properties as long as the amount recovered is within the liability admitted by the borrower, particularly when the decree of compromise has not been complied with.

    Section 19(18)(e) of the RDB Act read with Rule 12 (5) of the Debts Recovery Tribunal (Procedure) Rules, 1993 permits the Presiding Officer to order sale of properties under jurisdiction of another DRT as well as during pendency of an application.

    The whole motto behind the enactment of the RDDBFI Act is to recover the public money and in such process of recovery, principle of natural justice and equity should prevail. As such admitted amounts can be recovered without having to wait for the entire proceedings to end.

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