DRT recovery case: process and borrower’s options

A lender files an Original Application (OA) in the Debts Recovery Tribunal (DRT) under Section 19 of the Recovery of Debts and Bankruptcy Act 1993, but only for debts of ₹20 lakh or more. Once you receive the summons, you must file a written statement within 30 days, extendable by at most 15 more days. If the lender wins, the DRT issues a recovery certificate and a Recovery Officer enforces it. An appeal lies to the Debts Recovery Appellate Tribunal (DRAT) within 45 days, with a pre-deposit of 50% that can be reduced to 25%.

What the DRT is, and how it differs from a SARFAESI challenge

People often mix up two different proceedings before the same tribunal. In a Section 17 SARFAESI application, the borrower is the applicant, challenging the lender’s possession or sale of secured property within 45 days. In a Section 19 Original Application, the lender is the applicant and the borrower, guarantors and mortgagors are the defendants. Lenders often run both together: SARFAESI to sell the security, and an OA to recover the balance. If your issue is the house being taken, read SARFAESI notice under section 13(2): what a borrower should do. This page is about the case where you are sued for money.

The threshold matters. Under Section 1(4) of the Act read with a September 2018 notification, DRTs take recovery applications only where the debt is ₹20 lakh or more. For a smaller debt the lender must file a civil suit (often a summary suit under Order XXXVII of the Code of Civil Procedure), start arbitration where the agreement has a clause, or bring the matter to a Lok Adalat. If a bank files an OA for, say, ₹12 lakh, jurisdiction is the first thing to challenge.

The process, step by step

1. Summons. The DRT issues summons with a copy of the OA. Note the date of service.
2. Written statement. You must file it within 30 days of service of summons (Section 19(5)). The Presiding Officer can extend by a further period not exceeding 15 days in exceptional cases, so 45 days is the outer limit. High Courts have dealt with late written statements strictly and have not always agreed on how much indulgence is possible, so do not plan to be late.
3. Set-off and counterclaim. In the same reply you can claim set-off or file a counterclaim, for example for excess interest or charges the lender took. This is a real tool, not a formality: put figures and documents behind it.
4. Documents and hearing. The case is largely decided on documents and affidavits: the loan agreement, sanction letter, statement of account, notices, security documents. The lender must prove the debt, usually through a certified statement of account.
5. Interim orders. The lender can seek attachment of assets or restraint on dealing with them before judgment. You can oppose with proof of your means and a reasonable offer.
6. Final order. If the DRT finds the debt due, it issues a recovery certificate to the Recovery Officer, with interest as directed.
7. Recovery. The Recovery Officer can use the modes listed in the Act (Section 25), including attachment and sale of property and attachment of bank accounts. An order of the Recovery Officer can be challenged before the DRT by an appeal within 30 days (Section 30).

Hire a lawyer early. The written statement is your one chance to set out your defences, and amendment later is not easy. If you cannot afford one, the District Legal Services Authority gives free legal aid to eligible persons (NALSA helpline 15100).

Defences and options available to a borrower

• No jurisdiction. The debt is below ₹20 lakh, or the OA is not in the right DRT territorially.
• Limitation. A lender’s claim to recover a loan is ordinarily subject to three years under the Limitation Act 1963, counted from default. But a written acknowledgement of the debt signed before the period ran out starts a fresh period under Section 18 of that Act, and part-payments can have a similar effect. Banks therefore ask for balance confirmation letters. Check dates and any acknowledgements in the file.
• Wrong accounts. Interest charged on penal charges, compounding not allowed by your agreement or RBI’s rules, unexplained debits, payments not credited. Demand a statement from the first day of the loan.
• Documents missing. No proper sanction, unsigned or unproven agreement, security not created or not registered.
• Guarantor defences. Variation of terms or release of the borrower without consent can discharge a guarantor under the Contract Act, unless the deed gives advance consent. See guarantor liability when a borrower defaults.
• Set-off and counterclaim. Claim back excess charges or damages for wrongful acts.
• Settlement. Where a case is pending before a court or tribunal, an RBI-regulated lender can settle only subject to a consent decree from that forum. The practical steps are in one time settlement (OTS) with a bank.

What is not a defence: hardship alone. The tribunal will not cancel a genuine debt because you lost your job, though hardship helps in settlement and in asking for time to pay.

Appeal to the DRAT and the pre-deposit

A person aggrieved by the DRT’s final order can appeal to the Debts Recovery Appellate Tribunal within 45 days under Section 20. Section 21 makes a pre-deposit mandatory: 50% of the amount of debt due as determined by the DRT, which the DRAT may reduce, for reasons recorded in writing, to not less than 25%. The Supreme Court has held that the DRAT cannot entertain an appeal without the mandated deposit. Because the hurdle is steep, put your best effort into the DRT stage.

Note the difference from SARFAESI: an appeal against a DRT order under Section 17 of the SARFAESI Act goes to the DRAT within 30 days with a 50% pre-deposit (reducible to 25%) under Section 18 of that Act. Two Acts, two timelines. Diary the one that applies to your order.

Example

Prakash, a garment trader in Surat, has a business loan with ₹14 lakh principal and ₹4 lakh of interest and charges overdue, so the bank files a recovery case. He engages a lawyer, files the written statement within 30 days, and points out charges levied on charges. He also offers ₹11 lakh in three months, citing a fall in turnover shown in his GST returns. The bank counters at ₹13.5 lakh and they agree ₹12.75 lakh in two instalments, recorded as a consent order. He gets a no-dues certificate and release of his shop’s title deeds. Settling in the case saved him years of litigation and the risk of attachment.

Frequently asked questions

Can I be arrested because of a DRT case?

A DRT case is a civil recovery case. At the enforcement stage the Act lists arrest and detention among the modes available to a Recovery Officer, but it is used for a defendant who defeats the certificate, not for ordinary inability to pay. Attend hearings, file replies, and take advice if a recovery certificate is issued against you.

I missed the 30 days for my written statement. What now?

Take a lawyer at once and file with an application for extension within the 15-day window. Beyond 45 days, the Delhi High Court has held that the period cannot be condoned, although High Courts have differed, so treat 45 days as the hard limit.

Can the DRT hear a personal loan of ₹10 lakh?

No. The DRT’s jurisdiction starts at ₹20 lakh. A lender with a smaller claim would go to a civil court, arbitration or Lok Adalat.

Does a DRT case stop SARFAESI action or the other way round?

No. Lenders can pursue both. SARFAESI recovers from the security, and the OA recovers the balance. The same tribunal hears both kinds of matter.

Can the RBI Ombudsman help in a DRT case?

Not on the dispute itself. The Ombudsman will not take up a matter pending before a court or tribunal. It can still act on separate service issues such as harassment by agents or wrong credit reporting.

Quick quiz

For the whole picture from missed EMI to DRT, see Borrowers’ Rights: EMI Default, Recovery Agents, SARFAESI and DRT.

Sources

• Recovery of Debts and Bankruptcy Act 1993, sections 1(4), 19, 20, 21, 25 and 30; Central Government notification of September 2018 (₹20 lakh)
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, sections 17 and 18
• Limitation Act 1963, section 18; Code of Civil Procedure, Order XXXVII
• RBI Framework for Compromise Settlements and Technical Write-offs (8 June 2023)
• Supreme Court on mandatory pre-deposit for appeals before the DRAT; Delhi High Court on the 45-day outer limit for written statements
• Reserve Bank Integrated Ombudsman Scheme 2026

This page is for education and general information, not legal advice for a specific case. Law as on 7 November 2026.