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Explanation of DRT Terms

Explanation of DRT Terms

Let’s delve into detailed explanations for each of the terms related to the Debt Recovery Tribunal (DRT) in India:

1. Debt Recovery Tribunal (DRT):

  • DRT is a quasi-judicial body established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It adjudicates cases related to the recovery of debts by banks and financial institutions.

2. Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act:

  • SARFAESI Act empowers banks and financial institutions to take measures for recovering non-performing assets (NPAs) without court intervention. It provides tools like the issuance of SARFAESI notices and allows the sale of secured assets.

3. Non-Performing Asset (NPA):

  • NPA refers to a loan where interest or principal payments remain overdue for a specified period, usually 90 days. Banks and financial institutions classify loans as NPAs to address issues of default.

4. Recovery Officer:

  • An officer appointed by the DRT to execute orders for the recovery of debts. The Recovery Officer has powers to attach and sell properties to recover outstanding amounts.

5. Compromise Settlement:

  • A negotiated agreement between the borrower and the lender to settle the outstanding debt. It often involves revised terms of repayment.

6. Attachment of Property:

  • The process of seizing and taking control of the borrower’s assets as part of the recovery process.

7. Garnishee Order:

  • An order directing a third party (like an employer or a debtor of the borrower) to withhold payments due to the borrower for debt recovery.

8. Recovery Certificate:

  • A certificate issued by the Recovery Officer specifying the amount due for recovery. It is the basis for further recovery proceedings.

9. Deficiency Memo:

  • A document issued by the Recovery Officer specifying any shortfall in the amount realized from the sale of secured assets compared to the outstanding debt.

10 Public Auction:

  • The process of selling secured assets through public bidding to recover the outstanding debt. It is a transparent method to realize the maximum value from the assets.

11. Attachment Order:

  • An order directing the attachment of specific properties of the borrower as part of the recovery process. It is a legal step to secure assets for potential sale.

12. Compensation for Wrongful Attachment:

  • Damages awarded to the borrower if it is proven that the attachment of property was done wrongfully. This ensures fairness in the recovery process.

13. Interim Order:

  • A temporary order issued by the DRT before a final decision on the case. It provides relief or sets conditions until a final resolution is reached.

14. Original Jurisdiction:

  • The authority of the DRT to hear cases related to debt recovery as the first instance. It is the primary legal forum for cases falling under its jurisdiction.

14. Rehabilitation and Restructuring:

  • Measures to revive and reorganize the business of a defaulting borrower to facilitate debt repayment. It aims to provide an opportunity for financial recovery and business sustainability.

15. Appeal:

  • The process of challenging a DRT decision before the Debt Recovery Appellate Tribunal (DRAT). It provides an avenue for parties dissatisfied with DRT rulings to seek review.

16. Stay Order:

  • An order temporarily halting further legal proceedings. It may be issued to maintain the status quo during the course of the case.

17. Mortgage:

  • A legal agreement where the borrower offers real property as security for a loan. In case of default, the lender may have the right to take ownership of the mortgaged property.

18. Jurisdictional DRT:

  • The DRT having territorial jurisdiction over a specific area where the borrower or the property is located. It determines which DRT has the authority to hear a particular case.

Understanding these terms is essential for all stakeholders involved in DRT proceedings, ensuring a comprehensive grasp of the legal processes and tools available for debt recovery in India.

Adcocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)

Contact: 88271 22304

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