Only DRTs allowed to adjudicate debt disputes of more than Rs 10 lakhs, check details

drts allowed to adjudicate debt disputes

Adjudication of debt disputes involving the amount of more than Rs.10 lakh can only be done by the DRTs

In a ruling, the Kerala High Court has stated that if there is adjudication of debt disputes involves amount more than Rs 10 lakhs, then only Debt Recovery Tribunal (DRT) which comes under Recovery of Debts and Bankruptcy Act, 1993 (RDBA Act) can do it. The District Collector can’t do it under the Revenue Recovery Act. 

Justice  Devan Ramachandran gave this judgement while he was disposing a batch of writ petition. It had challenged the revenue recovery proceedings that the banks had initiated recently against guarantors and borrowers which comes under RR Act. 

The Court has stated that under Section 17 of RDBA Act it is unambiguous that any adjudication in order to recover a debt amounting to more than Rs 10 lakh can’t be done by any entity or person or institution apart from the DRT. It had been constituted under the RDBA Act. Section 18 of this Act has certain provisions under which jurisdiction is barred from pursuing any such matter by any authority or person. 

The Mandate of Section 19 of RBDA Act states any financial institution such as bank which tries to recover a debt amounting to more than Rs 10 lakhs, it is mandatory for them to make an application under the DRT. No other entity shall be involved. Apart from that, RBDA Act which comes under Section 34 has excluded the jurisdiction of any court except the Supreme Court and High Courts. 

The Court also added that SARFAESI Act case was different from others because it was a special one and was brought in the association of RDBA Act. It intended to provide different ways to recover debts through the different specified methods. 

The Court further directed the revenue authorities to cease further actions involved. It also gave full liberty to the banks to pursue and invoke different remedies under RDBA Act.