RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 (DRT ACT) :
Recovery of the dues of loans from the borrowers through courts was a major issue for the banks and financial institutions due to huge back log of cases and the time involved. The Act came into operation from 24th June 1993.
Important highlights of DRT Act, 1993 are:
1. This Act constituted the special ‘Debt Recovery Tribunals’ for speedy recovery;
2. This Act is applicable for the debt due to any Bank or Financial Institution or a consortium of them, for the recovery of debt above ` Ten lakhs;
3. This Act is applicable to the whole of India except the State of Jammu & Kashmir;
4. The term ’debt’ covers the following types of debts of the Banks and Financial Institutions:
(a) any liability inclusive of interest, whether secured or unsecured;
(b) any liability payable under a decree or order of any Civil Court or any arbitration award or otherwise; or
(c) any liability payable under a mortgage and subsisting on and legally recoverable on the date of application.
Some examples of interpretation of the term ‘debt’ by different courts are:
(a) In the case of United Bank of India vs DRT (1999) 4 SCC 69, the Supreme Court held that if the bank had alleged in the suit that the amounts were due to it from respondents as the liability of the respondents had arisen during the course of their business activity and the same was still subsisting, it is sufficient to bring such amount within the scope of definition of debt under the DRT Act and is recoverable under that Act
(b) In G.V. Films vs UTI (2000) 100 Compo Cases 257 (Mad) (HC), it was held that payment made by the bank by mistake is a debt
(c) In the case of Bank of India vs Vijay Ramniklal AIR 1997 Guj. 75. it was held that, if an Employee commits fraud and misappropriation of money, the amount recoverable from him is not a debt within the meaning of DRT Act.