Banks and financial institutions duly registered with the Reserve Bank of India (RBI) provide lending services to corporate bodies and individuals (borrowers). In case the borrower fails to repay the loan amount or part thereof which also includes unpaid interest and other charges and/or the debt becomes Non Performing Asset (NPA), banks and financial institutions can recover the debt by contacting the appropriate judicial offices. We say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay Before the RDDBFI Act came into force, banks and financial institutions were facing huge challenges in recovering debts from borrowers as the courts were overloaded with a large number of regular cases due to which the courts they could not give priority to the recovery issues of banks and financial institutions. Government of India in 1981 constituted a committee headed by Mr. T.Tiwari, this committee suggested a quasi-judicial setup exclusively for banks and financial institutions which by adopting summary procedure can quickly resolve the recovery cases filed by the banks and financial institutions against borrowers. As late as 1991, a committee was set up under the leadership of Mr. Narasimham, who endorsed the view of the Shri T. Tiwari committee and recommended the establishment of a quasi-judicial system for speedy recovery of debts. Under which the Government of India enacted the RDDBFI Act. Through the RDDBFI Act, quasi-judicial authorities were established and the procedure for speedy recovery of debts was specified. Origin of the Act The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, was enacted on 27 August 1993, to provide for the establishment of Tribunals for the speedy adjudication and recovery of debts owed to banks and financial institutions, and for matters connected or ancillary to them. Obviously, the idea of ​​the law was to provide an alternative mechanism for the recovery of debts to banks and financial institutions. Clearly, the law was not intended for resolving banking cases, as only banks and financial institutions could file cases before the DRTs, and that too related solely to debt recovery. The legality and validity of the Act had however been challenged in the Delhi High Court in the matter of Delhi High Court Bar Association v. Union of India[1], wherein various issues were raised to question the constitutional sanctity of the Act . On some of these cases, the petition was successful and the Delhi High Court found the law to be erroneous on grounds such as the central government's power to constitute courts under Articles 323A and 323B of the Constitution, and the fact that the law placed the courts on a higher pedestal than the High Courts in matters of monetary jurisdiction; that the judiciary had been given no role in the appointment of presidents; that there were no provisions for set-off, counterclaims or transfer of cases, etc. However, the Supreme Court intervened and stayed that order of the Delhi High Court having an assurance that the government will consider amending the legal anomalies in the law. Finally, the necessary changes were made in 2000 and the law was given the green signal. The Act was recently amended by the Enforcement of Security Interest and Debt Recovery (Amendment) Act, 2012[3] (the Amendment Act).1. Debt Recovery Tribunal Section 3 provides for the establishment of the Debt Recovery Tribunal (DRT), by notification issued by the Central Government, forthe exercise, jurisdiction, powers and authority vested in such Tribunal under the RDDBFI Act. The first DRT was established in Kolkata in 1994. Currently 33 DRTs are functioning in various places in India and 6 more DRTs are being set up. As per section 4, DRT consists of only one member, known as the President. Article 5 provides that a person who has been or is qualified to become a District Judge may be appointed as President of the DRT. Article 6 provides that the term of office of the President will cease after the expiry of the period of 5 years from the date he takes office and he may be re-appointed provided he has not reached the age of 65 years. Sections 8 -11 deal with the establishment, qualification and mandate of the President of the Debt Recovery Appellate Tribunal (DRAT). The DRAT is established to exercise the control and powers conferred by the RDDBFI Act. The DRAT is made up of a single member called the President. A person can become President if he has either been qualified to become a judge of the High Court, or has been a member of the Indian Legal Services and has held a Grade 1 appointment as such member for a minimum period of three years or has held the office of President of the Court for a period of at least three years. The President of the DRAT remains in office for a period of five years and can be re-elected, provided he has not reached his seventieth birthday. Currently there are 5 DRATs in India in Delhi, Chennai, Mumbai, Allahabad and Kolkata. DRAT has appellate and supervisory jurisdiction over DRTs. Who can recover money from the DRT under the RDDBFI Act Under section 1(4), the provisions of the RDDBFI Act do not apply where the amount of debt owed to the bank or financial institution or consortium of banks and financial institutions is less than ten lakh rupees or any other amount not less than one lakh rupees, in which cases the Central Government may specify so by notification. Therefore, in essence, the minimum debt to be recovered by the DRT should not be less than ten lakh rupees. In case of SARFAESI Act, if the asset has been declared as Non-Performing Asset (NPA), eligible banks and financial institutions, after strengthening security, can recover the remaining amount under RDDBFI Act which is in excess , of rupees one lakh. The courts if they do it concern income tax or sales tax or excise duty or customs or administration have now become an essential part of the judicial system of our country. Such specialized institutions may not strictly fall under the concept of judiciary, as per Article 50, but it cannot be denied that such courts have become an indispensable part of the justice delivery system, like tribunals. Sections 17 and 18 of the RDB Act 1993 have vested exclusive jurisdiction in the tribunals and appellate tribunals established under that Act to hear and decide claims of banks and financial institutions for the recovery of debts owed to them. After the establishment of these courts, all cases where the amount claimed is Rs. 10 lacs or more, is automatically transferred to them (the transferred matter must be taken up from the stage to which it was transferred or from an appropriate stage and not de novo). No other court or authority shall exercise jurisdiction, power or authority in relation to such matters except the Supreme Court or the High Court exercising jurisdiction under Articles 226 and 227 of the Constitution. However, Section 18 shall not apply in case of proceedings relating to recovery of debts due to multi-state cooperative banks under the Multi-State Co-operative Societies Act, 2002, pending before the coming into force of the amendment act; such proceedings.