The research paper titled "Challenges Faced by Debt Recovery Tribunals (DRTs) : An In-depth Analysis" aims to provide a comprehensive examination of the significant challenges encountered by Debt Recovery Tribunals in the Indian context. Debt Recovery Tribunals (DRTs) were established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) to provide a specialized forum for the expeditious recovery of debts due to banks and financial institutions.

Debt Recovery Tribunals play a pivotal role in the efficient resolution of debt-related cases, contributing to the stability of financial institutions and the overall economic health of the country. However, these institutions have been facing a myriad of challenges that impede their effectiveness and hinder the timely resolution of cases.

The paper will begin by introducing the concept and significance of Debt Recovery Tribunals within the Indian legal framework. It will then delve into an exploration of the multifaceted challenges that these tribunals face.

The key challenges to be addressed in the paper include:

1. Case Backlog: One of the primary challenges faced by DRTs is the overwhelming backlog of cases. The paper will analyze the reasons behind this backlog, including the complex nature of financial disputes, inadequate infrastructure, and the shortage of qualified personnel.
2. Delays in Proceedings: The research will delve into the factors leading to delays in the proceedings of DRTs. These factors may range from procedural bottlenecks to the involvement of multiple parties, thereby impeding the swift resolution of cases.
3. Enforcement Issues: Even after obtaining favorable judgments, the process of enforcing the recovery of dues remains a challenge. The paper will examine the hurdles in the execution of DRT orders and the impact on successful recovery.
4. Legal Complexities: Debt recovery involves intricate legal and financial issues. The paper will discuss how the complexity of laws, overlapping jurisdictions, and varying interpretations of statutes can contribute to challenges in DRT proceedings.
5. Lack of Adequate Resources: Insufficient allocation of resources, including finances and technology, can hinder the functioning of DRTs. The research will evaluate how modernizing these tribunals with advanced technology can streamline processes and enhance efficiency.
6. Lender-Borrower Dynamics: The paper will also address the challenges arising from the delicate lender-borrower relationship, which can sometimes lead to settlements, loan restructurings, or even manipulation of legal proceedings.
7. Lack of Specialization: DRTs handle a wide range of cases, from individual borrowers to large corporations. However, the absence of specialized tribunals for specific sectors like banking, real estate, and agriculture might lead to inefficiencies in handling diverse cases.

The paper will employ a mixed-methods approach, combining qualitative analysis of case studies and quantitative data from official reports, government sources, and judicial decisions.

In conclusion, this research paper aims to shed light on the various challenges faced by Debt Recovery Tribunals in India, which are crucial for the efficient functioning of the financial sector. By identifying these challenges and proposing potential solutions, the paper intends to contribute to the ongoing discourse on legal reforms necessary to strengthen the debt recovery framework in India.

Hypothesis:
"The challenges faced by Debt Recovery Tribunals (DRTs) significantly impact the efficiency and effectiveness of the debt recovery process, leading to delayed resolutions, lower recovery rates, and procedural inefficiencies. By addressing these challenges through measures such as streamlined procedures, technological modernization, and improved resource allocation, the functionality of DRTs can be enhanced, resulting in quicker resolutions, higher recovery rates, and a more robust debt recovery framework."

Research Question:
"What are the primary challenges faced by Debt Recovery Tribunals (DRTs) in India, and how do these challenges impact the efficiency and effectiveness of the debt recovery process?"

Research Problems:

• How does the significant backlog of cases in Debt Recovery Tribunals affect the timely resolution of debt-related disputes?
• What procedural factors contribute to delays in the proceedings of Debt Recovery Tribunals?
• How do these delays affect the overall effectiveness of the debt recovery process?
• What challenges arise during the enforcement of DRT orders, and how do these challenges impact the actual recovery of debts?
• How do legal complexities, overlapping jurisdictions, and varying interpretations of statutes affect the decision-making process within Debt Recovery Tribunals?
• What role do inadequate resources, both financial and technological, play in hindering the efficient functioning of DRTs?

Addressing these challenges through suitable reforms and increasing the efficiency of the DRT system is crucial to ensuring a fair and expeditious debt recovery process.

Introduction
Banks and financial institutions had been experiencing considerable difficulties in recovering loans and enforcement of securities charge with them. The procedure for recovery of debts due to the banks and financial institutions was slow and resulted in a significant portion of the funds being blocked.

The Committee on Financial Systems, headed by Shri M Narasimhan, had considered the setting up of the "special tribunals" with special powers for adjudication and speedy recovery of such matters as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt to work out a suitable mechanism through which the dues to the banks and financial institutions could be realised without delay.

In 1981, a committee under the Chairmanship of Shri T Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested remedial measures including changes in law. The Tiwari Committee had also suggested setting up of special tribunals for recovery of dues of the banks and financial institutions by following a summary procedure. Consequently, the Recovery of Debts Due to Banks and Financial Institutions Act 1993 in short DRT Act was passed.

Keeping in line with the international trends on helping financial institutions recover their bad debts quickly and efficiently, the Government of India has constituted thirty three Debts Recovery Tribunals and five Debts Recovery Appellate Tribunals across the country. The Debts Recovery Tribunal (DRT) enforces provisions of the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 and also Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002

Purpose: The fundamental purpose of the 1993 Act was to remove claims of banks and financial institutions from the ordinary form to specialised tribunals. The avowed purpose of the statute was to ensure the speedy disposal of claims of banks and financial institutions intended to be governed by it.

The rationale behind the Act is contained in the Tiwari Committee Report, which stated: "The civil courts are burdened with diverse types of cases. Recovery of dues due to Banks and Financial Institutions is not given any priority by the civil courts. The Banks and Financial Institutions like any other litigants have to go through a process of pursuing the cases for recovery through civil courts for unduly long periods." The preamble of the Act provides for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto.

Under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 banks approach the Debts Recovery Tribunal (DRT) whereas, under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002 borrowers, guarantors, and other any other person aggrieved by any action of the bank can approach the Debts Recovery Tribunal (DRT). Appeals against orders passed by Debts Recovery Tribunal (DRT) lie before Debts Recovery Appellate Tribunal (DRAT). Each Debts Recovery Tribunal (DRT) is presided over by a Presiding Officer. The Presiding Officer of a Debts Recovery Tribunal is the sole judicial authority to hear and pass any judicial order.

One of the main challenges faced by DRTs is the large number of pending cases. According to a report by the Ministry of Finance, as of March 2021, there were a total of 35,972 pending cases in DRTs across India [2]. This backlog of cases has resulted in long delays and has made it difficult for banks to recover their dues in a timely manner.

Case Backlog:

Causes and Consequences of Case Backlog:

The overwhelming backlog of cases is a pressing issue for DRTs.
The causes of this backlog are multi-faceted:

• Complex Nature of Financial Disputes: Financial disputes, especially those involving banks and financial institutions, are inherently intricate. They often include multiple parties, convoluted financial transactions, collateral issues, and legal intricacies. Resolving such complex cases requires significant time and expertise.
   
• Inadequate Infrastructure: Many DRTs face infrastructural limitations, including insufficient courtrooms, administrative support staff, and related services. The lack of proper infrastructure constrains their ability to manage a large volume of cases efficiently.
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• Shortage of Qualified Personnel: DRTs often grapple with a shortage of qualified personnel, including judicial officers and support staff. This human resource deficit further complicates efficient case management and contributes to the backlog.

The consequences of this backlog are substantial:

• Delays in Debt Recovery: The backlog directly leads to delayed debt recovery, affecting both creditors and debtors. Creditors cannot access funds tied up in non-performing assets, and debtors remain in financial uncertainty.
   
• Burden on the Financial Ecosystem: The case backlog places a substantial burden on the financial ecosystem. Banks and financial institutions find it challenging to free up capital allocated to non-performing loans, potentially hampering their lending capacity and impacting the broader economy.
   
• Litigation Fatigue: Extended litigation due to case backlog can lead to "litigation fatigue" among stakeholders. This discourages them from seeking legal remedies, undermining the effectiveness of DRTs in debt recovery.
   

Delays in Proceedings:

Procedural Bottlenecks:

Delays in DRT proceedings are attributed to several factors:

• Complex Procedures: DRT proceedings often involve intricate legal procedures, including the submission of extensive documentation, adherence to timelines, and compliance with various legal formalities. These complexities slow down the resolution process.
• Involvement of Multiple Parties: Debt recovery cases frequently involve multiple stakeholders, such as banks, financial institutions, borrowers, guarantors, and other interested parties. These multifaceted interests can lead to legal disputes and complexities, making the resolution process time-consuming.

Enforcement Issues:

Challenges in Enforcing DRT Orders:

Even after obtaining favorable judgments, enforcing the recovery of dues is a formidable challenge. The hurdles in executing DRT orders are noteworthy:

• Execution Challenges: Enforcing DRT orders involves coordinating with enforcement agencies, banks, and other parties. It can be complicated by debtor resistance, the need for asset seizures, or challenges in locating and liquidating assets.
• Impact on Recovery: Delays or difficulties in enforcing orders significantly impact the actual recovery of debts. Creditors may incur additional costs, and the recovery process might be protracted or even unsuccessful, affecting the overall efficiency of DRTs in recovering dues.
   

Legal Complexities:

Complexity of Laws:

Debt recovery cases entail intricate legal and financial issues, contributing to the challenges faced by DRTs:

• Complexity of Laws: Debt recovery involves navigating a web of financial and legal intricacies. Different statutes, regulations, and legal precedents come into play. Understanding and interpreting these laws can be a time-consuming process, potentially leading to delays in proceedings.
• Overlapping Jurisdictions: Overlapping jurisdictions among various legal authorities can further complicate matters. DRTs, civil courts, and other forums may have concurrent jurisdiction over debt recovery cases, leading to disputes and inefficiencies in legal proceedings.
• Varying Interpretations of Statutes: Different interpretations of legal provisions can create challenges. These discrepancies may arise from differences in legal precedent or regional interpretations of statutes, impacting decision-making within DRTs.
   

Lack of Adequate Resources:

Insufficient Allocation of Resources:

Insufficient allocation of resources, both financial and technological, poses significant challenges to DRT operations:

• Financial Resources: Many DRTs face budgetary constraints, limiting their ability to invest in necessary resources. This financial shortfall can lead to inadequate infrastructure and a shortage of personnel, impacting the efficiency of case resolution.
• Technological Modernization: Integrating advanced technology, including case management systems, digital communication tools, and data analysis software, can streamline DRT processes. This modernization has the potential to reduce delays and enhance efficiency.
   

Lender-Borrower Dynamics:

Complexities in the Lender-Borrower Relationship:

The lender-borrower relationship introduces unique challenges:

• Settlements and Loan Restructurings: Lender-borrower dynamics sometimes lead to negotiations, settlements, or loan restructuring agreements. These agreements can impact the progress of legal proceedings and may result in changes to the terms of repayment, adding complexity to the case.
• Manipulation of Legal Proceedings: In contentious lender-borrower relationships, legal disputes or manipulation of legal processes may occur. Creditors and debtors may engage in legal maneuvering, potentially influencing the resolution process and its efficiency.

Lack of Specialization:

Handling Diverse Cases:

DRTs handle a wide range of cases, from individual borrowers to large corporations. However, the absence of specialized tribunals for specific sectors can lead to inefficiencies:

• Efficiency Challenges: Without specialized tribunals, DRTs may struggle to effectively handle cases requiring sector-specific expertise. This can lead to delays and misunderstandings in the resolution process.

Addressing these challenges is imperative for enhancing the functionality of DRTs and ensuring a fair and expeditious debt recovery system.

Possible Solutions:

Suggestions to improve the efficiency of the Debt Recovery Tribunal Accountability are as under:

1. High Courts do not have supervisory jurisdiction over the Debt Recovery Tribunal in the state. However a writ petition can be filed in the High Court against an order/decree of the Debt Recovery Tribunal. So, as a matter of fact, the Debt Recovery Tribunal does not have any accountability what so ever to any public office. There is no mechanism in place to ensure that the cases at the Tribunal be disposed in a timely manner. As a matter of fact, there is an added need for ensuring accountability for the Tribunal.
2. The DRAT should look into the reason for the backlog of cases and see to it that the speedy recovery is assured.
3. The duty to appoint staff at the Tribunal lies with the Ministry of Finance. Timely appointments have to be made by the ministry to ensure smooth functioning of the Tribunal. Also, the ministry must ensure that only individuals with a fine understanding of the law and debt recovery scenario be appointed to key posts, such as the Registrar and Presiding Officer.
4. Stay Petitions have to be analyzed carefully before being accepted. Allowing Stay Petitions to a large number of the cases has been determined as one of the reasons for the piling up of cases in the DRT. Adjournment should also be strictly regulated.

Conclusion & Suggestions
From the study conducted it has been ascertained that the cases get delayed inordinately in a Debt Recovery Tribunal much against the spirit and motive of its very establishment. Banks have expressed their dissatisfaction with the system that was instituted to ensure speedy recovery. The number of claims in litigation is quite large and changes should be made urgently to revamp the existing model. Unless the system is overhauled, the rate of pendency at the Tribunal will rise unrestrained. Such a state of affairs will seriously put the banking system in doldrums.

The functioning of Debt Recovery Tribunals (DRTs), created to help financial institutions recover dues speedily without being subjected to the lengthy procedures of usual civil courts, appears to cause more pain than gain for banks. Consider this: The amount recovered from cases decided in 2013-14 under DRTs was Rs 30,950 crore, while the outstanding value of debt sought to be recovered was Rs 2,36,600 crore. In other words, recovery was only 13 per cent of the amount at stake. Also, while the law indicates that cases before DRTs must be disposed off in six months, only about a fourth of the cases pending at the beginning of the year were disposed during the year.

"The functioning of DRTs needs to improve to ensure bank are able to recover their existing loans and offer fresh advances at cheaper rates. In the current scheme of things, there is no mechanism in place to ensure that the tribunal disposes the case in a timely manner. There is a strong need to bring in more accountability for the DRT," said Shashwat Sharma, partner (Management Consulting), KPMG in India.

One problem is the small number of DRTs and Debt Recovery Appellate Tribunals, where judgments of DRTs can be appealed. While there are 33 DRTs, there are only five Debt Recovery Appellate Tribunals in the country. "There is certainly a need for more number of DRTs. The biggest challenge, it appears, is their ability to deal with a subject with speed.

The system that was designed is clearly not working. Probably, there should be a feedback mechanism and people involved with DRTs should be encouraged to point out the areas of pain," said Ashvin Parekh, Managing Partner at Ashvin Parekh Advisory Services. Deepak Haria, Senior Director at Deloitte in India, echoed a similar view.

"The challenge is that our judicial system is both clogged and inadequate in infrastructure, which slows down any redressal. Recovery can be speeded up only when there is a fixed time-frame for all disposals, and realisation of assets could be speeded up by having special courts to deal with such recoveries," he said. The functioning of DRTs is also keeping the Reserve Bank of India (RBI) worried. "If bankers cannot get their money back, they are not going to give you loans at cheap price.

So, making sure debt recovery tribunals work better, making sure that you don't have excess number of stays, excess number of appeals – that is what we need to focus on," RBI Governor Raghuram Rajan said following the central bank's fifth bi-monthly monetary policy review. Experts suggest that the law should be strengthened to ensure mandatory time-bound disposal of cases. Also, performance indicators of the adjudicating officer could be used to improve the efficiency of the system. A few recommended that stay petitions should be analysed before being accepted as there have been instances where advocates exploit the loopholes of the Act and plead for stays, leading to piling up of cases.

As to the suggestions to improve the debt recovery scenario in the country it is recommended that the time bound disposal of cases though the Court has to dispose an order application within six months, and a stay application within two months from the date of its admission, this has not been followed by the Tribunals in India in many situations.

The government has to make sure that time-bound disposal of the cases is done mandatorily by adding the clause in the Act and making it a law. Even though the SARFAESI Act has mandated the Debt Recovery Tribunals to settle the Original Applications within six months, this is not obeyed strictly. Efforts have to be taken to ensure this.

Written By: Manan Bhuva - Alliance University (B.B.A-L.LB)