Banks and financial institutions duly registered with the Reserve Bank of India (RBI) offer loan facilities to corporate bodies and individuals (borrowers). In case the borrower fails to repay the loan amount or any part thereof which also includes unpaid interest and other charges and/or the debt becomes a non-performing asset (NPA), banks and financial institutions can recover the debt by approaching the appropriate legal forums. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Before the enactment of the RDDBFI Act, banks and financial institutions faced enormous challenges in recovering debts from borrowers as the courts were overburdened. with a large number of regular cases due to which the courts could not prioritize recovery issues from banks and financial institutions. The Government of India constituted a committee headed by MT Tiwari in 1981, this committee suggested a quasi-judicial setup exclusively for banks and financial institutions which by adopting summary procedure can expeditiously settle the recovery cases filed by banks and financial institutions against borrowers. Again in 1991, a committee was set up under the leadership of Mr. Narasimham, which endorsed the view of the Shri T.Tiwari committee and recommended the creation of a quasi-judicial body for speedy recovery of debts. Pursuant to which the Government of India has enacted the RDDBFI Act. Through the RDDBFI Act, quasi-judicial authorities were constituted and the procedure was clarified for speedy recovery of debts.Origin of the ActThe Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was promulgated on August 27 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 therewith or incidental thereto. Obviously, the idea of ​​the law was to provide an alternative mechanism for recovering debts owed to banks and financial institutions. Obviously, the Act was not intended to resolve banking matters, as only banks and financial institutions could file complaints before the DRTs, and these also related only to debt recovery. The legality and validity of the Act was, however, challenged before the Delhi High Court in the case of Delhi High Court Bar Association v. Union of India[1], in which various issues were debated to challenge the constitutional nature of the Act. On some of these points, the petition succeeded and the Delhi High Court found the law to be bad for reasons such as the power of the central government to constitute tribunals under Articles 323A and 323B of the Constitution, which the law placed the courts on a higher pedestal than the High Courts in matters of monetary jurisdiction; that the judiciary had played no role in the appointment of the session presidents; that there was no provision for set-off, counterclaims or transfer of business etc. However, the Supreme Court intervened and stayed such an order of the Delhi High Court after it was assured that the government would consider amending the legal anomalies in the law. Finally, the necessary changes were made in 2000 and the law received the green signal. The Act was recently amended by the Enforcement of Security and Recovery of Debts (Amendment) Act 2012[3] (the Amendment Act).1.Section 3 of the Debt Recovery Tribunal provides for the establishment of a Debt Recovery Tribunal (DRT), by notification issued by the Central Government, for the exercise of the jurisdiction, powers and authority vested in this court under the RDDBFI Act. The first DRT was established in Kolkata in 1994. Currently, 33 DRTs are functioning at various places in India, and 6 more DRTs are also being established. Pursuant to Article 4, the DRT consists of only a single member, known as the Chairman. Section 5 provides that a person who has been or is qualified to become a District Judge may be appointed as Chairman of the DRT. Article 6 provides that the mandate of the chairman of the session will end after the expiration of a period of 5 years from the date of his entry into office and that he will be re-electable provided that he has not reached the age of 65. Articles 8 to 11 deal with the creation, qualification and mandate of the President of the Debt Recovery Appeal Tribunal (DRAT). The DRAT is created to exercise the control and powers conferred by the RDDBFI law. The DRAT is composed of a single member known as the president. A person is eligible to become the President if he has been or qualified to become a judge of the High Court, or if he has been a member of the Indian Legal Services and has held a Grade 1 position as a member for a minimum period of three years . or has held the position of President of the Tribunal for a period of at least three years. The president of the DRAT can exercise his functions for a period of five years and is also re-electable, provided that he has not reached the age of seventy. There are currently 5 DRATs in India in Delhi, Chennai, Mumbai, Allahabad and Kolkata. The DRAT has appeal and monitoring jurisdiction over DRTs. Who can recover money from the DRT under the RDDBFI Act As per section 1(4), the provisions of the RDDBFI Act do not apply where the amount of debt owed to the bank or the financial institution or the consortium of banks and financial institutions are less than ten lakh rupees or such other amount not less than one lakh rupees, such cases as the Central Government may specify by notification. So, in essence, the minimum debt to be recovered from 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 applying the guarantee, can recover the remaining amount under the RDDBFI Act which exceeds 1 Lakh rupee. which relate to income tax, sales tax, excise, customs or administration have now become an essential part of the judicial system of our country. Such specialized institutions may not strictly come under the concept of judicial power, as envisaged by Article 50, but it cannot be denied that these courts have become an indispensable part of the judicial system, just like the courts . Sections 17 and 18 of the RDB Act, 1993 gave exclusive jurisdiction to the Courts and Appellate Tribunals established under that Act to hear and determine applications for recovery of debts of banks and financial institutions. On establishment of these courts, all suits in which the amount claimed is Rs. 10 lacs or more, stands are automatically transferred to them (the matter transferred should be taken up at the stage where it was transferred or at a appropriate stage and not de novo). No other court or authority shall exercise any jurisdiction, powers or authority in relation to such matters except the Supreme Court or a High Court exercising jurisdiction under sections 226 and 227 of the.