The Recovery of Debts and Bankruptcy Act, 1993 provides for establishment of Debts Recovery Tribunals (DRTs) with original jurisdiction and Debts Recovery Appellate Tribunals (DRATs) with appellate jurisdiction, for expeditious adjudication and recovery of debts due to banks and financial institutions, insolvency resolution and bankruptcy of individuals and partnership firms and connected matters therewith. The Act aims to safeguard the interest of banks and financial institutions as lenders, while not discouraging borrowers.
The SARFAESI Act, 2002 aims to regulate securitization and reconstruction of financial assets and enforcement of security interest and to provide for a Central database of security interests created on property rights and for connected matters therewith. The Act has simplified the recovery procedure for banks and specified financial institutions for recovery of secured debts from borrowers without intervention of Courts at the first stage. Borrowers can file applications in the Debts Recovery Tribunals (DRTs) against action taken for enforcement of security interest under this Act, with the appellate jurisdiction for such applications lying with the Debts Recovery Appellate Tribunals (DRATs).
The firm has represented interests of both borrowers and lenders before the debt recovery tribunals and has advised on several issues arising out of SARFAESI Act, 2002. The firm has advised clients to obtain a stay in sale of property and also further recover due amount. The firm has also advised clients with respect to entering into OTS proposals. The firm has represented financial creditors in their enforcement proceedings before the tribunal. Also represented borrowers facing recovery and default related proceedings and in some cases have managed to succeed in settlements with the financial creditors.