DRT vs Civil Court: Choosing the Right Recovery Forum

Banks, NBFCs, and small finance banks pursuing recovery of dues above ₹20 lakh generally have the option, and in most cases, the obligation, to proceed before the Debts Recovery Tribunal rather than a civil court, under the Recovery of Debts and Bankruptcy Act, 1993.

Why the DRT Exists

The DRT was created specifically to give banks and financial institutions a faster, specialised forum for debt recovery, free of the general civil court backlog. Original Applications before the DRT follow a more streamlined evidentiary process than an ordinary civil suit.

When Civil Court Is Still Relevant

Civil suits remain relevant for claims below the DRT's pecuniary threshold, for matters involving unsecured lenders outside the RDB Act's scope, or where the relief sought falls outside recovery of a debt as defined under the Act.

Interaction With SARFAESI

Where security exists, SARFAESI enforcement and a DRT recovery suit are often pursued in parallel, SARFAESI for enforcement against the secured asset, and a DRT Original Application to recover any shortfall between sale proceeds and the total outstanding debt.

Getting the Forum Right the First Time

Filing in the wrong forum, or failing to pursue both routes where both are available, can cost an institution months of avoidable delay. Forum selection should be a deliberate first decision in any recovery strategy, not an afterthought.