Defending a Bank's Original Application Before the DRT

What is a bank's Original Application in the DRT?

It is a claim by a bank or financial institution to recover a debt, filed before the Debts Recovery Tribunal instead of a civil court. Section 19 of the RDB Act sets out the procedure. The bank files the application with its documents and a statement of your assets; the tribunal issues summons; you file a defence; the tribunal decides, largely on documents and affidavits; and if the bank succeeds, the Presiding Officer issues a recovery certificate for the amount found due, with interest and costs.

The DRT has exclusive jurisdiction over such debts once the amount is ₹20 lakh or more, which means a civil court cannot hear the bank's claim, and in most cases cannot hear a borrower's connected claim against the bank either, which must come as a counter-claim in the OA. Below ₹20 lakh, banks go to the civil courts or use other remedies.

An OA can run side by side with SARFAESI action on the same loan. The Supreme Court held in Transcore v Union of India that a bank does not have to choose one. In practice, banks often take possession of the mortgaged property under SARFAESI and file an OA for the balance and against the guarantors. If you are facing both, see our post on the section 17 application for the SARFAESI side.

I have received DRT summons. How many days do I have?

Section 19(4) requires the summons to direct you to show cause within 30 days why the relief should not be granted, and to disclose particulars of your properties and assets other than those the bank has listed. Section 19(5) requires the written statement within 30 days of service of summons. The tribunal may extend the time, but by not more than 15 days. So the outer limit is 45 days from service.

How strictly is that applied? The Delhi High Court held in 2021, and a Division Bench reaffirmed in October 2026, that the 45 days cannot be extended by the DRT or by any court, and that section 5 of the Limitation Act does not help. In the 2026 case, the court also rejected the argument that the bank's late supply of a complete paper book justified a delayed defence. Other High Courts, including Telangana and Punjab and Haryana, have taken a softer view, treating the time limit as directory or leaving room for condonation on facts, and the question may yet reach the Supreme Court. For a case before a Delhi DRT, plan on 45 days being the absolute end.

Two practical consequences follow. First, if the paper book you received is incomplete, write to the bank's counsel and the registry at once asking for the missing documents, and file your written statement on time anyway, reserving the right to add to it. Second, if you are within the first 30 days, use them; do not plan on an extension you may not get.

How an Original Application usually moves

Times vary between tribunals. The statutory limits are firm; the rest depends on the tribunal's list.

First checks: is the OA in the right tribunal and against the right people?

Jurisdiction is the first page of any defence. Section 19(1) allows the bank to file where the defendant, or any of the defendants, resides or carries on business, where the cause of action wholly or partly arose, or, since 2016, where the bank branch maintaining the account is located. For a Delhi borrower with a Delhi branch, this rarely helps. It matters more for guarantors living in another state or loans booked in a branch far from where the money was used.

Check the amount. The DRT can hear only claims of ₹20 lakh and above; a smaller claim belongs in a civil court, and an OA for less should be objected to at the outset. Check the parties too: is every defendant someone who signed a loan document or guarantee? Legal heirs of a deceased borrower are liable only to the extent of the estate they inherited, not personally, and the written statement should say so.

When Advocate B.K. Singh opens a new OA brief, he reads the bank's list of documents before the claim itself. Missing sanction letters, unsigned guarantee pages, a mortgage deed for a different property or a statement of account that starts years after disbursement tell you where the claim is weak long before you reach the bank's figures.

Limitation: is the bank's claim time-barred?

Section 24 of the RDB Act applies the Limitation Act to OAs. For most loan claims, the bank has three years, usually counted from the default or from the date the debt became payable, depending on the terms of the loan. A fresh period starts from each written acknowledgment of the debt signed by the borrower (section 18 of the Limitation Act) and from each part payment (section 19). Banks routinely take balance confirmation letters and revival letters for exactly this reason, and the Supreme Court held in 2021 that entries in a company's balance sheet can also amount to acknowledgment.

So limitation is a real defence only after careful checking. List every acknowledgment the bank relies on, every payment and every balance confirmation, with dates, and see whether there is a gap of more than three years anywhere. Check who signed each acknowledgment: a letter signed by the borrower may not extend limitation against a guarantor who did not sign it, though guarantee deeds often contain clauses dealing with this.

Limitation helps less where the bank enforces a mortgage. A suit to enforce payment of money secured by a mortgage has a longer period, 12 years, so the bank may lose its personal money claim on limitation while keeping its right to sell the mortgaged property. The written statement should take the point clearly for the personal claim, especially for guarantors, rather than overstate it.

How do you challenge the amount the bank is claiming?

The statement of account is the bank's main evidence and should be the main object of your defence. Under the Bankers' Books Evidence Act 1891, a certified copy of entries in the bank's books is prima facie evidence, and computer printouts need the certificate the Act requires. Check that the statement is properly certified, covers the whole period from disbursement, and that every debit is explained. Tribunals do not decide cases by the Evidence Act alone, but an uncertified or incomplete statement weakens the bank's case considerably.

Then check the interest. Compare the rate applied with the sanction letter and any rate change letters. Look for compounding at intervals the agreement does not allow, for penal interest added on top of the agreed rate, and for interest charged on penal charges, which RBI's directions on penal charges have disallowed for loans since 2024. Look for debits labelled legal charges, inspection charges or insurance that the agreement does not cover. And check that every recovery is credited: payments, adjustments from other accounts, and above all the proceeds of any SARFAESI sale of the mortgaged property.

The DRT decides the interest rate for the period after the OA is filed and up to realisation under section 19(20). Tribunals often allow simple interest at a reasonable rate for that period rather than the contractual rate with penal additions. Ask for it specifically in the written statement; a tribunal is more likely to give relief that is clearly asked for and reasoned.

Defences that often matter for guarantors

These are covered in depth in our post on guarantor liability; here is what to look for when drafting the written statement.

• The limit of the guarantee. A guarantee limited to a stated amount or facility cannot be enforced beyond it, however large the borrower's debt.
• Change in the loan without consent. Under section 133 of the Indian Contract Act, a variance in the terms of the contract between the bank and the borrower without the guarantor's consent discharges the guarantor for later transactions. Many guarantee deeds include advance consent clauses, so read the deed first.
• Loss of security. Section 141 entitles a guarantor to the benefit of securities the bank held, and if the bank loses or parts with security without consent, the guarantor is discharged to that extent.
• Revocation of a continuing guarantee. A continuing guarantee can be revoked for future transactions by notice (section 130). Liability for advances made after a valid revocation can be disputed.
• Signature and execution. If the guarantor never signed, or signed blank papers, say so specifically. A forensic examination can be sought where execution is denied.

Set-off and counter-claim: when the bank owes you

Section 19(6) allows you to claim set-off of an ascertained sum of money legally recoverable from the bank, and section 19(8) allows a counter-claim for any right or claim against the bank, whether for damages or otherwise, arising before or after the OA was filed but before your defence is filed or the time for it expires. Section 19(9) gives the counter-claim the same effect as a cross-suit, so the tribunal decides both claims in the same order.

Counter-claims that tribunals take seriously are those with documents behind them: a sanctioned limit the bank refused to release, causing a business loss; a wrongful dishonour of your cheques; a sale of hypothecated stock or mortgaged property far below value, or without notice; amounts debited without authority. Counter-claims that are really general complaints about the bank's behaviour rarely get far and can cost you credibility.

The counter-claim must be filed with the written statement, within the same time limit, and carries a court fee. If you have a real claim against the bank and do not raise it now, you may lose it, because the DRT's exclusive jurisdiction can bar a separate suit later. Think about it in the first two weeks, not on day 44.

How to prepare and file your written statement

This is the order in which a defence is best put together. The 45-day limit means the steps overlap.

1. Note the date of service and the deadline

   Write down the date you were served and the 30th and 45th days. If you were not served properly but learnt of the case otherwise, record how and when, and appear anyway.

2. Check the paper book

   Compare the documents received with the bank's list. Write at once to the bank's counsel and the registry for anything missing, and keep proof that you asked.

3. Collect your own records

   Gather the sanction letters, account statements from your side, payment proofs, correspondence with the bank, any settlement offers, and the guarantee or mortgage deeds you signed.

4. Draft the preliminary objections

   Jurisdiction, pecuniary threshold, limitation, wrong parties, and the bank's failure to file key documents. Keep each to a short, specific paragraph.

5. Reply on the facts and the account

   Answer each paragraph of the OA. Admit what is true, deny what is not, and explain why. A general denial is weak; specific denials with documents are what the tribunal reads.

6. Add set-off or counter-claim

   If the bank owes you money or has caused you loss, plead it now, with documents and the court fee. It cannot easily be added later.

7. Disclose assets and verify

   Comply with the direction to disclose assets, accurately. Verify the written statement and support it with an affidavit as the rules require, and file within time.

Documents for defending an OA

How is the case heard and decided?

The DRT follows a summary procedure. Section 22 frees it from the strict rules of the Code of Civil Procedure; it is guided by natural justice and regulates its own procedure, while having specified civil court powers such as summoning witnesses and requiring documents. Evidence is mostly by affidavit. Cross-examination of the bank's witness is allowed where the tribunal thinks it necessary, so ask for it only where a real factual dispute needs testing, such as execution of a guarantee.

Many OAs are decided almost entirely on documents. That puts weight on the written statement and the documents filed with it. Points not pleaded are hard to raise at the arguments stage, and documents not filed are hard to rely on. Keep written submissions short and tied to the documents: the account entries, the dates of acknowledgment, the clauses of the guarantee.

The Act asks tribunals to decide OAs within 180 days. Most take longer because of the number of cases and interim applications. Attend every date, or ensure your advocate does. An OA is one of the easiest cases in which to suffer an ex parte order, because the tribunal can decide on the bank's documents if you are absent.

Interim orders: asset disclosure, injunction and attachment

The bank often asks for interim orders soon after filing. The summons itself can restrain you from dealing with the assets the bank has listed pending hearing, and section 19(12) and (13) allow the tribunal to grant injunctions against transfer and to attach property before judgment where it is satisfied that you may dispose of assets to defeat recovery. Take these applications seriously and reply to them in time.

The direction to disclose your other assets is not a formality. An incomplete or false disclosure can lead to adverse orders, and in later recovery proceedings the bank will compare what you disclosed with what it finds. Disclose accurately, including assets in which you have only a share, and explain any encumbrance. If an asset is genuinely not yours, such as a property in a family member's name bought with their own money, say so with documents.

Do not transfer property, close accounts or move money after you have been served, even within the family. Transfers made to defeat a creditor can be set aside, and a transfer made in the teeth of a DRT restraint invites contempt-like consequences and loses you any sympathy the tribunal might have had.

What if the DRT has already passed an ex parte order?

Section 22(2) gives the tribunal power to set aside an order passed ex parte. Apply as soon as you learn of the order, explaining why you could not appear: summons sent to a wrong or old address, service by publication in a newspaper you could not have seen, illness, or a genuine mistake by your previous counsel. Treat 30 days from the date you learnt of the order as the outer limit, and file sooner if you can. Attach whatever proves your explanation, such as returned envelopes or medical records.

Tribunals are more willing to set aside an ex parte order where the defendant shows a real defence and acts quickly. They often impose conditions, such as costs or a deposit. If the recovery certificate has already been issued and the Recovery Officer has begun proceedings, the application to set aside is still possible but more urgent, because attachments and sales may follow. Alongside it, consider an appeal to the DRAT, which runs on its own 45-day clock.

If the order was ex parte because you ignored the summons, be honest about it. Tribunals deal with many such cases, and a credible explanation with a good defence is more persuasive than an implausible story.

Settling the OA: when and how

Settlement is available at any stage, and many OAs end that way. A one-time settlement under the bank's policy, a structured repayment, or a consent decree for a reduced amount with a payment schedule can all be recorded before the tribunal. DRTs also hold Lok Adalats from time to time, where settlements are recorded as awards that are final. Our post on negotiating a one-time settlement covers how banks assess proposals.

A strong defence improves settlement terms. A bank facing a real limitation problem, an uncertified statement or a credible counter-claim has a reason to accept less. So file the written statement properly even if you intend to settle; the defence is part of the negotiation, not a substitute for it.

Get every settlement in writing from the bank's competent authority, not just the branch, and have it recorded before the tribunal with clear terms on what happens if a payment is late. Make sure it covers all defendants, including guarantors, and provides for release of the security and a no-dues certificate on completion. If the bank has also declared you a wilful defaulter, deal with that in the same settlement where possible; see challenging a wilful defaulter declaration.

Mistakes defendants make in DRT recovery cases

• Missing the 45 days. In Delhi, a written statement filed late is likely to be refused altogether. Every other defence then becomes much harder to raise.
• Filing a bare denial. "The contents are wrong and denied" defends nothing. Each figure and each document must be answered specifically.
• Not raising a counter-claim on time. Claims against the bank must come with the written statement, or they may be lost.
• Hiding or transferring assets. Incomplete disclosure and transfers after summons lead to attachment orders and damage your credibility.
• Missing dates. An absent defendant risks an ex parte order on the bank's documents.
• Assuming the SARFAESI sale ended the matter. The bank can pursue the shortfall in the OA. Make sure the sale proceeds are credited in full.
• Guarantors relying on the borrower's lawyer. A guarantor's defences are often different and sometimes opposed to the borrower's. Guarantors need their own written statement.

After the final order: recovery certificate and appeal

If the bank succeeds, the Presiding Officer issues a recovery certificate under section 19(22) for the amount due, with interest and costs, and sends it to the Recovery Officer. The Recovery Officer can then attach and sell property, attach bank accounts, appoint a receiver and, in limited cases, order arrest. Our post on recovery certificates and Recovery Officer proceedings explains that stage.

An appeal lies to the DRAT under section 20, within 45 days of receiving a copy of the order. Under section 21, a borrower or guarantor who appeals must deposit 75 per cent of the amount of debt determined by the DRT; the DRAT can reduce this, but not below 25 per cent, for reasons recorded in writing. The pre-deposit decides whether many appeals are realistic. See DRAT appeals and pre-deposit for how the reduction is argued.

Before appealing, weigh the money honestly. If the pre-deposit would take most of what you have, a settlement after the final order, while the bank is deciding whether to begin recovery, may be a better use of it.

What to do in the first week after DRT summons

Write down the date of service and count 30 and 45 days. Read the paper book against the bank's list of documents and ask in writing for anything missing. Collect your own statements, payment records and correspondence. If you are a guarantor, find the guarantee deed and any revocation letter. Do not transfer any property or close accounts.

Then decide whether you have a counter-claim, because it must go in with the written statement. Think about settlement in parallel; a realistic proposal sent while the defence is being prepared often helps both. In OA matters that reach the office of Advocate B.K. Singh, the first meeting is spent on dates and documents rather than arguments, because those decide what defences will still be open. If you want the summons and paper book read before the deadline, send them through our online enquiry form, or see our banking and finance practice.