What Happens If You Ignore a Debt Recovery Tribunal Notice?

What Happens If You Ignore a Debt Recovery Tribunal Notice in India?

When someone defaults on their loan they usually start off by missing out on some instalments. Due to loss in business, job loss or any other reason which could result in not having enough money. Maybe your customer hasn't paid you back or some family issues came up. The banks will call you and send you recovery letters. One day you'll receive a letter which says Debt Recovery Tribunal.

Most people think if I don't accept the letter or show up to my hearing I'll be fine. Or talk to the recovery manager at the bank will help me.

A DRT can go ahead without the borrower attending. As long as certain conditions are met by law. You could be missing out on chances to clear up confusion about the debt you owe. Maybe you had made some payments or were overcharged interest you can defend yourself.

This can get really bad if there is a house, commercial building or any business asset involved that was given as collateral or guarantee.

If you receive a notice from the Debt Recovery Tribunal, have an argument with the bank over money being recovered, have been asked for possession or any dues pending with your bank you can speak to Advocate BK Singh at Loan Settlement Lawyer.

Why Is Ignoring a DRT Notice Risky for Borrowers in India?

Whether its salaried person, small business or house property owner. Borrowers from all over India fall victim of debt recovery issues.

There can be cases where you have to pay your EMIs and also have to deal with the recovery agent and the property which was given as security.

This can be anywhere in Delhi NCR i.e. Noida, Greater Noida, Ghaziabad, Gurugram and Faridabad.

Borrower can be called to appear at the DRT tribunal for the debt they owe. It can be any amount. If you don't respond to this then you leave the bank with a free hand on what debt you owe them.

These are some things borrowers should know.

1. When you receive a notice from DRT it doesn't mean the bank has won the case against you.
2. You can get a summons sent to you from the DRT. If you don't appear you can lose the case.
3. If you are negotiating a settlement with the bank it does not mean that your case at the DRT will be stopped.

If you are a businessman and stop showing up because someone from the bank has told you there is a possibility of a settlement. Your case can continue without you.

Advocate BK Singh can help you find out if you are being pursued over an amount you may not owe. Or if there is already a recovery order passed or you need to defend yourself against a settlement.

What Are the Quick Facts About Ignoring a DRT Notice?

What Is a Debt Recovery Tribunal Notice?

When you receive a Debt Recovery Tribunal notice it will have something to do with the DRT which is a forum made for hearing cases pertaining to debt recovery.

It could be asking you to reply to the banks case against you. Or come to the DRT or follow a specific instruction.

Make sure you know the difference between a real DRT summons and a demand notice sent by your bank or collection agency.

It all depends on what notice you have received and who has issued it.

Banks and Financial Institutions can file for debt recovery in the DRT if the amount is recoverable as per the Recovery of Debts and Bankruptcy Act 1993. The DRT can also hear cases on some actions taken under SARFAESI Act 2002.

So its important to know what type of notice you have received from your bank. Not all debt recovery will be in the DRT.

Loan Settlement Lawyer can help you understand this. If you need to know whether you actually have a DRT case against you speak to Advocate BK Singh.

Can a DRT Case Continue If You Do Not Appear?

Yes it can go ahead in absence of defendant if he does not appear after due service of notice on him as per the requirement laid down by Tribunal.

It can result into Exparte proceeding against the borrower.

However this does not mean that bank will get all what they ask for. It still has to be viewed from legal point of view.

But there are certain drawbacks of not appearing before Tribunal.

You may not get an opportunity to question about your disputed interest, payments made in past and how contract was calculated or any issue regarding your guarantor.

Suppose you run a small industry in Ghaziabad and receive notice from Tribunal regarding your loan. You feel that the loan has been calculated higher than what it should be because few payments were not adjusted in your favoure.

In such scenario if you fail to appear then you are leaving the lender with all the evidence they have.

It will cost you more money in future instead of hiring a lawyer at initial stage.

You can consult Advocate BK Singh in case of missing hearings from Tribunal, improper service, exparte and other situations where you don't know what's going on in your case.

What Legal Powers Does the DRT Have Against Loan Defaulters?

The DRT deals with most matters under the provisions of Recovery of Debts and Bankruptcy Act, 1993. They have different powers than what normal debt collectors have.

Under section 19 a lender who qualifies can make an application for recovery. Summons will be issued as well as provisions for defence, interim orders and final order.

Normally the defendant has to file there written statement within 30 days of summons being served on them. However under certain circumstances the presiding officer can grant more time up to a maximum of 15 days if conditions are met.

Interim orders/restrictions can be passed by the DRT. An order for liability to be recovered can also be made and a certificate for recovery.

Once a certificate for recovery is issued the process of recovery can take place in accordance to the law and various property which is attachable.

Who Should Seek Legal Assistance After Receiving a DRT Notice?

Can be received by anyone with varying income level.

Someone who takes salary may be having a high amount of unpaid debt. Could be someone who sold their ancestral property on mortgage for running a business. It could also be Directors or Guarantor of a company which has taken loan from any Bank.

If you run your own business then there are higher chances that you may receive this. When a DRT notice is received related to working capital, machine finance, security or as Guarantor of a Company.

It is advisable to take legal help if you fall under any of the following-

• Loan taken from a bank and you want to dispute the figures.
• Mortgaged Property and are worried about it.
• You run MSME and have money issues.
• Have been asked to recover an amount as Guarantor.
• Your Company has a debt that is being disputed.
• Want to settle an amount legally.

Advocate BK Singh can advise you if your case falls under the validity of claim. Recovering of an amount or missing date of DRT Tribunal or to reach a Settlement.

What Happens After a Borrower Ignores a DRT Notice?

This will depend if the summons was served to you as the original summons or an interim direction, hearing or final order made.

Once you have failed to respond at the first instance this may limit your options when trying to dispute what the lender is claiming.

Should the case proceed then it can be decided upon by the tribunal with the information that is available and what the law dictates.

There could be an order passed against you which could allow the debt to be recovered once all conditions are met.

Which may lead to the borrower having trouble paying back the amount owed if an attachment/possession/sale is applicable.

Just because you have failed to attend your hearing does not mean there isn't anything you can do about the situation. There are things you can do if it was served to you correctly and what order was passed and how much time has passed.

Speak to Loan Settlement Lawyer and Advocate BK Singh to see what options are open to you.

Which Documents Matter When a DRT Notice Has Been Received?

It will be beneficial if you have records related to loan taken and money paid back.

Some of these would be

• DRT Notice, case file and orders from the tribunal if any.
• Letter of Sanctioning and Loan Agreement.
• Account statement and record of payment.
• Statement with interest which you find incorrect.
• Loan mortgage security and guarantee documents.
• Previous demands and communication from bank.
• Any offer for settlement and communication from lender.
• Record of notice served and received.

If you are a corporate borrower there could be communication regarding rescheduling of loan or settlement.

Advocate BK Singh can analyse the value of these documents while giving legal opinion on your DRT recovery case.

How Much Time Do You Have Before a DRT Notice Becomes Serious?

Notice will become problematic once it triggers an obligation or sets off a timeline.

When making a claim for recovery u/s 19 of the 1993 Act the timeline to respond to written statement would typically be 30 days from service. Subject to minor exception explained above.

There could be other timelines associated with appeal or other relief under SARFAESI.

To file an Appeal before DRAT against order passed by DRT under Recovery of Debts and Bankruptcy Act the timeline would be 30 days u/s 20 read with its provision. Subject to fulfilling prerequisite if any. The above timelines must not be confused with each other.

Borrower should not rely on discussions with bank or a verbal communication or application for settlement being filed before the Tribunal. In case of delay one can approach Advocate BK Singh for options available.

Can You Negotiate a Loan Settlement After Receiving a DRT Notice?

Yes. They can go for settlement as well provided if the Lender is open for the same.

One Time Settlement is when the Lender agrees to settle the debt at certain terms & conditions. It is purely a business deal and there is no statutory right on this.

Lender can look at the unpaid Principal Amount, Charges Levied, Payment History, Security held with them, Recovery potential etc and their own policies.

If Recovery Certificate has already been granted or attachment of property has taken place then the position will change.

Loan Settlement Lawyer help you in case of Loan Dispute Settlement. You can always approach Advocate BK Singh to know more about it in case you have any DRT proceeding pending against you.

Why Should You Hire a DRT Lawyer Instead of Handling the Notice Alone?

A DRT dispute is more than just non payment of EMIs. There can be various aspects of law which can play in such a case. Time limits, calculations, question on sureties etc. can all be involved in the matter of a recovery proceeding.

There could be reasons why you defaulted but you may not know if there is any validity to what your lender is saying.

Your bank statement may show certain debits which need clarification. Payments made before could be cross checked. There can be doubt as far as surety is concerned too.

If you have ignored a notice or there is an interim order passed against you then having a lawyer would help. In situations where lender is going after your secured asset too. Advocate BK Singh can be reached out for help in such cases.

How Can Loan Settlement Lawyer Help You With a DRT Notice?

Loan Settlement Lawyer deals with Bank Loans, Recovery, Settlement and Rights of Borrower related issues. You can also read about borrower protection and rights in India.

DRT Notice can be assessed for following:-

• What does the notice mean and what you stand to gain/loose from the said notice.
• Outstanding balance of the loan, Interest paid and paid towards the loan.
• If any Collateral or surety is at risk.
• Current Directions and Orders against you from the Tribunal.
• Settlement offers which you can negotiate with your Bank.
• Remedies available to protect yourself.
• We will guide you what can you expect from this situation.

Advocate BK Singh can be contacted via Loan Settlement Lawyer if you require personal guidance on your matter. It all depends upon your circumstances, documents available with you, limitation and Tribunal's order.

Frequently Asked Questions

Final Thoughts

If you ignore a DRT notice then this can result into ExParte proceedings. You could end up getting recovery order issued against you. And if your asset falls under purview of attachment you can be attached as well. So its best to consult a lawyer at earliest. If you have any dues from banks which you dispute. Or need help regarding your case then. Consult a advocate BK Singh on Loan Settlement Lawyer.

You might require legal help if you have unpaid Business loan, are facing recovery proceedings, attachment of property or have any issue related to loan settlement. For another DRT-related topic, see this guide on what happens when credit card debt goes to DRT.

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