Section 2 of RDDB Act : Section 2: Definitions

Explanation using Example

Imagine a situation where a business, XYZ Pvt. Ltd., has taken a loan from a bank, ABC Bank, to expand its operations. Over time, XYZ Pvt. Ltd. fails to repay the loan as per the agreed terms, accumulating a significant debt inclusive of the principal amount and interest. ABC Bank, after several failed attempts to recover the money, decides to approach the Debts Recovery Tribunal (DRT) to recover the outstanding debt from XYZ Pvt. Ltd.

In this scenario:

• The bank (ABC Bank) files an application to the DRT under section 19 of the Recovery of Debts and Bankruptcy Act, 1993 to recover the debt owed by XYZ Pvt. Ltd.
• The Tribunal (DRT) will hear the case, and if the debt is found legally recoverable, it may order XYZ Pvt. Ltd. to repay the outstanding amount to ABC Bank.
• If XYZ Pvt. Ltd. is not satisfied with the decision of the DRT, they have the option to appeal to the Appellate Tribunal.
• The appointed day refers to the date on which the DRT was established and began its operations.
• The Presiding Officer of the DRT will oversee the proceedings, and if the Tribunal orders recovery, the Recovery Officer will be responsible for executing the tribunal's orders.

This example demonstrates how a bank can use the provisions of the Recovery of Debts and Bankruptcy Act, 1993 to recover debts owed by a borrower through a legal process involving the DRT and potentially the Appellate Tribunal.