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Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
DRT Act can supersede the Companies Act and other laws in certain contexts, particularly regarding recovery of debts and enforcement of security interests. The DRT (Debt Recovery Tribunal) has been granted exclusive jurisdiction over recovery proceedings initiated by Banks and Financial Institutions under the DRT Act, which often overrides the jurisdiction of the Companies Court or other statutory bodies ["2013 8 Supreme 297"] ["
Bank of Rajasthan Ltd. VS Govinda Pathara Rolling Mills Pvt. Ltd. - Dishonour Of Cheque
"] ["2012 0 Supreme(Del) 1907"].The provisions of the Banking Regulation Act, 1949, define bank and banking company and establish that suits for recovery by banking companies are primarily to be filed before the DRT. The DRT's jurisdiction is exclusive in matters related to recovery of debts, and this can supersede the jurisdiction of the Companies Act, especially during insolvency or winding-up proceedings ["2025 0 Supreme(Bom) 1122"] ["
Bank of Rajasthan Ltd. VS Govinda Pathara Rolling Mills Pvt. Ltd. - Dishonour Of Cheque
"].The DRT Act also has overriding effect over other laws, including the Companies Act and state statutes like the State Financial Corporations Act, 1951, when it comes to recovery and enforcement of security interests. The Supreme Court and various tribunals have clarified that the DRT's jurisdiction is paramount in debt recovery cases, and other courts or authorities cannot interfere or entertain proceedings concurrently ["2000 0 Supreme(Guj) 991"] ["
Bank of Maharashtra VS Pandurang Keshav Gorwardkar - Dishonour Of Cheque
"].In cases involving winding-up or insolvency, the DRT's jurisdiction generally prevails over the Companies Court, and proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), also operate in a different legal field but are often aligned with DRT proceedings, with certain provisions limiting civil court intervention ["INDSC_12529_2005"] ["2009 0 Supreme(Del) 1037"].
The transfer or initiation of proceedings under the DRT Act is often deemed to have precedence over other legal processes, and the DRT's orders are appealable, with the Act providing a comprehensive framework that limits civil court jurisdiction in matters of enforcement, recovery, and security interest actions ["2022 Supreme(Online)(MP) 7098"] ["
Ashwini Trading Co. VS Housing Bank Limited - Current Civil Cases
"].Analysis and Conclusion:The Debt Recovery Tribunal (DRT) Act generally takes precedence over the Companies Act and other related statutes in matters of debt recovery, enforcement of security interests, and insolvency proceedings. The DRT's jurisdiction is explicitly exclusive in these areas, and provisions of the DRT Act override conflicting laws, including the Companies Act, under Section 34 of the SARFAESI Act and other legal provisions. Therefore, in cases concerning recovery of debts by banks or financial institutions, the DRT Act can indeed supersede the Companies Act, making the DRT the primary forum for such proceedings ["2025 0 Supreme(Bom) 1122"] ["2000 0 Supreme(Guj) 991"].
In the complex world of Indian corporate law, businesses often face overlapping jurisdictions between specialized tribunals and traditional courts. A common question arises: Can the DRT Act supersede the Companies Act? This query is particularly relevant for banks, financial institutions, and companies navigating debt recovery amid potential or scenarios. While the provides a streamlined mechanism for debt recovery, it does not blanketly override the (or its successor, the ). Instead, its supremacy is limited to specific debt recovery matters. This post breaks down the legal nuances, supported by judicial precedents and statutory provisions.
Note: This article provides general information based on established case law and is not legal advice. Consult a qualified lawyer for specific cases.
The DRT Act was enacted to expedite the and recovery of debts owed to banks and financial institutions, addressing delays in civil courts. Its preamble emphasizes expedited and recovery of debts 2009 2 Supreme 529. vest exclusive jurisdiction in and bar other courts from entertaining such matters 2009 2 Supreme 529.
Key features include:- : These give the DRT Act overriding effect over inconsistent provisions in other laws 2009 2 Supreme 529 2023 0 Supreme(SC) 440.- : States that the Act's provisions prevail notwithstanding anything inconsistent in any other law 2009 2 Supreme 529.
In contrast, the Companies Act governs corporate affairs, including under ( Act), which involve declaring a company insolvent and liquidating its assets—a broader process vested in the or 2006 5 Supreme 148.
The Supreme Court has affirmed that the DRT Act's jurisdiction is exclusive for debt recovery and , superseding other laws to that extent. In , the Court held that DRT handles of debts and that it cannot entertain petitions or declarations of 2009 2 Supreme 529. Section 34 confers a non-obstante effect, making the jurisdiction of the DRT exclusive in matters of debt recovery, and that it overrides the jurisdiction of other courts, including the , to the extent of conflict 2009 2 Supreme 529.
Thus, for pure debt recovery:- Banks can approach DRT without interference.- petitions under the Companies Act yield to DRT proceedings if they conflict on recovery issues 2013 2 Supreme 494.
However, this override is not absolute. The DRT's role is confined to issuing , not 2006 5 Supreme 148.
is distinct from recovery. It encompasses declaration, asset distribution, and creditor parity, falling under the 's domain 2006 5 Supreme 148. Courts have emphasized mutual exclusivity:- DRT cannot wind up companies or declare 2013 2 Supreme 494.- In , the ruled that DRT’s jurisdiction is limited to adjudicating liability and issuing certificates for recovery, and that it does not have the authority to wind up companies 2006 5 Supreme 148.
The Supreme Court reinforces: Proceedings under the Companies Act, including petitions, are distinct and operate in a separate, mutually exclusive jurisdiction from the DRT, especially when the purpose is recovery of debts 2006 5 Supreme 148 2013 2 Supreme 494.
Judicial consistency underscores these boundaries:1. Supreme Court in : DRT's exclusivity for recovery; no supplementation by Companies Act 2009 2 Supreme 529.2. rulings: DRT functions do not extend to powers 2006 5 Supreme 148.3. General principle: The Companies Act is a general Act and does not prevail over the DRT Act. Even if the Companies Act is treated as special law, the DRT Act being subsequent, the latter should prevail over the former 2002 0 Supreme(AP) 1184.
These decisions prevent and ensure specialized handling.
Recent laws like the introduce further layers. The IBC's provides overriding effect, transferring certain DRT proceedings to the for resolution processes (CIRP). For instance:- In cases involving personal guarantors of corporate debtors under CIRP, jurisdiction shifts to NCLT, invalidating DRT orders 2025 0 Supreme(Bom) 1686. The Supreme Court in Lalit Kumar Jain v. Union of India () 9 SCC 321 clarified this transfer.- in held that IBC provisions have overriding effect under and proceedings under cannot be barred by pending DRT actions 2024 Supreme(Online)(NCLAT) 1276.
Under , DRT handles enforcement challenges, but IBC/NCLT takes precedence in 2025 0 Supreme(Bom) 1686. Cooperative banks' jurisdiction remains ambiguous, often requiring larger bench clarification 2025 0 Supreme(Bom) 1869.
In liquidation scenarios, DRT can sell assets with Official Liquidator involvement for workmen's dues under of Companies Act, but distribution follows oversight 2013 0 Supreme(Kar) 328
.
.
Courts urge caution: High Courts continue to ignore availability of statutory remedies under DRT Act... and exercise jurisdiction under 2016 0 Supreme(Kar) 617.
Generally, the DRT Act supersedes the Companies Act for debt recovery due to its and exclusive jurisdiction, but yields on and . This balance promotes efficiency while protecting comprehensive liquidation processes. Key takeaways:- Exclusive for recovery: DRT overrides conflicting provisions 2009 2 Supreme 529.- Separate spheres: stays with /NCLT 2006 5 Supreme 148.- Evolving landscape: IBC often trumps DRT in .
Stay informed on these dynamics to safeguard interests. For tailored guidance, professional legal counsel is essential.
References:- 2009 2 Supreme 529, 2006 5 Supreme 148, 2013 2 Supreme 494, 2023 0 Supreme(SC) 440, 2025 0 Supreme(Bom) 1686, 2024 Supreme(Online)(NCLAT) 1276, 2002 0 Supreme(AP) 1184, 2016 0 Supreme(Kar) 617, 2013 0 Supreme(Kar) 328,
(as cited inline). #DRTAct, #CompaniesAct, #DebtRecovery
He contends that suit for recovery by a Banking Company against any borrower would essentially lie before DRT. Mr. ... Adwant, learned Advocate for respondent no.1/plaintiff contends that since the plaintiff is a Banking Company registered under the Banking Regulation Act, 1949, suit is rightly transferred by the learned Trial Court to DRT. ... Adwant contends that the term debt means any amount that is claimed as due by the Bank or the Financial Institution and since the amount is now being claimed by ....
, 2002 (SARFAESI Act). ... DRT to NCLT 112. ... Mr Shah referred to the decision of the National Company Law Appellate Tribunal (NCLAT) order in State Bank of India v. ... Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the ... From the above observations, w....
that the SFC Act is a special statute qua the general powers of the Company Judge under the Companies Act. ... company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, appointed under this Act or under the a href="./.. ... of the Companies Act regarding distribution of the assets of the company-in-liquidation.’” ... New Cawnpore Flour Mills, (2008) 15 SCC 1] , this....
This fact is not in dispute that Section 19(25) of the Recovery of Debts Due To Banks and Financial Institutions Act, 1993, confers inherent discretionary powers on the DRT to pass appropriate orders. ... Counsel submits that without having any jurisdiction, the DRT had entertained the misc. application submitted by the respondents, contrary to the provisions contained under Section 62 of the Indian Contract Act. ... Counsel for the petitioner-Bank submits that when the default was committed by the respondents, proceedin....
Section 2 (1)(d) defines “banking company” as in Section 5(c) of the Banking Regulation Act, 1949. (1)(e) defines “bank” to mean “banking company”.
CONTENTION III - Does DRT Act override BRU Act ... ( 11 ) AS regards the contention about the applicability of the provisions of the DRT Act, the Court is of the view that the BRU Act and DRT Act operate in different fields. ... Section 34 of the said Act gives an overriding effect to the DRT Act over all other laws except a few. ... are recoverable under the Recovery of Debts due to Banks and Fin....
It was also argued that the DRT passed the impugned order without following the mandatory provisions of S.19 of the Act of 1993. ... In view of specific provisions of the Act of 1993, we are of the opinion that procedure followed by the DRT while deciding the original application preferred by the petitioner bank cannot be faulted. ... 19. ... Guru, learned counsel for the petitioner bank, in addition to the grounds taken by the bank before the tribunals below, has also tried to attack the procedure followed by the #HL_....
Companies Act, 2013 (‘the Act’) invoking powers of this Tribunal to pass orders to bring end to the acts of oppression and mismanagement. Both these company petitions and the company application a href="./.. ... This is that the DRT has heard the S.A on its merits and reserved the order on 30.07.2018 so as to deliver the order on 03.01.2019. ... In the case at hand, it is conceded before me that the DRT, Ernakulam has reserved orders on 30.07.2018 for being delivered on 03.01.2019.
The various provisions of the Banking Regulation Act, 1949, clearly maintain the difference between the Banking Company and its branches. Therefore, when Section 6 of the Act of 1993 refers to a `Bank', it can only mean the Banking Company and not its branches. ... Learned Counsel for the appellant contended that as per Section 2(d) of the Act of 1993 the `Bank', among other things, means a `Banking Company'. ... He also referred to Section 2 (e) of the Act of 1993 as....
e. , DRT Act. ... subsection (1) of Section 7 of the DRT Act. ... The Companies act is a general Act and does not prevail over the DRT Act. Even if the Companies act is treated as special law, the DRT Act being subsequent, the latter should prevail over the former. ... Act, which are made applicable by reason of Section 29 of the DRT Act. ... ,....
It has also been stated that whether the assets are realised by a secured creditor even if it be by proceeding under the 1993 Act or the 1951 Act, the distribution of assets would only be in terms of Section 529-A of the Companies Act and by recognising the right of the Liquidator to calculate the workmen's dues and collected for distribution among them pari passu with the secured creditors. By noticing that there is no conflict on the question of applicability of Section 529-A read with Section 529 of the Companies Act to cases where the debtor is a company and is in liquidation, ....
In my opinion the judgment of the apex court in the case of Allahabad Bank v. Canara Bank: AIR 2000 SC 1535 covers the issue at hand. The apex court has considered whether the jurisdiction of the recovery officer is exclusive for execution of the recovery certificate and while answering the aforesaid question formulated, the apex court has stated as under (page 77) : "22. The apex court while considering the said scheme has formulated the question which is directly relevant in the present case. In the said case also the apex court has considered the scheme of the provisions of the ....
Act the question of priorities among the banks and financial institutions can be decided only by the Tribunal in accordance with section 19(19) of DRT Act read with section 529A of the Companies Act and in no other manner. It has also been held that the Companies Act has to yield to DRT Act.
By noticing that there is no conflict on the question of applicability of Section 529A read with Section 529 of the Companies Act to cases where the debtor is a company and is in liquidation, it was observed that the conflict, if any, is in the view that DRT could sell the properties of the Company in terms of the 1993 Act and to that extent, the 1993 Act shall prevail over the Companies Act being the general law. It has also been stated that whether the assets are realized by a secured creditor even if it be by proceeding under 1993 Act or the 1951 Act, the distribution of....
By noticing that there is no conflict on the question of applicability of Section 529A read with Section 529 of the Companies Act to cases where the debtor is a company and is in liquidation, it was observed that the conflict, if any, is in the view that DRT could sell the properties of the Company in terms of the 1993 Act and to that extent, the 1993 Act shall prevail over the Companies Act being the general law. It has also been stated that whether the assets are realized by a secured creditor even if it be by proceeding under 1993 Act or the 1951 Act, the distribution of....
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