Split Jurisdiction in Debt Recovery: Why DRAT Prefers One Forum
- One case, two tribunals = split jurisdiction
- Risk of conflicting orders & delay
- DRAT pushes consolidation for consistency
New Delhi: In debt recovery disputes, split jurisdiction occurs when different parts of the same loan dispute (OA under the RDB Act, and SA/TSA under SARFAESI) end up before different DRTs. Appellate benches increasingly favour consolidation before a single tribunal to avoid contradictory directions and speed up disposal.
What is split jurisdiction?
- OA (Original Application for recovery) proceeds in one DRT, while SA/TSA (challenges to SARFAESI actions) runs in another.
- Happens due to asset location, branch location, or procedural transfers.
- Outcome: parallel proceedings on the same borrower-bank dispute across forums.
Why it’s a problem
- Conflicting orders: One DRT may stay a sale; another may allow recovery—creating deadlock.
- Delay & cost: Parties shuttle between cities, multiplying dates and filings.
- Forum shopping: Side may understate dues or choose venues tactically to change jurisdiction.
DRAT’s approach (plain language)
- When connected cases involve the same parties and transactions, keep them in one DRT.
- Notifications vesting large-value cases (e.g., ₹100 crore+) in a specific DRT apply to both OA and SARFAESI matters.
- Understating dues to avoid jurisdiction can backfire; benches look at the real exposure across connected cases.
How split jurisdiction happens (examples)
| Scenario | What typically happens | Preferred fix |
|---|---|---|
| OA in City A; SARFAESI SA in City B (asset location) | Parallel hearings; risk of contradictory orders | Transfer SA to the OA forum for consolidation |
| High-value matter split between two DRTs | Threshold notifications ignored/misread | Apply notification; move all to the designated DRT |
| Intentional understatement (₹99.5 cr vs actual ₹100+ cr) | Attempt to change forum | Recompute dues; treat connected exposure as one |
What bankers & borrowers should do
- Seek/consent to consolidation when cases involve the same account.
- Compute dues accurately (include interest till filing date) to avoid jurisdiction disputes.
- Press for expeditious disposal once consolidated—fewer adjournments, faster outcome.
Editor’s note: This explainer simplifies the concept of split jurisdiction in debt recovery matters and why consolidation at a single DRT ensures consistent, faster decisions.
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