Banking Litigation & Loan Recovery

Overview

Banking litigation in India is a specialised discipline that combines the procedural complexity of multi-forum proceedings with the technical demands of financial services law. Effective representation in DRT proceedings, the prosecution of security enforcement actions, and the management of complex borrower challenges require counsel who understands both the banking law framework and the litigation environment in which recovery actions are pursued. The Debt Recovery Tribunals, constituted under the Recovery of Debts and Bankruptcy Act 1993, provide an accelerated recovery mechanism for banks and financial institutions with non-performing advances above the prescribed threshold (currently INR 20 lakhs). The DRT Delhi — one of the busiest in the country — exercises original jurisdiction over Original Applications filed by banks and counter-claims filed by borrowers. Appeals from DRT orders go to the Debt Recovery Appellate Tribunal, with further appeal to the High Court on questions of law. The DRT process, while designed for speed, is frequently contested vigorously by borrowers. Preliminary objections to the bank's claim, counterclaims for alleged misrepresentation, set-off claims, and challenges to the security documentation are standard borrower tactics. Effective prosecution of a bank's DRT case requires thorough preparation of the Original Application, complete and properly exhibited documentation, and senior legal representation at the hearings. For banks and financial institutions pursuing recovery through the civil court mechanism — where the debtor is not a company or the DRT threshold is not met — the Order XXXVII summary suit procedure under the Code of Civil Procedure provides an accelerated mechanism for claims based on negotiable instruments and contracts for recovery of money. The plaintiff bank files a summary plaint and the defendant can only defend with leave of the court — a procedural advantage that must be maintained through rigorous procedural compliance. Mortgage enforcement through a mortgage suit before the civil court — seeking a decree for sale of mortgaged property — is the alternative to SARFAESI for lenders whose security documentation does not satisfy SARFAESI eligibility requirements, or where the borrower has successfully challenged the SARFAESI action before the DRT. Mortgage suits carry longer timelines but can be pursued where SARFAESI is unavailable or has been stayed. Corpus Juris Legal represents banks, financial institutions, ARCs, and NBFCs in the full spectrum of banking litigation — from Original Application filing through execution of recovery certificates and decree enforcement.

Key Service Components

• ◆DRT Delhi Original Application filing and prosecution for banks and financial institutions
• ◆DRAT representation in appeals against DRT orders
• ◆Borrower counter-claim and preliminary objection management in DRT proceedings
• ◆Recovery Certificate execution — possession proceedings and asset attachment at DRT
• ◆Summary suit filing under Order XXXVII CPC for banking and negotiable instrument claims
• ◆Mortgage suit prosecution and decree for sale of mortgaged property
• ◆ARC portfolio litigation management and recovery strategy advisory
• ◆Guarantor recovery proceedings — personal and corporate guarantee enforcement
• ◆Attachment before judgment applications in banking fraud and diversion matters
• ◆IBC Financial Creditor application coordination with DRT recovery strategy

Our Approach

Corpus Juris Legal approaches banking litigation from the perspective of a recovery-focused practice rather than a general litigation function. We assess the realistic recovery quantum and timeline before advising on the forum and strategy, and we manage proceedings with the discipline and preparation that DRT practice demands. Our banking law expertise — across documentation, SARFAESI enforcement, and IBC proceedings — means that our DRT representation is informed by a complete understanding of the creditor's legal position across every available recovery mechanism.

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