Replying to a DRT Summons: The Written Statement Under Section 19(5)

A defendant served with summons in a Debts Recovery Tribunal Original Application has thirty days from the date of service to present a written statement under Section 19(5)(i) of the Recovery of Debts and Bankruptcy Act 1993, extendable by no more than fifteen further days in exceptional cases and for special circumstances recorded in writing. That written statement must carry any claim for set-off under Section 19(6) and any counter-claim under Section 19(8) — both are lost if omitted — and must be verified on affidavit, failing which its contents cannot be used as evidence at all. If nothing is filed, Rule 12(7) of the Debts Recovery Tribunal (Procedure) Rules 1993 permits the Tribunal to proceed forthwith and pass an order on the application as it thinks fit.

The compressed timetable is the design of the forum, and its cost falls on the defendant. As an Advocate practising at the Delhi High Court and Senior Partner at Unified Chambers And Associates, the expensive failures I see on the borrower side are rarely bad defences — they are sound defences filed late, filed unverified, or filed without the set-off and counter-claim that had to appear in the same document.

What does a Section 19(4) summons actually direct?

The DRT summons is no longer a bare "show cause" notice. Section 19(4), as substituted in 2016, requires it to carry three directions: to show cause within thirty days of service why the relief prayed for should not be granted; to disclose particulars of properties or assets beyond those already specified by the applicant under clauses (a) and (b) of Section 19(3A); and to restrain the defendant from dealing with or disposing of assets disclosed under clause (c) of that sub-section, pending the attachment application. Two further consequences follow on service, and both are routinely missed.

Section 19(4A) imposes an automatic freeze. Notwithstanding Section 65A of the Transfer of Property Act 1882, the defendant, on service of summons, shall not transfer by sale, lease or otherwise — except in the ordinary course of business — any asset over which security interest is created, or any property specified or disclosed under Section 19(3A), without the Tribunal's prior approval. No order is needed; the restraint attaches on service. Approval cannot be granted without notice to the applicant to show cause, and where secured assets are sold in the ordinary course the defendant must account for the proceeds and deposit them with the bank holding the security.

Failure to disclose is punishable with detention. Section 19(5)(iii) permits the Presiding Officer to direct that the person or officer in default be detained in civil prison for up to three months, subject to an opportunity of being heard. The Explanation adopts the definition of "officer who is in default" in Section 2(60) of the Companies Act 2013, so in a corporate borrower's case the exposure attaches to named individuals.

How long is the deadline, and can it be extended?

Section 19(5)(i) requires the defendant, within thirty days from the date of service of summons, to present a written statement including any set-off under Section 19(6) or counter-claim under Section 19(8), accompanied by original documents — or true copies with the leave of the Tribunal — relied on in the defence.

The proviso is narrow. Where the defendant fails to file in time, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, extend the period by a further period not exceeding fifteen days. Three limits sit in that sentence: the extension is discretionary, it requires recorded reasons, and it is capped.

Whether any residual power exists to take a written statement on record beyond forty-five days is contested: Section 22(1) frees the Tribunal from the Code of Civil Procedure and directs it to be guided by the principles of natural justice, and defendants argue from that to a discretion to condone. The safer reading is that the outer limit is real — the proviso is drafted as a cap on a power that is itself exceptional, and a Tribunal taking a pleading on record after day forty-five is exercising a discretion the section does not confer in terms. Assume day forty-five is the end, and where delay is unavoidable apply to extend before day thirty, particularising the circumstances on dates — the proviso asks the Presiding Officer to record reasons, and a bare prayer gives him nothing to record.

How the DRT deadline compares with other forums

The DRT sits at the tightest end of that range. Unlike the route described in the note on the Order XXXVII summary suit, there is no leave-to-defend gateway: the defence is filed as of right, but only inside the window.

What must the written statement contain to be usable as evidence?

This is where competent drafting is undone by procedure. Section 19(10A) requires the written statement, the set-off, the counter-claim, the reply to a counter-claim — indeed "any other pleading whatsoever" — to be supported by an affidavit sworn by the party verifying all facts, pleadings and annexed documentary evidence. Its proviso adds that where a party intends to lead evidence of witnesses, those affidavits must be filed simultaneously with the pleading.

Section 19(10B) supplies the sanction: facts or pleadings not verified in the prescribed manner cannot be relied on as evidence, nor can any of the matters set out in them. An unverified written statement is not merely irregular; it is evidentially inert.

Rule 12(9) sets the evidentiary default and the one route out of it: the Tribunal may, for sufficient reason, order that any particular fact be proved by affidavit, and its proviso entitles either party that bona fide desires the production of a witness for cross-examination to have the Tribunal order that witness's attendance where the witness can be produced. The sanction runs against the party relying on the affidavit — if the witness does not appear, that affidavit is not taken into evidence, and no other oral evidence is permitted in its place. Rule 12(10) allows the Tribunal, where liability is denied, to act on the affidavit of the applicant or an officer of the applicant acquainted with the facts of the case or who has verified the contents of the records. In most matters the written statement and the affidavits filed with it are the whole of the defendant's evidence, with no later stage at which to plug a gap.

What is the risk in admitting part of the claim?

Section 19(5B) punishes loose drafting more than any other provision. Where a defendant makes an admission of the full or part of the amount of debt due, the Tribunal shall order payment to the extent of the admission within thirty days of that order, failing which it may issue a certificate under Section 19(22) to the extent of the debt admitted. Rule 12(8) carries the same direction on the procedural side. That is a recovery certificate obtained without a trial, on the strength of the defendant's own pleading.

Sentences drafted for candour — "the defendant admits availing the facility and having repaid part thereof", "the principal is not disputed, only the interest is" — read as admissions of quantum. Admit the facility, the execution of documents and the fact of default where genuinely undisputed, but deny the computed sum specifically and put the applicant to strict proof of each component.

Section 19(5A) then requires the Tribunal, on receipt of the written statement or on expiry of the time granted, to fix a hearing for admission and denial of documents and for continuation or vacation of the interim order passed under Section 19(4). That hearing is the defendant's first real opportunity to have the Section 19(4)(iii) restraint lifted.

Can the borrower plead a set-off, and how does it differ from a counter-claim?

Both are available, both must be raised in the written statement, and they are not interchangeable.

Two points follow. The counter-claim is a paid filing on the bank's own scale, and one drafted into the written statement without the fee draws a registry objection that consumes the forty-five-day window. And the clock runs symmetrically: Rule 12(4) gives the applicant thirty days to answer a counter-claim, with a further fifteen under Rule 12(5), and Rule 12(7) applies to a bank that does not answer just as it does to a defendant that does not defend.

What interim orders can the Tribunal pass while the application is pending?

The interim architecture was rewritten in 2016 and the old numbering still circulates in commentary. Sub-sections 19(12) and 19(14) were omitted by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act 2016 with effect from 4 November 2016; Section 19(17) still refers to sub-section (12), a drafting relic rather than a live power. What remains is:

• **Section 19(4)(iii)** — the restraint in the summons itself on dealing with assets disclosed under Section 19(3A)(c).
• **Section 19(4A)** — the automatic freeze on transfer of secured and disclosed assets, operating from service.
• **Section 19(13)** — attachment before judgment. The Tribunal must first be satisfied that the defendant, **with intent to obstruct, delay or frustrate execution**, is about to dispose of property, is about to remove it beyond the Tribunal's jurisdiction, or is likely to damage it or affect its value by misuse or by creating third-party interests. It then directs the defendant, within a fixed time, either to furnish security or to show cause why he should not. Only on failure does clause (B) permit attachment of so much of the property as appears sufficient.
• **Section 19(15)** — conditional attachment of the whole or any portion of the property specified under Section 19(13).
• **Section 19(16)** — an attachment ordered **without complying with Section 19(13) is void**. This is the answer to an attachment obtained on an affidavit that never pleads intent, or without the preceding direction to furnish security.
• **Section 19(17)** — for disobedience or breach, attachment of the defaulter's properties and detention in civil prison for up to three months.
• **Section 19(18)** — where just and convenient, appointment of a receiver before or after the recovery certificate, removal of a person from possession, conferment on the receiver of the owner's powers of suing, realising, managing and collecting rents, and appointment of a Commissioner to inventory or sell.

The answer to an interim application is therefore rarely a bare denial of default. It is an attack on the ingredient the applicant must plead — the intent in Section 19(13) — supported by evidence of continued custody and value, and often by an offer of security that makes attachment unnecessary.

What defences belong in the written statement on the merits?

The statute defines the container; the content is ordinary banking-law defence work, and the strongest written statements are narrow and evidenced rather than exhaustive.

Limitation. Section 24 of the RDB Act applies the Limitation Act 1963, as far as may be, to an application made to a Tribunal. The applicable Article turns on the nature of the claim — money lent, money lent repayable on demand, money charged upon immovable property, or the residuary Article — and the period for enforcing a mortgage is substantially longer than for an unsecured money claim, so the correct Article must be identified before the point is taken. Plead the date of default, the last credit and the date of filing precisely. The bank's answer is normally Section 18 of the 1963 Act — an acknowledgment in writing signed before the period expired, typically a balance-confirmation letter or an entry in an audited balance sheet — or Section 19, a part payment of principal or interest. Call for each such document and dispute it on the pleading rather than at argument.

The statement of account. The Explanation to Section 19(3) treats a statement of account or an entry in a banker's book, duly certified under the Bankers' Books Evidence Act 1891, as a document for the purposes of the application. Section 4 of that Act makes a certified copy of an entry prima facie evidence — receivable, and rebuttable. Section 2A prescribes what a printout must carry: a certificate from the principal accountant or branch manager that it is a printout of the entry, and a certificate from the person in charge of the computer system describing the system and its safeguards against unauthorised entry, unauthorised alteration, data loss and tampering, with confirmation that the system operated properly at the material time. A statement produced without those certificates is open to objection — but the objection must be taken in the written statement to be worth anything later.

Within the account, the recurring disputes are the rate and rests actually applied measured against the sanction letter, appropriation of payments under Sections 59 to 61 of the Indian Contract Act 1872, insurance and inspection charges, unapplied credits, and the capitalisation of penal levies. The Reserve Bank's 2023 directions on penal charges in loan accounts require penal levies to be recovered as charges rather than as penal interest added to the rate, and provide against capitalisation — a point to verify against the circular current on the date of the account. One limit runs the other way: Section 21A of the Banking Regulation Act 1949 bars a court from reopening a transaction between a banking company and its debtor on the ground that the interest charged is excessive.

Classification of the account. The classification date drives the interest computation and the enforcement chronology, so an incorrect date is a quantifiable defect rather than a rhetorical one. The grounds on which it can be put in issue are in the note on challenging a wrongful NPA classification.

Guarantors. Where guarantors are arrayed as defendants, the written statement should address Sections 133 to 141 of the Indian Contract Act 1872 on their own terms — variance without the surety's consent, release or discharge of the principal debtor, a compromise or promise not to sue, and, under Section 141, the surety's entitlement to the benefit of every security the creditor holds against the principal debtor, with discharge to the extent of the value of any security the creditor loses or parts with without consent. Where insolvency has been triggered against the guarantor, see the note on Section 95 personal-guarantor insolvency.

Threshold objections. Section 1(4) excludes the Act where the debt is below the notified threshold, specified by the Central Government at twenty lakh rupees. Section 19(1) fixes territorial jurisdiction by the branch maintaining the account, the residence or place of business of a defendant, or where the cause of action arises. Whether a particular non-banking lender is a "financial institution" within Section 2(h), and so competent to file at all, depends on the notification relied on. Service is itself a fact in issue: the clock runs from service, and defective or unproved service founds any later application to set aside an ex parte order.

What happens if the written statement is simply not filed?

Rule 12(7) is the immediate consequence: where the defendant fails to file the reply as specified, the Tribunal may proceed forthwith to pass an order on the application as it thinks fit. Section 22(2)(f) separately gives the Tribunal the civil court's power of dismissing an application for default or deciding it ex parte.

The remedy is Section 22(2)(g), the power to set aside a dismissal for default or an order passed ex parte. It is discretionary: the application must explain the non-appearance on facts, ordinarily disclosing the defence so the Tribunal can see there is something to try. Rule 5A separately permits a review within thirty days for a mistake or error apparent on the face of the record, supported by a verifying affidavit.

Beyond that lies the appeal, and this is where an ex parte order becomes expensive. Section 20(3) requires an appeal to the Debts Recovery Appellate Tribunal within thirty days from receipt of a copy of the order, with power to condone delay for sufficient cause. Section 21 then bites: an appeal by the person from whom the debt is due shall not be entertained unless fifty per cent of the debt determined by the Tribunal is deposited, and the Appellate Tribunal may, for reasons recorded in writing, reduce that to not less than twenty-five per cent. Since the 2016 amendment there is no power of complete waiver under Section 21 — a distinction worth holding against the separate regime discussed in the note on the DRAT pre-deposit under SARFAESI Section 18.

A forty-five-day working sequence

1. Day 0 — record the date and mode of service. Preserve the envelope, the acknowledgement and the paper book served under Rule 11. Every later date runs from this one.

2. Days 1 to 3 — read the summons for the disclosure and restraint directions, and instruct internally that Section 19(4A) now bars transfer of secured or disclosed assets outside the ordinary course without the Tribunal's approval.

3. Days 1 to 7 — call for the account: the certified statement with its Bankers' Books Evidence Act certificates, the sanction letters, the security documents, the demand notice with proof of service, and every balance confirmation on file.

4. Days 5 to 12 — fix the limitation position on dates: default, last credit, last acknowledgment, date of filing.

5. Days 7 to 20 — reconstruct the quantum independently. Recompute interest against the sanctioned rate and rests, test the appropriation sequence, isolate penal levies and their capitalisation. This is the work that decides the case and it cannot be compressed.

6. Days 15 to 25 — decide on set-off and counter-claim, and arrange the Rule 7(2) fee if a counter-claim is to be filed. The right is lost with the written statement.

7. Days 20 to 29 — draft the defence, denying quantum specifically, and swear the verifying affidavit under Section 19(10A) together with every witness affidavit.

8. Day 30 — file two complete sets in paper-book form under Rule 12(1) and serve a copy on the applicant under Rule 12(2). If an extension is unavoidable, apply before day 30 with the circumstances set out on dates.

What follows the written statement?

Section 19(20) requires the Tribunal, after hearing both sides on all claims, set-off, counter-claim and interest, to pass an interim or final order within thirty days from the conclusion of the hearings, which may include interest from the date the amount is found due until realisation. Section 19(24) sets the outer expectation: proceedings completed, so far as possible, in two hearings, and the application disposed of finally within one hundred and eighty days of receipt. Section 19(20A) requires the Tribunal, where it is proved to its satisfaction that the claim has been adjusted wholly or in part by a lawful agreement or compromise in writing signed by the parties, or that the defendant has repaid or agreed to repay the claim, to pass orders recording that agreement, compromise or satisfaction — the route by which a negotiated settlement is brought on record, as discussed in the note on the legal framework for one-time settlements.

On a final order, Section 19(22) requires the Presiding Officer to issue a recovery certificate to the Recovery Officer, and the matter leaves the adjudicatory stage for the execution machinery described in the note on execution of a recovery certificate. Two parallel tracks should stay in view while the defence is prepared: an application under Section 17 of the SARFAESI Act 2002, where the same lender is enforcing security, runs before the same Tribunal on the timeline for a securitisation application; and admission of a corporate borrower into insolvency halts the Original Application altogether under the Section 14 moratorium.

For the structure of the forum, see the Debt Recovery Tribunal guide; for the vocabulary used above, the glossary of Indian legal terms; and for the forums in which these matters are heard, the note on courts and tribunals. The documentation expectations on the lender side are set out for banks, NBFCs and ARCs, and the practice area under debt recovery.

This article is general information on the law as it stands and is not legal advice; the defences available in any Original Application depend on the loan documents, the account and the facts of the particular matter. Queries may be directed through the contact page.