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RECOVERY OF DEBT DUE TO BANKS AND FINANCIAL

INSTITUTIONS THROUGH DEBT RECOVERY TRIBUNAL
AND DEBT RECOVERY APPELLATE TRIBUNAL: A
COMPARATIVE ANALYSIS OF INDIA AND NEPAL
Aakriti Khanal*
Introduction
Recovery of Debt is essential for the stability of the bank and financial
institution. It is important from various perspective .When we see from
borrower‘s angle, it is important because delaying in payment may increase
liabilities and refrain bank from earning income from alternative investment
and securities, which are kept by borrower may also lose its value. None of
them gain profit without recovery of debt, even the general public will have
to suffer from economic instability. Keeping in mind all these matters each
country provides legal framework to deal with the matter of the debt
recovery. In order to end the matter within short span of time, Nepal and
India both have enacted separate legislations and separate Tribunal are
established under these legislations to deal with the claim on bank and
financial debt recovery.

In India thirty eight DRT‘S and five DRAT‘S are established in different
states to entertain the cases brought by bank and financial institutions for the
recovery of debt. The main reason behind its establishment is that as of 30th
September 1990, more than 1.5 million cases filed by the public sector
banks and 304 cases filed by the financial institutions were pending in
various courts.1 Keeping in mind the burden of courts DRT‘S and DRAT‘S
has been established. However at present several questions are raised
regarding its composition, procedure and efficiency.

*LL.M Scholar, GNLU Gandhinagar

1
Manasi Phadnis & N. Prabhala, Debt Recovery Tribunals in India: A Short Note, Cafral
(Mar. 2015), http://www.cafral.org.in/sfControl/content/Speech/462016115856AM-
Phadnis_Prabhala_Paper_Mar_2015.pdf
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The banks and financial institutions in Nepal have over the years been
experiencing various difficulties in recovering debts. This has caused
negative impact upon bank's profit, revenue of government and the overall
financial sector of Nepal. So, need of an urgent mechanism which can work
for the recovery of dues to bank and financial institutions was felt. As per
the decision of the Council of Ministers, DRT and DRAT was established in
2003 under the Bank Debt Recovery Act 2002.2
This main objectives of this research paper is to understand the role of DRT
and DRAT in recovering the debt due to the banks and financial institutions
in Nepal and India under the Debt Recovery Act of Nepal and India and
SARFAESI Act of India, to understand the efficiency of the provisions of
the related Acts, and to understand the composition, jurisdiction, procedures
and implication of Higher Judiciary. Further the researcher attempts to
compare the legal framework provided for the recovery of debt due to the
bank and financial institutions and the procedure applied by the tribunal
established in Nepal and India and to compare its effectiveness in providing
speedy justice to the banks and financial institutions.
Concept and Definition of Bank Debt Recovery in India and Nepal
In Indian context ―Bank‖ means— (i) banking company; (ii) a
corresponding new bank; (iii) State Bank of India; (iv) a subsidiary bank; or
(v) a Regional Rural Bank;3 and for the Nepalese context bank means bank
and financial Institutions as referred in section 3 which includes Agriculture
development bank, Commercial banks, Industrial development corporation
banks and any other financial institutions as may be specified by Nepal
Rastra bank from time to time.4
Recovery of debts of bank and financial institutions refers to process that

2
ऋण असु ली न्यायाधिकरण, ऋण असु ली न्यायाधिकरण,
http://www.drtribunal.gov.np/main.php?f=introduction (last visited Aug 20, 2017).
3
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 2(d) (1993).
4
The Rec. of Debts of Banks and Fin. Ins. Act sec. 2(a) 2058 (2002).
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makes individual or organization, those who have not paid the amount that
they owe to the bank to make such payment. A bank begins a debt recovery
process when it seeks money it is owed. A bank takes recovery action for a
number of reasons, but the most common is when a customer fails to make
loan repayments. Debt recovery may include:
i. Referring the matter to a specialist debt recovery team within the
bank
ii. Employing an external debt collection agency to act on its behalf
iii. Selling property over which the bank holds security
iv. Seeking a judgment from the courts to enforce the debts5

Meaning of debt recovery has not been defined in the related Acts of Nepal
and India. Nevertheless, both the countries have recognized this concept by
enacting separate legislation.

Composition of DRT and DRAT in India and Nepal

Indian Context

For the speedy trial and adjudication of the cases relating to debt due to the
bank and financial institutions separate Debt Recovery Tribunals and
Appellate Debt recovery Tribunals are established in India. 6 They are
constituted under Debt recovery Tribunal Act 1993.7 The Central
Government by notification has established thirty eight Debts Recovery
Tribunals and five Debt Recovery Appellate Tribunals to exercise the
jurisdiction, power and authority confers under the Debt Recovery Tribunal

5
R Gandhi, Banks, debt recovery and regulations - a synergy, Bank for International
Settlement (Dec. 29, 2014), http://www.bis.org/review/r150109f.htm.
6
SujataVisaria, Legal Reform and Loan Repayment: The Microeconomic Impact of Debt
Recovery Tribunals in India, 1 America Eco. Asso. 62-63 (Jul. 2009).
7
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 3&8
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Act 1993.8

Debt Recovery Tribunal consists of one person only referred to as the

Presiding Officer appointed by notification, by the Central Government who
is qualified to become the District Judge.9 Who holds office for the five
years term or until he attains the age of 65 years whichever is
earlier.10Tribunal‘s consists of the two recovery officers and one registrar.
Debt Recovery Appellate Tribunals also consists of only one person who is
referred as chairperson11. Such chairperson holds the office for the term of
five years or until he attains the age of 67 years whichever is earlier.12

Nepalese Context
Government of Nepal, by a notification in Nepal Gazette can establish DRT.
In 2014 through Nepal Gazette Government of Nepal has established the
debt recovery tribunal situated in Kathmandu.13 It includes the members as
follows:
(a) Law member,
(b) Banking member, and
(c) Accounts member
Government of Nepal, by a notification in the Nepal Gazette, establish the
debt recovery Appellate Tribunal, as per necessity and appoint any person
who is an incumbent judge, or has already become or is eligible to become
judge, of the Appellate Court(now High court) to the post of Appeal hearing

8
Government of india, History of DRAT and DRT' (Debt Recovery Tribunals and Appellate
Tribunals), Government of India (Feb. 2017), https://www.drt.gov.in/FrmHistory.aspx.
9
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 5 (1993).
10
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 6 (1993).
11
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 9 (1993).
12
Rebecca Furtado, Recovery Of Money Under The Recovery Of Debts Due To Banks And
Financial Institution Act, 1993, Pleaders Intelligent Legal Solutions (Feb. 27, 2017).
13
Ekantipur, DRT gets 108 loan recovery requests in nine months, Kathmandu post,
Apr.20, 2015
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authority of the Appellate Tribunal.14 Who holds office for a period of five
years from the date of his/her appointment to the post and may be
reappointed.15 Recently there is only one DRAT established in Nepal which
is situated at Kathmandu.
This composition of DRT under Nepalese Act has really helped to decide the
cases in prompt manner as there is expertise from three different areas i. e
law member, account member and banking member. This compositions
seems to be beneficial in regard of comprehending the cases and disposal of
cases within short span of time because the banking member understands
the banking issues promptly and can understand the claims of banks and
financial institutions, the account member contributes in overall accounting
matters, which the law member and the banking member may not be aware
of and law member has that knowledge of applying the legal provisions and
see its consequences over the parties. In practice it seems that the law
member dominates in overall settling of the cases filed in DRT and DRAT in
Nepal. But in India, one presiding officer who is eligible to become district
court judge is the judge of DRT‘s. The DRT‘S and DRAT‘S in India has no
administrative features as there is no administrative members in those
tribunals. This aspect of the tribunals makes it different from that of
Nepalese Tribunal. While comparing this with the practice of Nepalese DRT
and DRAT it seems that the composition of Tribunals with one judge India
is not enough. It has become the reasons for the backlog of cases because of
cases load, parties appealing to the higher authority and questions upon
judge‘s competency are also raised.
Jurisdiction of DRT and DRAT in India and Nepal
Indian Context
The jurisdictional powers and authority of the DRT‘s and DRAT‘s of India
are set up so that civil courts do not directly intervene on the main issue on
14
The Rec. of Debts of Banks and Fin. Ins. Act sec. 9 2058 (2002).
15
The Rec. of Debts of Banks and Fin. Ins. Act sec. 10 2058 (2002).
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which DRTs must rule. The DRT will not have the jurisdiction to see the
cases, if the claim of Bank or financial institution or to a consortium of
banks or financial institutions is less than ten lakh rupees. Thus, following
conditions will be necessary for ousting a claim from jurisdiction of the
Tribunal:16 (a) when the amount of debt has been less than ―Rs. 10 lakhs‖;
or such other amount has not been less than one lakh rupees; (b) for both the
purposes the specification by the Central Government through notification is
necessary; as a condition precedent.17

RDDBFI Act vests in the DRT‘s, the authority to entertain applications from
banks. The DRAT has the power to address appeals made against any order
made or deemed to have been made by the DRT‘s.18Act also bars all other
Courts in relation to the matters of debt apart from the Supreme Court and
High Court, whose authority flows from article 226 and 227 of the Indian
Constitution. The bottom line is that relief against a judgment of DRAT can
be sought only from the High Court and the Supreme Court.19

Jurisdiction of DRT’S and DRAT’S under SARFAESI Act

Any person (including borrower) aggrieved by any of the measures referred

to in sub-section (4) of section 13 taken by the secured creditor or his
authorized officer under Chapter 16 may make an application along with
such fee, as may be prescribed, to the Debts Recovery Tribunal having
jurisdiction in the matter within forty-five days from the date on which such
measure had been taken.20

16
Dena Bank Kolkatta v. High Tech Engineering Systems & Ors., (3) Bank CLR 18 DRT
(Kol HC. 2004)
17
GS Dubey, An introduction to the Recovery of Debts due to banks and financial
Institutions Act 1993-A Study, Manupatra (March 2012)
18
The Rec. of Debts of Banks and Fin. Ins. Act sec 17
19
Manasi, supra, 1
20
The Sec. and Recons. of Fin. Assets and Enforce. of Security Interest Act sec. 17(1)
(2002).
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Any person aggrieved, by any order made by the Debts Recovery Tribunal
may prefer an appeal along with such fee, as may be prescribed to the
Appellate Tribunal within thirty days from the date of receipt of the order of
Debts Recovery Tribunal. However no appeal is entertained unless the
borrower has deposited with the Appellate Tribunal fifty per cent of the
amount of debt due from him, as claimed by the secured creditors or
determined by the Debts Recovery Tribunal, whichever is less.21

Civil court does not have jurisdiction to entertain any suit or proceeding in respect of
any matter, which a DRT or the Appellate Tribunal is empowered .However in the
matters, which are out of purview of the jurisdiction of DRT, Civil courts are not
restrained from the jurisdiction to entertain the cases.22Supreme Court held that to a
very limited extent jurisdiction of civil court can also be invoked where for example;
the action of the secured creditor is alleged to be fraudulent, misrepresentation.23
Nepalese Context
The Tribunal in Nepal has powers to originally try and settle cases on
recovery of debts of banks and financial institutions under its jurisdiction.
The DRT will not have the jurisdiction, to see the cases if the claim of Bank
or financial institution is less than five lakh rupees. In trying and settling
cases filed under this Act, the tribunal or the Appellate Tribunal shall have
the same powers including to issue summons, summon presence of
petitioner, defendant, witness, administer oath, take deposition, examine
proofs, evidence and necessary documents or statements, require submission
of documents, require furnishing of security and impose punishment as the
court of law has under the prevailing law. 24

21
The Sec. and Recons. of Fin. Assets and Enforce. of Security Interest Act sec. 18(1)
(2002).
22
CPS Ramachary, Jurisdiction of DRT under SARFAESI Act: An Overview, Lawyers
Club India (Apr. 26, 2012), Clubhttp://www.lawyersclubindia.com/articles/Jurisdiction-of-
DRT-under-SARFAESI-Act-An-overview-4696.asp.
23
Mardia Chemicals Ltd. Etc. Etc v. U.O.I. & Ors. Etc. Etc , (2004) 4 scc 311 (2004).
24
The Rec. of Debts of Banks and Fin. Ins. Act sec. 24 2058 (2002).
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The three members shall collectively exercise jurisdiction of the tribunal.

Majority opinions shall be deemed to be a decision of the tribunal. If two
members including the law member are present, cases may be tried and
settled. Other actions except deciding a case or issuing a final order may be
taken if two members other than the law member are present. If unanimity is
not made while trying and settling a case in presence of two members, the
case shall be submitted for action and settlement in presence of the absent
member, as well.25
If majority is not there even on submission pursuant to Sub-section it shall
be written to the appellate tribunal for a way-out in respect of such a case.
The appellate tribunal (DRAT) shall, following its establishment, have the
final power to hear appeal against any order issued by the tribunal under its
jurisdiction. 26
However a bank and financial institution may, in respect of a debt
recoverable by it, file a petition on recovery of the debt only in respect
whereof the following conditions are fulfilled.
1. Ample discussions and activities were held and carried out with the
borrower to settle, or cause to be settled, the debt.
2. The bank and financial institution took adequate action on the
recovery of debt but the debt could not be recovered. 27

Here, in this regard while comparing the jurisdiction of the DRT‘s in India
and Nepal it seems that DRT‘s of India has jurisdiction under RDDFIA Act
and SERFACIE Act whereas the Nepalese DRT has jurisdiction only under
the Recovery of Debt Due to Bank and Financial Institutions Act. In India
DRT will not have the jurisdiction to see the cases if the claim of Bank or
financial institution is less than ten lakh rupees .But in case of claim
amounting less than ten lakhs rupees the banks and financial institutions
25
The Rec. of Debts of Banks and Fin. Ins. Acts sec. 14 2058 (2002).
26
―id.‖
27
The Rec. of Debts of Banks and Fin. Ins. Acts sec. 14 2058 (2002)
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have option to knock the door of DRT under the SERFAESI Act, but there is
no such laws in Nepal .One can make application in DRT, only if the
claimed amount is five lakhs or more. Thus, banks and financial institutions
of Nepal face various problems in recovering the debt amount which is less
than five lakhs rupees.

Procedure applied by DRT’s and DRAT’s in India and Nepal

Indian Context
Bank and Financial institutions should follow the procedures set by the
laws, for the recovery of the debt. One cannot use muscular to recover
loan.28As per the provisions, incorporated in the Debt Recovery Tribunal
Act of India bank and financial institutes may follow the process outlined
below to recover dues:

 An application for recovery of debt shall be submitted to the debt

recovery tribunal by Bank or Financial Institution for recovery of
debts.29
 The Tribunal shall conduct expeditious trial and shall be guided by
the principles of natural justice.30
 It applies Summary procedure for adjudication of disputes.
Evidence is taken on affidavit and cross examination is permitted
only in few deserving cases.
 The Presiding Officer of the Tribunal shall issue a certificate for
recovery of the amount of debt and any other relevant dues to the
Recovery Officer. 31
 A borrower shall be able for an appeal against the order of the
Tribunal within forty days from the receipt of the order of DRT
28
ICICI Bank Vs Shanti Devi Sharma and ors., 7 SCC Online 532 (2008).
29
ML Tannan, Tannan‘s Banking Law and Practice in India, 1936 (23rd. 2010)
30
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 19 & 22 (1993).
31
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 19(7) (1993).
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subject to the borrower depositing seventy five per cent of the debt
as determined by the Tribunal.32

Any person aggrieved by an order made or deemed to have been made, by a

tribunal under can appeal to an Appellate Tribunal having jurisdiction in the
parties. One cannot appeal before the Appellate Tribunal, if the decision of
the tribunal is reached by the consent of both the parties. Appeal must be
filed within period of forty five days.

Recently The Act has empowered the Central Government to prescribe

uniform procedural rules to be observed by the Debt Recovery Tribunals
and Debt Recovery Appellate Tribunals in the conduct of their
proceedings.33

DRAT‘S doesn‘t entertain cases unless such person from whom the debt is
due to a bank and financial institution deposits 50%34 of the amount of debt
so due from him as determined by the tribunal.35However in some
exceptional cases waiver of deposit is given under the discretion of courts.36
Nepalese Context
In Nepal, where a bank or financial institution fails to recover any amount
recoverable from the borrower, it has to file a petition, accompanied by the
prescribed fees, in the prescribed format, to the tribunal within the following
time limit so as to have such amount recovered. In filing a petition the
concerned bank or financial institution has also to pay an amount to be set
by 0.25 per cent of the amount claimed by it to the tribunal in advance as the

32
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 20 & 21 (1993).
33
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 22(A) (1993).
34
The Rec. of Debts due to Banks and Fin. Ins. Act sec 30(A) (through latest amendment of
2016)
35
The Rec. of Debts due to Banks and Fin. Ins. Act sec. 21 (1993).
36
Chand Narain Langar V. Punjab & Sind Bank, 2 BC 28184(Mad) (DB) (2009)
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debt recovery fee. 37 The Summary procedure is applied in hearing the cases
i. e
 Issue a 15-day summons to the defendant to file a note of defense
 Extension of the time limit not exceeding fifteen days in case of
circumstances beyond control.38
 Issue an interim order to the concerned office to withhold such
property until another order is issued in some special matters. It
shall be the duty of the concerned office to observe the order as
referred.39
 It has to settle case filed under this act no later than One hundred
fifty days from the date of submission of a note of defense. Where
the note of defense is not filed, the time will start from the date of
expiration of the time limit for the filing of a note of defense. 40

A party who is not satisfied with the decision made by the tribunal may file
an appeal, accompanied by the prescribed appeal fee, in the prescribed
format, to the concerned Appellate Tribunal within fifteen of receipt of
duplicate copy of the decision. No later than seven days of registration of
the appeal, the Appellate Tribunal has to give a thirty-day time limit to the
defendant to file a note of defense, accompanied by proofs and evidence, for
his/her defense; and the defendant has to file the note of defense within that
time limit. However, that if the defendant fails to file a note of defense
within that time limit because of occurrence of a circumstance beyond
control and makes a petition, setting out reasons therefore, the Appellate
Tribunal may extend a time limit of fifteen days.41
The Act also provides that if both parties, with a view to compromise, make

37
The Rec. of Debts of Banks and Fin. Ins. Act sec. 15 2058 (2002).
38
―id.‖
39
The Rec. of Debts of Banks and Fin. Ins. Act sec. 16 2058 (2002).
40
The Rec. of Debts of Banks and Fin. Ins. Act sec. 17 2058 (2002).
41
The Rec. of Debts of Banks and Fin. Ins. Act sec. 19 2058 (2002).
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an application on compromise to the tribunal or appellate tribunal, and it

may have compromise irrespective of the stage of case proceedings. The
tribunal so making compromise has to order the debt recovery officer to
implement the compromise made.42.
DRT in India and Nepal has similar power, functions and jurisdiction to hear
the application of the parties. They are bound by the principles of natural
justice. The maximum time limitation for DRT and DRAT‘s in India for the
disposal of cases is 180 days. Whereas DRT and DRAT in Nepal should
dispose the case with 150 days.
Debt Recovery Tribunal Act 2002 of Nepal has provided the opportunity for
the parties to make the compromise irrespective of the stage of case
proceedings.43 This provisions has led both the parties and tribunal itself to
beneficial position because the parties whenever they feel that they don‘t
want to move further with the lengthy procedure of the court they can make
an compromise outside the tribunal and the tribunal‘s case load is also
reduced. However, there is no such express provision under Indian laws
where parties to the cases can compromise during the pendency of the cases
which has restrained those parties who wants to compromise the cases after
filing of cases in tribunal. But judicial interpretations accepts the
compromise made outside tribunal in United Bank Vs Hotel Southway44
held that the parties settled the amount outside the Tribunal and made it
payable in installments as per terms and conditions contained in the
instrument of compromise. The payment was completed and the defendant
was found to be under no liability.
In Nepalese perspective borrower who is not satisfied with the decision
should appeal within fifteen days of the receipt of the order and has to
furnish thirty percent of the amount held recoverable by a decision made by

42
The Rec. of Debts of Banks and Fin. Ins. Act sec. 20 2058 (2002).
43
The Rec. of Debts of Banks and Fin. Ins. Act sec. 20 2058 (2002).
44
Smt.Shashi Agrawal Vs Chairperson DRAT, AIR 2010 All 24 (2010).
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the tribunal. Whereas in India borrower who is not satisfied with the order
of the DRT has to appeal within forty five days and also has to furnish fifty
percent of the amount held recoverable by a decision made by the tribunal if
the matter/case is filed as under Recovery of debt of bank and financial
institutions Act and SERFAESI Act 2002. While comparing it seems that
the deposit amount for appeal in Nepal is less than that of India. This burden
of deposit amount of fifty percent has barred the borrower to make the
appeal in the DRAT‘s in India.

Implication on Higher Judiciary in India and Nepal

In India Appeals against the orders of DRT are made in the High Court as
well. It has been found that High Court Judges do not encourage debt-
recovery cases and that the High Court refers the matter back to the DRT or
if it is an appeal, to the Debt Recovery Appellate Tribunal. 45High-Courts
also can assume jurisdiction over debt-recovery cases by applying Articles
226 and 227 of the Constitution.46
The Karnataka High court in M/S Deepak Apparels Pvt Ltd vs City Union
Bank47 held that High court cannot entertain writ petition challenging the
order of the DRT unless any exceptional situation arises. The party without
resorting to the remedy provided under Section 18 of SARFAESI Act, which
requires ‗deposit of huge court fee, went to High court through writ
jurisdiction, which is neither efficacious nor feasible. The court further
cleared that one can resort to high court through writ petition against the
decision of DRT only in exceptional situation which includes statutory body
not acting in accordance with the provisions of the Act in question, defiance
of principles of judicial procedure etc.

45
Mukud P Unny, Working Paper SeriesA Study on the Effectiveness of Remedies
Available For Banks in a Debt Recovery Tribunal - A Case Study, C Policy Research (Feb.
2011).
46
―id.‖
47
M/S Deepak Apparels Pvt Ltd vs City Union Bank Ltd SCC Kar 686 (2016).
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In Sarvan Dall Mill‘s48 case Andra Pradesh High court held that the writ
jurisdiction is not barred wherein it has been held that judicial review under
article 226 is the only remedy available in certain circumstances such as
wrong classification of accounts contrary to RBI Guidelines for which no
remedy is available and the borrower has to face unsavory action until his
right to invoke section 17 arises.
Whereas in Nepal one who is not satisfied with the decision made by the
DRT can directly go to the DRAT and the decision of the DRAT is final in
this regard. However maximum cases ends here at the DRT because the law
has imposed that borrower who is not satisfied with the decision made by
the DRT can appeal in DRAT after depositing thirty percent of the amount in
question. One cannot appeal in High court and Supreme Court against the
decision of the DRT and DRAT but can go through writ petition if the
question is about the violation of fundamental rights or violation of the
principles of Natural Justice. This practice enumerated in Nepal lessens the
time period of resolving disputes as compared to Indian context.
Conclusions and Suggestions
From above discussions researcher comes to the conclusion that considering
the fact that bank and financial institutions face problem in recovering the
debt separate tribunal has been established in both Nepal and India.
The composition of DRT and DRAT in Nepal seems more structured and
representative from the different areas i. e (law, banking and accounting)
than that of India, which lacks the administrative features. In India
composition of judges has become one of the reasons for pendency of the
cases. So, in order to settle the cases with the opinion of at least one
additional member who is expertise in the banking sector must be provided
in Indian laws which will help to lessen the burden of the tribunal in
disposing of cases.

48
Sarvan Dall MILL(p) Ltd Vs Central Bank of India,n(1)ALT 321 (D.B.) (2010).
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The Jurisdiction of DRT‘S and DRAT‘S in India is broader than that of

Nepalese DRT and DRAT. In India banks and financial institutions has more
options for the recovery of the debt due despite of the ceiling made by the
related Acts. Whereas, as there is no SERFAESI Act in prevalence in Nepal,
the banks and financial institutions find it more difficult in recovering the
debt amount which is less than five lakhs. So, Nepalese government should
take initiative to enact SERFAESI Act or other relevant Acts.
The DRT‘S and DRAT‘S of Nepal and India while disposing the cases
follows the summary procedure and has to comply with the principle of
natural justice. However, there is lengthy procedure in India as compared
with Nepal because Banks and financial Institutions are left with
tremendous opportunities to make appeal before higher judiciary. But in
Nepal One can knock the door of higher judiciary only when there is
question of violation of principles of Natural Justice and fundamental rights.
This has become advantage for the Nepalese banks and financial institutions
because they get speedy justice within short span of time.
Therefore, both the countries, Nepal and India have provided separate
special mechanisms for the recovery of debt due to banks and financial
institutions. However there are some drawbacks and loopholes in the
composition, jurisdiction and procedure which need to be changed
accordingly by adopting the good practices existing in another country.