Kerala High Court: DRT order passed without a party's evidence can be set aside

The Kerala High Court has held that a Debts Recovery Tribunal (DRT) order passed after a party failed to lead any evidence is in the nature of an ex parte order, one passed without hearing that side, and that an application to set it aside must be heard. In a judgment delivered on 29 October 2026, the court set aside orders of the DRT and the Debts Recovery Appellate Tribunal (DRAT) that had refused such a plea in a South Indian Bank recovery case.

What Happened

South Indian Bank had filed a case before DRT-II, Ernakulam, to recover dues from a borrower. Two people who had bought land from the borrower in 2008 were added as parties, as the bank's claim covered property they say they own. They filed a written statement but no evidence. According to them, their counsel did not file the affidavit and documents they had handed over. On 22 January 2019, the DRT allowed the bank's case.

Their application to set aside that order was dismissed by the DRT on 22 July 2022, which held the order was passed on merits. The DRAT, Chennai, upheld this on 7 August 2025.

The High Court held that the DRT order was rejected mainly because no evidence had been adduced and was therefore in the nature of an ex parte order. It said that although the DRT is not a civil court, the basic principles of the Code of Civil Procedure can guide it, and that Section 22(2)(g) of the Recovery of Debts and Bankruptcy Act, 1993 empowers the DRT to set aside ex parte orders. It found the two tribunals' orders erroneous and said they resulted in a miscarriage of justice.

To balance the bank's interest, the court ordered the petitioners to pay costs of Rs 25,000 to the bank within two weeks. If they pay, the DRT must decide their application afresh within two months, and further proceedings under the 2019 order stay on hold until then.

What It Means

Borrowers, guarantors and property buyers who are parties before a DRT, and whose case was decided after they failed to lead evidence, may ask the tribunal to set that order aside instead of being told it was a decision on merits.

Source: High Court judgment