MCQs on Recovery of Debts and Bankruptcy Act, 1993 (RDB Act)
1. The Recovery of Debts and Bankruptcy Act, 1993 was originally enacted as:
A. Debt Recovery Act
B. Recovery of Debts Due to Banks and Financial Institutions Act
C. Banking Recovery Act
D. Financial Recovery Act
Answer: B
Explanation:
The Act was originally called Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act). In 2016, after amendments aligned with the Insolvency framework, it was renamed as Recovery of Debts and Bankruptcy Act, 1993.
2. The main purpose of the Act is to:
A. Regulate banking companies
B. Provide speedy adjudication and recovery of debts due to banks and financial institutions
C. Control interest rates of loans
D. Regulate cooperative banks
Answer: B
Explanation:
The Act establishes Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) to ensure expeditious adjudication and recovery of debts due to banks and financial institutions.
3. The Debt Recovery Tribunal (DRT) is established under:
A. Section 3
B. Section 5
C. Section 7
D. Section 10
Answer: A
Explanation:
Under Section 3, the Central Government establishes Debt Recovery Tribunals for adjudication and recovery of debts.
4. The Debt Recovery Appellate Tribunal (DRAT) is established under:
A. Section 3
B. Section 8
C. Section 15
D. Section 20
Answer: B
Explanation:
Section 8 provides for the establishment of Debt Recovery Appellate Tribunals (DRAT) to hear appeals against DRT orders.
5. The minimum amount of debt required for filing an application before DRT is:
A. ₹10 lakh
B. ₹20 lakh
C. ₹50 lakh
D. ₹1 crore
Answer: B
Explanation:
Under Section 1(4), the Act applies where the debt is not less than ₹20 lakh (earlier ₹10 lakh before amendment).
6. An application for recovery of debt before DRT is filed under:
A. Section 17
B. Section 18
C. Section 19
D. Section 20
Answer: C
Explanation:
Section 19 provides the procedure for banks and financial institutions to file Original Applications (OAs) before DRT for recovery of debts.
7. The Presiding Officer of a DRT is appointed by:
A. Chief Justice of India
B. Central Government
C. RBI
D. Finance Commission
Answer: B
Explanation:
Under Section 4, the Central Government appoints the Presiding Officer of a Debt Recovery Tribunal.
8. The qualification for appointment as Presiding Officer of DRT is:
A. Must be a High Court judge
B. Qualified to be a District Judge
C. Must be an advocate with 10 years practice
D. Chartered Accountant
Answer: B
Explanation:
The Presiding Officer must be qualified to be a District Judge.
9. Appeal against the order of DRT lies before:
A. High Court
B. Civil Court
C. Debt Recovery Appellate Tribunal
D. Supreme Court
Answer: C
Explanation:
Under Section 20, any person aggrieved by an order of DRT may appeal before the DRAT.
10. Time limit for filing appeal before DRAT is:
A. 15 days
B. 30 days
C. 45 days
D. 60 days
Answer: B
Explanation:
An appeal must be filed within 30 days from the date of the DRT order.
11. Before entertaining an appeal by borrower before DRAT, the borrower must deposit:
A. 25% of debt
B. 50% of debt
C. 75% of debt
D. No deposit required
Answer: B
Explanation:
Under Section 21, 50% of the amount of debt determined by DRT must be deposited.
DRAT may reduce it to not less than 25%.
12. Which officer executes recovery certificate issued by DRT?
A. Court bailiff
B. Recovery Officer
C. District Collector
D. Registrar
Answer: B
Explanation:
Under Section 25, the Recovery Officer executes recovery certificates issued by DRT.
13. Which of the following modes of recovery is provided under the Act?
A. Attachment of property
B. Arrest and detention of debtor
C. Appointment of receiver
D. All of the above
Answer: D
Explanation:
The Recovery Officer may recover debts through multiple modes including attachment, arrest, detention, and appointment of receiver.
14. Civil courts jurisdiction in matters covered by RDB Act is:
A. Allowed
B. Partially allowed
C. Barred
D. Allowed with permission
Answer: C
Explanation:
Under Section 18, civil courts have no jurisdiction in matters which DRT is empowered to determine.
15. The DRT is guided by:
A. Civil Procedure Code strictly
B. Principles of natural justice
C. Criminal Procedure Code
D. Banking Regulation Act
Answer: B
Explanation:
Under Section 22, DRT is not bound by CPC but guided by principles of natural justice.
16. Recovery certificate issued by DRT is under:
A. Section 19(22)
B. Section 25
C. Section 20
D. Section 17
Answer: A
Explanation:
After determining the debt, the Tribunal issues a Recovery Certificate under Section 19(22).
17. Who issues the Recovery Certificate?
A. Recovery Officer
B. Presiding Officer of DRT
C. Registrar
D. District Judge
Answer: B
Explanation:
The Presiding Officer of DRT issues the Recovery Certificate.
18. Which Act works parallel with RDB Act for enforcement of secured assets?
A. SARFAESI Act
B. Banking Regulation Act
C. Companies Act
D. Negotiable Instruments Act
Answer: A
Explanation:
Banks often use **SARFAESI Act, 2002 along with the RDB Act for faster recovery of secured debts.
19. Counterclaim by defendant before DRT is allowed under:
A. Section 17
B. Section 19(6)
C. Section 20
D. Section 22
Answer: B
Explanation:
Under Section 19(6), defendants may raise counterclaims or set-off against the bank.
20. Which authority supervises the functioning of Recovery Officers?
A. High Court
B. Presiding Officer of DRT
C. RBI
D. Ministry of Finance
Answer: B
Explanation:
Recovery Officers work under the supervision of the Presiding Officer of DRT.