html The bank files an Application (OA) before the Debt Recovery Tribunal (āDRTā) for recovery of a significant amount towards outstanding loans. The borrower reviews the application papers and realizes there is another side to the story. Payments were not credited or contract breaches occurred or maybe the borrower has a separate monetary claim against the bank. Simply defending against the banks demand may not adequately bring that claim before the Tribunal. Indian DRT law provides two very useful tools for these situations ā set-off and counterclaim. Essentially, a set-off deals with an ascertained money liability which is recoverable by way of legal action by the defendant against the applicant bank/financial institution. Counterclaim is a broader remedy and can deal with any right or claim in respect of a cause of action against the applicant, including a claim for damages (if the facts so warrant), subject to statutory limitations and timing under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. Timing is key. Just because a borrower gets served with an Original Application (āOAā) summons does not mean that a counterclaim can be conveniently raised at a later date. Section 19 and the Debts Recovery Tribunal (Procedure) Rules, 1993 have strict requirements regarding the written statement, supporting documents, affidavit and timing. If you are a borrower, guarantor, company or MSME please contact Advocate BK Singh to discuss whether the facts of your situation warrant a defence alone, a set-off, a counterclaim or a combination of all that which is allowed under law. Bank recovery suits are frequently treated as a one-way process where the bank sues for money and the borrower only responds to the suit. Section 19 provides a broader procedural avenue. An eligible defendant can put forward an eligible set-off or counterclaim before the very Tribunal which is hearing the bankās Original Application. This could be significant for borrowers doing business from Delhi NCR, Mumbai, Bengaluru, Hyderabad, Chennai, Kolkata or elsewhere. A contested loan account may have involved numerous transactions over several years, multiple facilities, restructuring agreements, securities etc. against disputed charges or alleged defaults. The legal issue isnāt always whether the borrower owes money to the bank. It can also be whether a legally enforceable amount is even recoverable from the applicant. Advocate BK Singh typically reviews the history of the transaction, pleadings and documents before deciding to treat a grievance as a counterclaim. The fact that a borrower has a complaint against the bankās conduct doesnāt necessarily convert that complaint into a legal, maintainable claim for a money counterclaim. One needs to understand that a set-off is much narrower in operation. Firstly, Section 19(6) would only be triggered where the defendant claims an ascertained amount of money which is legally recoverable from the applicant bank or financial institution. Secondly, the statutory language goes on to require particulars and evidence in support of that claim as well. For example, if a bank demands ā¹80 lakh and the defendant claims that there is a fixed and ascertained amount of money legally recoverable from that bank itself. Depending upon facts and maintainability of course, such claim could potentially raise a set-off issue. However, a counterclaim can be much broader in nature. Section 19(8) permits a defendant to rely on any right or claim that arises from a cause of action against the applicant ā this includes even where the counterclaim is framed as damages. The cause of action should have arisen before the delivery of the defence or at anytime before the period allowed for delivering it has expired. Even the interpretation by the Supreme Court above has been recognised by subsequent judgments as reading Sections 19(6) to 19(11) as an enabling provision for set-off/counterclaim. It is this difference which would make Advocate BK Singh first look at the nature of the amount being claimed rather than calling every possible claim against a lender a set-off. The principal Act is Recovery of Debts and Bankruptcy Act, 1993 (popularly known as RDB Act). Section 19 of Chapter IV (Tribunal procedure) is listed in India Code. 19(5). When the summons has been served on him, the defendant shall present the written statement of defence and set-off, if any, under section 19(6) or counterclaim, if any, under section 19(8) within thirty days from the date of service of summons. The Presiding Officer may, if he records reasons for doing so, allow the defendant a further time up to fifteen days in exceptional circumstances. 19(6) and 19(7). These Sections relate to set-off. The written statement of defence containing such set-off as is admissible in a set-off shall have the effect of a plaint in a cross- suit and the Tribunal shall dispose of the set-off together with the application for recovery. 19(8) and 19(9). These Sections deal with counterclaim. Like set-off, a counterclaim which is allowable in a counterclaim shall also have the effect of a cross-suit and the Tribunal shall dispose of the Original Application and the counterclaim together. 19(10A) and 19(10B). The pleadings shall be verified by an affidavit by the party pleadingā¦which shall verify the facts referred to therein and the documents and documentary evidence relied upon. Absence of verification as required may weaken the party from relying on those aspects. Section 19(11) also allows the applicant to argue that a counterclaim ought not to be disposed off in such a manner, rather by filing a separate suit. The Tribunal shall determine the issue along with the application for recovery. Therefore, Advocate BK Singh can check the maintainability, limitation, cause of action and documentary support before deciding upon adding a counterclaim to defence. Plaintiff-starts with the OA-summons, not with a stand-alone allegation against the lender. The defendant wants to know exactly what the bank has claimed in its plaint, how much it is claiming, under which loan facilities and on the basis of which documents it wants to recover the money. Advocates are India customer can analyse the OA with loan account and can understand whether the proposed monetary claim qualify under Section 19. Start by reading the bankās OA, account statement and sanction papers, loan documents, guarantees and security agreements carefully. Check who is making the proposed monetary claim and whether he/she is really suing the applicant in the DRT matter. If the defendant not only challenges the claimed amount but also the way in which the bank has interpreted its account. Assessment of DRT Case Defence Suit holds true significance. Verification of Original Application, documentary defence and recovery suits are all part of the DRT Solutions we offer on this website. Ask yourself this simple question: Is the sum certain and capable of being ascertained? Or does it require its own independent assessment of loss and damages? The answer to that question could affect whether you plead something that sounds more like a set-off under Section 19(6) or a counterclaim under Section 19(8). What matters for legal classification are facts and enforceable rights, not the language used by the defendant. Advocate BK Singh can look into whether the cause of action for the counterclaim arose within the statutory period envisaged for such claims. Under Rule 12 of Debts Recovery Tribunal (Procedure) Rules, the defendant may deliver the written statement including any claim for set-off or counterclaim along with his reply to the summons within 30 days from the date of service of summons. The rule goes on to provide for accompanying documents, service upon the applicant and the limited circumstances in which an extension may be granted. Ideally the written statement should be prepared in such a manner that it distinguishes between the defence against the bankās OA and the distinct affirmative claim in money being made against the applicant. For assistance with any of these documents, the DRT Notices (Verified) and Drafting page covers OA summons, Replies to OA, supporting documents and DRT drafting. Rule 7 refers to a specific fee table for an application to be made by way of counterclaim under Section 19(8). For claims up to ā¹10 lakh, the fees is ā¹12,000 and for a claim exceeding ā¹10 lakh, ā¹12,000 plus ā¹1,000 for every further ā¹1 lakh or part thereof, up to a maximum of ā¹1.5 lakh (as the rule helpfully states). It may still be worth checking the Registry/filing formalities at the DRT where you intend to file, as rules and practice can change. Advocate Bhupendra Kumar Singh can understand whether the value of goods and services provided in the proposed counter claim match with the relief being claimed by the defendant. While you can use your pleadings to air your broad allegations against the bank, a counterclaim cannot lie dormant on those assertions. Section 19(10A) specifically mandates verification of the counterclaim by affidavit, and the Procedure Rules also allow for material to be filed along with the pleadings. Documents such as invoices, payment receipts, correspondence and contracts should be consistent with each other. Affidavit quality can often spell the difference between a proposed set-off appearing as a valid cause of action or a mere complaint. Advocate BK Singh may request supporting documents before filing such as: Note that a set-off is afforded specific attention since Section 19(6) specifically refers to a sum of money that is ascertained and recoverable by law from the applicant. Professional consultation becomes more relevant after an OA notice has been served since then the statutory timeline starts to become relevant. Consultation should not be delayed if the proposed counterclaim amount is high, damages are disputed, multiple banking facilities were availed, corporate guarantees were involved, accounting entries are complex, there are competing limitation arguments or paperwork is incomplete. Advocate BK Singh can also evaluate whether the proposed claim should properly be filed before the DRT as a counterclaim or if the circumstances suggest a different legal remedy. That difference is important because the mere existence of a dispute against a bank does not automatically mean that the DRT has jurisdiction over every standalone claim. Readers in need of a preliminary opinion can access the verified DRT Consultation page. Additionally, DRTLawyer.com offers a separate service specifically for bank recovery notices. Services offered by DRTLawyer.com include DRT defence, recovery proceedings,Drafting and SARFAESI disputes/banking litigations . Published Service Information of DRTLawyer.com DRT includes document review, Original Applications (OA) replies and representation in recovery cases. Advocate BK Singh may also be able to review your OA for a potential set-off or counterclaim, pinpoint the basis of the cause of action, sift through account statements, organize supporting documents and determine procedural issues with respect to your claim as a defendant. The goal is not to create a counterclaim just because the bank has filed a recovery. You want to know if you have a legitimate claim and how to pursue it up to the extent allowed by law under Section 19. Yes. Section 19(8) allows the defendant in an application by the bank for recovery of money to sue a counterclaim against the applicant on a cause of action arising before the defence is delivered or before the time allowed for delivering the defence expires subject to meeting certain legal requirements in terms of cause of action and time limitation. Section 19(6) allows filing of set-off when there is an ascertained sum of money which can be legally recovered by defendant from the applicant bank or financial institution and is claimed to be deducted from the applicantās demand. Set-Off allows claiming of an ascertained legally recoverable amount of money. On the other hand, counterclaim can be based on wider right or claim including a claim for damages as long as requirements under Section 19(8) are met. The counterclaim is expected to be included alongwith written statement which is required to be filed within 30 days of service of summons as per Section 19(5) and Rule 12 . Extension of time is not given lightly and if at all is granted for a maximum of further 15 days under exceptional circumstances. Yes. Section 19(8) specifically provides that a counterclaim may be āin the nature of a claim for damagesā subject to other requirements of law being satisfied. DRT Procedure Rules specify a separate court fees schedule for filing a counterclaim under Section 19(8) which is based on the amount claimed subject to the prescribed limit . As mentioned above, Section 19(8) link the counterclaim to cause of action which arose before the delivery of defence or before the time allowed for delivering the defence expired. Late counterclaims therefore require detailed legal analysis instead of assuming that such late counterclaims will be allowed. Yes. Loan documents, OA, account statements, transactions in dispute and the basis of amount claimed can be reviewed to understand if the facts support set-off, counterclaim or even a defense. Yes. Section 19 allows applicants to file an answer to counterclaim. Further Section 19(11) allows the applicant to raise the issue that such counterclaim ought to be proceeded with by way of an independent suit and the Tribunal can determine such issue. You should consider speaking to us at the earliest after receiving summons to OA. Particularly if you think you are entitled to recover money separately from applicant bank or have any documented claim arising out the transaction you have entered into with bank. The reason to review documents early is because DRT allows limited time to file pleadings. A set-off/counter claim can alter the nature of a DRT recovery proceeding only if the facts give rise to a cause of action which can be maintained in a court of law. Section 19 expressly distinguishes between a set-off, counterclaim and regular defence. The Procedure Rules also provide strict requirements for pleading and documentary evidence. BK Singh can help you explore your options even before the expiry of the time limit to file a written statement, so the OA, transaction details, monetary relief sought, evidence and the proper procedural route can be considered at the same time. If you have a legitimate counterclaim, it should be based upon rights and documents that can be enforced ā not merely asserted as a response to the recovery proceeding.How to File a Counterclaim or Set-Off in DRT Recovery Proceedings
Why DRT Counterclaims and Set-Offs Matter in 2026
Quick Facts
What Is the Difference Between a Set-Off and Counterclaim
How Does the Legal Framework Apply
How Is a Counterclaim or Set-Off Filed in DRT
Read the Original Application (OA)
Determine what kind of monetary claim it is
Draft the Written Statement and Other Pleadings
Verify the Fees for Filing Counterclaim
Submit the Affidavit and Proof
What Documents and Evidence Should Be Collected
Copy of DRT summons and complete O.A
When Should You Consult a DRT Lawyer
How Can DRTLawyer.com Help
Questions and Answers
1. Can I file a counterclaim against bank in DRT ?
2. What is set-off in DRT ?
3. What is the difference between set-off and counterclaim ?
4. What is the time limit for filing counterclaim in DRT?
5. Can a counterclaim be filed for damages against bank ?
6. Is there any separate court fees for counterclaim in DRT ?
7. Can I file a counterclaim after filing written statement ?
8. Can Advocate BK Singh help me decide if my claim can be filed as set-off
9. Can bank oppose/set aside the counterclaim?
10. When should I approach Advocate BK Singh for help with DRT counterclaim?
Final Thoughts
There's no reason for concern. There is no difficult-to-understand legalese.
Someone who has helped many people with the same problems gives you clear, honest advice. We want to make the legal process easy to understand and use for everyone.
Schedule Your Consultation