Dismissed

Piramal Capital and Housing Finance Limited v. Aditya Birla Housing Finance Limited

DRT11 Jun 2025SA/90/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dealt with a dispute between two housing finance companies claiming security interests over the same property. Relying on Supreme Court precedents, the Tribunal held that such disputes between lenders attract statutory arbitration and dismissed the application. The matter was disposed of by directing the parties to arbitrate.

What did the court decide?

The Tribunal directed both parties to pursue arbitration under Section 11 of the SARFAESI Act and disposed of the application.

Piramal Capital and Housing Finance Limited versus Aditya Birla Housing… — Arbitration | DRT (2025)

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DEBTS RECOVERY TRIBUNAL – 1, KOLKATA JEEVANSUDHA BLDG. 9^TH FLOOR, 42/C, J.L.NEHRU ROAD, KOLKATA – 700071

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BEFORE SHRI AMBUJA MOHAN DAS, PRESIDING OFFICER

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SA No. 90 of 2025

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Piramal Capital and Housing Finance Limited

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A non-banking finance corporation engaged in the business of lending having its registered office at 4^th Floor, Piramal Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai, Maharashtra, India – 400 013 and having place of business at “Duckback House”, 41, Shakespeare Sarani, Kolkata – 700 017;

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................. Applicant

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-versus

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Aditya Birla Housing Finance Limited

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Having one of its offices at 2^nd Floor, Bangur, BLF Estate, 3, Chowranghee Road, Kolkata – 700 016;

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The Authorised Officer, Aditya Birla Housing Finance Limited

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Working for gain at 2^nd Floor, Bangur, BLF Estate, 3, Chowranghee Road, Kolkata – 700 016;

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Brajesh Prasad Singh, son of Barish Prosad Singh

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At 3, Achambit Shah Road, P.O and P.S Hastings, Kolkata – 700 022;

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Daisy Singh, wife of Brajesh Prasad Singh

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At 3, Achambit Shah Road, P.O and P.S Hastings, Kolkata – 700 022;

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Subhas Mahato

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Residing at 5/H/2, Shah Rajab Road, P.O. & P.S. Hastings, Kolkata – 700022;

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Mukesh Rajak

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(Sne)

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Residing at 102/B, P. N. Mitra, Brick Field Road, 2^nd Floor, Flat No. S6, P.S. Behala, Kolkata – 700 053;

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and

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7. Ranju Rajak, wife of Mukesh Rajak

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Residing at 102/B, P. N. Mitra, Brick Field Road, 2^nd Floor, Flat No. S6, P.S. Behala, Kolkata – 700 053.

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……………Respondents.

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Present:

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For Applicant: 1. Samrat Mukherjee, Ld. Counsel

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Kuheli Deb, Ld. Counsel and

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Rajeev Maity, Ld. Counsel

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For Respondents: 1. Abhishek Guha, Ld. Counsel

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J U D G E M E N T

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Delivered on 11^th June, 2025

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Both the Sarfaesi Applicant Company and Respondent No. 1 Company are housing finance company. Applicant Housing Finance Company granted credit facility to Respondent No. 6 and 7 who purchased housing property against security of 5,000 sq. ft. flat on second floor of building in holding no. 102/B at P.N.Mitra Brick Field Road, P.O. – New Alipore, P.S. – Behala, Kolkata – 700 053.

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Respondent No. 6 and 7 had entered into an agreement for sale for aforesaid flat with owner and promoter Respondent No. 5 and the said agreement for sale was registered on 28^th Novemeber, 2016 by deed no. 08311 of 2016. Respondent No. 6 and 7 deposited the said agreement for sale to applicant finance co. as security interest. Respondent No. 6 and 7 in the agreement for sale stated that there was no encumbrance on the said property.

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Subsequently, in the year 2018, the owner and developer finally executed the deed of conveyance in favour of Respondent No. 6 and 7 vide deed no.

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(Sne)

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190109438 of 2018. The said sale deed was deposited to the applicant to create security interest against loan advance.

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The Applicant came to know on 24^th March, 2025 that Respondent No. 1 finance co. is going to take physical possession of the said property on order of the Ld. CJM – Alipore in Misc. case no. 57 of 2023 vide order dated 06/03/2025. Applicant Co. enquired about the matter and came to know from order of Hon’ble High Court of Calcutta dated 06/03/2025 in WPA No. 30154 of 2024.

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Vide order dated 17/02/2025, Hon’ble High Court directed Ld. CJM – Alipore to pass order and accordingly Ld. CJM passed order dated 06/08/2025.

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Respondent No. 6 preferred writ petition before Hon’ble Hon’ble High Court of Calcutta in WPA no. 15394 of 2024. Hon’ble High Court passed order dated 2^nd July, 2024 vide Annexure – G wherein the Hon’ble High Court directed the Deputy Commissioner of Police – South West Division to conclude investigation in accordance with the law.

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At the time of hearing of this SA, it was brought to notice that the said property was also mortgaged to Respondent No. 1 company by the borrower dated 30/06/2018 and CERSAI registration was made on 09/02/2021. The CERSAI registration was made in favour of Diwan Housing Finance Corporation on 17/11/2016, deed of conveyance was made in favour of Respondent No. 6 and 7 made by registered deed dated 15/12/2018. The Respondent No. 1 has filed deed of conveyance by the owners and developers in favour of their borrower Mr. Brajesh Pratap Singh and Ms. Daisy Singh by a registered deed of conveyance on 30/06/2018.

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The borrower of Respondent No. 1 co. challenged the Sarfaesi action of Respondent No. 1 co. before Hon’ble DRT - 3 in an SA and filed IA/2434/2024 challenging the security interest and the Hon’ble DRT – 3 dismissed IA/2434/2024. Then borrower of Respondent No. 1 preferred an appeal

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(Sne)

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before DRAT – Kolkata in Misc. Appeal no. 64/2024 and the said appeal was also dismissed.

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At the time of hearing of the SA, Applicant F.C. and the Respondent F.C claim security interest in respect of the same property created by separate deed of conveyance dated 15/11/2018 which was mortgaged to Applicant No. 1 co. and another deed of conveyance dated 30/06/2018 was made in favour of Respondent F.C.

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Thus there is basically a dispute in creation of security interest by two deeds of conveyance and the Tribunal has to decide whose security is prior.

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The Applicant F.C. has filed decesion of Hon’ble Supreme Court in Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana & Anr. which is in respect of effect of registration.

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Hon’ble Supreme Court in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors. relating to a dispute between two finance companies regarding security interest examined section 11 of the Sarfaesi Act and came into final conclusion as follows:

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(I) Section 11 of the SARFAESI Act deals with resolution of disputes relating to securitisation, reconstruction or non-payment of any amount due between the bank or financial institution or asset reconstruction company or qualified buyer.

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(II) In order to attract the provision of Section 11 of the SARFAESI Act. twin conditions have to be fulfilled being; first, the dispute must be between any bank or financial institution or asset reconstruction company or qualified buyer and secondly, the dispute must relate to securitisation or reconstruction or non-payment of any amount due including interest. Where the aforesaid two conditions are found to be prima-facie satisfied, there the DRT will have no jurisdiction and the proper recourse would only be through Section 11 of the SARFAESI Act read with the Act, 1996.

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(Sne)

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(III) The expression "non-payment of any amount due, including interest" used in Section 11 of the SARFAESI Act is of wide import and would include a various range of scenarios of 'disputes' connected to unpaid amounts including those arising due to third-party defaults, such as indirect defaults of the borrowers.

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(IV) Any dispute between two banks, financial institutions, asset reconstruction companies or qualified buyers etc., where the jural relation between the two is of a lender and borrower, then Section 11 of the SARFAESI Act will have no application whatsoever. The use of the phrase "any person" in the definition of 'borrower' in Section 2(f) of the SARFAESI Act, makes it abundantly clear that even a bank, financial institution or asset reconstruction company or qualified buyer can be considered a borrower, if they receive financial assistance from a bank or financial institution ete by providing or creating a security interest. Thus, a lender-turned-borrower would also fall within the scope of a "borrower" under the SARFAESI Act and shall be governed by the same statutory framework as any ordinary borrower.

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(V) Section 11 of the SARFAESI Act, provides for a statutory arbitration for any dispute mentioned therein between any of the parties enumerated thereunder. There is no need for an explicit written agreement to arbitrate between such parties in order to attract Section 11 of the SARFAESI Act. The said provision creates a legal fiction as regards the existence of an arbitration (VI) Section 11 of the SARFAESI Act is mandatory in nature. The use of the word "shall" therein, the mandate of the said provision cannot be bypassed or subverted by the parties by secking recourse elsewhere. agreement notwithstanding whether such agreement exists or not in actuality.

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Therefore as per the decesion of Hon’ble Supreme Court in the above reported case, DRT has no jurisdiction to decide this SA under section 17(1) of Sarfaesi Act.

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(Sne)

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It is ordered as follows:

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O R D E R

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i) As per the decesion of the Hon’ble Supreme Court and Section 11 of the Sarfaesi Act, both parties are directed to go for arbitration.

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ii) This SA is disposed of with the above direction to Applicant Finance Company and Respondent No. 1 Finance Company.

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Copy of the Judgment/Final Order be uploaded in the

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File is consigned to the Record Room.

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(Dictated to Stenographer Gr. II, transcribed by him, corrected, signed and pronounced by me in the open Court on this the day 11^th June,2025) .

Presiding Officer

(Sne)

	Order She	et (continuation)
Case No. SA/9	0/2025 P	iramal Capital and Housing Finance Limited Vs. Aditya Birla Housing Finance Limited
Date of the Order		Order with Signature	Office action with date and dated Signature of Parties when necessary
11/06/2025	Present:
	For Applicant:	1. Samrat Mukherjee, Ld. Counsel 2. Kuheli Deb, Ld. Counsel and 3. Rajeev Maity, Ld. Counsel
	For Respondents: Matter was h The detailed gist of the order is a	1. Abhishek Guha, Ld. Counsel eard in open Court on 08/04/2025. order in five pages annexed separately. The s follows:
		O R D E R
	i)	As per the deciesion of the Hon’ble
		Supreme Court and Section 11 of the
		Sarfaesi Act, both parties are directed to go for arbitration.
	ii)	This SA is disposed of with the above
		direction to Applicant Finance Company and Respondent No. 1 Finance Company.
	Copy	of the Judgment/Final Order be uploaded in

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(Sne)

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Date of the Order	Order with Signature	Office action with date and dated Signature of Parties when necessary
	the Tribunal’s website.
	File is consigned to the Record Room. (Dictated to Stenographer Gr. II, transcribed by him, corrected, signed and pronounced by me in the open Court on this the day 11^thJune,2025)
	(Ambuja Mohan Das)
	Presiding Officer

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(Sne)

Piramal Capital and Housing Finance Limited v. Aditya Birla Housing Finance Limited

Case brief

What is this about?

What did the court decide?

Piramal Capital and Housing Finance Limited v. Aditya Birla Housing Finance Limited

Case brief

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What did the court decide?

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