Dismissed

Indusind Bank Ltd. v. Hinduja Housing Finance Limited

DRT28 Jul 2026SA/198/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal held that Special Applications filed under Section 17 of the SARFAESI Act by one secured creditor against another regarding priority of charges are not maintainable. Based on a Supreme Court judgment, the Tribunal ruled that such disputes must be referred to arbitration under Section 11 of the SARFAESI Act.

What did the court decide?

SA no. 198/2025 is dismissed; parties directed to approach for arbitration under Section 11 of the SARFAESI Act.

Indusind Bank Ltd. versus Hinduja Housing Finance Limited — Arbitration | DRT (2026)

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Debts Recovery Tribunal-Il, Delhi

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s[lt98l2o2s

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INDUSIND BANK LTD Vs HINDUJA HOUSING FINANCE LIMITED

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28.07.2026

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Item no. 23

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Present: Ms. Usha Singh, counsel for applicant. Ms. Shivangi Pandey, proxy counsel for Shri Gaurav Srivastava, counsel for respondent FI.

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Matter is taken through Video Conferencing/ Hybrid Mode.

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This SA has been filed by the applicant bank against the Hinduja Housing Finance Limited. prory counsel of the respondent FI has submitted that the present TSA is not maintainable as per judgement passed by the Hontle Supreme Court in Appeal no.7tt0l201i in matter of Bank of India Vs. M/s Sri Nangli Rice Mills private Limited and Ors. It is submifted that where there is a dispute with regard to the recovery of the loans and where it is to be decided which secured creditor has priority of the charges, the SA shall not be maintainable under Section 17 of the SARFAESI Act and the secured creditor has to move under Section 11 of the SARFAESI Act. It is, therefore, submitted that the present SA is liable to be dismissed in terms of the recent judgement passed by the Honble Supreme Court.

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Heard both the parties and perused the judgement passed by the Honble Supreme Couft. From perusal of the judgment in para no.2 it is clear that the matter was gone in appeal before the Honble Supreme Court on a question whether the dispute inter-alia is between two banks, the DRT has no jurisdiction to adjudicate the same and accordingly the parties may be

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directed to resolve the dispute through arbitration under Section 11 of the SARFAESI Act. The Honbe Supreme Court has considered this aspect in detail and has framed four issues for determination in para no. 42 of the judgement which are as below:-

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"42. Hauing heard the learnd counrel apparing for the parties and hauing gone through the mateials on rfford, the following questrbns fall for our ansideratrbn:

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I. Whatisthescopeof turbn 11 of thesARFAESIAct?In other words, what is the meaning of the expresstbn^,bny dispute relating to srcuritisation or rffonstruction or nonpyment of any amount due including interest,,rccurring in kction 11 0f the S4RFAESI Act?

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IL What is the signifianre of the expresgion^,brises amongst any of the parties, namely, the bank or financial instifution or asset rffonstruction company or quatifid buyer" ud in fuion 11 read with fuion 2 of the 94RFAESI Act? What is the undertying obj*t behind prescribing arbitration for the adjudication of disputes betwen a bantg financbt nstitutioq asset reconstruction company or qualifid buyer, in ion 1I of the SARFAESI Act?

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[il. Whether the existence of a wrifuen arbitration agrement futwen the pafties is rquird for the purpose of resolution of disputes under turbn II of the SARFAESI Act, 2002? In other words, is there any conflict between the d*isions of Oriental Bank of Commerce (supra) and Heral tunk (supra)?

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IV. Whether Section 11 of the SARFAESI Aq, 2002 should fu construed as mandatory or dirxtory in iB nature?,,

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The Honble Supreme Court has considered various judgements passed by the fionUe High Court and

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also by the Honble Supreme Couft and after making analysis of each and every Section used in this regard and also the intention of the enactment of the SARFAESI Act, has came to the following conclusion in para no. 124, which is reproduced below:-

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"124. We summanZe our final conclusion as under: - (I) kction 11 of the SARFAESI Act deals with resolution of dbputes relating to securitiatro4 r&onstruction or nonpyment of any amount due betwen the bnk or financial institution or asset reconstruction company or qualifid buyer.

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(II) In order to attract the prouisbn of tuion 11 of the SARFAESI Act, twn conditrbns have to be fulfilld being; first, the dispute must be betwen any bank or financial instifution or asset ruonstructtbn company or qualified buyer and wondly, the dbpute must relate to securitistion or ruonstruction or non-@yment of any amount due including interst. Wherc the aforesaid two conditions are found to be^prima-facie satisfid, there the DRT will have no^juriiliction and the proper recourse would only be through .*ction 11 of the SARFA$I Act read with the Acl 1996.

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(III) The expression "non-payment of any amount due, ncluding interest" usd in ion 11 of the SARFAESI Act is of wrde rmprt and would include a uanbus range of scenarios of 'disputes' connstd to unpaid amounb ncluding thore arising due to third-party defaul$ such as indirect defaults of the borrowerc.

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(IV) Any dispute betwen two banks, financial institutions, asret rsonstrudion companies or qualifid buyerc etc., where the^jural relatbn betwen the two is of a lender and borrower, then kctbn 11 of the SARFAESI Act wrll have no apph'cation whaboever. h"-rg of the phrase 'bny s,\

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perwn" in the definition of 'borrower' in Sxtion 2(t) of the 9 RFAESI Act, makes it abundantly clear that even a bank, financial institution or asset ruonstruction company or qualifid buyer an be ansiderd a borrower, if they rseive financial asgistance from a funk or financiat instifution etc by prourding or creating a security interst Thus, a lender-turnd-borrower would also fall within the xope of a "furrower" under the SARFAESI Act and shall be govemd by the sme statutory framework as any ordinary brrower,

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(V) tuion 11 of the SARFAESI Act, provides for a statutory arbitratrbn for any dispute mentiond therein betwen any of the parties enumeratd thereunder. There is no ned for an explicit wriXen agrement to arbitrate betwen such pafties in order to attract Sectrbn 11 of the SARFAESI Act The aid^provision creates a lqal fiction as rqards the evistence of an arbitation agrtrment notwithstanding whether such agrement exisB or not in actuality.

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(W) ffibn 11 of the SARFAESI Act is mandatory in nafure. The use of the word 'hhall" therein, the mandate of the aid prouision cannot fu bypasd or subvertd by the pfties byseking rffourre elfrwhere."

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From perusal of the above conclusion and discussion made in the^judgement it is clear that the Hontle Supreme Court has held that where the dispute is between the two financial institutions regarding recovery of dues, whether there is any dispute relating to the priority of the charges, the dispute shall be referred to the arbitration despite the fact that there is no any clause for arbitration and the DRT has no^jurisdiction to entertain the application under Section 17 of the SARFAESI Act.

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In the light of the above, this Tribunal is of the view that the present SA is not maintainable and therefore, the SA is dismissed in the light of the above judgement passed by the Honble Supreme Court and the pafties may approach for the arbitration under Section 11 of the SARFAESI Act.

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Order

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SA no.198/2025 is hereby dismissed.

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File be consigned to records.

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(susHrL r€MAR RASTOGT) PRESIDING OFFICER DRT-II, Delhi

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Indusind Bank Ltd. v. Hinduja Housing Finance Limited

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Indusind Bank Ltd. v. Hinduja Housing Finance Limited

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