The DRT clarified that disputes between financial institutions regarding securitisation or non-payment fall under Section 11 of the SARFAESI Act, mandating statutory arbitration over civil court jurisdiction.
Added prayers SA dismissed. Parties directed to resolve dispute via arbitration under Section 11 of the SARFAESI Act.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Court of the Presiding Officer Debts Recovery Tribunal, Jaipur
Item No. 38
Case No.SA/353/2025
AAVAS FINANCERS LTD Vs DCB BANK LIMITED
Date: 12.02.2026. Proceedings through hybrid mode Present:
Smt. Jayshree Joshi, Counsel for the Applicant
Ms. Kratika Sharma, Counsel for the Respondent Bank/FI
In the above matter the dispute relates to inter-se financial institutions and as per judgment of Hon’ble Supreme Court passed in the matter of Bank of India vs M/S Sri Nangli Rice Mills Pvt. Ltd on 23 May,2025 Hon’ble Supreme Court has held as under:
G. FINAL CONCLUSION
124. We summarize our final conclusion as under:
(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.
(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 nonpayment 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.
(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 thirdparty defaults, such as indirect defaults of the borrowers.
(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
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Court of the Presiding Officer Debts Recovery Tribunal, Jaipur
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 etc by providing or creating a security interest. Thus, a lender-turnedborrower 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.
(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 agreement notwithstanding whether such agreement exists or not in actuality.
(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 seeking recourse elsewhere. 125. Thus, for all the foregoing reasons, we have reached the conclusion that there is no infirmity in the impugned order passed by the High Court, directing the appellant and the respondent banks to resolve their dispute by way of arbitration in terms of Section 11 of the SARFAESI Act.
Accordingly, SA stands disposed of and parties are directed to resolve their disputes by way of Arbitration in terms of section 11 of the SARFASAI Act.
The period for which the pleadings were filed and till date shall not be counted for limitation.
Files be consigned to record as per rules. Copy of order be uploaded on website.
(Vimal Gupta) Presiding Officer Debts Recovery Tribunal, Jaipur
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2 issues framed by the court
Whether a dispute between inter-se financial institutions falls under Section 11 of the SARFAESI Act requiring statutory arbitration.
Whether Section 11 of the SARFAESI Act is mandatory and creates a legal fiction for arbitration even without an explicit written agreement.
Colour shows how this judgement treated each authority
Bank of India vs M/S Sri Nangli Rice Mills Pvt. LtdReferred¶8
Bank of India vs M/S Sri Nangli Rice Mills Pvt. Ltd
1 provisions across 1 enactments
AAVAS FINANCERS LTD
DCB BANK LIMITED
Vimal Gupta
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
