Dismissed

Axis Bank Limited v. Yes Bank

DRT27 Apr 2026SA/397/2024

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed the application filed by Axis Bank against Yes Bank. Relying on a Supreme Court judgment, the Tribunal held that disputes between two banks regarding recovery and priority of charges fall under mandatory Section 11 arbitration, making the Section 17 application maintainable. The SA was dismissed as not maintainable.

What did the court decide?

Debts Recovery Tribunal dismissed the application (SA No. 397/2024) as not maintainable, directing parties to approach for arbitration under Section 11 of the SARFAESI Act.

Axis Bank Limited versus Yes Bank — Arbitration | DRT (2026)

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Debts Recovely Tribunal-Il, Delhi

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sAl397l2024 AXIS BANK LIMITED Vs YES BANK

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27.04.2026

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Item no. 34

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Present Shri Randhir Singh, counsel for applicant bank. Ms. Sonia Rawat, counsel for respondent bank.

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Matter is taken through Video Conferencingl Hybrid Mode.

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This SA has been filed by the applicant bank against the Yes Bank. The Ld. counsel of the respondent bank has submitted that the present sA is not maintainabte as per judgement passed by the Honble supreme couft in Appeal no.7ll0l2025 in matter of Bank of India vs. M/s sri Nangli Rice Mills Private Limited and ors. It is submitted 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 L7 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 liabte to be dismissed in terms of the recent judgement passed by the Honble Supreme Couft.

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Heard the Ld. counsels of both the parties and perused the judgement passed by the HonUe supreme court. From perusal of the judgment in para no.2 it is clear that the matter was gone in appeal before the Hon,ble 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 directed to resolve the dispute through arbitration under section 11 of the SARFAESI Act. The_ Honble supreme court d\

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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 learned counsel appearing for the parties and hauing gone through the materials on record, the following^questions fall for our consrderation:

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I. What is the Kore of &ction 11 of the SARFAESI Act? In other words, what is the meaning of the expression "any dispute relating to securitisation or reconstruction or nonpayment of any amount due including interest" occuring in ftction 11 of the SARFAESI Act?

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il. What is the signifrcance of the expression "arises amongst any of the parties, namely, the bank or ftnancial institution or asst reconstruction company or qualifid bttyer" used in Section 11 read wth Section 2 of the SARFAESI Act? What is the underlying object behind prescribing arbitration for the adjudication of disputes futwen a banl<, frnancial institutio4 asset reconstruction company or qualified buyer, in Sxtion 11 of the SARFAESI ACt?

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fiL Whether the existence of a written arbitration agrement betwen the parties is required for the^purpose of resolution of disputes under ftction 11 of the SARFAESI Act, 2002? In other words, is there any conflict betwen the decisions of Oriental Bank of Commerce^(supra) and Fderal Bank (supra)?

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ru. Whether Section 11 of the SARFAESI Act, 2002 should be construed as mandatory or directory in iE nature?"

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The Hon'ble Supreme Court has considered various judgements passed by the Hontle High Court and also by the Hon'ble Supreme Court and after making analysis of tA.

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each and every Section used in this regard and also the intenUon of the enactment of the SARFAESI Act, has came to the following conclusion in para no. t24, which is

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"124. We summarize our final ondusion as under: - (I) ffiion 11 of the , RFAESI Ad deals with reslution of dtsput* relattng to #curifrfutt1oq raonstuctbn or non@Went^{of any amount due} futwen^the funk or^financial institution or ast rrconstruction company or qualr'fid buyer.

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(II) In order to attnct the prouision of kdion 11 of the SARFAESI Aq twin condihbns have to tu fulfilld being; fitst, the dispute must fu betwen any bank or financial institution or asret rffonstruction @mpany or qualiftd buyer and the dispute must relate to seuritisafrbn or reconstrudion or non-payment of any amount due including interst Where the aforesid two conditions are found to be prima-facie stisfrd, there the DRT will have no jundidbn and the proryr recour* would only fu through Wion 11 of the flRFAESI Ad rad with the Act 1996.

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(III) The arprcssrbn "non-pyment of any amount dug including interest" ud in Sxtion 11 of the 94RFAESI Ad is of wide imprt and would rtnclude a uarious range of scenarios of 'disputes' onnfu to unpid amounb including thore arising due to third-party defaulb, such as indirut defaul9 of the borrowerc.

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(IV) Any dtspute futwen two bank, financial aset reconstruction ampaniu or qualifid buyers etc., where the jural retation futwen trte two is of a lender and

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then Mion 11 of tlre ilRFAESI Ad wrll have no The use of the phrase 'any petson" in the definition of 'furrower' in Mbn 2(f) of the

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SARFAESI Act, makes it abundantly clear that even a bank,

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frnancial institution or asset reconstruction company or qualifred buyer can be consr:derd a borrower, if they receive frnancial assistance from a bank or ftnancbl institution etc by prouiding or creating a security interest. Thus, a lenderturned-furower 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 AQ, provides for a statutory arbitration for any dispute mentioned therein futwen any of the parties enumerated thereunder. There is no ned for an explicit written agreement to arbitrate betwen such pafties in order to attract Section 11 of the SARFAESI Act The sid provision creates a legtal fiction as regards the existence of an arbitration agrement notwithstanding whether such agreement exisB 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 prouision cannot fu bypassed or subverted by the pafties by seeking recourse elsewhere. "

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From perusa! 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 t7 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 €)

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passed by the Hon'ble 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.39712024 is hereby dismissed.

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File be consigned to records.

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(r\

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(susHrL rufinn nnsrocr) PRESIDING OFFICER DRT-II, Delhi

Axis Bank Limited v. Yes Bank

Case brief

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Axis Bank Limited v. Yes Bank

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