Dismissed

The Gic Housing Finance Ltd. v. Jana Small Finance Bank Ltd.

DRT15 Sept 2026SA/51/2025

Case brief

AI extract

What is this about?

In this matter, the Debts Recovery Tribunal-Il, Delhi, dismissed a Writ Petition Appeal (SA no.51/2025) filed by GIC Housing Finance Ltd against Jana Small Finance Bank Ltd. The Tribunal held the appeal not maintainable, relying on a recent Supreme Court judgment (Bank of India vs. M/s Sri Nangli Rice Mills). The Court directed parties to resolve their dispute regarding recovery and priority of charges through statutory arbitration under Section 11 of the SARFAESI Act, as disputes between financial institutions fall outside the jurisdiction of the DRT under Section 17.

What did the court decide?

SA no.51/2025 dismissed; parties directed to approach for arbitration under Section 11 of the SARFAESI Act.

The Gic Housing Finance Ltd. versus Jana Small Finance Bank Ltd. — Banking and Recovery | DRT (2026)

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Debts Recovery Tribunal-Il, Delhi

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sAlsLl2o2s

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THE GIC HOUSING FINANCE LTD VS JANA SMALL FINAT{CE BANK LTD

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15.09.2026

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Item no. 23

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Present: Shri Ajit Kumar Pasricha along with^{Ms. Renu} Tiwari, counsel for applicant FI. None for respondent bank.

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Matter is taken through Video Conferencing/^Hybrid Mode.

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This SA has been filed by the applicant FI against the Jana Small Finance Bank Ltd.^{From perusal} of the record, it is clear that the^present TSA^{is not} maintainable as per^{judgement passed} by the^Hon'ble Supreme Court 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 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^{judgementpassed} by the Hontle Supreme Court.

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Heard the Ld. Counsel for applicant FI and perused the judgement passed by the Honble Supreme Court. 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} juridiction to adjudicate the same and accordingly the

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sri

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parties may be directed to resolve the dispute through arbitration under Section 11 of the SARFAESI Act.^The Hon'ble Supreme Court has considered this aspectⁱⁿ detail and has framed four issues for determinationⁱⁿ para no. 42 of the judgement which are as below:-

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"42. Having heard the learnd counel appearing for the parties and having gone through the materials on recor4 the following^qustbns fall for our consideration:

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I. What is the rcope of Sution 11 of the SARFAESI Ad? In other words, what is the meaning of the expression 'bny dispute relating to srcuritisation or rffonstruction or non-payment of any amount due including interest" occurring in kcttbn 11 of the SARFAESI Act?

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II. What is the signifiance of the expression "ariss amongst any of the @rties, namely, the bank or financbl institution or asset ruonstruction company or^qualifid buyer" used in Sxtion 11 read with fuion 2 of the SARFAESI Act? What is the underlying objrt behind pr ribing arbitration for the adjudication of disputa betwen a banlC ftnancial institution, asset reconstruction company or qualifid buyer, in ftction 11 of the SARFAESI Act?

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lil. Whether the existence of a written arbitration agrtrment betwen the^parties is rquird for the purpos of resolution of disputa under Sstbn 11 of the SARFAESI Act, 2002? In other words, is there any conflid betwen the decisions of Oriental Bank of Commerce (supra) and Heral funk^(supra)?

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IV. Whether tubn 11 of the SARFAESI Act, 2002 should be construd as mandatgy or directory in iB nafiJre?" eA,

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eA,

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The Honble Supreme Court has considered various^{judgementspassed} by the Honble High Court and also by the Hontle Supreme Court 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^{conclusionin para no.} 124, which is reproduced below:-

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"124. We summarize our final anclusion as under:^- (I) Section 11 of the SARFAESI Act deals with resolution of disputes relating to suuritrfution,^{rxonstructionor} non-payment of any amount due betwren the bank^or financial institutbn or asst reconstruction^comrynyor qualified buyer.

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ion 11 of the (II) In order to attact the^prouision of 9 RFAESI Aq twin conditions^{have to be fulfilldbeing;} first, the dispute must be betwen^any bnk^{or financial} institution or asset ruonstruction^{company or qualifid} buyer and saondly, the dispute^{must relate to} suuritistion or ruonstruction^{or non-payment of any} amount due including interest^{Where the aforesid two} conditions are found to be^prima-facie stisfid,^there the DRT will have no^{jurisdiction and ffie properrecourse} would only be through S*tion 11 of^{the *ARFAESIAct} read with the Act, 1996.

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(III) The expessr'on "non-payment of any amount dug including interest" usd in ftction 11 of the^SARFAESI Act is of wide import and would^include a^uariousrange of scenarios of Aisputes' conn&td^{to unpaid amounts} including tho* aising due to third-Pr| defaults,^such as indirect defaults of the borrowerc.

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(U Any dispute betwen two funk, financial institutions, asset reconstruction companies or^qualifid buyerc etc., where the^jural relation betwen^{the two is}

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of a lender and brrower, then futbn 11 of the SARFAESI Act will have no application whatsoever. The use of the phrase "any^person" in the definition of 'bonower' in fuion 2(0 of the S RFAESI Act, makes it abundantly clear that even a banlC financial institution or asset rffonstruction comryny or^qualifid buyer^can be considerd a borrower, if they receive^financial asstrtane from a funk or financial instituhbn etc by providing or creating a recurity interst Thug a lender' turnd-borower would als fall within the rope^{of a} "bonower" under the %RFAESI Act and shall be governd by the ame statutory framework as any ordinaty borrower.

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(V) tuion 11 of the SARFAESI A4^prouides for a statutory arbitration for any dispute mentiond^therein betwen any of the^parties enumerated^thereunder. There is no ned for an explicit wriffen agrement^to arbitrate betwen such^pafties in^order to attrad ffiion 11 of the SARFAESI Act The aid^{provisioncreatesa} lqal fiction as regards the existence of an arbitration agrement notwithsbnding whether such^agreement exists or not in actuality.

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(VI) ftction 11 of the SARFAESI Act is mandatory in nature. The use of the word 'bhall" therei4^{the mandate} of the aid^provision annot be bypad^{or subverted by} the pafties by seking rrcourre elswhere."

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From perusal of the above conclusion^and discussion made in the^judgement it is clear that^the Hontle Supreme C-ourt 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}

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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 Hontle Supreme Court and the parties may approach for the arbitration under Section 11 of the SARFAESI Act.

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Order

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SA no.51/2025 is hereby dismissed.

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File be consigned to records.

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S.\ .

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(susHrl KUfuAR RASTOGT) PRESIDING OFRCER DRT-II, Delhi

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The Gic Housing Finance Ltd. v. Jana Small Finance Bank Ltd.

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The Gic Housing Finance Ltd. v. Jana Small Finance Bank Ltd.

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