Punjab National bank vs State Bank Of Bikaner & Jaipur And Ors.

J.M. Malik, J

This appeal has been preferred against the order dated 15.4.2011 passed by the learned DRT at Jaipur. The learned trial Court came to the conclusion that the present case stood covered under Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SRFAESI Act') and the matter would be adjudicated by an arbitrator. Aggrieved by that order, the present appeal has been filed by Punjab National Bank, applicant in the S. A. before the DRT.

Adumbrated in brief, the facts of this case are these. Punjab National Bank had granted a loan in the sum of Rs. 3,31,000/- to Mr. Mohan Lal Sharma and Mr. Raj Mal Sharma. To secure the repayment of the loan, an equitable mortgage was created in favour of the appellant Bank in respect of the property, residential house situated at village Ghosunda, Dist. Chittorgarh, Rajasthan, measuring 1806 sq. ft. Mr. Mohan Lal Sharma expired on 27.1.2004. The account of the appellant was declared NPA on 31.12.2009. Notice under Section 13(2) of the SRFAESI Act was issued on 13.2.2010 to enforce the rights over the secured asset. Thereafter, on 15.10.2010, Punjab National Bank took over the symbolic possession of the above said premises under Section 13(4) of the SRFAESI Act.

In the meantime, it transpired that State Bank of Bikaner and Jaipur had also granted a loan of Rs. 5,00,000/- to M/s. Raj Titles of which Mr. Raj Mal Sharma was the proprietor and had allegedly created a mortgage on the same very property. State Bank of Bikaner & Jaipur which has been arrayed as respondent No. 1 in this appeal took symbolic possession of the said property on 19.10.2010. It took physical possession of the secured asset through the District Magistrate on 15.12.2010. Aggrieved by the action of State Bank of Bikaner & Jaipur, respondent No. 1 herein, PunjabNational Bank, appellant herein, filed S.A. before the DRT and DRT passed the impugned order dated 15.4.2011 in the said S.A. Aggrieved by the said order, Punjab National Bank has preferred this appeal.

I have heard the Counsel for the appellant at the time of admission of this case. He argued that Section 11 of the SRFAESI Act has got no application in this case. He invited the attention of the Court towards Sections 5 and 7 of the SRFAESI Act and contended that the DRT at Jaipur has got jurisdiction to try this case.

I see no merit in this argument. The order passed by the learned trial Court cannot be faulted due to the following reasons. In a recent case titled as Oriental Bank of Commerce v. Canara Bank and Others, Appeal No. 472/2010 in S.A. No. 379/2010, DRT (Delhi-III) decided by me on 27.4.2011, I have taken the following view:

Since there is a dispute between the Banks inter se, therefore, 1 am of the considered view that the learned DRT did not have the jurisdiction to try the Securifisation Application under the SRFAESI Act. Recently, the attention of the Court was invited towards Section 11 of the SRFAESI Act which runs as follows:

Resolution of disputes.--Where any dispute relating to securitization or reconstruction or non-payment of any amount due including interest arises amongst any of the parties, namely, the Bank, or financial institution, or securitization company or reconstruction company or qualified institutional buyer, such dispute shall be settled by conciliation or arbitration as provided in the Arbitration and Conciliation Act, 1996 (26 of 1996), as if the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration and the provisions of that Act shall apply accordingly.

Consequently, it is clear that the previous view taken in this regard that DRT has the jurisdiction to try such disputes appears to be incorrect. The order passed by the learned DRT under the SRFAESI Act in this case is without jurisdiction. I, therefore, set aside the order to that extent. It is made clear that the Banks will approach the Hon'ble High Court and make a request to the Hon'ble High Court to appoint an arbitrator for the adjudication of this case.

The view neatly dovetails with an authority by Andhra Pradesh High Court in the matter of D. Dhananjaya Rao v. Bank of India represented by its Chief Manager, Kothapeta Branch and Another, III (2005) BC 604 (AP)=.

The appeal is without merit and the same is dismissed in limine.

Copies of this order be furnished to the parties as per law and another copy be sent to the learned DRT.