Punjab National Bank vs State Bank Of India And Ors.

J.M. Malik, J

Counsel for the parties present. Memo of appearance filed by the Counsel for the 1st respondent.

This is a dispute between the two Banks namely Punjab National Bank and State Bank of India. Both the Banks namely Punjab National Bank and State Bank of India claim that immovable property bearing Khana Shumari measuring 71 sq. yards situated at Gali Nadalian, Chowk Manna Singh, Amritsar was mortgaged with them by Mr. Birinder Singh Walia and Mrs. Anju Walia, proforma respondents Nos. 2 and 3. The dispute is between the two Banks. It is thus clear that the Court of DRT has no jurisdiction to try this case. The original applications and securitisation applications as against the borrowers will lie before the learned DRT. Sale and auction will be done under both the Acts.

From the impugned order and the statements made by both the Counsel it is apparent that main dispute is between the two Banks.

This is, however, unfortunate that the orders passed by the Court to produce the documents were not promptly obeyed. The Senior Manager of the Bank is hereby warned to be careful in future. Since the documents stand produced and the Counsel for the State Bank of India is not pressing for the costs in the sum of Rs. 11,000/- as directed by the learned DRT, therefore, the order in that context stands quashed.

In a recent case titled as Oriental Bank of Commerce v. Canara Bank and Others [Appeal No. 472/2010 in SA No. 379/2010 (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, I am of the considered view that the learned DRT did not have the jurisdiction to try the Securitisation 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 relatingto securitisation or reconstruction or non-payment of any amount due including interest arises amongst any of the parties, namely, the Bank, or financial institution, or securitisation 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.

Consequently, it is apparent that the learned Trial Court has no jurisdiction to try this case. The parties may approach the Hon'ble High Court for appointment of an Arbitrator. The order passed by the learned Trial Court is hereby set aside. This order will not preclude the learned Trial Court to decide those matters which do not fall within the ambit of Section 11 of the SRFAESI Act.

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, .

Appeal stands disposed of.

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