Application Rejected as DRT Lacks Jurisdiction Over Recovery Dispute Between Financial Institutions

Union Bank of India Vs Can Fin Homes Ltd (DRT Delhi)

The matter was heard by the Debt Recovery Tribunal (DRT), Delhi through video conferencing or hybrid mode. The application (TSA No. 222/2023) was filed by the applicant bank against a financial institution. During the proceedings, the respondent financial institution argued that the application was not maintainable in view of the judgment delivered by the Supreme Court in Appeal No. 7110/2025 concerning the interpretation of Section 11 of the SARFAESI Act.

The respondent submitted that where a dispute relates to recovery of loans and involves determining which secured creditor has priority over charges, such disputes cannot be adjudicated by the DRT under Section 17 of the SARFAESI Act. Instead, the appropriate remedy is to invoke arbitration under Section 11 of the SARFAESI Act. On this basis, the respondent argued that the present application should be dismissed in accordance with the Supreme Court’s ruling.

The Tribunal heard the submissions of both parties and examined the Supreme Court judgment relied upon by the respondent. The Supreme Court had considered the question of whether disputes between two banks or financial institutions could be adjudicated by the DRT or whether such disputes should be resolved through arbitration under Section 11 of the SARFAESI Act.