DRT 501373

IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 01.11.2023
+ W.P.(C) 2550/2020 and CM APPL. 8896/2020
IDFC FIRST BANK LIMITED ..... Petitioner

versus
UNION OF INDIA AND ORS. ..... Respondents
Advocates who appeared in this case:

For the Petitioner : Mr Sanjeev Singh and Ms Ridhi Pahuja,
Advocates.
For the Respondents : Mr Vivek Goyal, SPG and Mr Mimansak
Bhardwaj, GP, Mr Gokul Sharma, Mr Shivam
Singh and Ms Aneeta Goyal, Advocates for
R-1 & 2.
CORAM
HON’BLE MR JUSTICE VIBHU BAKHRU
HON’BLE MR JUSTICE AMIT MAHAJAN
JUDGMENT
VIBHU BAKHRU, J
1. The petitioner has filed the present petition impugning an order

dated 20.06.2019 (hereafter ‘the impugned order’) passed by the
learned Debts Recovery Tribunal III, Delhi whereby, the petitioner’s
application under Section 13(10) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereafter ‘the SARFAESI Act’) read with Rule 11
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By:DUSHYANT W.P.(C) 2550/2020 Page 1 of 26
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Signing Date:01.11.2023
of the Security Interest (Enforcement) Rules, 2002 (hereafter ‘the SIE
Rules’) for the recovery of balance amount of ₹6,92,551.63 along with
interest, was rejected on the ground that the same was less than
₹10,00,000 and was therefore, not within the pecuniary jurisdiction of
the learned Debts Recovery Tribunal - III.
2. The principal question to be addressed is whether the Debts

Recovery Tribunal has the jurisdiction to entertain a claim for less than
₹10,00,000/- under Section 13(10) of the SARFAESI Act.
Facts in Brief
3. The petitioner entered into a Loan Agreement on 30.12.2015

bearing Loan Account No. 4938084 for an amount of ₹23,00,000 with
respondent no.1 and 2. Thereafter, respondent no.1 and 2 created
security interest in respect of the built up property captioned 1/16953,
First Floor, Khasra No. 270, Village Skidarpur, Abadu Babarpur Road,
Shivaji Park, ILAQA, Shahadra, Delhi (hereafter ‘the Property’) to
secure the Loan and accordingly, deposited original title deeds for the
same to the petitioner.
4. It is the case of the petitioner that respondent no.1 and 2 were

unable to comply with their repayment obligations and therefore, the
loan amount was classified as Non-Performing Asset (NPA).
5. Admittedly, on 27.06.2017, the petitioner issued a demand notice

to respondent no.1 and 2 calling upon them to discharge their liability

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of ₹24,71,141.85 along with interest and other charges within a period
of 60 days from the said date.
6. Subsequently, the petitioner filed an application under Section 14

of the SARFAESI Act as a secured creditor, before the learned District
Court, Karkardooma, Delhi. On 09.02.2018, the learned District Court
appointed one Sh. Praveen Kumar Chauhan as a receiver to take the
possession of the Property on behalf of the petitioner.
7. Thereafter, the petitioner sold the Property for an amount of

₹21,38,000/- and issued a sale certificate dated 15.09.2018 to the
successful purchaser.
8. It is submitted on behalf of the petitioner that after adjusting the

sale proceeds recovered from the loan amount, an amount of
₹6,92,551.63 remained outstanding. Therefore, the petitioner filed an
application under Section 13(10) of the SARFAESI Act read with Rule
11 of the Rules titled IDFC First Bank Ltd. v. Deepak Yadav and Anr.
in O.A. Dy. No. 406/2019, before the learned Debts Recovery Tribunal
- III.
9. The Registrar, Debts Recovery Tribunal-III dismissed the

petitioner’s application, by the impugned order.
Submissions on behalf of the parties
10. It is submitted on behalf of the petitioner that the pecuniary limit

under Section 1(4) of the Recovery of Debts and Bankruptcy Act, 1993

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(hereafter ‘the RDB Act’) is inapplicable for recovery of balance
amount by the secured creditor under Section 13(10) of the SARFAESI
Act read with Rule 11 of the SIE Rules. It is contended that an
application under Section 13(10) of the SARFAESI Act is not an
application under the RDB Act and therefore, the provisions of the RDB
Act are not applicable. The said application is required to be
independently adjudicated under the SARFAESI Act and in accordance
with the SIE Rules. It is submitted that there is no provision in the
SARFAESI Act that corresponds to Section 1(4) of the RDB Act and
limits the amount to be claimed by a bank or a financial institution to
₹10,00,000.
11. According to the learned counsel for the petitioner, Section

13(10) of the SARFAESI Act read with Rule 11 of the SEI Rules, lays
down its own format under Appendix VI for the recovery of balance,
which is different from the procedure provided under Rule 4 of the
Recovery of Debts (Procedure) Rules, 1993.
12. It is also submitted on behalf of the petitioner that Section 34 of

the SARFAESI Act bars the jurisdiction of civil courts from
entertaining any suit or proceedings in respect of any matter that the
learned Debts Recovery Tribunal is empowered to adjudicate under the
SARFAESI Act, thereby, empowering only the learned Debts Recovery
Tribunal to entertain its application.
13. The learned counsel for the petitioner relied on the decision in
the case of State Bank of Patiala v. Mukesh Jain & Anr.: (2017) 1

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SCC 53 and on the strength of the said decision stated that the Debts
Recovery Tribunal constituted under the RDB Act has jurisdiction to
entertain an appeal as per Section 17 of the SARFAESI Act even if the
amount being claimed is less than ₹10,00,000.
14. Next, the learned counsel for the petitioner submitted that an
application under Section 19 of the RDB Act can only be filed by
financial institutions covered by Section 2(h) of the RDB Act, which in
turn renders financial institutions covered under Section 2(1)(m) of the
SARFAESI Act remediless thereby, defeating the object of the
SARFAESI Act.
15. The learned counsel for respondent no.2 submitted that the
present petition ought to be rejected as the petitioner has an equally
efficacious alternate remedy. He referred to the decision in United Bank
of India v. Satyawati Tandon & Ors.: (2010) 8 SCC 110, and submitted
that the Supreme Court has held that the RDB Act as well as the
SARFAESI Act has statutory remedies available to an applicant and
that he need not appeal to the High Court under Article 226 of the
Constitution for the same.
16. It is submitted on behalf of respondent no.2 that as per Gazette

Notification dated 06.09.2018 of the Ministry of Finance (Department
of Financial Services), the provisions of the RDB Act shall not apply
where the amount of debt due to any bank or financial institution or to
a consortium of banks or financial institutions is less than ₹20,00,000.

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17. Lastly, it was submitted on behalf of respondent no.2 that Section
13(10) of the SARFAESI Act lays down that if any amount is left due
even after selling the secured assets, the same will be recoverable, but
that does not mean that the application for recovery shall be
maintainable under the SARFAESI Act as the recovery of the balance
amount falls under the provisions of the RDB Act.
Reasons and Conclusion
18. The learned Registrar, Debts Recovery Tribunal-III had reasoned

that since the Debts Recovery Tribunal (Procedure) Rules, 1993 apply
mutatis mutandis to an application filed under Rule 11(1) of the SIE
Rules, the provisions of the RDB Act would apply. However, since the
provisions of the RDB Act are not applicable where debts due to the
bank or the financial institution is less than ₹20,00,000/-, and the
petitioner’s claim was below the said limit, the learned Debts Recovery
Tribunal-III did not have the jurisdiction to entertain the application
under the RDB Act.
19. At the outset, it is relevant to refer to Section 1(4) of the RDB

Act, which reads as under:
“1(4) Save as otherwise provided, the provisions of this

Code shall not apply where the amount of debt due to any
bank or financial institution or to a consortium of banks or
financial institutions is less than ten lakh rupees or such
other amount, being not less than one lakh rupees, as the
Central Government may, by notification, specify.”

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20. In terms of Sub-section (4) of Section 1 of the RDB Act, the
provisions of the RDB Act are not be applicable where the amount of
debt due to any bank or financial institution or to a consortium of banks
or financial institution, is less than ₹10,00,000/- or such other amount
as the Central Government may specify. The said threshold of
₹10,00,000/- has since been increased to ₹20,00,000/- by virtue of the
Notification [S.O. 4312 (E)] dated 06.09.2018 issued by the Ministry of
Finance (Department of Financial Services).
21. It is relevant to note that Sub-section (4) of Section 1 of the RDB

Act as originally enacted, did not include the opening words, “save as
otherwise provided”. These words were added by virtue of Section 249
read with the Fifth Schedule of the Insolvency and Bankruptcy Code,
2016 (hereafter ‘IBC’).
22. Undisputedly, an Original Application under Section 19 of the

RDB Act by a bank or a financial institution or a consortium of banks
or financial institutions, cannot be instituted in respect of debts due,
which are less than ₹20,00,000/-.
23. It is the petitioner’s case that its application for the recovery of a
sum of ₹6,92,551.63/- was not under the RDB Act, but under the
provisions of Section 13(10) of the SARFAESI Act. Therefore, the
provisions of the RDB Act, including Section 1 of the RDB Act, are
inapplicable. Section 13(10) of the SARFAESI Act expressly enables a
secured creditor to file an application for a recovery of the balance

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amount from a borrower, if its claims are not fully satisfied from the
sale proceeds of secured assets. According to the petitioner, Section
13(10) of SARFAESI Act is a separate code, independent of the RDB
Act, for the recovery of amounts due to the secured creditors that
remains outstanding after the proceeds of the secured assets are
appropriated.
24. Section 13(10) of the SARFAESI Act is set out below:
“13(10) Where dues of the secured creditor are not

fully satisfied with the sale proceeds of the secured assets,
the secured creditor may file an application in the form and
manner as may be prescribed to the Debts Recovery
Tribunal having jurisdiction or a competent court, as the
case may be, for recovery of the balance amount from the
borrower.”
25. Rule 11 of the SIE Rules sets out the procedure for making an
application under Section 13(10) of the SARFAESI Act. The said Rule
is set out below:
“11. Procedure for Recovery of shortfall of secured

debt.- (1) An application for recovery of balance amount
by any secured creditor pursuant to sub-section (10) of
section 13 of the Act shall be presented to the Debts
Recovery Tribunal in the form annexed as Appendix VI to
these rules by the authorised officer or his agent or by a
duly authorised legal practitioner, to the Registrar of the
Bench within whose jurisdiction his case falls or shall be
sent by registered post addressed to the Registrar of Debts
Recovery Tribunal.
(2) The provisions of the Debts Recovery Tribunal

(Procedure) Rules, 1993 made under Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (51 of

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1993), shall mutatis mutandis apply to any application filed
by under sub-rule (1).
(3) An application under sub-rule (1) shall be

accompanied with fee as provided in rule 7 of the Debts
Recovery Tribunal (Procedure) Rules, 1993.”
26. It is also relevant to refer to Section 31 of the SARFAESI Act,

which expressly provides the circumstances where the provisions of the
SARFAESI Act would not apply. In terms of Clause (h) of Section 31
of the SARFAESI Act, it would not apply where, any security interest
is in respect of any financial asset of ₹1,00,000/- or less. Clause (h) of
Section 31 of the SARFAESI Act is reproduced below:
“31. Provisions of this Act not to apply in certain cases.–

The provisions of this Act shall not apply to –
xxx xxx xxx
(h) any security interest for securing repayment of any

financial asset not exceeding one lakh rupees;”
27. Thus, the principal question to be addressed is whether the Debts

Recovery Tribunal constituted under the RDB Act, exercises any
original jurisdiction for the recovery of debts under the SARFAESI Act.
28. Section 3 of the RDB Act provides for establishment of Debts

Recovery Tribunal for exercising jurisdiction, powers and authority
conferred under the RDB Act. Section 3 of the RDB Act as originally
enacted is set out below:

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“3. Establishment of Tribunal.—(1) The Central
Government shall, by notification, establish one or more
Tribunals, to be known as the Debts Recovery Tribunal, to
exercise the jurisdiction, powers and authority conferred on
such Tribunal by or under this Act.
(2) The Central Government shall also specify, in the
notification referred to in sub-section (1), the areas within
which the Tribunal may exercise jurisdiction for
entertaining and deciding the applications filed before it.”
29. Section 17 of the RDB Act sets out the jurisdiction of the Debts
Recovery Tribunal and the Debts Recovery Appellate Tribunal. Section
17 of the RDB Act as originally enacted is reproduced below:
“17. Jurisdiction, powers and authority of Tribunals.—

(1) A Tribunal shall exercise, on and from the appointed
day, the jurisdiction, powers and authority to entertain and
decide applications from the banks and financial
institutions for recovery of debts due to such banks and
financial institutions.
(2) An Appellate Tribunal shall exercise, on and from the
appointed day, the jurisdiction, powers and authority to
entertain appeals against any order made, or deemed to
have been made, by a Tribunal under this Act.”
30. In terms of Section 179 of the IBC, the Debts Recovery Tribunal
is also the Adjudicating Authority for individuals and firms. Thus, to
clothe the Debts Recovery Tribunal with the jurisdiction to adjudicate
insolvency of individuals and firms, Section 249 of the IBC amended
certain provisions of the RDB Act as set out in the Fifth Schedule to the
IBC. This included amendment to Sub-section (4) of Section 1 of the
RDB Act by introducing the opening words “save as otherwise

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provided”. The import of the said words was to carve out an exception
to the clause regarding the pecuniary jurisdiction of the Debts Recovery
Tribunal. Thus, to the extent that the Debts Recovery Tribunal is
expressly conferred jurisdiction, it would exercise the same
notwithstanding, the pecuniary threshold specified under Sub-section
(4) to Section 1 of the RDB Act.
31. Sections 3 and 17 of the RDB Act were also amended by

introducing Sub-section (1A) in Section 3 and Sub-sections (1A) and
(2A) in Section 17 of the RDB Act. Sections 3 and 17 of the RDB Act
as amended by Section 249 of the IBC are set out below:
“3. Establishment of Tribunal.—(1) The Central

Government shall, by notification, establish one or more
Tribunals, to be known as the Debts Recovery Tribunal, to
exercise the jurisdiction, powers and authority conferred on
such Tribunal by or under this Act.
(1A) The Central Government shall by notification

establish such number of Debts Recovery Tribunals and its
benches as it may consider necessary, to exercise the
jurisdiction, powers and authority of the Adjudicating
Authority conferred on such Tribunal by or under the
Insolvency and Bankruptcy Code, 2016.
(2) The Central Government shall also specify, in the
notification referred to in sub-section (1), the areas within
which the Tribunal may exercise jurisdiction for
entertaining and deciding the applications filed before it.”
*** *** ***
“17. Jurisdiction, powers and authority of Tribunals.—
(1) A Tribunal shall exercise, on and from the appointed
day, the jurisdiction, powers and authority to entertain and
decide applications from the banks and financial

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institutions for recovery of debts due to such banks and
financial institutions.
(1A) Without prejudice to sub-section (1),—
(a) the Tribunal shall exercise, on and from the
date to be appointed by the Central Government, the
jurisdiction, powers and authority to entertain and
decide applications under Part III of Insolvency and
Bankruptcy Code, 2016 (31 of 2016).
(b) the Tribunal shall have circuit sittings in all district
headquarters.
(2) An Appellate Tribunal shall exercise, on and from
the appointed day, the jurisdiction, powers and authority to
entertain appeals against any order made, or deemed to
have been made, by a Tribunal under this Act.
(2A) Without prejudice to sub-section (2), the
Appellate Tribunal shall exercise, on and from the date to
be appointed by the Central Government, the jurisdiction,
powers and authority to entertain appeals against the order
made by the Adjudicating Authority under Part III of the
Insolvency and Bankruptcy Code, 2016 (31 of 2016).”
32. The SARFAESI Act also provides the Debts Recovery Tribunal
with the appellate jurisdiction to decide applications against any
measures taken by the secured creditors under the SARFAESI Act for
the enforcement of security interest. Sub-section (1) of Section 17 of
the SARFAESI Act enables any person aggrieved by the measures
referred to in Section 13(4) of the RDB Act to make an application to
the Debts Recovery Tribunal having jurisdiction in the matter. Sub-
section (1A) of Section 17 of the SARFAESI Act provides that an
application under Sub-section (1) of Section 17 of the SARFAESI Act
would be filed before the Debts Recovery Tribunal within the local

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limits of the jurisdiction where, cause of action wholly, or in part, arises;
where the secured asset is located; or the branch or any other office of
the bank or financial institution is maintaining an account in respect of
which the outstanding debt is claimed. Sub-section (7) of Section 17
also expressly provides that the Debts Recovery Tribunal shall, as far
as may be, dispose of the application under Section 17(1) of the
SARFAESI Act in accordance with the provisions of the RDB Act and
the Rules made thereunder. The aforementioned sub-sections of Section
17 are reproduced below:
“17. Application against measures to recover secured

debts.—(1) Any person (including borrower), aggrieved
by any of the measures referred to in sub-section (4) of
section 13 taken by the secured creditor or his authorised
officer under this Chapter, may make an application along
with such fee, as may be prescribed, to the Debts Recovery
Tribunal having jurisdiction in the matter within forty-five
days from the date on which such measure had been taken:
Provided that different fees may be prescribed for
making the application by the borrower and the person
other than the borrower.
Explanation.—For the removal of doubts, it is hereby
declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted
his representation or objection or the likely action of the
secured creditor at the stage of communication of reasons
to the borrower shall not entitle the person (including
borrower) to make an application to the Debts Recovery
Tribunal under this sub-section.
(1A) An application under sub-section (1) shall be
filed before the Debts Recovery Tribunal within the local
limits of whose jurisdiction—
(a) the cause of action, wholly or in part, arises;

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(b) where the secured asset is located; or
(c) the branch or any other office of a bank or
financial institution is maintaining an account in
which debt claimed is outstanding for the time being.
xxx xxx xxx
(7) Save as otherwise provided in this Act, the Debts
Recovery Tribunal shall, as far as may be, dispose of the
application in accordance with the provisions of the
Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (51 of 1993) and the rules made thereunder.”
33. Section 18 of the SARFAESI Act provides for a remedy of an

appeal to any person aggrieved by an order made by the Debts Recovery
Tribunal under Section 17 of the SARFAESI Act. In terms of Sub-
section (2) of Section 18 of the SARFAESI Act, the Appellate Tribunal
is required to dispose of the appeal in accordance with the RDB Act.
Section 2(1)(a) of the SARFAESI Act defines the “Appellate Tribunal”
to mean a Debts Recovery Appellate Tribunal established under Section
8(1) of the RDB Act. Section 18 of the SARFAESI Act is set out below:
“18. Appeal to Appellate Tribunal.—(1) Any

person aggrieved, by any order made by the Debts
Recovery Tribunal under section 17, may prefer an appeal
along with such fee, as may be prescribed to the Appellate
Tribunal within thirty days from the date of receipt of the
order of Debts Recovery Tribunal.
Provided that different fees may be prescribed for
filing an appeal by the borrower or by the person other than
the borrower:
Provided further that no appeal shall be entertained
unless the borrower has deposited with the Appellate

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Tribunal fifty per cent. of the amount of debt due from him,
as claimed by the secured creditors or determined by the
Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the
reasons to be recorded in writing, reduce the amount to not
less than twenty-five per cent. of debt referred to in the
second proviso.
(2) Save as otherwise provided in this Act, the
Appellate Tribunal shall, as far as may be, dispose of the
appeal in accordance with the provisions of the Recovery
of Debts Due to Banks and Financial Institutions Act, 1993
(51 of 1993) and rules made thereunder.”
34. It is apparent from the above that the legislature has enacted
express provisions for deciding such matters, which the legislature
intended the Debts Recovery Tribunal to decide. The key question to
be examined is whether there are any provisions in the SARFAESI Act
which confer jurisdiction to the Debts Recovery Tribunal to decide an
original claim under the SARFAESI Act, independent of the provisions
of the RDB Act.
35. Undeniably, the nature of the application under Section 13(10) of

the SARFAESI Act is that of an original action for the recovery of an
amount payable by the borrower to the secured creditor. An application
under Section 13(10) of the SARFAESI Act is not an action for
enforcement of a security interest in respect of a financial asset. The
nature of the said application is precisely that of the original action,
which is covered under the RDB Act. However, the SARFAESI Act
does not contain any express provisions, that stipulates which Debts

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Recovery Tribunal has the jurisdiction to decide any original claim as
to the outstanding amount that remains after the secured creditor has
enforced the security interest. This is in contradistinction to the
provisions of Section 249 of the IBC by virtue of which certain
provisions of the RDB Act were amended to expressly confer
jurisdiction on the Debts Recovery Tribunals to exercise jurisdiction,
powers and authority of an Adjudicating Authority conferred under the
provisions of the IBC.
36. Sub-section (10) of Section 13 of the SARFAESI Act merely

enables the secured creditor to file an application to the Debts Recovery
Tribunal having jurisdiction or to a competent court, as the case may
be, for recovery of the balance due to a borrower if the outstanding debt
is not satisfied by the sale proceeds of the secured assets. The plain
language of Sub-section (10) of Section 13 of the SARFAESI Act
indicates that such an application is required to be made in the form and
manner as prescribed. Rule 11 of the SIE Rules stipulates that the said
application is required to be made in the form annexed in Appendix VI
to the SIE Rules to the Registrar of the Bench within whose jurisdiction
the case falls. In terms of the SIE Rules, the said application can also
be sent by registered post addressed to the Registrar of Debts Recovery
Tribunal. In terms of sub-rule (2) of Rule 11 of the SIE Rules, the
provisions of the Debts Recovery Tribunal (Procedure) Rules, 1993
would apply mutatis mutandis to the said application. In terms of Sub-
rule (3), of Rule 11 of the SEI Rules, the application is also required to

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be accompanied by fee as provided under Rule 7 of the Debts Recovery
Tribunal (Procedure) Rules, 1993.
37. As stated at the outset, the only question to be addressed is

whether the pecuniary jurisdiction of a Debts Recovery Tribunal under
the RDB Act would also apply for an application made under Section
13(10) of the SARFAESI Act.
38. The petitioner contends that an application under Section 13(10)

of the SARFAESI Act is not an application under the RDB Act and
therefore, the pecuniary jurisdiction as notified under Section 1(4) of
the RDB Act would be inapplicable in cases where an application is
made under Section 13(10) of the SARFAESI Act. This contention is
premised on the basis that the SARFAESI Act confers jurisdiction on
the Debts Recovery Tribunal to decide an original application in
accordance with the Debts Recovery Tribunal (Procedure) Rules, 1993,
which are incorporated by way of a reference, by virtue of Rule 11 of
the SIE Rules. And, this is without recourse to the RDB Act. Thus,
according to the petitioner, neither Sub-section (4) of Section 1 of the
RDB Act, which limits the jurisdiction of the Debts Recovery Tribunal
nor, any other provisions of the RDB Act, are relevant. It is contended
that the remedy under Section 13(10) of the SARFAESI Act is an
independent remedy and read with Rule 11 of the SIE Rules, a complete
code for the adjudication of its remaining claim.

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39. We are unable to accept the aforesaid contention for several
reasons.
40. First, the SARFAESI Act does not stipulate the Debts Recovery
Tribunal, which would have the jurisdiction to adjudicate the
application filed under Section 13(10) of the SARFAESI Act. Sub-
section (1A) of Section 17 of the SARFAESI Act provides for the Debts
Recovery Tribunal, which would exercise jurisdiction. However, the
said provision is confined to considering the application made under
Section 17(1) of the SARFAESI Act. Thus, for the purposes of
ascertaining the jurisdiction, it would be necessary to refer to other
provisions of the RDB Act.
41. Clearly, if it is necessary to refer to the RDB Act for the purposes
of ascertaining the Debts Recovery Tribunal that would exercise
jurisdiction in respect of an application made under Section 13(10) of
the SARFAESI Act, there is no ground to disregard the limits of the
pecuniary jurisdiction of the Debts Recovery Tribunal under the RDB
Act.
42. Second, that the language of Section 13(10) of the SARFAESI

Act also clearly indicates that it is an enabling provision, which enables
the creditor to institute an action for the recovery of the balance amount
if the debts due to a secured creditor are not fully satisfied from the
proceeds of the secured assets. The secured creditor may make an

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application to the Debts Recovery Tribunal exercising jurisdiction or to
a court of competent jurisdiction. It is implicit that a remedy of making
an application to a Debts Recovery Tribunal is available subject to the
jurisdiction of the Debts Recovery Tribunal to decide the same, failing
which the creditor is required to approach the court of competent
jurisdiction.
43. It was contended on behalf of the petitioner that Section 31 of the

SARFAESI Act enables the secured creditor to take steps under the
SARFAESI Act for the recovery of a debt, which is in excess of
₹1,00,000/-. Thus, the said pecuniary threshold should also be read as
determining the minimum threshold of debt for approaching the Debts
Recovery Tribunal under Section 13(10) of the SARFAESI Act.
Plainly, the same is unmerited. There is no ground to read the pecuniary
threshold for taking measures under Section 13 of the SARFAESI Act
for the enforcement of security interest, for determining the jurisdiction
of the Debts Recovery Tribunal.
44. As noted hereinbefore, there is no provision in the RDB Act or

the SARFAESI Act, that specifies the Debts Recovery Tribunal, to
which an application is required to be made under Section 13(10) of the
SARFAESI Act. Section 17(1A) of the SARFAESI Act, specifies the
Debts Recovery Tribunal to which an application under Section 17(1)
of the SARFAESI Act may be made; however, there is no such similar

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provision for making an application under Section 13(10) of the
SARFAESI Act.
45. A bank or a financial institution has recourse to the RDB Act for
the recovery of debts due from a borrower. It is difficult to accept that
whereas, an original action for an amount less than 20,00,000/- would
be available under the SARFAESI Act before the Debts Recovery
Tribunal constituted under Section 3 of the RDB Act, the Debts
Recovery Tribunal would have no jurisdiction to entertain such a claim
under the RDB Act.
46. Third, that the provisions of the RDB Act, which are essential to
the scheme of adjudication of the claim and the recovery of the amount,
cannot be excluded. If the petitioner’s contention is accepted that an
application under Section 13(10) of the SARFAESI Act must be
construed in isolation of the provisions of the RDB Act, the remedy of
an appeal under Section 20 of the RDB Act would not be available.
Neither the creditor nor the borrower, would have the right to file an
appeal in respect of a determination of the amount due under Section
13(10) of the SARFAESI Act, the same having not been provided under
the SARFAESI Act. A secured creditor, which has exhausted its
security, and therefore, is unsecured in respect of its remaining claim,
would be placed in a more advantageous position than a bank or a
financial institution, which is also an unsecured creditor.

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47. The second material aspect is the borrower’s right to file a
counter claim. Whereas, under Section 19(5)(1) of the RDB Act, a
borrower against whom a claim is instituted under Section 19 of the
RDB Act, is entitled to claim a set off in terms of Sub-section (6) of
Section 19 of the RDB Act. The borrower is also entitled to file a
counter claim under Sub-section (8) of Section 19 of the RDB Act.
None of the said provisions would be applicable in case an application
under Section 13(10) of the SARFAESI Act is considered.
48. It is also material to note that the RDB Act (then known as
Recovery of Debts Due to Banks and Financial Institutions Act, 1993)
was held to be unconstitutional by this Court in Delhi High Court Bar
Association & Anr. v. Union of India, Secty. Department of Economic
Affairs: 1995 SCC OnLine Del 215 on various grounds including that
the enactment did not enable a defendant to claim any set off or make
any counter claim against a bank or a financial institution.
49. While the appeal against the said decision was pending before the
Supreme Court, the RDB Act was amended to remove the lacunae by
expressly enabling the debtor to claim a set off or raise a counter claim,
in an original application filed by the bank/financial Institution under
Section 19 of the RDB Act.
50. This Court is unable to accept that the legislative intent is to

provide parallel regimes for the recovery of debts. The provisions of

Digitally Signed
RAWAL
Section 13(10) of the SARFAESI Act, thus, cannot be interpreted in the
manner as contended on behalf of the petitioner.
51. In terms of Section 19(20) of the RDB Act, the Debts Recovery
Tribunal is required to make a final order. Further, in terms of Section
19(21) of the RDB Act, the Debts Recovery Tribunal is required to
forward the final order and the recovery certificate to the Recovery
Officer. The debts as determined are to be recovered under Chapter V
of the RDB Act. The SARFAESI Act has neither any provisions for the
Debts Recovery Tribunal to issue a recovery certificate, nor any
substantive or machinery provisions for the recovery of debts.
52. In State Bank of Patiala v. Mukesh Jain and Anr.: (2017) 1 SCC
53, the Supreme Court had considered the issue regarding the
jurisdiction of the Debts Recovery Tribunal to entertain an application
under Section 17(1) of the SARFAESI Act in a case where the amount
recoverable from the respondent was less than ₹10,00,000/-, which was
at the material time, the threshold value specified under Section 1(4) of
the RDB Act. In the said case, the appellant bank had lent a sum of
₹8,00,000/- to respondent no.1 by way of a term loan against mortgage
of its immovable property. Respondent no.1 defaulted in repayment of
the said loan and the appellant bank issued a notice under Section 13(2)
of the SARFAESI Act. Respondent no.1 filed a suit challenging the
said proceedings initiated under the SARFAESI Act. The appellant
bank had filed an application under Order VII Rule 11 of the CPC

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RAWAL
questioning the jurisdiction of the court to entertain the suit in view of
the provisions of Section 34 of the SARFAESI Act, which barred suits
in respect of matters under the SARFAESI Act. The said application
was rejected on the ground that the amount allegedly recoverable from
respondent no.1 was less than ₹10,00,000/- and in terms of Section 1(4)
of the RDB Act, would not apply. Thus, the Debts Recovery Tribunal
would have no jurisdiction to entertain any application against the
proceedings instituted by the appellant bank under the SARFAESI Act.
In the aforesaid context, the Supreme Court considered the jurisdiction
of the Debts Recovery Tribunal to entertain an application under
Section 17(1) of the SARFAESI Act. The Supreme Court held that the
Debts Recovery Tribunal exercises its appellate jurisdiction, where an
action initiated under the provisions of Section 13 of the SARFAESI
Act is challenged. The Supreme Court further observed that the
threshold limit of ₹10,00,000/- under Section 1(4) of the RDB Act
would be applicable to limit the original jurisdiction to the Debts
Recovery Tribunal. The Supreme Court had also referred to the
decision in Mardia Chemicals Ltd. & Ors. v. Union of India and Ors.:
2004 (4) SCC 311 and had observed that an aggrieved debtor could not
be left without a remedy. The relevant extract of the said decision reads
as under:
“20. In the aforestated circumstances, the only remedy

available to respondent no.1 debtor can be to approach the
Tribunal under the provisions of the DRT Act read with the
provisions of the Act. But, one would feel that as per
Section 1(4) of the DRT Act, provisions of the DRT Act

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RAWAL
would not apply where the amount of debt is less than
Rs.10 lakh.
21. The aforestated provision of Section 1(4) of the DRT

Act must be read in a manner which would not adversely
affect a debtor, who wants to have some remedy against an
action initiated under the provisions of Section 13 of the
Act.
22. The DRT Act mainly pertains to institution of

proceedings by a bank for recovery of its debt when the
debt is not less than Rs.10 lakh. If the debt is less than Rs.10
lakh, no suit can be filed by the creditor bank in the
Tribunal under the provisions of the DRT Act. So, when
the jurisdiction of the Tribunal has been referred to in
Section 1(4) of the DRT Act, which limits the jurisdiction
of the Tribunal to Rs.10 lakh, prima facie, the intention of
the legislature is to limit the original jurisdiction of the
Tribunal. If any claim is to be made before the Tribunal,
the amount must be more than Rs.10 lakh and if the amount
is less than Rs.10 lakh, the creditor bank will have to file a
suit in a Civil Court. So, one can safely interpret the
provisions of Section 1(4) of the DRT Act to the effect that
it deals with original jurisdiction of the Tribunal under the
provisions of the DRT Act.
23. In the instant case, we are concerned with the challenge

to the proceedings initiated under Section 13 of the Act.
There is a specific provision in the Act to the effect that the
proceedings initiated under the Act cannot be challenged
before a Civil Court because the Civil Court has no
jurisdiction to entertain any matter arising under the Act
and in that event, the concerned debtor has to approach the
Tribunal under the provisions of Section 17 of the Act.
24. Thus, the Tribunal would be exercising its appellate

jurisdiction when the action initiated under the provisions
of Section 13 of the Act is challenged before the Tribunal.

Digitally Signed
RAWAL
There is a difference between the Tribunal’s original
jurisdiction under the provisions of the DRT Act and the
appellate jurisdiction under the Act.
25. The issue with regard to availability of a forum for

challenging the action under the provisions of the Act had
been dealt with by this Court in the case of Mardia
Chemicals Ltd. (supra). This Court, in the said case,
unequivocally held that the aggrieved debtor can never be
without any remedy and we firmly believe that the
legislature would normally not leave a person without any
remedy when a harsh action against him is initiated under
the provisions of the Act.
26. So as to know the appellate jurisdiction of the Tribunal,

one has to look at the provisions of the Act as Section 17
of the Act specifically provides a right to the aggrieved
debtor to challenge the validity of an action initiated under
Section 13(4) of the Act before the Tribunal. Moreover, the
Act was enacted in 2002 and the legislature is presumed to
have knowledge about the provisions of Section 1(4) of the
DRT Act. So harmonious reading of both the afore stated
Sections would not be contrary to any of the legal
provisions.”
53. The remedy under Section 13(10) of SARFAESI Act cannot be

considered as a remedy independent of the RDB Act. An application
under Section 13(10) of the SARFAESI Act is required to be made in a
manner as prescribed – in the form annexed as Appendix VI to the SIE
Rules – and is required to be accompanied with the requisite fee as
prescribed under the Debts Recovery Tribunal (Procedure) Rules 1993.
However, for all intents and purposes, this application is an Original
Application under Section 19(1) of the RDB Act and is required to
adjudicated as such.

Digitally Signed
RAWAL
54. In view of the above, the petition is dismissed. The pending
application is disposed of.
55. The parties shall bear their own costs.
VIBHU BAKHRU, J
AMIT MAHAJAN, J
NOVEMBER 01, 2023
RK

Digitally Signed
RAWAL

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IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment delivered on: 01.11.2023

+ W.P.(C) 2550/2020 and CM APPL. 8896/2020

IDFC FIRST BANK LIMITED ..... Petitioner

UNION OF INDIA AND ORS. ..... Respondents

Advocates who appeared in this case:

1. The petitioner has filed the present petition impugning an order

Signature Not Verified

2. The principal question to be addressed is whether the Debts

3. The petitioner entered into a Loan Agreement on 30.12.2015

4. It is the case of the petitioner that respondent no.1 and 2 were

5. Admittedly, on 27.06.2017, the petitioner issued a demand notice

Signature Not Verified

6. Subsequently, the petitioner filed an application under Section 14

7. Thereafter, the petitioner sold the Property for an amount of

8. It is submitted on behalf of the petitioner that after adjusting the

9. The Registrar, Debts Recovery Tribunal-III dismissed the

Submissions on behalf of the parties

10. It is submitted on behalf of the petitioner that the pecuniary limit

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11. According to the learned counsel for the petitioner, Section

12. It is also submitted on behalf of the petitioner that Section 34 of

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16. It is submitted on behalf of respondent no.2 that as per Gazette

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Reasons and Conclusion

18. The learned Registrar, Debts Recovery Tribunal-III had reasoned

19. At the outset, it is relevant to refer to Section 1(4) of the RDB

“1(4) Save as otherwise provided, the provisions of this

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21. It is relevant to note that Sub-section (4) of Section 1 of the RDB

22. Undisputedly, an Original Application under Section 19 of the

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24. Section 13(10) of the SARFAESI Act is set out below:

“13(10) Where dues of the secured creditor are not

“11. Procedure for Recovery of shortfall of secured

(2) The provisions of the Debts Recovery Tribunal

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(3) An application under sub-rule (1) shall be

26. It is also relevant to refer to Section 31 of the SARFAESI Act,

“31. Provisions of this Act not to apply in certain cases.–

xxx xxx xxx

(h) any security interest for securing repayment of any

27. Thus, the principal question to be addressed is whether the Debts

28. Section 3 of the RDB Act provides for establishment of Debts

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“17. Jurisdiction, powers and authority of Tribunals.—

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31. Sections 3 and 17 of the RDB Act were also amended by

“3. Establishment of Tribunal.—(1) The Central

(1A) The Central Government shall by notification

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“17. Application against measures to recover secured

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33. Section 18 of the SARFAESI Act provides for a remedy of an

“18. Appeal to Appellate Tribunal.—(1) Any

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