A Division Bench, consisting of Justices Vibhu Bakhru and Amit Mahajan, emphasized that the relief provided by Section 13(10) of the SARFAESI Act is not standalone for banks, as it is intrinsically linked to the provisions of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), including the applicable pecuniary limit.
In the High Court judgment, it was determined that the Debts Recovery Tribunal III, Delhi, had jurisdiction to entertain original claims under Section 13(10) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). The petitioner had challenged the rejection of its application by the Debts Recovery Tribunal III, claiming ₹6,92,551.63, arguing that the claimed amount fell below ₹10,00,000 and was thus outside the tribunal's pecuniary jurisdiction.
The petitioner contended that the pecuniary limit under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), was not applicable to SARFAESI Act claims, asserting that Section 13(10) of the SARFAESI Act provided an independent mechanism for recovery.
The High Court scrutinized the jurisdictional conflict, emphasizing the absence of a corresponding provision in the SARFAESI Act to Section 1(4) of the RDB Act, which limits claims to ₹10,00,000. The court highlighted that Section 13(10) of the SARFAESI Act, along with Rule 11 of the Security Interest (Enforcement) Rules, outlined a distinct recovery procedure, different from the RDB Act. Rejecting the argument that the RDB Act applies to SARFAESI Act claims, the court clarified that Section 13(10) creates a separate code for recovery by secured creditors.
Addressing the petitioner's reliance on State Bank of Patiala v. Mukesh Jain and Another, REED 2016 SC 8102, the court affirmed that the Debts Recovery Tribunal had jurisdiction under Section 17 of the SARFAESI Act, even for amounts less than ₹10,00,000. The court dismissed the argument about the limited applicability of Section 19 of the RDB Act to certain financial institutions, emphasizing that the SARFAESI Act provides a comprehensive framework.
The High Court concluded that the Debts Recovery Tribunal III had jurisdiction to entertain the petitioner's claim under Section 13(10) of the SARFAESI Act, rejecting the notion that the pecuniary limits of the RDB Act applied. The petition was dismissed, and each party was directed to bear its own costs.