HDFC BANK vs PUNJAB AND SIND BANK on 23 October 2026

l)Eli'l's RltcovE ltY At,l,lll,LA'l'E'I'RlllUNAl,, DIII,III Appcal No.3712023 Arising out ol' SA No.75512{122 (l)lt'l'-.laipur) Itcm No.2tt I Iousing l)cvclopmcnt I,'inancc Oorporation Limitctl V. I)un.iab & Sind llanli ancl an<lthcr 23.10.2026 I lon'blc l)r. .lusticc Sudhir Kumar .lain I)rcsont: Sh. Anuj IJhanclari, Advocatc 1or appcllant tl-rrough VC Sh. tJjjwal Ilharclrvaj, Acivocatc firr rcsponclcnt r-ro.l through VC 'l'his mattcr is tal<cn r-rp thror-rgh Ilybricl hcaring. otil)EIl (ot{At,)

l. 'l'hc appcllarrt/ llor-rsing I)crzclol'rncnL liinancc Corporation Limitccl{llccl S.A. bcalirrg No.7-5512022 titlccl as llousing l)cvclopmcnt I,'inancc Oorporation l,inritctl V I'}un.jab & Sind lianl< which was statccl to bc ponding bclorc l)l{'l'- .laipr-rr'. l)l{'l'-Jaipr-rr viclc inrpr-rgnccl orclcr clatccl 17.12.2022 has dismisscd tho S.A. as thc prcscnt S.A. was lilcci lry onc lrr-rancial institutior-r/banl< against anothcr flnarrcial institutior-r/banl<. 'l'lrc appcllant bcing aggricvccl lllccl thc prcscnt appcal []ciu'i n s. no.37 12023 .

2. Ms. 'l'zurvccr l(aur, Aclvocettc {br thc appcllant ancl Sh. Aanjancy R.aghuvanshi, Aclvocittc f or thc rcsponclcnt no.l statocl that ir-r vicw ol' Scction I I o1' tl-rc Sn Itlrn IrSI Act,2002 as prcscnl dispLrtc ir-rvolvccl in thc appcal is bctwccn thc two flnanoial institr-rtions ar-rcl tl-rc saicl c'lispLrtc can orrly bc rcsolvccl cithcr by c<lr.rciliati<ln or arbitlation i,lncl praryccl that appropriartc orclcr r.nay bc passccl accorclingly.

3. Scct-iun ll ol'thc SAI{l;AITSI Act, 2002 dcals with rcsolurtion of- clispurtos and ltroviclcs [hat whcrc zury clisprrtc is bctwccn thc banl</llnancial institr-rtiur-r thcn thc clispLrtc shall bc scttlcci by c<;nciliation or arbiLrultion.

4. In vicw ol'Scction I I ancl thc Sr-rprcmc (lourt jr-rclgnrcnt clclivcrccl in casc llank ol' India v Sri Nangli liicc Mills l)rivirtc l,irnitctl and othcrs, Civil Appcal No.7ll0l2025 dccidcd on 23.05.2025, thc prcscnt disputc subjcct mattcr of thc prcscnt appcal can only bc dcoidcd cithcr by conciliation or arbitration in tcrms of Scction 11 of thc SAITFAIISI Aot. 'l'hc rclcvant paragraph of thc judgmcnt is rcprclduccd as undcr:

124. We sumrnarizrc olur final conclusion zrs under: *

(l) Scction ll ol'thc SAItlr'AItSI Act tlcals with rcsolution ol'disputcs rclating to sccuritisation, rcconstruction or non*p:rymcnt ol'any amount duc bctwccn thc lranl< rlr linancial institution rlr :rssct rcc<lnstruction comp2lny or quzrlilicd buycr.

(ll) lrt orclcr to:rttr:rct thc provision o{'Scction ll ol'thc SAltlr'AIlSl Act, trvin cortditiorts havc to bc I'ull'illod lrcing; l'irst, thc disputc must bc bctwccn any bank or financial institution or :rssct reconstruction company or c;ualificd lruycr :rnd sccondly, the dispute must relate to sccuritisation or rcconstruction or non-paymcnt of any amount duc inclucling intcrcst. Whcrc thc alilrcsaid two conditions arc lilund to bc prinra-ftrcic satislicd, tlrcrc thc l)lt'l'will havc no.jurisdiction and thc propcrrccoursc woulcl only bc through Section I I of thc SAllli'AIISI Act rcad with thc Act, 1996. (lIl) 'l'hc cxprcssion "non-paymcnt ol' any arnount duc, including irrtcrcst" usccl in Scction ll ol'thc SAItl,'AIlSl Act is ol'witlc importand lvoulcl include il vnrious range ol'sccnarios of tdisputcs' conncctcd to unpaid amounts including thosc arising duc to third-party clclaults, suclr as indircct dclaults o['lhc borrowcrs. (lV) Any disputc bctwcen two banks, financial institutions, assct rcconstruction companies or qualified buycrs ctc., where thc jural relation bctwccn the two is of a lcnder and borrower, then Section 11 of thc SAIIF'AESI Act will have no application whatsoever. The use of the phrase "urry pcrson" in thc dcfinition of 'borrowcr' in Scction 2(I) of thc SARI,'AI|SI Act, makes it ahundantly clcar that even a bank, financial institution or assct reconstruction company or qualified buyer can bc considercd a borrower, if they rcceivc financial assistance from a bank or financial institution ctc by providing or crcating a sccurity intercst. l'hus, a lender-turncd-borrowcr would also fall within thc scopc of a "horrowcr" undcr the SAIIITAESI Act and shall bc governcd by thc same statutory framework as any ordinary borrr)wer. (V) Scction 11 of the SAIII-AE,SI Act, providcs for a statutory arbitration for any disputc mcntioncd thcrcin bctwecn any of thc parties cnumcratcd thercundcr. I'hcrc is no nccd frrr an explicit writtcn agrccment to arbitratc betwcen such parties in ordcr to attract Section 11 of the SAIII-AE,SI Act. The said provision crcates a lcgal fiction as regards thc cxistcncc of an arbitration agreement notwithstanding whcthcr such agrecmcnt cxists or not in actuality.

(VI) Scction 11 of thc SAI{I,-AIrI,SI Act is mandatory in nature. The use of thc word "shall" thcrcin, thc mandate of thc said provision cannot bc bypasscd or subvcrted by thc partics by sccking rccoursc clscwhcrc.

5. Sh. Anuj llhandari, Advocatc {or thc appcllant statcd that as thc S.A. was {ilcd by IIoLrsing I)cvcloprlcnt liinancc Oorporatior-r Limitccland appcal is also filecl by IIor-rsing I)cvclopr-ncnt liinancc Corporation Limitcd, accordingly thc Ilousing I)cvclopnrcnt l;inancc Orlrporation Linritodis clircctcd to talcc lcgal procccclings Ibr zrrbitration lor rcsolr-rtiorr <ll'clispr-rtc bctwccn thc appcllau-rt and thc rcspondcnt no.l which etrc thc primc contcsting partics. 'l'hc prcsont appcal is accorclingly disposcd of'along with pcncling applications, if'any. ,s4 (Dr. .Iusticc Sudhir Kumar.Iain) Chairpcrson v$