PUNJAB NATIONAL BANK vs DENA BANK AND ORS on 23 October 2026

D ITI}TS ITECOV II]ITY AI'P ELLATI' I'RII}UNAL, D I']LHI Appcal No.441l2019 Arising otrt ol' SA No.24 612017 (l)Rl'-ll I, I)clhi) l'}un.iab National llank V. Ilanh of llaroda (Dcna llank) and othcrs Itcm No.26 23.10.2(126 llon'blc l)r. .lusticc Sudhir Kttmar.lain [)r'cscnt. Sh. Ilashmat Nabi, Advocatc for appcllant through VC Sh. Arun Aggarwal, Aclvooatc for rcsponclcnt no.1 through VC 'l'his nrattcr is tal<ctr urp thr<lugh I lybricl l-rcarir-rg. oRI)EIl (OI{AL)

l. 'l'hc Oricntal Ilanl< <t['(]onrnlcrcc now rcprcscntccl thror-rgl, I)urrjab National IJanl< lllccl S.A. bcaring no.24(tl20l7 titlccl as Pun.iab Natitlnal llank V l)cna lianli which wars statccl to bc pcncling lrc{irrc t)lL'l'-lll, I)clhi. I)l{'l'-111, I)cllri vidc irrpurgnccl orclcr clatccl 11.09.2019 has dismissccl thc S.A. as thc prcscnt S.A. was {ilccl by ono Ilnancial institr.rtion/banl< against atrothcr financial irrstitution/banl<. 'l'hc appcllzrnt bcing aggricvccl lllccl thc prcscnt appoal boaring ru>.44112019.

2. Sh. llasl1mat Nabi, AclvocaLc lirr thc appcllant ancl Sh. Arut-r Aggarwal, AcJvocatc lor tl-rc rcspondcnt r-ro.l statccl [hat in vicw of Scction ll of thc Sn Itlrn lrSI Act, 2OO2 as prcsont dispulc involvccl iri thc appcal is bctwccn thc two [ltrzpcial institr,rtions anc] Lhc saicl clispLrtr: calt only bc rcs<llvccl cithcr by cupciliation or arbitration anci prayccl that arppropriaLc orclcr l.]lzty bc passcd luccot'clirrgly.

3. Scction ll ol'thc SAItlin IrSI Act, 2OO2 dcals witlr rosolr-rtion of'disputcs ancl pr.oviclos that whcr'o zury c'lispr-rtc is bctrvccn thc banl</[lnancial institr-rtion thcn tl-rc disputc shall bc scLtlccl by cor-rcilialit>n or arbitration.

4. In vicw of Scction 1 I and thc Suprcmc Coutl judgment dclivcrcd in casc Ilank of India v Sri Nangli lticc Mills Privatc Limitcd and othcrs, Civil Appcal No.7llol2025 clccidccl on 23.05.2025, thc prcscnt disputc subjcct mattcr of thc prcscnt appcal can only bc clccided cithcr by conciliation or arbitration in tcrms of Sccl.ion ll ol'thc Snt{lin liSI Act. 'l'hc rclcvant paragrapli ol'thc.iudgrlcrrt is lcpxlcluccd as uuclcr:

124. Wc surnmarizc ouI' Iinal ctlrrclusitln as under: -

(l) Scction ll ol'thc SARIfAIi,SI Act dcals rvith rcsolution ol'disputcs rclating t<l sccuritisation, rcconstrrrction or non-paymcnt of any amount duc bctwccn thc lrank or I'inancial institution tlr assct rcconstrtlctitln company or qualil'ictl buycr.

(ll) ln ordcr to zrttract tlrc provision of Scction ll o1'thc SAI{ltAItSI Act' trvin conclitions havc to bc I'ull'illcd heing; first, thc dispute must hc bctlvccn itny banh or I'inancial institution or assct rcconstruction company rlr qualilicd buycr and sccondly, thc disputc must relatc to sccuritisation or rcconstruction or non-paymcnt <lf any am<lunt duc including intcrcst. Wherc thc alilrcsaid two conditions arc ftlund to bc prima-lircic satisficcl, thcrc thc I)lt'l' will havc no iurisdiction and thc propcrrccoursc would only lrc through Scctirln I I of thc SAIII'.AIISI Act rcad rvitlr thc Act, 1996.

(lll) 'l'hc cxprcssion "ntln-pitytncnt of any amount duc, including intcrcst" usccl in Section ll ol'thc SAlll.AltsI Act is of widc imp<lrt and would includc zr various rangc ol' sccn:lrios ttl' tdisputcst ctlnncctcd t<l runpairl arnounts including thosc arising clue to third-party defnults, such as intlircct clcfurults tll'thc btlrrtlwcrs. (lV) Any disputc bctwccn tlvo lrnnks, linancial instittltions, asset rocgnstruction companics or qualificd huycrs ctc., whcrc thc .iural rclati6n lrctwccn thc two is <ll' a lcndcr and borrower, thcn Scction l1 of thc SAItl.AllSI Act will hzrvc no application whatsocvcr. 'l'hc usc of thc phrasc "ony pcrson" in thc clcl'inition of 'borrowcr'in Scction 2(I) of thc SARI,r'AI,lSl Act, makcs it abtrndantly clcar that cvcn a bank, financial institution or assct rcconstmction cotnpany or qualilicd buycr can bc c<lnsiclcrcd a borrolver, il'thcy rcccivc I'inancial assistancc I'rom a bank rlr Iinancial instituti<ln ctc by providing or crurting a sccttrity intcrcst. 'l'hus, a lcndcr*turncd-lrorrowcr would als<l lerll within thc scopc ttf a "borrowor" undcr thc SAltl'AItSl Act and shall bc governcd by tltc samc statut<lry ['ramclv<lrh as any tlrdinary borrt)wcr. (V) Scction I I ol' thc SAltl.AIiSl Act, providcs lirr Lt statutory arbitratign {ilr any disputc mcntioncd thcrcin lrctwccn any of tlrc parties cnuncrirtctl thcrcunclcr. 'l'hcrc is no nccd l<lr an cxplicit writtcn agrccmcnt to arbitratc bctwccn such partics in ordcr to attract Scction ll ol'thc SAltlr'AIISI Act.'l'hc said provision crcatcs a lcgal liction as rcgartls thc cxistcncc ol' iln arbitr:rtion agrcclncnt notwithstanding whcthcr such agrccmclrt cxists tlr ntlt in actuality. (VI) Scction ll ol'thc SAIf I'Ali,SI Act is mandatory in naturc.'l'hc usc of (hc lvrlrcl "shall" thcrcin, thc rnandatc tll'thc said prtlvision cannot bc 5ypassctl or subvcrtcd by thc partics by sccking rccollrsc clscwhcrc.

5. Sh, Ilashmat Nabi, Aclvocatc ftrr thc appcllant statcd that as thc S.A. was filcd by Irunjab National Ilank arrcl appcal is also filcd by I'}unjab National llanh, accoruiingly tl'rc Punjab National tlank is diroctcd to takc lcgal procccdings for arbitration for rcsolution of disputc bctwccn thc appcllant and thc rcspondcnt no.1 which arc thc primc oontcsting partics. 'I'hc prcsont appcal is accorclingly disposc<l of along with pcnding applications, iI any. (Dr. .Iusticc Sudhir Kumar Jain) Chairpcrson v$