syndicateBANK vs PUNJAB NATIONAL BANK AND ORS on 23 October 2026

I)EI]'TS RI|COVEITY A I)PEI,I,A1.I.],I.RII}[JNAI,, DITI,III Misc. Appcal No.51 612018 Arising out of OA No.26612012 (Dlt'l'-III, Dclhi) Syndicatc llank V. I'un.iab National llank and othcrs Itcm No.22 23.10.2026 ilon'blc l)r. .lustice Sudhir Kumar .Iain I)ru:scn1.: Ilitcsh Sachar, Advocatc lbr appcllant through VC Ilashmat Nabi, Aclvocatc for rcsponclcnX no.1 through VC 'l'his mattcr is tal<cn up through llybricl hcaring. ot{t)tilt (oRAL) I. 'l'ho Oricntal Ilank o['(]onrnlcrco now r'ol)rcscntccl tl'rror-rgh I)r-rr-r.iab Natirlnal Ilanl< lllcd O.A. bcaring nr>.26612012 titlccl as Punjab National llank V l)cepak Sharm:r and othcrs which was statccl to bc pcnclir-rg bclorc l)l{'l'-lll, l)clhi. t)R'l'- III, I)clhi viclc inrpr-rgncci orclcr clatccl 19.01.2015 has clisrnissocl thc S.A. as thc prcsor-rt S.A. was Iilccl by onc llr-rancial institurtion/bank against ano[hr:r Ilnancial institr-rtion/banl<. 'l'lic appcllant bcing aggricvccl filccl thc prcscnt rnisc. appcal bcaring no.-5I 612018.

2. Sh. Ilitosh Sachar, Aclvocatc (ilr thc appcllant ancl Sh. Ilashn-rat Nabi, Aclvocatc fitr thc rcsporrclcnt no.l statccl that prcscnt c'lispurtc involvccl in tlrc erppoal is bctwccn thc two Ilrrancial institr-rtirlns ancl thc saicl clispr-rtc can ot'rly bc rcsolvcc'l cithcr by conciliation or arbi[ration ernd prayod tl-rat appropriatc orclcr may bc passocl accorclingly.

3. Scction ll ol'thc SAIIlrn lrSI Act, 2OO2 clcals with rosoluLion o['c'lisputcs and providcs that wl-rcro any disputc is bctwccn thc banl</llnancial institr-rtion tl-rcn tl-rc clispLrtc shall bc scttlccl by conciliation or arbitriition. zl. Irr rricrv o1'scction II ancj lhc Sultrcmc (]ourt.iuclgmurt ciclivcrcci in casc I]ank ol'lntlia v Sri Nangli l{icc Mills l)rivatc [,imitcd and othcrs, Civil Appcal No.7ll0l2O25 dcciclccl on 23.05.2025, thc prcscrrt disputc sr-rb.icct rnattcr ol'thc prcscr-rl- appcal carr only bc clcciclccl cithcr by corrciliartion or arbitration in tcrtls of' sh. Sh.

Scction I I ol- thc Sn Itlrn l,SI Act. 'l'hc rclcvant paragraph o1' tlrc judgmcnt is rcproclucccl as unclcr:

124. We summarizc our final c<lnclusion as undcr: -

(l) Section ll ol'thc SAltlr'AItSI Act dcals with rcsolution of disputes rclating to sccuritisation, rcconstruction or non-paymcnt of any arnount duc betwccn thc lrank <lr linancial institution or assct rcconstruction comp2lny <lr qualilicd huycr.

(ll) In order to attract thc provision ol'Scction ll ol'thc SAIl,ll'AI,ISI Act, twin conditions have to bc lullillcd bcing; first, thc disputc must bc bctwccn any bank or Iinancial institution or assct rcc<lnstruction company or qualificd buyer and sccondly, thc dispute must rclatc to sccuritisation or rcconstruction or non-paymcnt <lf any amount due including intcrcst. Whcrc thc alilrcsaid two conditions arc filund to bc prirna-lircic satislicd, therc thc l)l{'l' will havc no .iurisdiction and thc propcrrccoursc would <lnly hc through Scction l l o{'the SAI{I''AIISI Act read with thc Act, 1996.

(lll) 'l'hc cxprcssion "non-paymcnt of any amount duc, including intcrest" uscd in Scction ll of thc SAIII.'AIISI Act is of widc import and woulcl includc a various rangc ol sccnarios of 'disputcs' conncctcd to unpaid amounts including thosc arising duc to third-party dcfnults, such as indircct defaults ol'the brlrrolvers. (lV) Any dispute betwccn two banks, financial institutions, assct rcconstruction companies or quali{ied buycrs ctc., whcrc thc .jural rclation lrctlvccn thc two is ol' a lcndcr and brlrrowcr, thcn Section I I of thc SAItli'AIISI Act will havc no application wlratsocver.'l'hc usc of the phrasc "any pcrson" in thc dclinition <ll''borrowcr'in Scction 2(f) of the SAItl,'AI,I,SI Act, makcs it ahundantly clcar that evcn a bank, financial institution or asset rcconstruction company or qualilicd buyer can be considcrcd a borrowcr, if thcy rcccivc linancial assistancc I'rom a bank rlr financial instituti<ln ctc lry providing rlr crcating a sccurity intcrcst. 'l'hus, a lcnder-turncd-borrower would also fall within thc scope of a "borrowcr" undcr thc SAIllr'AIiSI Act and shall be govcrncd by thc sllme statutory framcwork as any ordinary borrt)wcr. (V) Scction 1l of thc SARtsAE,SI Act, provides for a statutory arbitration for any disputc mcntioned thcrcin bctwcen any of the partics enumcratcd thereundcr. 'fhcrc is no need for an explicit writtcn agreemcnt to arbitrate betwecn such partics in ordcr to attract Scction 11 of the SAIIFAIISI Act. 'Ihe said provision crcates a lcgal fiction as regards the existcnce of an arbitration agrccment notwithstanding whether such agrecmcnt cxists or not in actuality. (VI) Scction 11 of thc SARFAESI Act is mandatory in naturc. Thc usc of the word "shall" therein, thc mandatc of thc said provision cannot be bypasscd or subvcrted by thc partics by sccking rccourse clscwherc.

5. Sh. Ilitcsh Sachar, Advocatc {or thc appcllant statcd that thc appcal is filcd by Synclicatc Ilank, accordingly tl"rc Syndicatc Ilank is dircctcd to takc lcgal procccdings lor arbitration l'or rcsolution of disputc bctwccn thc appcllant and thc rcspondcnt no.1 whicl-r arc thc primc contcsting partics. 'l'hc prcscnt appoal is acoordingly disposcd of along with pcnding applications, il'any. (Dr..Iustice Sudhir Kumar Jain) Chairpcrson v$