Application u/s 19 of Recovery of Debts and Bankruptcy Act Maintainable Where Bank Holds Account: DRAT [Read Order]

The Kolkata bench of the Debts Recovery Appellate Tribunal (DRAT) has held that an application under section 19 of the Recovery of Debts and Bankruptcy Act 1993 can be filed in any branch or any other office of the Bank or financial institution is maintaining an account in which the debt claimed is outstanding.

The appeal arose from an order of DRT Hyderabad, which had dismissed the borrower’s Sri Sri Cotton’s application questioning the territorial jurisdiction in recovery proceedings. The central issue was whether the Original Application (O.A.) filed by HDFC Bank, the respondents for recovery of Rs. 14.87 crore, could be entertained by DRT Hyderabad, or whether jurisdiction lay with DRT Visakhapatnam since the borrower and property were located in Guntur, Andhra Pradesh.

The borrower argued that the cause of action arose entirely at Guntur, where the loan was availed, and the secured property was situated. They contended that the transfer of the account to HDFC’s Special Operations Department in Hyderabad was unilateral and not intimated to them, and therefore could not confer jurisdiction on DRT Hyderabad.

They relied on a memo filed in earlier securitisation proceedings where the Bank had withdrawn SARFAESI actions, claiming this further undermined Hyderabad’s jurisdiction.

HDFC Bank countered that under Section 19(1)(a) of the Recovery of Debts and BankruptcyAct, 1993, a recovery application can be filed before the Tribunal within whose jurisdiction the bank branch or office maintains the account in which the debt is outstanding.

The Bank emphasised that once the account was transferred to its Special Operations Department in Hyderabad, all recovery actions, including notices under Section 13(2) of the SARFAESI Act, were issued from Hyderabad. Thus, the cause of action arose there, making DRT Hyderabad the proper forum.

The DRT accepted the Bank’s position, holding that since the statutory notices were issued from Hyderabad, jurisdiction lay with DRT Hyderabad. On appeal, the DRAT examined the statutory framework and the facts.

It noted that Section 19(1)(a) clearly allows the filing of recovery applications where the bank maintains the account. In this case, the account had been transferred to Hyderabad, and the notices initiating recovery proceedings were issued from that office.

The Tribunal rejected the borrower’s contention that property location alone determined jurisdiction, clarifying that the statute ties jurisdiction to the place where the account is maintained.

The bench of Anil Kumar Srivastava (Chairperson) also addressed the borrower’s reliance on withdrawal of SARFAESI actions, observing that only the Section 13(4) notice had been withdrawn, not the entire recovery process.

In its ruling, the DRAT upheld the DRT’s order, confirming that DRT Hyderabad had jurisdiction under Section 19(1)(a). The appeal was dismissed as lacking merit. Importantly, the Tribunal directed DRT Hyderabad to expedite the disposal of the pending O.A., which had been filed in 2019, and decide the matter within eight weeks of receiving the order.

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