DRAT Transfers ₹100 Cr Debt Recovery Case to DRT, Rejects Canara Bank's Attempt to Split Jurisdiction [Read Order]
It was held that splitting matters risked conflicting orders.
DRAT - Debt Recovery - DRT - Canara Bank - taxscan
DRAT - Debt Recovery - DRT - Canara Bank - taxscan
The Chennai bench of the Debt Recovery Appellate Tribunal (DRAT), in a ruling rejecting the CanaraBank’s attempt to split jurisdiction, ordered the transfer of a ₹100+ crore debt recovery case from DRT-II Bengaluru to DRT-I Chennai to prevent conflicting orders and consolidate related proceedings.
The Applicants, M/s Cadryche Automation and Office Solution Pvt. Ltd. and others, challenged Canara Bank's actions, including unilateral crystallization of export credit facilities, classification as NPA without notice, and initiation of SARFAESI proceedings claiming ₹108.57 crores.
The first Petitioner is the company incorporated under Companies Act, 2013, second and third Petitioners are its current Directors and fourth and fifth Petitioners are guarantors to the loan facilities availed by 1st Petitioner. The Petitioners availed various export credit facilities from the Respondent Bank.
The Respondent Bank unilaterally crystallized the export bills before sanction dated on 09.08.2021, Shipping Bill No. 3710034 on 24.05.2022, remaining Shipping Bills not lodged. Thus, converted the Pre shipment Credit in Foreign Currency limits from USD to INR, the Bank claimed outstanding of Rs.108.57 Crores as on 28.02.2023. This came to be known to the Petitioners only on receiving Demand Notice on 30.08.2022 under SARFAESI Act, 2002. The Bank already classified the loan as NPA on 26.08.2022 without prior intimation.
There is significant discrepancy in the outstanding loan amount claimed and calculation of interest. Respondent No.2 initiated subsequent SARFAESI proceedings by issuing symbolic Possession Notice dated 25.04.2023 and multiple sale notices.
They filed multiple applications: OA 08/2023 (recovery certificate under RDB Act), SA 21/2024 and SA 7/2025 (challenging sale notices under SARFAESI Act), all pending before DRT-I Chennai. When a Securitisation Application (later registered as TSA 4/2025) was transferred to DRT-II Bengaluru, the Applicants sought its consolidation in Chennai.
It is seen from the Notification dated 04.10.2022, issued by the Ministry of Finance (Department of Financial
Services) that in exercise of the powers conferred by Section 3 of the RDB Act, 1993, the jurisdiction of DRTs have been notified.
The Bank argued that the Central Government's 04.10.2022 Notification (vesting jurisdiction over ₹100+ crore debts with DRT-I Chennai) applied only to Recovery Applications (OAs) under RDB Act, not SARFAESI Applications. It contended TSA 4/2025 should remain in Bengaluru as the secured assets and branch were located there, and claimed the debt in Section 14 proceedings was shown as ₹99.52 crores (below the threshold).
As per the Notification all Applications involving debt amount of Rs.100 crores and above, if otherwise falling under the jurisdiction of DRT-II and DRT-III, Chennai, DRT, Madurai, DRT-I and DRT-II, Bengaluru, DRT-I and DRT-II Ernakulum and DRT, Coimbatore, is vested with DRT-I, Chennai. That is the reason why the Respondents filed OA 8/2023 for recovery of the dues of Rs.100 Crores and above.
It is the case of the Applicants that in Section 14 proceedings, deliberately the loan due was shown less than Rs. 100 Crores i.e. at Rs.99,52,02,742.22p, without properly calculating the loan due as on the date of Application. If interest is calculated till the date of filing of Application, the loan due would have been more than 100 Crores, and to harass the Applicants, Section 14 proceedings were initiated by showing lesser loan due amount. This contention appears to have merit, especially when the three connected cases involve the debt due of more than Rs.100 Crores.
Rejecting the Bank's contention, DRAT held that the Notification applied to both OAs and SARFAESI Applications, as Section 17(7) of SARFAESI Act mandates disposal under RDB Act provisions. The Bank deliberately understated the debt as ₹99.52 crores in Section 14 proceedings to avoid Chennai DRT's jurisdiction, while the actual dues exceeded ₹100 crores in all connected cases. All proceedings (OA 08/2023, SA 21/2024, SA 7/2025, and TSA 4/2025) involved the same parties and identical loan transactions.
It was held that splitting matters risked conflicting orders. Citing Section 17A(2) of RDB Act and the Delhi HC's Paramount Plastics ruling, DRAT exercised its power to transfer cases between Tribunals. The DRAT Bench, comprising Justice G. Chandrasekharan, allowed Transfer Petition T.P:10/2025, directing DRT-II Bengaluru to transfer TSA 4/2025 records to DRT-I Chennai within two weeks. DRT-I Chennai was ordered to dispose of all four connected applications expeditiously, jointly or separately.
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