BANK OF INDIA v. M/S SRI NANGLI RICE MILLS PVT. LTD.
Discusses statutory interpretation, arbitration agreements, and the interplay between different statutes.
Court: Supreme Court of India
Citation: 2025 INSC 765
Decision Date: 23-05-2025
List of Laws
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act); Arbitration and Conciliation Act, 1996; Indian Contract Act, 1872; Code of Civil Procedure, 1908 (CPC); Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDBFI Act); General Principles of Law
Legal Discussion
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act): The judgment extensively discusses Section 11 of the SARFAESI Act, focusing on its scope, the meaning of "any dispute relating to securitisation or reconstruction or non-payment of any amount due including interest", and the significance of the phrase "arises amongst any of the parties". It analyzes whether a written arbitration agreement is required under Section 11, addressing conflicting DRAT decisions. The judgment also determines if Section 11 is mandatory or directory, concluding it is mandatory. It also discusses Section 13(2) and Section 13(4) regarding demand notices and taking possession of secured assets. The judgment also mentions Section 14 regarding seeking assistance from the District Magistrate. The judgment also discusses Section 17 regarding the right to apply to the DRT. The judgment also discusses Section 31(b) of the SARFAESI Act, stipulating that the Act shall not apply to the pledge of movable goods as defined under Section 172 of the Indian Contract Act, 1872.
- Arbitration and Conciliation Act, 1996: The judgment discusses Section 7, which defines an arbitration agreement and its form. It also discusses Section 8, which empowers a judicial authority to refer parties to arbitration if a valid arbitration agreement exists. The judgment analyzes the interplay between these sections and Section 11 of the SARFAESI Act, particularly regarding the necessity of a written arbitration agreement.
- Indian Contract Act, 1872: The judgment mentions Section 172, defining pledge, in relation to Section 31(b) of the SARFAESI Act, which excludes pledges of movable goods from the Act's purview. The judgment clarifies that the exclusion under Section 31(b) applies to disputes between the borrower and the lender concerning the pledge of movables.
- Code of Civil Procedure, 1908 (CPC): The judgment mentions Section 144 CPC regarding restitution, but states it does not apply in this case as no order has been set aside in any appeal.
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDBFI Act): The judgment discusses the RDBFI Act in the context of the legislative history leading to the SARFAESI Act, noting its limitations in addressing the growing problem of NPAs. It also mentions Section 19(25) of RDDBI & FI Act, the directions should have to be issued to give effect to its order and to prevent misuse of process and to secure ends of justice.
- General Principles of Law: The judgment discusses the doctrine of election, particularly in relation to arbitration as a dispute resolution mechanism. It explains that the choice to select arbitration exists only if the law accepts it as an alternative remedy. The judgment also discusses the interpretation of the word "shall" in statutes, noting that it is generally construed as mandatory unless such an interpretation would be anathema to the scope of the enactment. The judgment also discusses the interpretation of the expression “as if" in any given provision.