1 2026:CGHC:21453 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBR No. 3 of 2026 Yes Bank Limited A Banking Company Incorporated Under The Companies Act, Having Its Registered Office At Yes Bank House, Off Western Express Highway, Santacruz (E), Mumbai 400055 and Branch Office At Raipur, Through Its Authorized Officer Shri K. Ravi Kumar, Sr. Manager, Raipur Branch, District - Raipur, Chhattisgarh ... Applicant versus 1. UCO Bank, A Banking Company Incorporated Under The Companies Act, Having Its Registered Office At UCO Bank Ltd. 10, Biplabi Trailokya Maharaj (BTM) Sarani, Kolkata - 700 001 And Branch Office At Civic Center Branch Indira Palace, Sector-5, Bhilai, Chhattisgarh 2. Pawani Gupta W/o Ashok Gupta Aged About 46 Years R/o 613, Kurud Road, Kohka Ward No.7, Purani Basti, Kohka Bhilai, District- Durg (C.G.) 3. Sachin Jain S/o Shri K.C. Jain Aged About 42 Years R/o 21/18, Nehru Nagar Bhilai, Chhattisgarh, ... Respondents For Applicant : Mr. Bhaskar Payashi, Advocate. For Respondent No.1 : Mr. P.R.Patankar, Advocate. For Respondent No.2/Intervenor : Mr. Shishir Dixit, Advocate. For Respondent No.3/Intervenor : Mr. Pankaj Agrawal and Ms. Preeti Yadav, Advocate. Hon’ble Mr. Ramesh Sinha, Chief Justice Order on Board 07.05.2026 1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator. PREETI KUMARI Digitally signed by PREETI KUMARI Date: 2026.05.15 13:34:19 +0530 2 2. Mr. Bhaskar Payashi, learned counsel for the applicant submits that the applicant is a scheduled Commercial Bank and had granted a Home loan of Rs.85,00,000/- on 01.07.2024 to the following borrowers- a. Mrs. Pawani Gupta (Respondent No.2), b. Mrs. Shweta Gupta, c. Mr. Rakesh Kumar Gupta, d. Mr. Ram Niwas Gupta. The said loan was secured by creation of equitable mortgage over the immovable property in favor of Applicant Bank, described as: Residential House on Plot no. 03, Block No. 96, Ward no. 03, situated at Kosa Nagar, Nehru Nagar East, Bhilai, Tehsil and District Durg, Chhattisgarh (hereinafter referred in the "Secured Property") basis Deed of Transfer executed by The Municipal Corporation, Bhilai District Durg (C.G.) through its Authorised Officer in favor of Roshan Jain dated 16-07-2019 conveying absolute rights over the property, who in turn sold the said property in favor of applicant Bank borrower ie, Pawani Gupta & Shweta Gupta vide Registered Sale Deed 3024 dated 08-01-2024. The loan account is non-delinquent and EMIs are paid on regular basis by borrower/s. The charge of Applicant (Yes Bank Limited) was duly created and registered as per law and continues to subsist. Respondent No.1 (UCO Bank) has claimed that, it had also granted loan in the form of cash credit (Property Loan Scheme) to Mrs. Sarita Seengal, Mr. Gaurav Seengal, Mr. Neeraj Seengal, Mrs. Anu Seengal, Mrs. Sushma Seengal against the very same property, but basis mortgage created during 06-10-2016 over_Lease hold rights (commencing from 01-04-1992 till 31-03-2021) executed originally by SADA in favor of Tikam Lal Mahobe who in turn conveyed the same Lease Hold rights to Ms. Sarita Seengal vide Doc No.869 dated 29-08-2005, and suppressing the said vital facts about the lease rights, UCO bank initiated recovery proceedings before DRT vide case No. OA 1778 of 2019 after the said account turned NPA and obtained decree. Respondent No.1/UCO Bank thereafter executed the decree by filing Recovery Case No. 219/2023, 3 wherein on 01.12.2025, the Recovery Officer illegally issue a Sale Certificate to the third party, by completely ignoring the prior absolute charge in favour applican Bank. The applicant Bank appeared before the Recovery Officer, filed detailed objections along with all relevant documents, categorically asserting its prior, valid and subsisting charge, yet the same was overlooked and ignored, and issued Sale Certificate arbitrarily without jurisdiction. Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) clearly mandates that where two or more secured creditors claim charge over the same secured asset, disputes relating to priority of charge must be resolved as per law and judicial determination. 3. Mr. Payashi further submits that the Hon’ble Apex Court in Bank of India Vs M/s. Arj Nangli Rice Mills vide order dated 23.05.2025 has observed that- priority disputed between secured creditors cannot be unilaterally decided by Recovery Officers, Arbitration/adjudicatory mechanism must be invoked and Rights of secured creditors cannot be defeated without due adjudication. Further, the Apex Court further observed that any sale or recovery action ignoring an existing charge is void and unsustainable in law. In view of the above binding precedent, the dispute between applicant and respondent No. 1 regarding priority of charge over the secured property is clearly arbitrable. Despite objections, respondent No.1- UCO Bank has refused to acknowledge the applicant bank charge, giving rise to instant dispute. 4. On the other hand, Mr. P.R.Patankar, learned counsel for respondent No.1/UCO Bank submits that the applicant in the present case has filed the present application for the appointment of an Arbitrator to decide upon the priority of rights over Residential house on Plot No.03, Block No.96, Ward No.03, situated at Kosa Nagar, Nehru Nagar East, Bhilai, Tehsil and District 4 Durg, Chhattisgarh, area admeasuring 3874 sq. ft. (Hereinafter referred to as Secured Property). The applicant herein has contended that they had advanced a Home Loan of Rs.85,00,000/- on 01.07.2024 to borrowers namely, Mrs. Pawani Gupta, Mrs. Shweta Gupta, Mr. Rakesh Kumar Gupta and Mr. Ram Niwas Gupta on creation of an Equitable Mortgage against the Secured Property. They have further contended that a valid CERSAI Registration (Annexure A-3) was obtained by them and thereby a valid charge was created. The applicant has contended the basis of afore- mentioned facts that they have the right of first charge over the property. The applicant has further alleged that the Recovery Officer, Debt Recovery Tribunal in Recovery Case No.219/2023, has rejected the objections raised by the applicant and directed for issuance of a Sale Certificate on 01.12.2025. 5. Mr. Patankar further submits that respondent No.1/ UCO Bank vehemently denies all the adverse remarks made against it in the application and herein submits that the applicant has no charge over the property and the applicant has failed to disclose material facts related to the creation of first charge in favor of respondent No.1/ UCO Bank by one Mrs. Sarita Seengal, on the basis of which the Recovery Officer has allowed the Sale Certificate to be issued. The material and relevant facts relating to the present case are that the rights over the Secured Property were purchased by Mrs. Sarita Seengal from one Teekamlal Mahobe and her name was duly mutated in the Revenue Records of the Municipal Corporation Bhilai on 23.09.2005. The contention of the applicant that this fact was hidden by respondent No.1/UCO Bank while obtaining the sale certificate is an erroneous submission and this fact was never hidden from the Debts Recovery Tribunal while obtaining Sale Certificate. On 21.04.2016, Mrs. Sarita Seengal applied for a Cash Credit/Overdraft Facility from respondent No.1/UCO Bank and an equitable 5 mortgage was created on the Secured Property by delivery of the title deeds to the bank. Further, on 25.06.2016, agreement relating to Deposit of Title Deeds between respondent No. 1/UCO Bank and Mrs. Sarita Seengal was executed and finally on 08.07.2016 the CC/OD facility of Rs.75,00,000/- was sanctioned by respondent No.1 in favour of Smt. Sarita Seengal, Shri Gaurav Seengal, Shri Neeraj Seengal, Smt. Sushma Seengal with Shri Neeraj Seengal and Shri V K Seengal stood as guarantors. Respondent No.1/ UCO Bank registered the afore-mentioned equitable Mortgage with the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) on 29.03.2017 and has duly obtained a challan in lieu of the same. If there is a CERSAI registration certificate the same to be provided by the bank. Mrs. Sarita Seengal along with other borrowers availed the CC/OD limit to the full extent of Rs.75,00,000/- and thereafter defaulted on the repayment of the loan and was declared NPA as per the RBI guidelines. A Balance Confirmation Letter was sent by respondent No.1/UCO bank to the afore-mentioned borrowers on 17.01.2018 and on 02.04.2019 a recall notice was issued under the SARFAESI Act to the borrowers and even after the recall notice, the borrowers failed to liquidate the outstanding dues. Respondent No.1/UCO Bank thereafter approached the Debt Recovery Tribunal (hereinafter referred to as DRT). On an application under Section 19 of the Recovery of Debts and Bankruptcy Act (RDB Act) and the same was registered as O.A. No. 1778/2019 before the DRT. 6. On 28.04.2023, the Recovery Officer passed an ex-parte judgment against the borrowers (Sarita Seengal & Ors) as the borrowers did not appear before the DRT, and ordered that the Secured Creditor UCO Bank was entitled to receive Rs.81,19,902.17/- along with 11.50% interest, and that the Respondent UCO Bank was entitled to sell the mortgaged property for the 6 realization of the dues and further ordered for issue of a Recovery Certificate under section 19(22) of the RDB Act to the Respondent UCO Bank. An Intervenor, Roshan Jain in the Execution proceedings pending before the DRT Jabalpur in RC 219/2023 submitted an application before the DRT contending that he had purchased the Secured Property from Mrs. Sarita Seengal on 15.10.2018 and thereafter obtained Freehold rights over the property from Municipal Corporation, Bhilai. The Intervenor therefore challenged the Recovery certificate issued by the DRT under Section 19(22) of the RDB Act in favor of the Respondent UCO Bank. The Learned DRT vide order dated 11.07.2025 dismissed the application filed by the Intervenor Roshan Jain stating that once the charge of equitable mortgage was created in favor of Respondent No.1/ UCO Bank herein, the same could sold to the Intervenor Roshan Jain and the sale was null and void. Further, the Recovery officer, DRT also held that under section 26 of the RDBFI Act 1993, the Recovery Officer has no jurisdiction to entertain any challenge to Recovery certificate once it has been issued. Thus, the application of the Intervenor Roshan Jain was dismissed by the DRT. Respondent No.1/UCO Bank thereafter made a request to the Recovery officer of the DRT for the auction of the Secured Property and the same was allowed by the Recovery officer vide order dated 22.08.2025. In furtherance of the same, an e-auction of the property was conducted on 08.10.2025 by Respondent No.1/UCO Bank wherein one Sachin Jain/respondent No.3 emerged as the highest bidder with a bid of Rs.2,77,10,000/-. A Sale Certificate was granted to the Auction Purchaser on 18.12.2025 after the same was directed by the DRT vide order dt.01.12.2025 which was collected by one Swapnil Jain who was authorized representative on behalf of the Auction Purchaser. 7. On 31.12.2025 an application was filed by the present applicant, YES Bank as an Intervener before the Recovery Officer of the DRT challenging the 7 orders dated 11.07.2025 and 18.12.2025 stating that Sarita Seengal had sold the property to Roshan Jain, which was further sold by Roshan Jain to Pawni Gupta/respondent No.2 vide an unregistered sale deed. Pawni Gupta along with others took a Home Loan of Rs.85,00,000/- and therefore contended that the auction was invalid as the applicant has a prior charge over the property. The learned D.R.T vide order dated 02/01/2026 has ordered that the Application of the Intervenor was hit by Res Judicata as the same issue was already decided by the D.R.T whereby the sale to Roshan Jain was already declared invalid and therefore declared the auction to be valid. Further, an appeal under Section 30(1) of RDB Act was filed by intervenor Roshan Jain challenging the order dated. 11.07.2025 but the same has been dismissed by Order dated 29.01.2026 in Appeal No.17/2025 by the DRT finding no merit in the application. Pawani Gupta/respondent No.3/intervenor, the purchaser of the property via unregistered sale deed, filed a civil case no. 230A/2025 against respondent No.1/ UCO Bank herein, which has been dismissed by the learned Civil Judge on an application under Order 7 Rule 11 of CPC filed by respondent No.1/UCO Bank vide order dt. 08.10.2025. Respondent No.1 herein submits that it has a prior charge over the property on the basis of the fact that the loan was advanced to Sarita Seengal and other borrowers against the Secured Property in 2016 and the CERSAI Registration, for registering of the Equitable Mortgage, and this fact itself would show that the same was obtained by respondent No.1/UCO Bank on 29.03.2017. The applicant contending that they had advanced a Home Loan to Mrs. Pawni Gupta amongst other borrowers against the same Secured Property and therefore contending that they have a charge over the Secured Property is not a valid submission on two grounds. Firstly, the sale deed issued in favor of Roshan Jain by Sarita Seengal after the equitable mortgage had been created in favor of UCO Bank, has been rightly declared 8 void by DRT Jabalpur and therefore further conveyance in favor of Mrs. Pawni Gupta is also void. The fact that Mrs. Sarita Seengal had conveyed the property in favour of Roshan Jain has also been challenged by her by filing a complaint case before C.J.M. Durg under Section 420 of I.P.C. against Roshan Jain contending that they have committed a fraudulent transfer of her property. Furthermore, the conveyance in favor of Mrs. Pawni Gupta was through an unregistered Sale Deed which is hit by Section 17 of the Registration Act. Thus, the property was never conveyed legally to Mrs. Pawni Gupta. Secondly, even if it is assumed that there was a valid conveyance is in favor of Mrs. Pawni Gupta and a valid charge over the Secured Property was created in favor of the applicant Yes Bank herein, still the fact remains that the CERSAI Registration was obtained by the Respondent Bank on 29.03.2017 whereas the applicant herein got the CERSAI registration on 03.08.2024 which is later in time than respondent No.1/UCO Bank. Respondent No.1 has a prior charge than the applicant and therefore there is no merit in the application of the applicant herein on the basis of the above arguments. 8. Furthermore, the applicant has referred to the decision of the Hon'ble Apex Court in the case of Bank of India vs M/s. Nangli Rice Mills Pvt. Ltd. (2025 INSC 765) to argue that the present case is covered under the afore- mentioned decision and according to judgement, the present case being a dispute between two financial institutions regarding the priority of rights must be referred for arbitration. However, respondent No.1/UCO Bank submits that the Judgment cited by the applicant relates to the proceedings under the SARFAESI Act, whereas in the present case the auction proceedings have been conducted by the Recovery Officer under the RDB Act (Recovery of Debt and Bankruptcy Act, 1993) and therefore the aforesaid precedent is not applicable to the present case and thus, the present dispute should not be 9 referred to arbitration and the application of the applicant must be dismissed at the threshold. Respondent No.1/UCO Bank humbly submits that, in view of the foregoing submissions the application of the applicant sans merit and deserves to dismissed with costs. Hence, he prays that this petition may be rejected. 9. Vide order dated 05.02.2026, I.A. No. 01/2026, application filed by Intervernor – Pawani Gupta was allowed and the said intervenor was arrayed as respondent No.2. Thereafter, I.A. No. 03/2026 was allowed vide order dated 27.04.2026 and the intervenor Sachin Jaik was also directed to be impleaded as respondent No.3. 10. Today, learned counsel for the respondent Nos. 2 and 3 though have appeared, but no return has been filed nor any submissions have been advanced by them on behalf of the respective respondent. 11. I have heard learned counsel appearing for the parties, perused the pleadings and documents appended thereto. 12. After hearing learned counsel for the parties and upon perusal of the pleadings and documents placed on record, and the fact that the entire dispute projected by the applicant/YES Bank pertains to enforcement and priority of security interest over the secured asset, which has already been subject matter of adjudication before the Debt Recovery Tribunal in proceedings initiated under the RDB Act. It is not in dispute that respondent No.1/UCO Bank had created equitable mortgage over the secured property in the year 2016 and the same was duly registered with CERSAI on 29.03.2017, much prior to the alleged mortgage created in favour of applicant- YES Bank in the year 2024. The material placed on record further demonstrates that respondent No.1 had already obtained recovery 10 certificate from the DRT and consequential auction proceedings were conducted pursuant thereto. This Court further finds that the applicant has failed to demonstrate existence of any arbitration agreement between the parties so as to invoke jurisdiction under Section 11(6) of the Act of 1996. In absence of a valid arbitration agreement, reference to arbitration cannot be directed merely on the basis of inter se dispute regarding priority of charge between two secured creditors. The reliance placed by the applicant upon the judgment rendered in Bank of India vs. M/s Arj Nangli Rice Mills Pvt. Ltd. is misconceived and distinguishable on facts, inasmuch as the present controversy arises out of proceedings conducted under the RDB Act after issuance of recovery certificate and culmination of auction proceedings by the Recovery Officer. 13. In view of the aforesaid facts and circumstances, this Court is of the considered opinion that the present arbitration request application is nothing but an attempt to reopen issues already adjudicated by the competent forum under the special statute. The dispute involved is not liable to be referred to arbitration in absence of any arbitration agreement. Consequently, the application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 is hereby rejected. Sd/- (Ramesh Sinha) Chief Justice Preeti