OCD-22 ORDER SHEET IN THE HIGH COURT AT CALCUTTA COMMERCIAL DIVISION ORIGINAL SIDE AP-COM/456/2026 STATE BANK OF INDIA AND ANOTHER VS CANARA BANK AND ANOTHER BEFORE: The Hon’ble JUSTICE GAURANG KANTH Date : 10th July, 2026. Appearance: Mr. Debashis Saha, Adv. Mr. Avirup Roy Sanyal, Adv. Ms. Sucheta Pal, Adv. Mr. Jyotishman Sarkar, Adv. …for petitioners Mr. Shyamal Kr. Sinha, Adv. Mr. Shreyas Sinha, Adv. …for respondents The Court: Affidavit of service is taken on record. This is a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 read with Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), seeking appointment of an arbitral tribunal to adjudicate disputes between the petitioners and the respondents relating to competing security interests claimed over two immovable properties described in Schedule "A" and Schedule "B" of the petition. The dispute concerns the validity and priority of the respective mortgage interests asserted by the parties over two secured 2 assets, and the legality of measures initiated by the respondent under the SARFAESI Act. Learned Counsel for the petitioner submitted that on 6th November, 2021, the State Bank of India sanctioned a home loan in favour of one Sri Abhijit Kar for purchase of Flat No. 303, Block-B, Third Floor, in a project developed by Roofers Infrastructure India Private Limited, and that the borrower created a valid security interest in favour of the petitioner by depositing the title deeds of the flat. The petitioner subsequently learned that the respondent Bank had issued a demand notice under Section 13(2) of the SARFAESI Act dated 11th September, 2024, alleging that the same flat had earlier been sold to Smt. Jayanti Sounth, wife of the developer's Managing Director, who had obtained financing from the respondent Bank in January, 2020 and defaulted. The respondent Bank subsequently issued a possession notice under Section 13(4) of the SARFAESI Act dated 21st January, 2025. The petitioner alleged that the transfer in favour of Smt. Jayanti Shounth was fraudulent and collusive, engineered to create a competing mortgage in favour of the respondent Bank. Similarly, Learned Counsel submitted that the petitioner had sanctioned another home loan on 20th December, 2019 in favour of Shri Pankaj Kumar Singh for Flat No. 103, Block-F, First Floor, originally purchased from the same developer. The petitioner alleged that this property was fraudulently transferred to Prasanta Biswas, brother-in-law of the developer's Managing Director, who had similarly obtained financing from the respondent Bank in January, 2020 by creating a mortgage over the property. The respondent Bank 3 issued a Section 13(2) demand notice on 11th September, 2024 and a Section 13(4) possession notice dated 21st January, 2025 in respect of this flat as well. The petitioner contended that the original borrowers continue to remain in possession of the respective flats, and that the mortgages created in favour of the respondent Bank are invalid and incapable of prevailing over the petitioner's prior security interest, having arisen from fraudulent transactions in collusion with the developer and related persons. Learned Counsel for the petitioner submitted that under Section 11 of the SARFAESI Act, disputes between banking institutions relating to securitisation, reconstruction, or non-payment are required to be resolved through arbitration or conciliation. Accordingly, the petitioner issued a notice dated 27th April, 2026 invoking arbitration under Section 21 of the Arbitration and Conciliation Act, proposing Mr. Mohit Gupta, Advocate, as sole Arbitrator; this notice was received by the respondents on 29th April, 2026. The respondents, however, failed to take steps for appointment of an arbitrator and instead proceeded with SARFAESI measures, issuing a legal notice scheduling auction of both properties for 24th June, 2026. Learned Counsel for the petitioner submitted that the dispute falls within the ambit of Section 11 of the SARFAESI Act, and that, per Supreme Court precedent, the existence of a statutory arbitration mechanism suffices to invoke jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, particularly given the respondents' failure to act on the arbitration notice. 4 Learned Counsel for the respondents did not oppose this contention and consented to appointment of an arbitrator. Both parties jointly proposed Mr. Siddhartha Lahiri, Advocate, as sole Arbitrator. The Court accordingly appointed Mr. Siddhartha Lahiri (Mob. No. 9830082839), Advocate, as Arbitrator to adjudicate the disputes between the parties, directing that he enter reference in compliance with Section 12(5) of the Arbitration and Conciliation Act, 1996, and that he be entitled to fix his remuneration under the Fourth Schedule of the Act. A copy of the order was directed to be communicated to the learned Sole Arbitrator for necessary steps. The Court clarified that all questions relating to arbitrability, admissibility of claims, limitation, jurisdiction, and other issues are left open to be urged before the learned Sole Arbitrator, to be decided in accordance with law. With the aforesaid directions, the present petition stands disposed of. (GAURANG KANTH, J.) S.Mandi/bp.