H.D.F.C.Bank Limited vs Kishore K.Mehta (Dead) Thr. Lrs.

REPORTABLE
2026 INSC 688


IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION



CIVIL APPEAL NO. 4211 OF 2010
[ARISING OUT OF SLP (CIVIL) NO. 18860 OF 2008]

H.D.F.C. BANK LIMITED … APPELLANT
VERSUS
KISHORE K. MEHTA (DEAD) THR. LRS. … RESPONDENTS




J U D G M E N T
DIPANKAR DATTA, J.
1
1. The issue in the present appeal, at the instance of HDFC Bank Limited ,
is whether an insolvency notice under Section 9(2) of the Presidency
2
Towns Insolvency Act, 1909 can be issued on the basis of a recovery
3
certificate issued by a Debts Recovery Tribunal .
2. At the threshold, Section 9(2) of the Insolvency Act is reproduced below

for ease of understanding:
9. Acts of insolvency. –
(1) …
(2) Without prejudice to the provisions of sub-section (1), a debtor
commits an act of insolvency if a creditor, who has obtained a

1
Appellant-Bank
2
Insolvency Act
3
DRT
1

decree or order against him for the payment of money (being a decree
or order which has become final and the execution whereof has not been
stayed), has served on him a notice (hereafter in this section referred to
as the Insolvency notice) as provided in sub-section (3) and the debtor
does not comply with that notice within the period specified
therein : …
(3) …
(4) …
(5) …
(emphasis ours)

3. In brief, Section 9(2) of the Insolvency Act provides that a debtor
commits an “act of insolvency” where a creditor has obtained a “decree
or order” against the debtor for payment of money. In the present case
however, the Appellant-Bank sought to proceed against Kishore K.
4
Mehta by relying not on a “decree or order” in the strict statutory sense,
but on the strength of a recovery certificate issued by the DRT under the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993
5
(rechristened as the Recovery of Debts and Bankruptcy Act ). We are
tasked to decide whether a “decree or order” will include a recovery
certificate issued by a DRT under the pre-amended RDB Act.
4. Facts in brief are these. The original respondent was a director of
Beautiful Diamonds Ltd., which had availed credit facilities from a
consortium of 15 banks, including the Appellant-Bank, for its diamond
business. The facilities were secured by mortgage through deposit of
title deeds, and the original respondent, along with other directors,
executed personal guarantees. Upon default, and after the invocation of
personal guarantees failed, the Appellant-Bank approached the Debt

4
original respondent
5
RDB Act
2

6 7
Recovery Tribunal, Mumbai by filing an application . By an order dated
th
26 October, 2004, the DRT, Bombay directed issuance of a recovery
certificate for Rs. 14,74,51,929.35 against the original respondent,
th
followed by a recovery certificate dated 30 November, 2004. Based on
the recovery certificate, the Insolvency Registrar issued an insolvency
8
notice under Section 9(2) of the Insolvency Act upon an approach being
made by the Appellant-Bank. This notice is the core of this litigation. The
original respondent challenged the notice before the High Court of
9 10
Judicature at Bombay by taking out a Notice of Motion under Section
11
9(5) , contending that a recovery certificate of the DRT could not form
the basis of an insolvency notice. A Single Judge, while keeping the
notice of motion pending, considered the present issue and later held
that no insolvency notice could have been issued on the basis of a
12 13
recovery certificate , and the Division Bench, vide the impugned order
upheld the order of the Single Judge. Aggrieved, the Appellant-Bank

6
DRT, Bombay
7
Original Application No. 146 of 2002
8
No. N/224 of 2006
9
High Court
10
No. 40 of 2007
11
(5) Any person served with an insolvency notice may, within the period specified therein
for its compliance, apply to the Court to set aside the insolvency notice on any of the
following grounds, namely:—
(a) …;
(b) that he is entitled to have the decree or order set aside under any law providing for
the relief of indebtedness and that—
(i) he has made an application before the competent authority under such law for
the setting aside of the decree or order; or
(ii) the time allowed for the making of such application has not expired;
(c) that the decree or order is not executable under the provisions of any law referred to
in clause (b) on the date of the application.
Explanation. ….
12 th
vide common order dated 4 September, 2007 in Notice of Motion No.40 Of 2007 in
Notice No. N/224 of 2006 and other connected matters
13 th
judgment and order dated 30 June 2007 in Appeal No. 710/2007 by the High Court
3

14 th
preferred the present appeal , whereupon leave was granted on 4
th
May, 2010. Vide order dated 11 July, 2008, this Court had stayed the
proceedings in Notice of Motion No. 40 of 2007 and such stay was
th
continued vide order dated 4 May, 2010.
th
5. During pendency of the appeal, the original respondent died on 20 May,
th
2024. Application dated 11 August, 2024 of the Appellant-Bank for
substitution of the legal representatives of the original respondent (since
th
deceased) was allowed by the Registrar on 10 February, 2025.
Respondents 1.1 to 1.4 were substituted in place of the deceased
original respondent. They are his three sons and wife.
6. The Single Judge as well as the Division bench of the High Court relied
on the decision of this Court in Paramjeet Singh Patheja v. ICDS
15
Ltd. , wherein the issues involved were: whether an arbitration award
is a “decree” for the purpose of Section 9, and whether insolvency
proceedings under Section 9(2) of the Insolvency Act can be initiated
based on an arbitral award. This Court answered both the questions in
the negative and held that the words "decree or order" cannot include
an arbitral award.
7. The case of the Appellant-Bank is that:
(i) In Section 9(2), the legislature has only used the word “decree or
order” and not ‘decree or order of a Court’, whereas in Section 9(1)(e &
h), the term "Decree of any Court" is used; therefore, the term is wide

14
arising out of SLP (Civil) No. 18860/2008
15
(2006) 13 SCC 322
4

enough to cover a recovery certificate issued by the DRT, Mumbai. By
using two different words in the same section, the legislature intended
two different meanings.
(ii) Prior to the 1978 Amendment to the Insolvency Act which introduced
Section 9(2) to 9(5), Section 9(1)(e) and (h) referred to a “decree for
payment of money” “of any Court.” However, while introducing Section
9(2), Parliament deliberately omitted the phrase “of any Court” and
added the words “or order.” This indicates a conscious legislative intent
to include not only decrees of civil courts but also orders passed by
judicial, quasi-judicial, or statutory authorities.
(iii) Reliance placed by the High Court on Paramjeet Singh Patheja
(supra) is misplaced as it was delivered in the context of arbitration
proceedings and not the RDB Act.
(iv) The RDB Act transferred jurisdiction of bank and financial institution
claims above Rs.10 lakhs from the civil courts to the DRT, while the civil
courts retained jurisdiction for smaller claims. This shows that the DRT
effectively steps into the role of the civil court for high value recovery
matters. It would be anomalous if a civil court decree for a small amount

could support insolvency proceedings, but a DRT judgment or recovery
certificate for a much larger bank debt could not. Therefore, since the
DRT has all the trappings of a civil court, a recovery certificate issued by
it should be treated as equivalent to a civil court decree for relevant legal
purposes.
5

(v) Where two statutes operate in different fields and there is no direct
conflict, both must be allowed to operate. The Insolvency Act and the
RDB Act occupy different fields: one concerns insolvency status and the
collective rights of the creditors, the other concerns bank debt
adjudication and recovery.
8. Resting his case on the above points, Mr. Gopal Jain, learned senior
counsel for the Appellant-Bank, sought appellate interference and
prayed for setting aside of the impugned order of the High Court.
9. Mr. Dhruv Mehta, learned senior counsel for some of Respondents
opposed the contentions while praying for dismissal of the appeal.
10. Having perused the reasoning given in Paramjeet Singh Patheja
(supra) as also the reasoning given by the Single Judge and the Division
Bench, inter alia , following the said decision, we find no reason to
disagree with the same.
11. True it is, the question involved in Paramjeet Singh Pathreja (supra)
arose with respect to an arbitral award; nevertheless, its ratio rests on
wider principle. This Court noted that: (i) the Insolvency Act must be
strictly construed as insolvency has grave civil consequences; (ii) the
term “decree or order" must be understood in light of the definition
contained in the Code of Civil Procedure, 1908; and (iii) insolvency
notice is not a mode of execution/enforcement. Relevant excerpts from
the decision are reproduced below:

17. We are of the view that the Presidency Towns Insolvency Act, 1909 is
a statute weighed down with the grave consequence of “civil death” for a
person sought to be adjudged an insolvent and therefore the Act has to be
6

construed strictly. The Arbitration Act was in force when the PTIA came into
operation. Therefore it can be seen that the lawmakers were conscious of
what a “decree”, “order” and an “award” are. Also the fundamental
difference between “courts” and “arbitrators” was also clear as back as in
1909.

20. Sections 2(2) and 2(14) CPC define what “decree” and “order” mean.
For seeing whether a decision or determination is a decree or order, it must
necessarily fall in the language of the definition. Section 2(2) CPC defines
“decree” to mean…

21. The words “court”, “adjudication” and “suit” conclusively show that only
a court can pass a decree and that too only in a suit commenced by a plaint
and after adjudication of a dispute by a judgment pronounced by the court.
It is obvious that an arbitrator is not a court, an arbitration is not an
adjudication and, therefore, an award is not a decree.

30. The PTIA, 1909 does not define “decree” or “order” for the simple
reason that the meaning of these terms has been well settled since the Civil
Procedure Code of 1859 and 1882 and had been again defined in the Civil
Procedure Code of 1908. The other indicators that an award of arbitrators
is not intended to be a “decree” or “order” are:
( i ) Sections 2( a ) and ( b ) define “creditor” to include a decree-holder
and a “debt” to include a judgment-debt and “debtor” to include a
judgment-debtor.
( ii ) It is quite clear from Section 33 CPC that a decree, being the
formal expression of adjudication by a court, follows only upon
pronouncement of judgment by the court. It is equally clear that
courts and judges render judgments; arbitrators only make awards.
( iii ) Sections 9( e ) and ( h ) put the matter beyond controversy by
expressly mentioning “decree of any court for the payment of
money”. Thus as enacted in 1909, the Insolvency Act dealt only with
debtors who had suffered decrees by any court for the payment of
money.

33. The words “litigant”, “money decree”, “judgment-debtor”, “decretal
amount” and “decree-holder” plainly show that Parliament intended to deal
with litigants who do not pay amounts decreed by civil courts. There is no
reference at all to arbitrations and awards in the Statement of Objects and
Reasons and in sub-sections (2) to (5) of Section 9, which were introduced
in 1978 by Parliament.

34. As already noticed, “litigation” has been held to mean “a legal action,
including all proceedings therein, initiated in a court of law”. Obviously
therefore Parliament had in mind debts due to “litigants” i.e. debts due by
reason of decrees of courts. It is well settled that courts, unlike arbitrators
or Arbitral Tribunals, are the third great organ under the Constitution—
legislative, executive and judicial. Courts are institutions set up by the State
in the exercise of the judicial power of the State, which will be seen from
the cases mentioned hereinbelow: …

7

41. Issuance of a notice under the Insolvency Act is fraught with serious
consequences: it is intended to bring about a drastic change in the status
of the person against whom a notice is issued viz. to declare him an
insolvent with all the attendant disabilities. Therefore, firstly, such a notice
was intended to be issued only after a regularly constituted court, a
component of the judicial organ established for the dispensation of justice,
has passed a decree or order for the payment of money. Secondly, a notice
under the Insolvency Act is not a mode of enforcing a debt; enforcement is
done by taking steps for execution available under CPC for realising monies.

12. Accordingly, this Court reasoned that an arbitral award is not a “decree
or order”. It is true that one more reason which weighed with the Court
was that when the Insolvency Act was enacted, an arbitration law was
already in force and, therefore, the lawmakers, being aware of the
meaning of an “award”, consciously chose to exclude it from the
Insolvency Act. This is not the situation in the present case, as the
concept of a recovery certificate came into existence only after the RDB
Act was enacted in 1993. Be that as it may, in view of the wider ratio
noted above, this distinction is of no consequence.
13. Mr. Gopal Jain impressed upon us that Section 19(22)A of the RDB Act,
16
which was included vide an amendment in the year 2016 , explicitly
provides that a recovery certificate issued by a DRT is deemed to be a
decree of the Court for the purpose of initiation of insolvency
proceedings under any law. Section 19(22A) is reproduced below:
(22A) Any recovery certificate issued by the Presiding Officer under sub-
section (22) shall be deemed to be decree or order of the Court for the
purposes of initiation of winding up proceedings against a company
registered under the Companies Act, 2013 (18 of 2013) or Limited Liability
Partnership registered under the Limited Liability Partnership Act, 2008 (6
of 2009) or insolvency proceedings against any individual or partnership
firm under any law for the time being in force, as the case may be.


16
Act 44 of 2016
8

14. Insertion of sub-section (22A) in Section 19 of the RDB Act, we are
inclined to the view, instead of supporting the Appellant-Bank
demolishes its case. Section 19(22A), as it now stands, aids in settling
the issue. The fact that Parliament found it necessary in 2016 to insert
sub-section (22A) in Section 19 of the RDB Act for the express purpose
of equating a recovery certificate with a ‘decree or order’ is clear
legislative recognition that such equivalence did not exist earlier. By
necessary implication, a recovery certificate issued prior to the 2016
amendment could not form the basis for initiating insolvency
proceedings. To hold otherwise would be to supply what the legislature
omitted – a clear casus omissus . That apart, it is significant that the
amendment has not been given retrospective effect. Matters would
perhaps have been simpler, had the amendment been made earlier.
15. Additionally, we hold that the issue emerging from the present appeal
must be decided on the basis of the law as it stood when the litigation
commenced.
17
16. To support this conclusion, we rely on Rameshwar v. Jot Ram , which
18
quoted P. Venkateswarlu v. Motor & General Traders : “it is basic
to our processual jurisprudence that the right to relief must be judged
to exist as on the date a suitor institutes the legal proceeding”. This
Court further went on to observe that it is an emphatic statement that
the right of a party is determined by the facts as they exist on the date

17
AIR 1976 SC 49
18
AIR 1975 SC 1409
9

the action is instituted . Granting the presence of such facts, then he is
entitled to its enforcement. Later developments cannot defeat his right
because, had the court found his facts to be true the day he sued he
would have got his decree. The Court’s procedural delays cannot deprive
him of legal justice or right crystallised in the initial cause of action.
19
17. To similar effect is the decision in Beg Raj Singh v. State of U.P. .
The relevant passage from such decision reads as follows:
7. … The ordinary rule of litigation is that the rights of the parties stand
crystallized on the date of commencement of litigation and the right to relief
should be decided by reference to the date on which the petitioner entered
the portals of the court. A petitioner, though entitled to relief in law, may
yet be denied relief in equity because of subsequent or intervening events
i.e. the events between the commencement of litigation and the date of
decision. The relief to which the petitioner is held entitled may have been
rendered redundant by lapse of time or may have been rendered incapable
of being granted by change in law. There may be other circumstances which
render it inequitable to grant the petitioner any relief over the respondents
because of the balance tilting against the petitioner on weighing inequities
pitted against equities on the date of judgment. Third-party interests may
have been created or allowing relief to the claimant may result in unjust
enrichment on account of events happening in-between. Else the relief may
not be denied solely on account of time lost in prosecuting proceedings in
judicial or quasi-judicial forum and for no fault of the petitioner. A plaintiff
or petitioner having been found entitled to a right to relief, the court would
as an ordinary rule try to place the successful party in the same position in
which he would have been if the wrong complained against would not have
been done to him. …

18. If denying a suitor relief based on accrual of post-natal events because
of the Court’s delay to decide the lis is impermissible, by the same logic,
the converse must also hold. A claim which was untenable on the date
the suitor entered the portals of the Court cannot become tenable simply
because a fortuitous event during the pendency of the trial has made it
so. The lis must be decided on the basis of rights and liabilities as they

19
(2003) 1 SCC 726
10

stood on the date of institution, unless the statute or equity of the case
otherwise requires.
19. We, therefore, hold that Section 19(22A) of the RDB Act does not aid
the Appellant-Bank.
20. Consequently, the law laid down in Paramjeet Singh Patheja (supra)
applies with full force. We are, therefore, unable to accept the
submission advanced by Mr. Jain.
21. We place on record Mr. Jain’s fair submission that Paramjeet Singh
Patheja (supra) was doubted by this Court in Sundaram Finance
20
Limited v Ashok D Soniminde, Mumbai but subsequently, vide
rd 21
order dated 23 April, 2015 , a 3-Judge Bench of this Court felt that
“that the judgment delivered in the case of Paramjeet Singh (supra),
does not require any reconsideration.”
22. Before parting, we record that Mr. Mehta is also right in pointing out that
Section 19(22A), even if it were to apply on its very terms, the
Appellant-Bank is not entitled to any relief. The phrase “recovery
certificate issued by … under … shall be deemed to be decree or order
for … initiation of … insolvency proceedings … under any law for the time
being force …” has been emphasised by him in support of the proposition
that the stage of initiation of proceedings did not fructify because the
notice of insolvency itself, issued under Section 9(2) of the Insolvency
Act, stood quashed by the High Court.

20 th
order dated 10 January, 2008 in SLP (Civil) 23495 of 2007
21
Civil Appeal No.485 OF 2008
11

23. We, thus, dismiss the present appeal. The proceedings in notice of
motion before the Single Judge, if pending, will stand closed qua the
deceased original respondent.
24. Along with the deceased original respondent, his two sons (Respondents
1.2 and 1.3) were also certificate debtors. However, the Appellant-Bank
proceeded only against the original respondent (since deceased).
Though the lis did survive qua the deceased original respondent in view
22
of the observation made in the decision of this Court in Ebrahim
23
Aboobaker v. Tek Chand Dolwani , no order is required to be made
now against the Respondents 1.2 and 1.3 in view of dismissal of the
appeal. Appellant-Bank, if so advised, can work out its remedies against
them, in accordance with law, if not barred by limitation or otherwise.
25. Pending application, if any, stands disposed of.


………..…………………J.
(DIPANKAR DATTA)



……………………….………………J.
(SATISH CHANDRA SHARMA)

NEW DELHI;
July 13, 2026.

22
the principle underlying the insolvency law seems to be that the death of the insolvent

during the pendency of the application for insolvency does not cause the proceedings to
abate but that they must be continued so that his property could be administered for the
benefit of the creditors.
23
(1953) 1 SCC 621
12