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2026 Supreme(SC) 761

SUPREME COURT OF INDIA
Dipankar Datta, Satish Chandra Sharma, JJ.
H.D.F.C. Bank Limited – Appellant
Versus
Kishore K. Mehta (Dead) Thr. Lrs. – Respondents
Civil Appeal No. 4211 of 2010 [Arising OUT of SLP (Civil) NO. 18860 OF 2008]
Decided On : 13-07-2026

Advocates appeared:
For the Appellant(s) : Mr. Gopal Jain, Sr. Adv. Mr. Sanjay Gupta, Adv. Ms. Aditi Pundhir, Adv. Mr. Raghu Aggarwal, Adv. Mr. Alok Tripathi, AOR
For the Respondent(s): M/S. Chambers Of Kartik Seth, AOR Mr. Tarun Mehra, Adv. Mr. Dakshesh Vyas, Adv. Mr. Shivendra Singh, AOR Ms. Aryama Singh Rajput, Adv. Mr. Devdatt Kamat, Sr. Adv. Mr. Utsav Trivedi, Adv. Mr. Arpit Gupta, Adv. Ms. Manini Roy, Adv. Mr. Girish Bhardwaj, AOR Mr. Varun Singh, AOR Mr. Gaurav Nair, Adv. Ms. Nishtha Kumar, Adv. Ms. Veera Mathai, Adv. Ms. Bhairavi Sn, Adv. Mr. Shrom Sethi, Adv. Mrs. Archana Singh, Adv. Mr. Imran Khan, Adv. Mr. Inam Ul Haq, Adv. Mr. Varun Agarwal, Adv. Mr. Ashish Wad, Adv. Mr. Manoj Wad, Adv. Ms. Swati Arya, Adv. Mr. Deepanshu Verma, Adv. M/s J S Wad And Co, AOR Mrs. Bina Gupta, AOR Mr. Nishe Rajen Shonker, AOR Mrs. Anu K Joy, Adv. Mr. Alim Anvar, Adv. Mr. Santhosh K, Adv.

IMPORTANT POINT
Lis must be decided on the basis of rights and liabilities as they stood on the date of institution, unless statute or equity of case otherwise requires.

Headnote:
Presidency Towns Insolvency Act, 1909 – Section 9(2) – Insolvency notice – Issue emerging from present appeal must be decided on the basis of law as it stood when litigation commenced – If denying a suitor relief based on accrual of post-natal events because of Court’s delay to decide lis is impermissible, by same logic, converse must also hold – A claim which was untenable on the date suitor entered portals of Court cannot become tenable simply because a fortuitous event during pendency of trial has made it so – Lis must be decided on the basis of rights and liabilities as they stood on the date of institution, unless statute or equity of case otherwise requires – Section 19(22A), even if it were to apply on its very terms, Appellant-Bank is not entitled to any relief – Proceedings in notice of motion before Single Judge, if pending, will stand closed qua deceased original respondent. (Paras 15, 18, 22 and 23)
Facts of the case:
The issue in the present appeal, at instance of HDFC Bank Limited, is whether an insolvency notice under Section 9(2) of Presidency Towns Insolvency Act, 1909 can be issued on the basis of a recovery certificate issued by a Debts Recovery Tribunal.
Findings of Court:
No order is required to be made now against Respondents 1.2 and 1.3 in view of dismissal of appeal. Appellant-Bank, if so advised, can work out its remedies against them, in accordance with law, if not barred by limitation or otherwise.
Result : Appeal dismissed.

JUDGMENT :

DIPANKAR DATTA, J.

1. The issue in the present appeal, at the instance of HDFC Bank Limited¹[Appellant-Bank], is whether an insolvency notice under Section 9(2) of the Presidency Towns Insolvency Act, 1909²[Insolvency Act] can be issued on the basis of a recovery certificate issued by a Debts Recovery Tribunal³[DRT].

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 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. Mehta⁴[original respondent] 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 (rechristened as the Recovery of Debts and Bankruptcy Act⁵[RDB 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 Recovery Tribunal, Mumbai⁶[DRT, Bombay] by filing an application⁷[Original Application No. 146 of 2002]. By an order dated 26th October, 2004, the DRT, Bombay directed issuance of a recovery certificate for Rs. 14,74,51,929.35 against the original respondent, followed by a recovery certificate dated 30th November, 2004. Based on the recovery certificate, the Insolvency Registrar issued an insolvency notice⁸[No. N/224 of 2006] 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 Judicature at Bombay⁹[High Court] by taking out a Notice of Motion¹⁰[No. 40 of 2007] under Section 9(5)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. ….], 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 recovery certificate¹²[vide common order dated 4th September, 2007 in Notice of Motion No.40 Of 2007 in Notic

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2026 Supreme(SC) 761

SUPREME COURT OF INDIADipankar Datta, Satish Chandra Sharma, JJ.H.D.F.C. Bank Limited – AppellantVersusKishore K. Mehta (Dead) Thr. Lrs. – RespondentsCivil Appeal No. 4211 of 2010 [Arising OUT of SLP (Civil) NO. 18860 OF 2008]Decided On : 13-07-2026

IMPORTANT POINTLis must be decided on the basis of rights and liabilities as they stood on the date of institution, unless statute or equity of case otherwise requires.

Cases Referred (5)

SUPREME COURT OF INDIA
Dipankar Datta, Satish Chandra Sharma, JJ.
H.D.F.C. Bank Limited – Appellant
Versus
Kishore K. Mehta (Dead) Thr. Lrs. – Respondents
Civil Appeal No. 4211 of 2010 [Arising OUT of SLP (Civil) NO. 18860 OF 2008]
Decided On : 13-07-2026

IMPORTANT POINT
Lis must be decided on the basis of rights and liabilities as they stood on the date of institution, unless statute or equity of case otherwise requires.