1. This writ petition is filed by the HDFC Bank Limited (hereinafter referred to as the bank) questioning the validity of orders dated 9th March, 2011 passed in Appeal No.116/2011 by the Debt Recovery Appellate Tribunal, Delhi (DRAT for short) which had confirmed the orders dated 8th October, 2010 passed by the Debt Recovery Tribunal – II (DRT-II for short) in OA 178/2009. The bank had filed OA before the DRT for recovery of the outstanding amount against the loan disbursed to the respondent and in this OA, the respondent herein had filed application under Section 8 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) on the ground that Clause 14.7 of the loan agreement provided for adjudication of disputes through arbitration by a sole arbitrator and, therefore, the respondent prayed for stay of the proceedings of the OA. This application was allowed by the Presiding Officer vide order dated 8th October, 2010 holding that once there was an arbitration agreement between the parties, provisions of the Arbitration Act as contained in Section 8 of the Arbitration Act would

prevail over the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (“RDB Act”). The DRT, thus, dismissed the OA as not maintainable giving liberty to the bank to refer the matter to the arbitration as per law. The bank went in appeal but this order is maintained by the DRAT dismissing the appeal in limine. The present writ petition is filed against the aforesaid orders.

2. It is clear from the brief description of the factual matrix noted above that the core issue is which of the two enactments, namely, Arbitration Act and RDB Act is to prevail over the other. The Division Bench has framed this legal question in the following format:

“Whether the provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act) are excluded in respect of proceedings initiated by banks and financial institutions under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDB Act).”

2. 3. When the matter came up for hearing before the Division Bench, another judgment of Division Bench of this Court in Kohinoor Creations and Ors. v. Syndicate Bank, 2005 (2) Arb. LR 324 (Delhi) was referred to wherein it has been inter alia held that in view of the provisions of Section 34 of the RDB Act, the provisions of Arbitration Act stand excluded and on that basis, it was argued that the view held by DRT and DRAT in the impugned orders did not reflect the correct legal position which was contrary to the aforesaid judgment of this Court. The Division Bench considered it proper that the matter required to be settled by a larger bench giving the following reasons therefor:

“Learned counsel for the petitioner has referred to a judgment of Division Bench of this court in Kohinoor Creations and Ors. Vs. Syndicate Bank 2005 (2) ARBLR 324 Delhi wherein it has been inter alia held that in view of the provisions of section 34 of the RDB Act, the provisions of the Arbitration Act stand excluded. In coming to this conclusion, specific emphasis is laid on sub-section (2) of Section 34 of the RDB Act. Section 34 of the RDB Act reads as under:-

“34. Act to have over-riding effect-

(1). Save as otherwise provided in sub-section(2), the provisions of this Act shall have

effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

2). The provisions of this Act or the rules made there under shall be in addition to, and not in derogation of the Industrial Finance Corporation Act, 1948, the State Financial Corporation Act, 1951, the Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of India Ltd., 1984, the Sick Industrial Companies (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989.”

The submission of t