1. Bank filed recovery application before DRT—DRT returned OA on territorial jurisdiction ground—Appeal. (Para 2 )
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2026 Supreme(Online)(DRAT) 931
DEBT RECOVERY APPELLATE TRIBUNAL
Sudhir Kumar Jain, Chairperson
ICICI Bank Limited – Appellant
Versus
Varun Resources Limited – Respondent
Appeal No. 03 of 2025|TA No. 192 of 2022
Important Points
Execution of integral loan documents within a jurisdiction constitutes a "part of the cause of action" under Section 19(1)(c) of the RDB Act, 1993, conferring territorial jurisdiction regardless of where the loan was sanctioned, disbursed, or declared NPA.
Subject
Banking Law - Debt Recovery
Act Referred
Headnote
(A) Recovery of Debts and Bankruptcy Act, 1993 - Section 19(1)(c) - Territorial Jurisdiction - Cause of Action - Execution of loan documents in a particular place - Whether this constitutes part of the cause of action for filing an application before the concerned Tribunal - Held that "cause of action" is a bundle of essential facts necessary for the plaintiff to prove. If integral documents pertaining to a loan transaction, such as deeds of guarantee and pledge, are executed within the territorial jurisdiction of a Tribunal, it establishes that a part of the cause of action has arisen there. The mere fact that the loan was sanctioned, disbursed, and declared NPA at a different location does not negate the existence of a partial cause of action where the documents were executed. (Paras 5, 6, 7)
Facts of the case:
An application for recovery of debts was filed before the Tribunal in Delhi on the grounds that several loan documents, including the Deed of Personal Guarantee and Deed of Pledge, were executed in Delhi. However, the Tribunal returned the application, observing that the loan was sanctioned, disbursed, and declared as a Non-Performing Asset (NPA) in Mumbai, and thus, the execution of documents in Delhi was merely an attempt to claim partial cause of action.
Findings of Court:
The execution of integral loan documents in Delhi clearly establishes that a part of the cause of action for filing the original application arose within the local jurisdiction of Delhi. The observation that the execution was done solely to obtain the benefit of partial cause of action was based on conjectures and surmises.
Issues: Whether the execution of loan documents in Delhi, despite the sanction, disbursement, and NPA declaration occurring in Mumbai, confers territorial jurisdiction upon the Tribunal in Delhi under Section 19(1)(c) of the RDB Act, 1993.
Ratio Decidendi: The court ruled that the term "part cause of action" under the RDB Act cannot be given a restricted meaning. Execution of important documents in a specific place confers territorial jurisdiction to that place, and such execution constitutes an integral part of the loan transaction, thereby forming part of the cause of action.
Result: Appeal allowed; impugned order set aside.
Facts of the case:
An application for recovery of debts was filed before the Tribunal in Delhi on the grounds that several loan documents, including the Deed of Personal Guarantee and Deed of Pledge, were executed in Delhi. However, the Tribunal returned the application, observing that the loan was sanctioned, disbursed, and declared as a Non-Performing Asset (NPA) in Mumbai, and thus, the execution of documents in Delhi was merely an attempt to claim partial cause of action.
Findings of Court:
The execution of integral loan documents in Delhi clearly establishes that a part of the cause of action for filing the original application arose within the local jurisdiction of Delhi. The observation that the execution was done solely to obtain the benefit of partial cause of action was based on conjectures and surmises.
Issues: Whether the execution of loan documents in Delhi, despite the sanction, disbursement, and NPA declaration occurring in Mumbai, confers territorial jurisdiction upon the Tribunal in Delhi under Section 19(1)(c) of the RDB Act, 1993.
Ratio Decidendi: The court ruled that the term "part cause of action" under the RDB Act cannot be given a restricted meaning. Execution of important documents in a specific place confers territorial jurisdiction to that place, and such execution constitutes an integral part of the loan transaction, thereby forming part of the cause of action.
Result: Appeal allowed; impugned order set aside.
Legal Category Hierarchy
Advocates:
For the Appellants/Petitioners: Misha, Siddhant Kant, Moulshree Shukla, Sailee Basu
For the Appellants/Petitioners: Misha, Siddhant Kant, Moulshree Shukla, Sailee Basu
Table of Contents
2. Appellant argued execution of documents in Delhi constitutes part cause of action—DRT erred in rejecting jurisdiction. (Para 3 , 4 )
3. Execution of integral loan documents like guarantee and pledge deeds at Delhi establishes part cause of action. (Para 7 )
4. Part cause of action under Section 19(1)(c) RDB Act arises where integral loan documents are executed. (Para 7 )
5. Appeal allowed—impugned order set aside—DRT directed to decide OA on merits. (Para 8 , 9 )
6. What constitutes 'cause of action' under Section 19(1)(c) of the RDB Act?
Cause of action is a bundle of facts necessary for plaintiff to prove; it includes every fact giving occasion for and forming foundation of suit. (Para 6 )
7. Does execution of loan documents at a place confer territorial jurisdiction on DRT under the RDB Act?
Yes, execution of integral loan documents like guarantee, pledge, and corporate guarantee deeds at a place establishes part cause of action. (Para 7 )
8. Can a jurisdiction clause in an agreement create territorial jurisdiction for a DRT?
No, parties cannot create jurisdiction by agreement under the RDB Act; jurisdiction is determined by where cause of action arises. (Para 2 )
9. Does sanction and disbursement of loan at one branch exclude other locations for filing recovery application?
No, if part cause of action arises elsewhere, DRT at that place also has jurisdiction despite sanction and disbursement at another place. (Para 7 )
ORDER
1. The perusal of order dated 25.11.2025 reflects that the notices were delivered upon the respondents no.1 to 6, 9 to 14 & 17 including at the alternative address of the respondent no.5. The respondent no.7 was stated to be ex parte before DRT-III, Delhi. The respondents no.8 to 18 are stated to be the proforma party and no relief was claimed against them. It is reflecting that the service upon the contesting respondents stands completed.
2. The relevant facts of the case are that the appellant filed O.A. bearing T.A. No.192/2022 titled as ICICI Bank V M/s Varun Resources Limited & others which was stated to be pending before DRT-III, Delhi(hereinafter referred to as 'DRT'). DRT vide order dated 06.11.2024 (hereinafter referred to as 'the impugned order') observed that the loan was sanctioned as well as disbursed by the Mumbai Branch of the appellant and NPA was also declared at Mumbai. It was further stated that certain loan documents were executed/registered at New Delhi which did not give any right to the appellant for taking benefit of partial cause of action under Section 19(1)(c) of the RDB Act,1993. DRT further observed that merely because various documents contained a jurisdiction clause, it would not confer jurisdiction upon the Tribunal at a particular place. Accordingly, DRT directed the Registry to return the O.A./T.A. and documents to the appellant along with certificate of court fees for filing the O.A./T.A. before the competent Tribunal. The relevant portion of the impugned order dated 06.11.2024 is reproduced as under:
4.2 So far as, point has been raised for the partial cause of action is concerned, in order to appreciate this aspect of the matter, one needs to understand what would constitute a cause of action. Cause of action, as commonly understood, is a bundle of facts that the plaintiff must prove, if traversed, to entitle him to a judgment, in his favour, by the concerned court.
4.3 In the present case, record reveals one of the branch of applicant bank is situated at Bhishma Pitamah Marg, New Delhi, however, record further reveals that the loan was sanctioned to the defendants from the Mumbai branch of applicant bank and in the memo of parties, addresses of all the defendants have been given which shows that though the defendants no. 1 to 17 reside at Mumbai, however, branch office of defendant no. 18/ SBI Cap Trustee Company Limited has been given at New Delhi. So far as, the address of defendant no. 18 at New Delhi (mentioned in Memo of Parties), it is admitted position that defendant no. 18 is only holding the custody of the original documents and it has nothing to do with the sanction / disbursement of loan to the borrower / guarantor of applicant bank. Moreover, from the perusal of memo of parties it is clear that the registered office of defendant no. 18 is situated at Mumbai and one branch is situated at Delhi. Hence, this Tribunal is of the view that the address of defendant no. 18 at Delhi has been mentioned in the OA just to get the benefit of partial cause of action, so that this OA can be filed before DRT, Delhi.
4.4 In the present case, Ld. counsel for applicant bank has argued that certain loan documents, as stated by Ld. counsel for applicant bank, were executed by the parties at New Delhi and the registration of said documents was also done at New Delhi. However, record further reveals that the loan was sanctioned to defendant no. 1 company from the Mumbai branch of applicant bank and the registered office of defendant no. 1 company is given at Mumbai only. Moreover, disbursement of loan was done at Mumbai Branch, loan account is maintained at Mumbai branch of applicant bank and loan was declared NPA also from the Mumbai branch of applicant bank. Hence, this Tribunal is of the view that mere execution / registration of documents at New Delhi has been done, just to get the benefit of partial cause of action, so that this OA can be filed before DRT, Delhi.
4.5 So far as, the poin
