On 29 November 2006, a two-judge bench of the Supreme Court held that the SARFAESI Act 2002 and the RDDBFI Act 1993 are complementary, not mutually exclusive: a secured creditor may simultaneously prosecute a Debts Recovery Tribunal Original Application under Section 19 of the 1993 Act and a Section 13 SARFAESI enforcement without first withdrawing the OA. The doctrine of election does not apply. The first proviso to Section 19(1) of the 1993 Act does not require withdrawal as a condition precedent — the Section 13(2) notice is a show-cause step, not 'action' within the meaning of the proviso. Section 13(4) 'possession' extends to physical possession.
On 30 May 2022 a three-judge bench of the Supreme Court, in Kotak Mahindra Bank Ltd v. A. Balakrishnan, held that the liability arising from a Recovery Certificate issued by a Debts Recovery Tribunal under Section 19 of the RDDBFI Act is a 'financial debt' within the meaning of Section 5(8) of the IBC, that the holder of such a Certificate is a 'financial creditor' under Section 5(7) entitled to file a Section 7 application, and — most consequentially for limitation practice — that the Certificate creates a fresh cause of action so that limitation under Article 137 of the Limitation Act runs from the date of its issuance, not from the date of the original default. A close reading of the bench's reasoning, its extension of the Dena Bank v. C. Shivakumar Reddy line, and what the ruling has come to mean for banks, ARCs and corporate debtors at the s.7 admission stage.