A DRT Recovery Certificate Is Not a Decree: Insolvency Notice Under the 1909 Act Quashed

The question

Section 9(2) of the Presidency Towns Insolvency Act, 1909 lets a creditor issue an insolvency notice where a decree or order for payment of money has been obtained and remains unsatisfied. The issue was whether a recovery certificate issued by a Debts Recovery Tribunal counts.

A borrower had taken credit facilities from a consortium of fifteen banks, including the appellant. Recovery proceedings before the Tribunal produced a recovery certificate. The bank then issued an insolvency notice on the strength of it. The High Court quashed the notice.

Why the bank lost

The Court followed its earlier decision in Paramjeet Singh Patheja, which held that a recovery certificate is not a decree for these purposes. It recorded that although that decision had been doubted in Sundaram Finance, a three-judge Bench had subsequently held, by an order of 23 April 2015, that Paramjeet Singh Patheja does not require reconsideration. The point was therefore settled.

The bank also relied on Section 19(22A) of the Recovery of Debts and Bankruptcy Act, which deems a recovery certificate to be a decree or order for the initiation of insolvency proceedings under any law for the time being in force. The Court accepted the respondent's reading of that provision: it operates at the stage of initiation, and here the insolvency notice itself had been quashed by the High Court, so that stage never fructified.

The point about the deceased debtor

The original respondent had died during the proceedings. The Court noted the principle underlying insolvency law, drawn from Ebrahim Aboobaker, that the death of an insolvent during the pendency of an application does not cause the proceedings to abate. They continue so that the estate can be administered for the benefit of creditors.

So the lis did survive against the deceased respondent. But because the appeal failed on the merits, the Court made no order against his two sons, who were also certificate debtors but had not been proceeded against. The bank was left to work out its remedies against them separately, subject to limitation.

Who this is useful for

• Recovery practitioners should treat the insolvency notice route under the 1909 Act as closed where the only foundation is a recovery certificate.
• The reading of Section 19(22A) matters: the deeming provision attaches at initiation, and cannot revive proceedings whose initiating notice has already been quashed.
• The abatement point is a useful reminder that insolvency proceedings against a deceased debtor continue for the administration of the estate.

Who argued it

Frequently asked

Can an insolvency notice be issued on a DRT recovery certificate?

No. The Supreme Court in HDFC Bank v. Kishore K. Mehta followed Paramjeet Singh Patheja and held that a recovery certificate issued by a Debts Recovery Tribunal does not support an insolvency notice under Section 9(2) of the Presidency Towns Insolvency Act, 1909.

What about Section 19(22A) of the RDB Act?

The Court accepted that the deeming provision operates at the stage of initiation of insolvency proceedings. Since the insolvency notice had already been quashed by the High Court, that stage never fructified and the provision did not assist the bank.

Do insolvency proceedings abate if the debtor dies?

No. The Court noted the principle from Ebrahim Aboobaker that the death of an insolvent during the pendency of an application does not cause the proceedings to abate; they continue so the estate can be administered for the benefit of creditors.

What is the citation?

H.D.F.C. Bank Limited v. Kishore K. Mehta (Dead) Through Legal Representatives, 2026 INSC 688, reported at [2026] 8 S.C.R. 204, decided on 12 July 2026.

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