Pankaj Kumar Tiwari vs Indian Overseas Bank Asset Recovery Management Branch

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6736 OF 2023 (Arising out of S.L.P.(Civil) No. 22744 of 2023)

PANKAJ KUMAR TIWARI ... APPELLANT(S)

VS.

INDIAN OVERSEAS BANK ASSET RECOVERY MANAGEMENT BRANCH & ORS. ... RESPONDENT(S)

J U D G M E N T

ABHAY S.OKA J.

Leave granted.

2. It is not necessary to serve notice to the second

to eleventh respondents. Notice is accepted by the

learned counsel for the first respondent.

3. By the impugned order dated 27th September, 2023, a

Division of the Bombay High Court stayed an order passed

by a Civil Court in Bihar by entertaining a petition

under Article 226 of the Constitution of India.

4. Heard the learned counsel appearing for the Signature Not Verified Digitally signed by Anita Malhotra Date: 2023.10.19 appellant and the learned senior counsel appearing for 16:58:00 IST Reason:

the first respondent.

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5. The present appeal discloses a shocking state of

affairs. The first respondent is a nationalized bank.

The second respondent was the borrower who had created an

equitable mortgage in respect of the properties mentioned

in paragraph 1 of the impugned order. The first

respondent proceeded against five properties mentioned in

paragraph 1 of the impugned order. Orders were passed in

favour of first respondent under Section 14 of the

Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (for short

"SARFAESI Act, 2002"). The details of the properties as

described in paragraph No.1 of the impugned order read

thus:

Description of the Property Section 14 Order Possession of the Whether Court Secured Property Receiver has taken by the possession Petitioner/Bank

1. Ambernath Plot No. E 47: 24.10.2018 Physical Yes, pursuant to Siwan @Pg. 155- 156 Possession taken: Court's Order dated Plot No. E47 situated at 20.09.2022 24.01.2023 additional Ambernath @Pg. 171-195 Industrial Area, MIDC, Jambivali, Ambernath (E), Ulhasnagar, District - Thane.

2. Ambernath Plot No. D36: 24.10.2018 Physical Yes, pursuant to Siwan @ Pg. 155- 156 Possession taken: Court's Order dated Plot No. D36, additional 20.09.2022 24.01.2023 Ambernath Industrial Area, @Pg. 171-195 MIDC, Jambivali, Ambernath (E), Ulhasnagar, District – Thane.

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3. Ambernath Plot No. D 42: 24.10.2018 Possession pending Yes, pursuant to Siwan Physical Physical Court's Order dated Plot No. D42 situated at @Pg. 155- 156 Possession Notice 24.01.2023 additional Ambernath sent: 02.08.2022 Industrial Area, MIDC, @Pg. 170.

Jambivali, Ambernath (E), Ulhasnagar, District - Thane.

4. Andheri Flat No. 314: 06.08.2019 Physical Yes, pursuant to Siwan Flat No. 314, 3rd Floor, @Pg. 161- 169 Possession pending Court's Order dated Andheri Jumbo Co-operative Symbolic 24.01.2023 Housing Society Ltd. situated Possession taken:

at Vile Parle, Andheri bearing 23.10.2017 @Pg.

Survey No. 47/1, CTS No. 95, 125-128 Plot No. 277, admeasuring 703 sq. ft.

5. Vile Parle Flat No. 602: 06.08.2019 Physical Yes, pursuant to Siwan @Pg. 161-169 Possession pending Court's Order dated Flat No. 602, 6th Floor, 24.01.2023 Vallabh Darshan CHSL, A- Symbolic Wing, Ville Parle Mumbai. Possession taken: 23.10.2017 @Pg. 129-132

6. Thereafter, the present appellant filed a suit

before the Civil Court at Siwan in the State of Bihar in

which the defendants (second to fifth respondents) were

the borrowers against whom orders under Section 14 of the

SARFAESI Act were passed. The appellant relied upon the

alleged Memorandum of Understanding dated 4th October 2015

executed by the appellant and the borrowers in relation

to the properties which are mentioned above. The prayer

made by the appellant in the suit was to declare their

alleged rights in respect of the said properties. A

mandatory prayer was made directing defendants in the

Civil Appeal @ SLP(Civil)No.22744 of 2023 Page 3 of 11 suit to comply with the Memorandum of Understanding. On

24th January 2023, the Trial Court purported to exercise

the power under Rule 1 of Order XL of the Code of Civil

Procedure, 1908 (for short "CPC") by appointing the 7th

respondent, who was a practising advocate as the Court

Receiver for taking possession of the properties

mentioned above. He was permitted to get help from the

local police and take physical possession of the

properties. The Receiver acted upon the said order and

took possession of the aforesaid five properties. Prior

to the institution of the suit, orders were already

passed under Section 14 of the SARFAESI Act at the

instance of the first respondent. Before the institution

of the suit, the first respondent had already taken

physical possession of the properties mentioned at S.Nos.

1 and 2, and as regards three other properties, symbolic

possession was taken. If these facts had been pointed

out to the Civil Court at Siwan, we are sure that the

order which was passed on 24th January 2023 would not have

been passed.

7. There is one more serious aspect of the case. The

appellant cannot plead ignorance about the proceedings

initiated by the first respondent. A written statement

was filed in the said suit by the first defendant (second

Civil Appeal @ SLP(Civil)No.22744 of 2023 Page 4 of 11 respondent) therein in which there is a specific averment

in paragraph 12 that litigations and disputes were

pending in the Debts Recovery Tribunal and in the Courts

of the Chief Metropolitan Magistrate, Mumbai and Thane

regarding the schedule properties. Paragraph 12 also

records that the defendants were liable to pay amounts to

the first respondent bank and it was stated that they

would do so. Thus, the appellant cannot plead ignorance

about the knowledge of the pending proceedings initiated

by the first respondent Bank. Notwithstanding the

knowledge of the said proceedings, the appellant pressed

for the appointment of Court Receiver and on 24th January,

2023 the Receiver was appointed with a direction to take

possession of the aforesaid five properties.

8. At this stage, the learned counsel appearing for

the appellant submits that in paragraph 12 of the Written

Statement, the details of the proceedings were not set

out. It was the duty of the appellant, before pressing

the application for appointment of Receiver, to call upon

the defendants to furnish the details. It was the duty

of the appellant to place the details before the Trial

Court. Instead of doing that, the appellants pressed the

application for appointment of Receiver. We find that in

the order of the Trial Court, the fact that the second

Civil Appeal @ SLP(Civil)No.22744 of 2023 Page 5 of 11 respondent had mortgaged the said properties has been

mentioned. The Trial Court ought not have passed a

drastic order appointing Court Receiver without

impleading the mortgagee as a party defendant.

9. Then comes the role played by the first respondent

bank. The order passed by the Civil Court in Bihar was

appealable under Order XLIII of the CPC. Instead of

availing the remedy of the appeal, the first respondent

took the extraordinary step of invoking the jurisdiction

of the Bombay High Court under Article 226 of the

Constitution of India by specifically challenging the

order of appointment of the Receiver passed by the Civil

Court in Bihar. In our view, the first respondent ought

not to have filed such a petition when a statutory remedy

was available. Moreover, the High Court ought not to

have entertained the Writ Petition. The jurisdiction of

the High Court under Article 226 is no doubt very wide.

But the propriety and judicial discipline required the

High Court not to entertain such a petition. The High

Court ought to have relegated the first respondent to the

statutory remedy while possibly granting a limited

protection. A statutory remedy was available to the

first respondent before the concerned Court in Bihar. If

the High Courts start entertaining Article 226 petitions

Civil Appeal @ SLP(Civil)No.22744 of 2023 Page 6 of 11 for challenging the orders passed by the Civil Courts in

other states, it will lead to a chaotic situation.

Therefore, we have no manner of doubt that the impugned

order will have to be set aside.

10. However, we also find that the appellant has

indulged in the suppression of material facts while

persuading the Trial Court to pass a drastic order for

appointing a Court Receiver. There is another feature of

the case. In the written statement filed by the

defendants in the suit filed by the appellant, an issue

of maintainability was raised. The order of the Trial

Court noted that the first respondent had mortgaged the

properties. The Trial Court did not pay attention to the

issue of maintainability as well as the issue of

territorial jurisdiction. An order appointing a Court

Receiver has very drastic consequences. As noted

earlier, such a drastic order was casually passed by the

Civil Court.

11. The learned senior counsel appearing for the first

respondent stated that in terms of the impugned order,

the possession of the properties at serial Nos. 1 and 2

has been handed over to the said respondent by the Court

Receiver and the status quo ante has been restored as

regards the properties at serial Nos. 3, 4 and 5.

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12. Therefore, we propose to dispose of this appeal by

directing that the order dated 24th January 2023 of the

Civil Court shall not be acted upon to enable the first

respondent to adopt appropriate remedies. We also make

it clear that the status quo as obtaining in respect of

the above five properties immediately before the Civil

Court passed the order dated 24th January 2023 shall be

maintained.

13. The learned counsel appearing for the appellant at

this stage agrees that the appellant will implead the

first respondent as party defendant No.5 to the suit.

14. Hence, we dispose of the appeal by passing the

following order:

(a) We set aside the impugned order dated 27th

September 2023 passed by the Bombay High Court and

dismiss Writ Petition No.7064 of 2023 on the

ground that a statutory remedy was available to

the first respondent and therefore, the Bombay

High Court ought not to have entertained the Writ

Petition under Article 226 of the Constitution of

India for challenging the order passed by a Civil

Court in another State;

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(b) The appellant will carry out a formal

amendment to the suit for impleading the first

respondent bank as a party defendant No.5;

(c) The order dated 24th January 2023 passed in

Title Suit No.2024 of 2022 by the learned Civil

Judge, Senior Division XII, Siwan shall remain

stayed with a clarification that status quo as

regards the five properties above, as prevailing

immediately before the passing of the said order,

shall continue to operate. The order dated 24th

January 2023 shall be treated as an ad-interim

order;

(d) We direct the appellant and the first

respondent to appear before the Trial Court on 30th

October 2023 in the morning. It will be open for

the first respondent to file a written statement

in the suit and reply to the application for

appointment of a Court Receiver. It will be open

for the first respondent to raise all possible

contentions, including the contention regarding

maintainability of the suit and lack of

territorial jurisdiction;

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(e) After hearing the first respondent, the

Trial Court will pass a fresh order on the

application for appointment of Court Receiver. We

make it clear that till the said application is

pending, the order dated 24th January 2023 will

remain in abeyance and status quo as prevailing

just before passing of the said order, will

continue to operate;

(f) We also make it clear that in the event the

order which may be passed on the application for

appointment of Court Receiver by the Trial Court

be adverse to the respondent No.1, the said order

shall not be acted upon for a period of one month

from the date of passing of the order; and

(g) It is further made clear that

notwithstanding this order, it will be open for

the first respondent to initiate appropriate

proceedings on the basis of the orders under

Section 14 of the SARFAESI Act which are already

passed and to take over possession of the

remaining three properties in accordance with the

law.

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15. The appeal is accordingly partly allowed on the

above terms.

..........................J. (ABHAY S.OKA)

..........................J. (PANKAJ MITHAL) NEW DELHI;

October 13, 2023.

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