Back
2023 Supreme(SC) 1148
SUPREME COURT OF INDIA
ABHAY S. OKA, PANKAJ MITHAL, JJ.
Pankaj Kumar Tiwari - Appellant
Versus
Indian Overseas Bank Asset Recovery Management Branch & Ors. - Respondents
Civil Appeal No. 6736 of 2023 (Arising out of S.L.P.(Civil) No. 22744 of 2023)
Decided On : 13-10-2023
For the Petitioner(s): Mr. Sunil Murarka, Adv. Mr. Satyajit A Desai, Adv. Mr. Iswar Charlewar, Adv. Mr. Anup K Mishra, Adv. Mr. Siddharth Gautam, Adv. Mr. Abhinav K. Mutyalwar, Adv. Mr. Gajanan N Tirthkar, Adv. Mr. Vijay Raj Singh Chouhan, Adv. Ms. Anagha S. Desai, AOR
For the Respondent(s): Mr. Gopal Sankarnaraynan, Sr. Adv. Ms. Prachi Johri, AOR Mr. Dhrupad Vaghani, Adv. Ms. Nandita Bajpai, Adv. Ms. Abhipsa Sahu, Adv. Mr. Nirman Sharma, Adv. Mr. Ajiz Mk, Adv. Mr. Rishabh Sethi, Adv. Mr. Gaurav Jain, Adv. Mr. Rahat Kalpatri, Adv. Mr. J Rajesh, Adv.
Possession of Properties
Headnote:
SARFAESI Act, 2002 - Section 14: Orders were passed in favor of the first respondent under Section 14 of the SARFAESI Act, allowing them to take possession of the properties. The first respondent had already taken physical possession of some properties and symbolic possession of others. The first respondent is allowed to initiate proceedings under Section 14 to take possession of the remaining properties.
Fact of the Case:
The appellant filed a suit before the Civil Court in Bihar against the borrowers who had created an equitable mortgage. The appellant sought to declare their alleged rights in respect of the properties and requested the appointment of a Court Receiver. The Trial Court appointed a Court Receiver and possession of the properties was taken. The first respondent, instead of appealing the order, filed a petition under Article 226 of the Constitution of India in the Bombay High Court to challenge the appointment of the Receiver. The High Court entertained the petition, which was improper. The appellant suppressed material facts while seeking the appointment of the Receiver. The Court sets aside the order of the High Court and directs the appellant to implead the first respondent as a party defendant. The order of the Trial Court is stayed, and status quo is maintained. The Trial Court will hear the first respondent and pass a fresh order on the application for appointment of the Receiver. The first respondent is allowed to initiate proceedings under Section 14 of the SARFAESI Act to take possession of the remaining properties.
Finding of the Court:
The Court finds that the first respondent should have appealed the order of the Trial Court instead of filing a petition under Article 226. The High Court should not have entertained the petition. The appellant suppressed material facts while seeking the appointment of the Receiver. The Trial Court passed a drastic order without considering the issue of maintainability and territorial jurisdiction. The Court sets aside the order of the High Court and directs the appellant to implead the first respondent as a party defendant. The order of the Trial Court is stayed, and status quo is maintained. The Trial Court will hear the first respondent and pass a fresh order on the application for appointment of the Receiver. The first respondent is allowed to initiate proceedings under Section 14 of the SARFAESI Act to take possession of the remaining properties.
Ratio Decidendi: The Court holds that the first respondent should have appealed the order of the Trial Court instead of filing a petition under Article 226. The High Court should not have entertained the petition. The appellant suppressed material facts while seeking the appointment of the Receiver. The Trial Court passed a drastic order without considering the issue of maintainability and territorial jurisdiction. The Court sets aside the order of the High Court and directs the appellant to implead the first respondent as a party defendant. The order of the Trial Court is stayed, and status quo is maintained. The Trial Court will hear the first respondent and pass a fresh order on the application for appointment of the Receiver. The first respondent is allowed to initiate proceedings under Section 14 of the SARFAESI Act to take possession of the remaining properties.
Result: The appeal is partly allowed. The order of the High Court is set aside. The appellant is directed to implead the first respondent as a party defendant. The order of the Trial Court is stayed, and status quo is maintained. The Trial Court will pass a fresh order on the application for appointment of the Receiver. The first respondent is allowed to initiate proceedings under Section 14 of the SARFAESI Act to take possession of the remaining properties.
JUDGMENT :
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 appellant and the learned senior counsel appearing for the first respondent.
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 Secured Property by the Petitioner/Bank | Whether Court Receiver has taken possession |
| 1. Ambernath Plot No. E 47: Plot No. E47 situated at additional Ambernath Industrial Area, MIDC, Jambivali, Ambernath (E), Ulhasnagar, District - Thane. | 24.10.2018 @Pg. 155-156 | Physical Possession taken: 20.09.2022 @Pg. 171-195 | Yes, pursuant to Siwan Court's Order dated 24.01.2023 |
| 2. Ambernath Plot No. D36: Plot No. D36, additional Ambernath Industrial Area, MIDC, Jambivali, Ambernath (E), Ulhasnagar, District – Thane. | 24.10.2018 @ Pg. 155-156 | Physical Possession taken: 20.09.2022 @Pg. 171-195 | Yes, pursuant to Siwan Court's Order dated 24.01.2023 |
| 3. Ambernath Plot No. D 42: Plot No. D42 situated at additional Ambernath Industrial Area, MIDC, Jambivali, Ambernath (E), Ulhasnagar, District - Thane. | 24.10.2018 Physical @Pg. 155-156 | Possession pending Physical Possession Notice sent: 02.08.2022 @Pg. 170. | Yes, pursuant to Siwan Court's Order dated 24.01.2023 |
| 4. Andheri Flat No. 314: Flat No. 314, 3rd Floor, Andheri Jumbo Co-operative Housing Society Ltd. situated at Vile Parle, Andheri bearing Survey No. 47/1, CTS No. 95, Plot No. 277, admeasuring 703 sq. ft. | 06.08.2019 @Pg. 161-169 | Physical Possession pending Symbolic Possession taken: 23.10.2017 @Pg. 125-128 | Yes, pursuant to Siwan Court's Order dated 24.01.2023 |
| 5. Vile Parle Flat No. 602: Flat No. 602, 6th Floor, Vallabh Darshan CHSL, A-Wing, Ville Parle Mumbai. | 06.08.2019 @Pg. 161-169 | Physical Possession pending Symbolic Possession taken: 23.10.2017 @Pg. 129-132 | Yes, pursuant to Siwan Court's Order dated 24.01.2023 |
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 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 ab
