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Banking & Debt Recovery LawSupreme Court of India

Bank of India v. Yadav Consultancy Services (P) Ltd.

Civil Appeal · 2017 INSC 1176Decided 5 Dec 2017
Civil Appeal No. 5150 of 2017
Justice Kurian Joseph · Justice R. Banumathi

Background

Bank of India had auctioned a mortgaged property to recover a loan default and appointed Yadav Consultancy Services as a "Court Commissioner" to guard the property pending handover to the auction purchasers. After possession was handed to the auction purchasers in November 2006, a dispute arose over who was liable to keep paying the Commissioner's security charges: the Bank or the auction purchasers. Yadav Consultancy, after years of litigation before the Debt Recovery Tribunal (DRT) and its Appellate Tribunal, instead sought arbitration before a Micro, Small and Medium Enterprises Facilitation Council, which awarded it over Rs. 1.62 crore plus 24% interest against the Bank. The High Court of Bombay upheld that award, prompting the Bank's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that once the DRT had ruled in 2008 that the Commissioner's charges after a certain date were payable only by the auction purchasers (an order Yadav Consultancy never appealed and in fact acted upon), that finding attained finality and could not be reopened. The High Court was wrong to hold that the DRT lacked jurisdiction to decide this. Because the dispute had already been lawfully adjudicated by DRT/DRAT, quasi-judicial bodies with the trappings of civil courts, the MSME Facilitation Council had no jurisdiction to arbitrate the same claim afresh. The Court set aside both the High Court's judgment and the Council's award, allowing the Bank to recover amounts already paid out and permitting it to withdraw the balance deposited in court, while leaving Yadav Consultancy free to pursue the auction purchasers directly for any post-2008 charges.

Lesson Learnt

Once a competent tribunal's order is accepted without challenge and acted upon, a party cannot later go "forum shopping" to a different authority (like an MSME Council) to relitigate the same issue, doing so undermines the finality of judicial and quasi-judicial orders.

Bank of India v. Yadav Consultancy Services (P) Ltd. – Legal Case Shots | LegalAware