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Pankaj Kumar Tiwari vs Indian Overseas Bank Asset Recovery Management Branch & Ors

Civil Appeal · 2023 INSC 937Decided 13 Oct 2023
Civil Appeal No. 6736 of 2023

Background

Indian Overseas Bank had already obtained orders under Section 14 of the SARFAESI Act, 2002 and taken physical or symbolic possession of five mortgaged properties from its defaulting borrower. The appellant, Pankaj Kumar Tiwari, then filed a separate civil suit in Siwan, Bihar, claiming rights over the same properties under an alleged 2015 Memorandum of Understanding with the borrowers, and got the trial court to appoint a Court Receiver to seize the properties, without disclosing that the bank had already taken possession under SARFAESI proceedings. Instead of filing a statutory appeal against the Receiver order, the bank went straight to the Bombay High Court under Article 226 of the Constitution, which stayed the trial court's order.

Decision Breakdown

The Supreme Court held that the Bombay High Court should not have entertained a writ petition challenging an order of a civil court sitting in a different state (Bihar) when a statutory appeal remedy existed, allowing that would create jurisdictional chaos across High Courts. At the same time, the Court found that the appellant had suppressed material facts (the bank's prior possession under SARFAESI) to obtain the drastic Receiver order, and that the trial court itself acted casually without considering maintainability or territorial jurisdiction, or impleading the bank as a party. The Court therefore set aside the High Court's order but also put the trial court's Receiver order into abeyance, directed the appellant to implead the bank as a defendant, preserved status quo on the properties, and sent the matter back to the trial court for a fresh, properly-heard decision on the Receiver application.

Lesson Learnt

A litigant must disclose all material facts (such as a rival claimant's already-existing legal possession) when seeking a drastic remedy like appointment of a Court Receiver, and parties aggrieved by a civil court's order should use the statutory right of appeal rather than bypass it through a writ petition in another state's High Court.

Official source (sci.gov.in)View Judgment (PDF)

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