Hiralal Patni Vs. Loonkaram Sethiya
& Ors [1961] INSC 149 (11 April 1961)
SUBBARAO, K.
DAYAL, RAGHUBAR MUDHOLKAR, J.R.
CITATION: 1962 AIR 21 1962 SCR (1) 868
CITATOR INFO :
R 1984 SC1471 (41)
ACT:
Civil Procedure--Receiver, continued by
Preliminary decree till discharged--Final decree silent--Whether receiver
automatically discharged--Lease by receiver to Party--Term of lease
expiring--Dispossession of lessee by receiver-Summary procedure or civil
suit--Code of Civil Procedure, 1908 (V of 1908), O. 40.
HEADNOTE:
The John Mills comprising of three textile
mills and one flour mill were jointly owned by several persons. The financier
of the Mills filed a suit for recovery of the amount due to him. During the
pendency of the suit a receiver was appointed to take possession of the flour
mills but he was not empowered to run the mills directly without further
directions of the court. A preliminary decree was passed in the suit directing
among other things that the receiver was to continue until discharged.
Thereafter, an arrangement was made for running the mills and the court
directed that the appellant, who was one of the co-owners of the mills, be
given a lease of the flour mill for three years by the receiver. In the lease
deed the appellant undertook to deliver back possession to the receiver upon
the expiry 869 of the three years. Shortly thereafter, a final decree was
passed in the suit but it was silent in regard to the receiver appointed
earlier. On the expiry of the three year term of the lease the court directed
the receiver to take back possession of the flour mill from the appellant. The
appellant contended (i) that after, the passing of the final decree the
receiver ceased to 'be a receiver in respect of the rights of the co-owners and
could not dispossess the appellant, and (ii) that the appellant could only be
dispossessed by a suit filed by the receiver and not by a summary procedure.
Held, that the receiver continued by the
preliminary decree was entitled to function till he was discharged. The legal
position with regard to the continuance of receivers is that: (i) if a receiver
is appointed in a suit until judgment, the appointment is brought to an end by
the judgment in the suit; (ii) if a receiver is appointed in a suit without his
tenure being expressly defined, he will continue till he is discharged; (iii)
even after the final disposal of the suit, though as between the parties to the
suit his functions are usually terminated, the receiver continues to be answerable
to the court till he is finally discharged, and (iv) the court has ample power
to continue the receiver even after the final decree if the exigencies of the
case so require. The final decree in the present case did not finally dispose
of the suit and did not bring the appointment of the receiver to an end.
Held, further that the court was entitled to
direct the appellant to give back possession of the flour mill to the receiver.
The court was merely making suitable arrangement for the running of the mill in
the course of its administration of the estate through the receiver. The mill
had been leased out to the appellant with an express condition that he should
redeliver the property to the receiver on the expiry of the lease and the court
was competent under 0. 4o r. 1(1)(d) Code of Civil Procedure to confer a power
on the receiver to recover the property from the appellant. It was not
necessary for the receiver to file a suit for the recovery of the property.
CIVIL APPELLATE, JURISDICTION: Civil Appeal
No.110 of 1961.
Appeal by special leave from the judgment and
order dated October 14, 1960, of the Allahabad High Court in First Appeal from
Order No. 41 of 1959.
C. B. Agarwala, RameshwarNath, S. N. Andley,
J. B. Dadachanj and P. L. Vohra, for the appellant.
K. B. Choudhuri, A. K. Kirty and Ratna Rao,
for respondent No. 1.
870 S. P. Sinha and M. I. Khawaja, for
respondents Nos. 2, 3 and 4.
H. N. Sanyal, Additional Solicitor-General of
India and G.
C. Mathur, for respondent No. 5.
Naunit Lal, for respondent No. 7.
1961. April 11. The, Judgment of the Court
was delivered by SUBBA RAO, J.-This appeal by special leave is directed against
the judgment dated October 14, 1960, of the High Court of Judicature at
Allahabad confirming the order passed by the Civil Judge, Agra, directing the
Official Receiver to take possession of the property of the appellant.
This case illustrates how the enforcement of
an interlocutory order appointing a Receiver made in the interest of all the
parties concerned could be obstructed and the object of the order itself be
defeated by dilatory tactics adopted by one party or other.
At Agra, there were three spinning mills and
one flour mill, all of which together were described as the Johns Mills; and,
originally, the John family or their predecessors were the owners of all these
mills. At the time the present proceedings were initiated, other persons had
acquired interest therein. The following persons were the joint owners of the
mills: (1) Hiralal Patni, the appellant, and Munni Lal Mehrt... 19/40th share;
(2) Gambhirmal Pandiya Private Ltd.... 8/40th share; (3) Messrs.
John & Co .... 11/40th share; and (4)
I.E. John ... 2/40th share. Seth Loonkaran Sethiya, respondent No. 1, advanced
large amounts to Messrs. John & Co. on the security of its business assets
and stocks. On April 18, 1949, the said Sethiya filed 0. S. No. 76 of 1949 in
the Court of the Civil Judge, Agra, against John & Co. for the recovery of
the amount due to him by sale of the assets of the said company.
To that suit the partners of Messrs. John
& Co., for convenience described as "defendants 1st set", and the
partners of Messrs. Johns Jain & Co., who were for convenience described as
"defendants 2nd set", were made parties. Pending the suit, the said
Sethiya filed an application, under O. XL, r. 1, Code of Civil 871 Procedure,
for the appointment of a Receiver. By an order dated May 21, 1949, the learned
Civil Judge appointed two joint Receivers and directed them to run the three
spinning mills. Hiralal Patni filed an appeal against that order to the High
Court at Allahabad, and the said Court by its order dated August 22, 1949,
modified the order of the Civil Judge confining the order of appointment of
Receivers only to the share of Messrs. John & Co. in John Jain Mehre &
Co. Loonkaran Sethiya made another application in the Court, of the Civil Judge
for the appointment of a Receiver for the property of Hiralal Patni and the
learned Civil Judge by his order dated December 1, 1951, directed the Receivens
to take possession of the appellant's share in the mills also Against this
order an appeal was preferred to the High Court and the operation of the said
order was stayed pending the disposal of the appeal. On April 5, 1954, the
Civil Judge passed a preliminary decree against the defendants therein
directing them to deposit the decree 'amount in court within the prescribed
time, and in default the plaintiff was given a right to apply for a final
decree for sale of the business assets of the defendants. The decree also gave
a right to apply for a personal decree in case the sale proceeds were not
sufficient to discharge the decree. The preliminary decree directed that the
Receivers should continue on the property until discharged. Hiralal Patni
preferred a appeal to the High Court against the said preliminary decree and
applied for interim stay of its operation. On August 23, 1955, the High Court
discharged the Receiver,,; appointed by the learned. Civil Judge, and appointed
another Receiver in their place. On March 25, 1955, the learned Civil Judge
prepared a scheme for running the mills, and the parties preferred appeals
against that scheme to the High Court.
The said appeals were compromised and under
the term-, of the compromise the parties agreed to take different mills on
lease for a period of three years from the Receiver. On January 14, 1956, the
Receiver executed a lease in respect of the flour mill in favour of Hiralal
Patni for a 872 period of three years. Under the lease deed it was agreed that
he should deliver the demised premises to the Receiver upon the expiry of the
term. In due course, on March 14, 1956, a final decree was made in the suit for
the sale of the properties, but the final decree was silent in regard to the
Receiver appointed earlier. On September 29, 1958, Hiralal Patni applied to the
High Court for extension of the lease by three years. On January 16, 1959, the
High, Court rejected the application on the ground that the lease was only a
stopgap arrangement and that it was for the Receiver to make a fresh
arrangement for the future under the supervision and directions of the Civil
Judge, Agra. On January 17, 1959, the Receiver applied to the Civil Judge for
instructions whether he should proceed at once to dispossess the appellant. On
notice, Hiralal Patni raised various objections and claimed that he was
entitled to remain in possession of the property as its owner. The learned
Civil Judge disallowed his objections and held that the Receiver derived his
authority from the preliminary decree, and directed the Receiver to lease out
the said flour mill by auction for a period of two years. Pursuant to that
order, an auction was held, and the appellant was the highest bidder, and he
paid the lease amount and executed a formal lease deed. Not satisfied with the
order of the Civil Judge, Hiralal Patni preferred an appeal to the High Court.
The High Court in an elaborate judgment considered the contentions raised on
behalf of Hiralal Patni and dismissed the appeal. Hence the present appeal.
Learned counsel for the appellant raised
before us the following three contentions, which the appellant, unsuccessfully
raised before the High Court as well as before the Civil Judge. (1) On a true
construction of the relevant orders the Receiver has no power to dispossess the
appellant in such a way as to prevent him from working his flour mill. (2)
After the passing of the final decree, though the Receiver may continue for the
purpose of accounting and discharge of debts, he cannot exercise any powers in respect
of the rights of the parties. And (3) in any view, as the appellant 873
acquired a right under a lease deed and continued in possession after its
expiry, he could be dispossessed only by a suit and not by a summary procedure.
The first question turns upon the
construction of the relevant orders. The Civil Judge appointed two joint
Receivers by an order dated May 21, 1949. It it not necessary to consider the
said order as the final order that governed the rights of the Receiver and the
parties was that made by the High Court on appeal on August 22, 1949. After
considering the contentions of the parties, the High Court came to the
conclusion that a Receiver should be appointed to be in charge of the entire
property, immoveable and move.
able, of the defendants 1st set for its
protection and preservation. The order of the High Court described the John
family as defendants 1st set to the suit, and defendant 5, Hiralal Patni,
defendant 6, Munnilal Mehra, and Messrs.
John Jain Mehra & Co. as defendants 2nd
set. This order was confined only to the properties of defendants 1st set. The
High Court further proceeded to state:
"In the finance agreement in plaintiffs
favour, the plaintiff was not given any right to enter into possession on
non-payment or to run the mills...... There being no right given to the
plaintiff to enter into possession and manage the mills or to have a receiver
appointed, a receiver can be appointed only under Order 40, rule 1 of the Code
of Civil Procedure." Adverting to the contention raised by the defendants
that a Receiver could not be appointed to run the mills, the High Court
observed:
"In view of the order that we propose to
pass today we do not want to go into that question.
In case the mills are not run under the order
of the Collector under the United Provinces Industrial Disputes Act, or by the
partners we propose to give the parties permission to move this court. In case
we decide to appoint a receiver to run the mills we shall then consider whether
a receiver can or cannot be appointed for the purpose of running the
mills." Then the High Court stated:
110 874 "We have already set out the
circumstances which in our opinion make it necessary that a receiver should be
appointed to take charge of the property of defendants first set whether under
the finance agreement of July 1948 there was a charge created on the property,
moveable and immoveable, or not. The Receiver will not interfere with the
running of the mills except under express orders of the Court and to the extent
when it becomes necessary by reason of the value of the security being
jeopardized by any action of the defendants." Then the High Court pointed
out that the Collector had the power under s. 3 of the Industrial Disputes Act
to make arrangements for the running of the mills. Finally the High Court
observed: , "It may be necessary from time to time to give directions to
the receiver. The parties may also want portions 'of this order to be clarified
or other directions obtained. The lower court may give such directions to the
receiver or to the parties as it may consider just and proper. In case further
directions are necessary or the receiver or the parties are not satisfied with
the directions given they may move this court for further direction."
Shortly stated, the High Court confirmed the order of the Civil Judge
appointing the Receivers and directed them to take charge of the properties of
defendants 1st set. The High Court expressly prohibited the Receivers from
interfering with the running of the mills except under express orders of the
court, for at that time it did not think it necessary to direct the Receivers
to do so. It may be recalled that the Receivers were not appointed for the
flour mill of the appellant, Hiralal Patni, as he was one of the defendants
belonging to the 2nd set. Learned counsel for the appellant contends that this
order did not put the mills in the possession of the Receivers and that the
Receivers were given only a supervisory control over the share of the
defendants 1st set in the mills. Whatever terminology may have been used, the
fact remains that the Receivers were put in charge of the entire property 875
of defendants 1st set, which includes their share in the mills, though it was
equally made clear that the Receivers could not directly run the mills without
further directions in that regard.
The Civil Judge by his order dated December
1, 1951, directed the Receivers to take possession of 'the share of defendants
2nd set also. The operative portion of that order reads:
"For all these reasons I have come to
the conclusion that it is just and convenient that a receiver should be
appointed over the share of the defendant 11 set, and I order that the present
receivers who are in possession of the defendant 1st set share should also be
appointed receivers over the share of the defendant 11 set. As for the prayer
allowing the receivers to run the mills the question of running of the mills is
already before the High Court as is shown by the compromise dated 8th September
1950. It is not known what has happened after this compromise. The receivers
are directed to seek the direction of the Hon'ble High Court on the question of
the running of the mills so that there may be no chance of conflicting of
orders passed by this court and the Hon'ble High Court, on this matter. The
receivers will not interfere with the running of the mills except under express
orders of this court and to the extent when it becomes necessary by reason of
the value of the security being jeopardized by any action of the persons
running the Mills. The receivers are appointed over the share of the defendants
II set only, for the purpose of preservation and protection and realization of
the rent." This order runs on the same lines indicated by the High Court
in its earlier order in respect of the share of defendants 1st set. What is to
be noted is that under this order the Receivers were prohibited from' running
the mills except under the specific' orders of the said court or of the High
Court. On April 5, 1954, a preliminary decree was made in the suit, and under
that decree the defendants were directed to deposit a sum of Rs. 18,00,152 in
court within the prescribed 876 date and in default the plaintiff was given a
right, to apply for a final decree for the sale of the assets of the spinning
mills. There was a further direction that in case the net sale proceeds of the
said property were found insufficient to satisfy the plaintiffs claim, the
plaintiff would get a personal decree against defendants 1st set and defendants
2nd set for the balance of his claim. The Receivers were directed to continue
on the property until discharged. Under the preliminary decree, the plaintiff
became entitled not only to the sale of the assets of the spinning mills but
also to a personal decree against all the defendants for recovering any balance
that might still be due to him after the sale of the said properties. What is
more, the Receivers were expressly directed to continue till they were
discharged, and as the decree did not specify the powers of the Receivers, it
must be held that they continued to exercise such powers as they had under the
previous, orders of the courts dated August 22, 1949 and December 1, 1951.
On March 25, 1955, the learned Civil Judge,
Agra, prepared a scheme for the running of the three spinning mills, and the
parties preferred two appeals to the High Court against the scheme. On July 22,
1955, a compromise was effected between the parties in the aid two appeals and
the appeals were disposed of in terms of the compromise by order of the High
Court dated August 23, 1955. As the terms of this order are rather important in
the context of the contentions raised before us, we would read the relevant
portions hereof:
Clause 1. That the aforesaid parties have
without prejudice to their rights and litigation between them have after
deliberate consideration and as a special effort to make arrangements for
running the Johns Mill have decided that the three spinning Mills and Flour
Mill situate in Agra should be run by the parties in accordance with the terms
and conditions set forth below.
(vi) That the lease shall be granted by the
receiver on terms and conditions approved by the Court.
877 (ix) If any lessee shall fail to run the
Mill after delivery of possession or pay the lease money or fail to carry out
the arrangements arrived at between the parties for a period of three months,
the receiver shall take possession of the Mills and with the permission of the
court shall lease out that particular mill to any of the parties excepting the
party in default who may offer the highest bid in accordance with the orders
passed by the Civil Judge in this matter.
Clause, 4.................................
The arrangement embodied in this document is
only for the purpose of working the mills by the petitioners. Nothing contained
in this document will affect the rights and obligation of the parties which are
or may be the subject matter of suit No. 76 of 1949 or in any litigation
between the parties and notwithstanding anything contained herein but subject
:however to the express provision in the preceding paragraph of this clause it
will be open to the petitioners to seek their remedies in any manner provided
by law, and without prejudice to the rights of the parties to obtain a stay
order from the Hon'ble High Court or any other Court." What is the effect
of this order? Learned counsel for the appellant contends that this order
embodies an internal arrangement between the defendants for running the mills
and that it does not in any way enlarge the scope of the orders dated August
22, 1949, and December 1, 1951, under which the Receivers were appointed. We do
not think that the scope of the orders is so limited. The combined effect of
the said earlier orders was that the Receivers should take possession of the
entire properties of the two sets of defendants. But the Receivers were not
given the power to run the mills without specific directions to that effect by
the court.
The Civil Judge by his order dated March 25,
1955, evolved a scheme for running the mills, and by that order he laid down
the conditions and directed the Receivers to advertise calling for applications
from persons, including the Government, who were willing to run the mills. This
order 878 was only confined to the three spinning mills. The compromise order
in the appeals covered also the flour mill.
Though different mills were to be run by
different defendants by obtaining lease deeds, that was only a mode evolved for
running the mills tinder the supervision of the court. Under the compromise,
the leases were to be executed in favour of the Receiver. It also provided that
in case the lessees did not carry out the terms of the lease, the Receiver
should take possession of the mill in respect of which default was committed
and, with the permission of the court, should lease out the mill to any of the
defendants other than the defaulting party. The clauses saving the rights of
the parties obviously refer to their rights which were the subject-matter of
the suit and they could not have any reference to the terms agreed upon under
the compromise order. Under the compromise order, the courts, though by
consent, gave directions for running the mills which they left out for future
consideration in their earlier orders.
The result, was that under the earlier
orders, all the properties of the defendants were put in possession of the
Receivers, and under the compromise order, the Receiver was directed to run the
mills under the agreed scheme.
Pursuant to the terms of the compromise
order, on January 14, 1956, the Receiver executed a lease in favour of the
appellant in respect of the flour mill for a period of three years, and under
that lease deed the appellant got possession from the Receiver and agreed
"To yield up all the demised premises with all fixture, improvement and
replacements thereto in good and tenantable repair and condition in accordance
with the lease covenants in that behalf herein contained upon the expiry of the
term hereby created or the sooner determination of these presents as herein
provided." Whatever ambiguity there may have been, this lease deed dispels
it, for under the lease deed the appellant admits the legal possession of the
Receiver, takes a lease under him, and agrees to put him back in possession
after the expiry of the lease. On September 29, 1958, the appellant again
applied to the court for extension of the lease for three more years, thereby
879 accepting his possession under the Receiver, though the court on January
16,1959, dismissed that application on the ground that the lease was only a
stopgap arrangement and that it was for the Receiver to make a fresh
arrangement for the future under the supervision and directions of the Civil
Judge under whose preliminary decree he derived authority.
It is manifest from the aforesaid orders that
the Receiver was put in possession of the entire property of the defendants,
that he was not empowered to run the mills personally, that by subsequent
orders he was directed to lease out the mills to the parties in the manner
prescribed and that under the final order he was to take over possession and
make other arrangements for running the mills. In the premises, we find it very
difficult to accept the argument of learned counsel that the Receiver was not put
in possession of the mills, but the mills continued to be in the possession of
tile defendants. We hold on a construction of the relevant orders that the
flour mill of the appellant was also put in the possession of the Receiver and
that the appellant was running the said mill under the compromise formula.
The second contention of learned counsel for
the appellant is that the Receiver appointed in the suit ceased to be a
Receiver qua the rights of the parties when the final decree was made by the
Court. This contention leads us to the consideration of the question whether a
Receiver appointed in a suit ceases to be such automatically on the termination
of the suit. Neither s. 51(d) nor Order XL of the Code of Civil Procedure
prescribes for the termination of the office of receivership.. We must,
therefore, look for the solution elsewhere. Some of the authoritative
text-books on receivers may usefully be consulted in this connection.
In Halsbury's Laws of England, 3rd edn., Vol.
32 (Lord Simonds), at p. 386 under the heading "Duration of appointment by
court", the following statement occurs:
"When a receiver is appointed for a
limited time, as in the case of interim orders, his office determines on the
expiration of that time without any 880 further order of the court, and if the
appointment is until judgment or further order' it is brought to an end by the
judgment in the action. The judgment may provide for the continuance of the
receiver, but this is regarded as a now appointment. If a further order of the
court, though silent as to the receivership, is inconsistent with a continuance
of the receiver, it may operate as a discharge.
When a receiver has been appointed on an
interlocutory application without any limit of time, it is not necessary to
provide for the continuance of his appointment in the final judgment. The
silence of the judgment does not operate as a discharge of the receiver or
determination of his powers. So, also the appointment of a receiver generally
by the judgment in an administration action need not be continued by the order
on further consideration." In Kerr on Receivers, 12th edn., in chapter XII
under the heading "Discharge of a Receiver", the legal position is
explained thus:
"The appointment of a receiver made
previously to the judgment in an action will not be superseded by it, unless
the receiver is appointed only until judgment or further order." In High
on the Law of Receivers, 4th edn., the following observations appear at p. 985:
, "The functions of a receiver usually terminate with the termination of
the litigation in which he was appointed. And when the bill upon which the
appointment was made is afterwards dismissed upon demurrer, the duties of the
receiver cease as between the parties to the action........... And although as
between the parties to the litigation his functions have terminated with the
determination of the suit, he is still amenable to the court as its officer
until he has complied with its directions as to the disposal of the funds which
he has received during the course of his receivership.............. But an
order of discharge does not necessarily follow, in all.
cases, because of the determination of the
suit, and the court may, upon sufficient cause shown, 881 either discharge or
continue the receiver, according to the exigencies of the case." The
learned author makes a further distinction at p. 986 between the following two
classes of cases:
"Since the final decree in the cause is
generally decisive of the subject-matter in controversy, and determines the
right to the possession of the fund or property held by the receiver, it is
usually the case that such decree supersedes the functions of the receiver,
since there is then nothing further for him to act upon, although it would seem
to be still necessary that a formal application be made for his discharge. But
when the court by its decree does not attempt to decide the main question in
controversy, and leaves the receiver's possession undisturbed, it cannot be
held to have the effect of operating as a discharge, or of superseding his
functions." Woodroffe in "The Law relating to Receivers in British
India", 4th edn., states at p. 22 thus:
O. XL, r. 1(a) now expressly provides that a
receiver may be appointed whether before or after decree. As long as the order
appointing a receiver remains unreversed, and as long as the suit remains a lis
pendens, the functions of the receiver continue, until he is discharged by
order of the Court." The law may briefly be stated thus: (1) If a receiver
is appointed in a suit until judgment, the appointment is brought to an end by
the judgment in /the action. (2) If a receiver is appointed in a suit, with.
out his tenure being expressly defined, he will continue to be receiver till he
is discharged. (3) But, after the final disposal of the suit as between the
parties to the litigation, the receiver's functions are usually terminated, he
would still be answerable to the court as its officer till he is finally
discharged.. (4) The court has ample power to continue the receiver even after
the final decree if the exigencies of the case so require.
Let us now apply the said principles to the
facts of the instant case. The order appointing the Receivers III 882 did not
expressly state that the Receivers' term would expire on the termination of the
suit. Under the preliminary decree the plaintiff became entitled to apply for
the passing of the final decree for the sale of the property charged and also
to get a personal decree against the defendants 1st set and 2nd set for the balance
of his claim remaining due after the sale The preliminary decree expressly
directed the Receivers to continue until discharged. Pursuant to the
preliminary decree, a final decree for sale of the said properties was made,
but they said decree did not in any way modify the direction given in the
preliminary decree in respect of the Receivers. The combined effect of the two
decrees is that the final decree did not terminate the suit, for the plaintiff
would still be entitled to get a personal decree in case the sale proceeds were
not sufficient to pay off his dues. It cannot, therefore, be said that the suit
has be finally an disposed of. That apart, the preliminary decree in express
terms directed the Receivers to continue till they were discharged. In the circumstances,
we are definitely of the opinion that the Receivers continued by the
preliminary decree are entitled to function in that capacity till they are
discharged.
The third contention of learned counsel for
the appellant raises the question whether in the circumstances of this case the
Receiver could recover possession from the appellant only by instituting a
regular suit against him for eviction. The facts germane to this contention may
be briefly recapitulated. On January 14, 1956, the appellant executed a lease
deed in respect of the flour mill in favour of the Receiver and there was an
express recital therein that the lessee would deliver possession to the
Receiver of all the demised premises upon the expiry of the term of lease. The
said lease was executed as a part of a compromise scheme for running the mills.
The term of the lease had expired. Thereafter the court directed the Receiver
to take possession of the property and auction the same to the highest bidder.
The question is whether under the circumstances a court can dispossess the
appellant under, a summary process or 883 whether it could only do so by
directing the Receiver to file a suit for eviction. The material provisions of
Order XL of the Code of Civil Procedure read:
Rule 1. (1) Where it appears to the Court to
be just and convenient, the Court may by order.................................
(b) remove any person from the possession or
custody of the property;
.................................
(d) confer upon the receiver all such powers,
as to bringing and defending suits and for the realization, management,
protection, preservation and improvement of the property, the collection of the
rents and profits thereof (2) Nothing in this rule shall authorize the Court to
remove from the possession or custody of property any person whom any party to
the suit has not a present right so to remove.
Under this Order, a receiver is an officer or
representative of the court and he functions under its directions.
The court may, for the purpose of enabling
the receiver to take possession and administer the property, by order, remove
any person from the possession or custody of the property. Sub-r. (2) of rule 1
of the Order limits that power in the case of a person who is not a party to the
suit, if the plaintiff has not a present right to remove him. But when a person
is a party to the suit, the court can direct the receiver to remove him from
the possession of the property even if the plaintiff has not a present right to
remove him. In the present case, the appellant was a party to the suit and the
court, through the Receiver took possession of the mill and thereafter the
Receiver, during the course of the administration of the property, under a
compromise arrangement for running the mills, leaned out the flour mill to the
appellant with an express condition that the appellant should redeliver the
property to the Receiver on the expiry of the lease. Admittedly the term of
the, lease had expired, and the court directed the Receiver to take possession
of the mill. The court, in our view, 884 was legally competent to confer a
power on the Receiver under Order XL, r. 1(1)(d), of the Code of Civil
Procedure to recover the property from the appellant.
The decisions cited at the Bar are not of much
relevance to the present case. Krista Chandra Ghose v. Krista Sakha Ghose (1)
is a case where a lease was granted by a Receiver acting under an order of
court and the possession of the property had been given to the lessee, and
subsequently certain parties applied to the court for a declaration that the
lease was invalid on the ground that it was obtained by collusion. There the
court held that no summary order could be passed to set aside the lease and the
proper remedy would be by a suit against the Receiver and also against the
lessee. In that case the lessee, though he was a party to the suit, acquired a
leasehold right under the lease deed and third parties, who offered a higher
rent, sought to question the lease on the ground of collusion. Woodroffe, J.,
held that the dispute could only be decided in a properly instituted suit. The
Rajasthan High Court in Nanakchand v. Pannalal (2) held that a Receiver could
not recover the rent from a lessee in a summary order of the court, but should
file a suit just like any other landlord.
The Allahabad High Court in Loonkaran v. I.
N. John (3), though it conceded that where a lease had been executed by the
Receiver, the lessee may ordinarily be evicted from the demised property only
by a regular suit, held that where after the expiry of the term of the lease
granted by a Receiver, the sub. lessee in possession gave an undertaking to the
court that he would vacate the premises in favour of the prospective lessee if
no fresh lease was granted in his favour, the court has power to eject the
sub-leessee in its summary jurisdiction. The learned Judge observed at p. 59
thus:
"By giving an undertaking to the court
that he would vacate the Mill in favour of the prospective lessee and by
bidding in the court-auction the appellant, in our view, submitted himself to
the (1) (1908) I.L.R. 36 Cal. 52. (2) A.I.R. 1951 Raj. 152.
(3) A.I.R. 1961 All. 59.
885 jurisdiction of the court. The appellant
could therefore be ejected by summary process, instead of by a suit." So
too, the High Court of Travancore-Cochin in Sivarajan v. Official Beceiver,
Quilon District (1) held that where the period of the lease granted to the
receiver had already expired and as per the express stipulation in the lease
deed the lessee was bound to surrender possession of the property without
raising any objection at all, the Court could summarily evict him. The learned
Judge made the following observations at p. 39:
"Even though the lease deed stands in
favour of the receiver the express undertaking given by the lessee for an
unconditional surrender of the property is in favour of the court........ The
summary enforcement of the undertaking thus taken by the court is only a, step
towards the discharge of the duties of the court in the management of the estate
and it cannot be said that the court has lost its jurisdiction in that
direction merely because the property has been in the possession of a
lessee." Further citation would be redundant. These and such decisions
seem to hold that a court cannot evict a lessee from a receiver, whether he is
a party to the suit or not, in exercise of its summary jurisdiction unless the
lease expressly conferred a right of re-entry under the lease deed on the
receiver. It is not necessary to demarcate the boundaries of the summary
jurisdiction of a court in managing an estate through a receiver, for in this
case we are clearly of the opinion that the appellant was in possession of the
mill under an agreed and integrated scheme for running the mills by the
different partners, though he was put in possession under a document described
as a lease deed. In effect the Receiver, during the course of the management,
entrusted each mill to one of the partners so that the mills might be properly
worked under experienced hands. The appellant expressly agreed to put the
Receiver in possession of the mill after the expiry of three years.
No question of (1) I.L.R. 1953 T.C. 30.
886 deciding the conflicting claims of a
lessee and a third party arises in this case; nor is the court called upon to
pronounce on the vested rights of a lessee in conflict with those of the
Receiver. But this is a simple case of a court in the course of its
administration of the estate through the agency of a receiver making a suitable
provision for the running of the mills. As the agreed term had expired, the
court, in our view, could certainly direct the appellant to put the mill in the
possession of the Receiver.
Lastly it has been brought to our notice that
an application for the discharge of the Receiver is pending in the lower court.
Any observations that we have made in this judgment are not intended to affect
the merits one way or other in the disposal of that application. That
application will be disposed of in accordance with law.
In the result, the appeal fails and
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