PETITIONER: HIRALAL PATNI Vs. RESPONDENT: LOONKARAM SETHIYA & OTHERS DATE OF JUDGMENT: 11/04/1961 BENCH: SUBBARAO, K. BENCH: 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 con- tinues 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. JUDGMENT:
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, Rameshwar- Nath, 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 nett 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 per-
mission 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 Govern-
ment, 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 defen-
dants, 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 th
e
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 the
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 com-
promise 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 represen-
tative 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. Aamittedly the term of the,
lease had expired, and the court directed the Receiver to
take possession of the mill. The court, in our view,
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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.
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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 is dismissed with costs.
Appeal dismissed.