{"id":171537,"date":"1961-04-11T00:00:00","date_gmt":"1961-04-10T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hiralal-patni-vs-loonkaram-sethiya-others-on-11-april-1961"},"modified":"2016-05-24T09:49:53","modified_gmt":"2016-05-24T04:19:53","slug":"hiralal-patni-vs-loonkaram-sethiya-others-on-11-april-1961","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hiralal-patni-vs-loonkaram-sethiya-others-on-11-april-1961","title":{"rendered":"Hiralal Patni vs Loonkaram Sethiya & Others on 11 April, 1961"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Hiralal Patni vs Loonkaram Sethiya & Others on 11 April, 1961<\/div>\n
Equivalent citations: 1962 AIR 21, \t\t 1962 SCR (1) 868<\/div>\n
Author: K Subbarao<\/div>\n
Bench: Subbarao, K.<\/div>\n
           PETITIONER:\nHIRALAL PATNI\n\n\tVs.\n\nRESPONDENT:\nLOONKARAM SETHIYA & OTHERS\n\nDATE OF JUDGMENT:\n11\/04\/1961\n\nBENCH:\nSUBBARAO, K.\nBENCH:\nSUBBARAO, K.\nDAYAL, RAGHUBAR\nMUDHOLKAR, J.R.\n\nCITATION:\n 1962 AIR   21\t\t  1962 SCR  (1) 868\n CITATOR INFO :\n R\t    1984 SC1471\t (41)\n\n\nACT:\nCivil  Procedure--Receiver, continued by Preliminary  decree\ntill   discharged--Final  decree  silent--Whether   receiver\nautomatically  discharged--Lease by receiver to\t Party--Term\nof  lease  expiring--Dispossession of lessee  by  receiver--\nSummary\t procedure or civil suit--Code of  Civil  Procedure,\n1908 (V of 1908), O. 40.\n\n\n\nHEADNOTE:\nThe  John  Mills comprising of three textile mills  and\t one\nflour  mill  were  jointly owned by  several  persons.\t The\nfinancier  of  the Mills filed a suit for  recovery  of\t the\namount\tdue  to\t him.  During the pendency  of\tthe  suit  a\nreceiver was appointed to take possession of the flour mills\nbut  he was not empowered to run the mills directly  without\nfurther\t directions of the court.  A preliminary decree\t was\npassed\tin  the suit directing among other things  that\t the\nreceiver  was to continue until discharged.  Thereafter,  an\narrangement  was  made for running the mills and  the  court\ndirected that the appellant, who was one of the co-owners of\nthe  mills,  be given a lease of the flour  mill  for  three\nyears  by  the receiver.  In the lease\tdeed  the  appellant\nundertook  to deliver back possession to the  receiver\tupon\nthe expiry\n869\nof the three years.  Shortly thereafter, a final decree\t was\npassed\tin  the\t suit but it was silent\t in  regard  to\t the\nreceiver appointed earlier.  On the expiry of the three year\nterm  of the lease the court directed the receiver  to\ttake\nback  possession of the flour mill from the appellant.\t The\nappellant contended (i) that after, the passing of the final\ndecree\tthe receiver ceased to 'be a receiver in respect  of\nthe  rights  of the co-owners and could not  dispossess\t the\nappellant,  and\t (ii)  that  the  appellant  could  only  be\ndispossessed  by a suit filed by the receiver and not  by  a\nsummary procedure.\nHeld, that the receiver continued by the preliminary  decree\nwas entitled to function till he was discharged.  The  legal\nposition  with\tregard to the continuance  of  receivers  is\nthat:  (i)  if\ta  receiver is appointed  in  a\t suit  until\njudgment,  the\tappointment  is brought to  an\tend  by\t the\njudgment  in the suit; (ii) if a receiver is appointed in  a\nsuit  without  his tenure being expressly defined,  he\twill\ncontinue  till he is discharged; (iii) even after the  final\ndisposal  of the suit, though as between the parties to\t the\nsuit his functions are usually terminated, the receiver con-\ntinues\tto  be answerable to the court till  he\t is  finally\ndischarged,  and (iv) the court has ample power to  continue\nthe  receiver even after the final decree if the  exigencies\nof  the\t case so require.  The final decree in\tthe  present\ncase  did not finally dispose of the suit and did not  bring\nthe appointment of the receiver to an end.\nHeld,  further\tthat the court was entitled  to\t direct\t the\nappellant  to give back possession of the flour mill to\t the\nreceiver.  The court was merely making suitable\t arrangement\nfor   the  running  of\tthe  mill  in  the  course  of\t its\nadministration of the estate through the receiver.  The mill\nhad  been  leased  out\tto the\tappellant  with\t an  express\ncondition  that\t he  should redeliver the  property  to\t the\nreceiver  on  the  expiry of the lease\tand  the  court\t was\ncompetent under 0. 4o r. 1(1)(d) Code of Civil Procedure  to\nconfer a power on the receiver to recover the property\tfrom\nthe  appellant.\t  It was not necessary for the\treceiver  to\nfile a suit for the recovery of the property.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE, JURISDICTION: Civil Appeal No.110 of 1961.
\nAppeal\tby special leave from the judgment and\torder  dated
\nOctober\t 14,  1960,  of the Allahabad High  Court  in  First
\nAppeal from Order No. 41 of 1959.\n<\/p>\n
C. B. Agarwala, Rameshwar- Nath, S. N. Andley,
\nJ.   B. Dadachanj and P. L. Vohra, for the appellant.
\nK.   B. Choudhuri, A. K. Kirty and Ratna Rao, for respondent
\nNo. 1.\n<\/p>\n
870<\/span><\/p>\n
S.   P. Sinha and M.  I. Khawaja, for respondents Nos. 2,  3
\nand 4.\n<\/p>\n
H.   N. Sanyal, Additional Solicitor-General of India and G.
\nC. Mathur, for respondent No. 5.\n<\/p>\n
Naunit Lal, for respondent No. 7.\n<\/p>\n
1961.\tApril 11.  The, Judgment of the Court was  delivered
\nby
\nSUBBA  RAO,  J.-This  appeal by special\t leave\tis  directed
\nagainst\t the  judgment dated October 14, 1960, of  the\tHigh
\nCourt of Judicature at Allahabad confirming the order passed
\nby the Civil Judge, Agra, directing the Official Receiver to
\ntake possession of the property of the appellant.
\nThis   case   illustrates   how\t the   enforcement   of\t  an
\ninterlocutory  order  appointing  a  Receiver  made  in\t the
\ninterest  of all the parties concerned could  be  obstructed
\nand  the object of the order itself be defeated by  dilatory
\ntactics adopted by one party or other.\n<\/p>\n
 At  Agra,  there were three spinning mills  and  one  flour
\nmill,  all  of which together were described  as  the  Johns
\nMills;\t and,\toriginally,  the  John\t family\t  or   their
\npredecessors  were  the owners of all these mills.   At\t the
\ntime  the present proceedings were initiated, other  persons
\nhad  acquired interest therein.\t The following persons\twere
\nthe  joint  owners  of the mills:  (1)\tHiralal\t Patni,\t the
\nappellant,  and\t Munni\tLal  Mehrt…  19\/40th\tshare;\t (2)
\nGambhirmal Pandiya Private Ltd…. 8\/40th share; (3) Messrs.
\nJohn  & Co …. 11\/40th share; and (4) I.E. John …  2\/40th
\nshare.\t Seth Loonkaran Sethiya, respondent No. 1,  advanced
\nlarge amounts to Messrs.  John & Co. on the security of\t its
\nbusiness  assets  and stocks.  On April 18, 1949,  the\tsaid
\nSethiya filed 0. S. No. 76 of 1949 in the Court of the Civil
\nJudge,\tAgra,  against John & Co. for the  recovery  of\t the
\namount due to him by sale of the assets of the said company.
\nTo  that  suit\tthe partners of Messrs.\t  John\t&  Co.,\t for
\nconvenience  described\tas  “defendants 1st  set”,  and\t the
\npartners  of  Messrs.\tJohns  Jain  &\tCo.,  who  were\t for
\nconvenience  described\tas “defendants 2nd set”,  were\tmade
\nparties.   Pending  the\t suit, the  said  Sethiya  filed  an
\napplication, under O. XL, r. 1, Code of Civil
\n871<\/span>
\nProcedure,  for the appointment of a Receiver.\tBy an  order
\ndated  May 21, 1949, the learned Civil Judge  appointed\t two
\njoint Receivers and directed them to run the three  spinning
\nmills.\tHiralal Patni filed an appeal against that order  to
\nthe High Court at Allahabad, and the said Court by its order
\ndated August 22, 1949, modified the order of the Civil Judge
\nconfining the order of appointment of Receivers only to\t the
\nshare  of  Messrs.   John & Co. in John\t Jain  Mehre  &\t Co.
\nLoonkaran Sethiya made another application in the Court,  of
\nthe  Civil Judge for the appointment of a Receiver  for\t the
\nproperty of Hiralal Patni and the learned Civil Judge by his
\norder dated December 1, 1951, directed the Receivens to take
\npossession  of\tthe  appellant’s share\tin  the\t mills\talso
\nAgainst this order an appeal was preferred to the High Court
\nand  the operation of the said order was stayed pending\t the
\ndisposal of the- appeal.  On April 5, 1954, the Civil  Judge
\npassed\ta preliminary decree against the defendants  therein
\ndirecting them to deposit the decree ‘amount in court within
\nthe prescribed time, and in default the plaintiff was  given
\na right to apply for a final decree for sale of the business
\nassets\tof the defendants.  The decree also gave a right  to
\napply  for a personal decree in case the sale proceeds\twere
\nnot  sufficient\t to discharge the decree.   The\t preliminary
\ndecree\tdirected that the Receivers should continue  on\t the
\nproperty until discharged. Hiralal Patni preferred a  appeal
\nto  the High Court against the said preliminary\t decree\t and
\napplied\t for interim stay of its operation.  On\t August\t 23,
\n1955, the High Court discharged the Receiver,,; appointed by
\nthe learned.  Civil Judge, and appointed another Receiver in
\ntheir  place.\tOn March 25, 1955, the learned\tCivil  Judge
\nprepared  a  scheme for running the mills, and\tthe  parties
\npreferred  appeals  against that scheme to the\tHigh  Court.
\nThe  said appeals were compromised and under the  term-,  of
\nthe compromise the parties agreed to take different mills on
\nlease  for  a period of three years from the  Receiver.\t  On
\nJanuary\t 14, 1956, the Receiver executed a lease in  respect
\nof the flour mill in favour of Hiralal Patni for a
\n872<\/span>
\nperiod\tof three years.\t Under the lease deed it was  agreed
\nthat he should deliver the demised premises to the  Receiver
\nupon  the expiry of the term.  In due course, on  March\t 14,
\n1956,  a final decree was made in the suit for the  sale  of
\nthe properties, but the final decree was silent in regard to
\nthe  Receiver  appointed earlier.  On  September  29,  1958,
\nHiralal Patni applied to the High Court for extension of the
\nlease by three years.  On January 16, 1959, the High,  Court
\nrejected  the application on the ground that the  lease\t was
\nonly a stopgap arrangement and that it was for the  Receiver
\nto  make  a  fresh  arrangement for  the  future  under\t the
\nsupervision  and  directions of the Civil Judge,  Agra.\t  On
\nJanuary\t 17, 1959, the Receiver applied to the\tCivil  Judge
\nfor  instructions  whether  he should  proceed\tat  once  to
\ndispossess  the appellant.  On notice, Hiralal Patni  raised
\nvarious\t objections  and  claimed that he  was\tentitled  to
\nremain\tin  possession of the property as  its\towner.\t The
\nlearned Civil Judge disallowed his objections and held\tthat
\nthe  Receiver  derived his authority  from  the\t preliminary
\ndecree,\t and  directed the Receiver to lease  out  the\tsaid
\nflour  mill by auction for a period of two years.   Pursuant
\nto  that order, an auction was held, and the  appellant\t was
\nthe  highest  bidder,  and  he paid  the  lease\t amount\t and
\nexecuted a formal lease deed.  Not satisfied with the  order
\nof the Civil Judge, Hiralal Patni preferred an appeal to the
\nHigh  Court.   The  High  Court\t in  an\t elaborate  judgment
\nconsidered the contentions raised on behalf of Hiralal Patni
\nand dismissed the appeal.  Hence the present appeal.
\nLearned\t counsel  for  the appellant raised  before  us\t the
\nfollowing   three   contentions,   which   the\t  appellant,
\nunsuccessfully\traised\tbefore\tthe High Court\tas  well  as
\nbefore\tthe Civil Judge. (1) On a true construction  of\t the
\nrelevant orders the Receiver has no power to dispossess\t the
\nappellant  in such a way as to prevent him from working\t his
\nflour  mill.  (2)  After the passing of\t the  final  decree,
\nthough\tthe  Receiver  may  continue  for  the\tpurpose\t  of
\naccounting  and discharge of debts, he cannot  exercise\t any
\npowers in respect of the rights of the parties.\t And (3)  in
\nany view, as the appellant
\n873<\/span>
\nacquired  a  right  under  a lease  deed  and  continued  in
\npossession  after its expiry, he could be dispossessed\tonly
\nby a suit and not by a summary procedure.\n<\/p>\n
The  first  question  turns upon  the  construction  of\t the
\nrelevant  orders.   The\t Civil\tJudge  appointed  two  joint
\nReceivers  by  an  order  dated May 21,\t 1949.\t It  it\t not
\nnecessary to consider the said order as the final order that
\ngoverned the rights of the Receiver and the parties was that
\nmade by the High Court on appeal on August 22, 1949.   After
\nconsidering  the contentions of the parties, the High  Court
\ncame  to the conclusion that a Receiver should be  appointed
\nto be in charge of the entire property, immoveable and move.
\nable,  of  the\tdefendants 1st set for\tits  protection\t and
\npreservation.\tThe  order of the High Court  described\t the
\nJohn family as defendants 1st set to the suit, and defendant
\n5,  Hiralal Patni, defendant 6, Munnilal Mehra, and  Messrs.
\nJohn Jain Mehra & Co. as defendants 2nd set.  This order was
\nconfined only to the properties of defendants 1st set.\t The
\nHigh Court further proceeded to state:\n<\/p>\n
\t      “In   the\t finance  agreement  in\t  plaintiffs
\n\t      favour, the plaintiff was not given any  right
\n\t      to enter into possession on non-payment or  to
\n\t      run the mills…… There being no right given
\n\t      to the plaintiff to enter into possession\t and
\n\t      manage  the  mills  or  to  have\ta   receiver
\n\t      appointed,  a receiver can be  appointed\tonly
\n\t      under  Order 40, rule 1 of the Code  of  Civil
\n\t      Procedure.”\n<\/p><\/blockquote>\n
Adverting to the contention raised by the defendants that  a
\nReceiver  could not be appointed to run the mills, the\tHigh
\nCourt observed:\n<\/p>\n
\t      “In view of the order that we propose to\tpass
\n\t      today we do not want to go into that question.
\n\t      In case the mills are not run under the  order
\n\t      of  the Collector under the  United  Provinces
\n\t      Industrial Disputes Act, or by the partners we
\n\t      propose to give the parties permission to move
\n\t      this  court.  In case we decide to  appoint  a
\n\t      receiver\tto  run\t the  mills  we\t shall\tthen
\n\t      consider\twhether a receiver can or cannot  be
\n\t      appointed\t for  the  purpose  of\trunning\t the
\n\t      mills.”\n<\/p><\/blockquote>\n
Then the High Court stated:\n<\/p>\n
110<\/span>
\n874<\/span><\/p>\n
\t      “We  have\t already set out  the  circumstances
\n\t      which in our opinion make it necessary that  a
\n\t      receiver should be appointed to take charge of
\n\t      the  property of defendants first set  whether
\n\t      under the finance agreement of July 1948 there
\n\t      was a charge created on the property, moveable
\n\t      and immoveable, or not.  The Receiver will not
\n\t      interfere with the running of the mills except
\n\t      under  express orders of the Court and to\t the
\n\t      extent when it becomes necessary by reason  of
\n\t      the value of the security being jeopardized by
\n\t      any action of the defendants.”\n<\/p><\/blockquote>\n
Then  the High Court pointed out that the Collector had\t the
\npower  under  s. 3 of the Industrial Disputes  Act  to\tmake
\narrangements for the running of the mills.  Finally the High
\nCourt observed: ,
\n\t      “It may be necessary from time to time to give
\n\t      directions  to the receiver.  The parties\t may
\n\t      also  want  portions  ‘of\t this  order  to  be
\n\t      clarified\t or other directions obtained.\t The
\n\t      lower  court may give such directions  to\t the
\n\t      receiver or to the parties as it may  consider
\n\t      just  and proper.\t In case further  directions
\n\t      are  necessary or the receiver or the  parties
\n\t      are  not satisfied with the  directions  given
\n\t      they   may   move\t this  court   for   further
\n\t      direction.”\n<\/p>\n
Shortly\t stated, the High Court confirmed the order  of\t the
\nCivil  Judge appointing the Receivers and directed  them  to
\ntake  charge of the properties of defendants 1st  set.\t The
\nHigh   Court   expressly  prohibited  the   Receivers\tfrom
\ninterfering  with  the\trunning of the\tmills  except  under
\nexpress\t orders\t of the court, for at that time it  did\t not
\nthink it necessary to direct the Receivers to do so.  It may
\nbe  recalled that the Receivers were not appointed  for\t the
\nflour mill of the appellant, Hiralal Patni, as he was one of
\nthe  defendants belonging to the 2nd set.   Learned  counsel
\nfor  the appellant contends that this order did not put\t the
\nmills  in  the\tpossession of the  Receivers  and  that\t the
\nReceivers  were\t given only a supervisory control  over\t the
\nshare  of  the defendants 1st set in  the  mills.   Whatever
\nterminology  may have been used, the fact remains  that\t the
\nReceivers were put in charge of the entire property
\n875<\/span>
\nof  defendants\t1st set, which includes their share  in\t the
\nmills,\tthough it was equally made clear that the  Receivers
\ncould not directly run the mills without further  directions
\nin that regard.\n<\/p>\n
The  Civil  Judge  by  his order  dated\t December  1,  1951,
\ndirected  the Receivers to take possession of ‘the share  of
\ndefendants  2nd\t set also.  The operative  portion  of\tthat
\norder reads:\n<\/p>\n
\t       “For  all  these reasons I have come  to\t the
\n\t      conclusion that it is just and convenient that
\n\t      a receiver should be appointed over the  share
\n\t      of the defendant 11 set, and I order that\t the
\n\t      present receivers who are in possession of the
\n\t      defendant\t  1st  set  share  should  also\t  be
\n\t      appointed\t receivers  over the  share  of\t the
\n\t      defendant 11 set.\t As for the prayer  allowing
\n\t      the receivers to run the mills the question of
\n\t      running  of  the mills is already\t before\t the
\n\t      High Court as is shown by the compromise dated
\n\t      8th September 1950.  It is not known what\t has
\n\t      happened after this compromise.  The receivers
\n\t      are  directed  to seek the  direction  of\t the
\n\t      Hon’ble  High  Court on the  question  of\t the
\n\t      running  of the mills so that there may be  no
\n\t      chance of conflicting of orders passed by this
\n\t      court  and  the Hon’ble High  Court,  on\tthis
\n\t\t\t    matter.  The receivers will not interfere with
\n\t      the running of the mills except under  express
\n\t      orders of this court and to the extent when it
\n\t      becomes  necessary by reason of the  value  of
\n\t      the  security being jeopardized by any  action
\n\t      of   the\tpersons\t running  the  Mills.\t The
\n\t      receivers are appointed over the share of\t the
\n\t      defendants  II  set only, for the\t purpose  of
\n\t      preservation and protection and realization of
\n\t      the rent.”\n<\/p><\/blockquote>\n
This  order  runs on the same lines indicated  by  the\tHigh
\nCourt  in  its\tearlier order in respect  of  the  share  of
\ndefendants 1st set.  What is to be noted is that under\tthis
\norder the Receivers were prohibited from’ running the  mills
\nexcept\tunder the specific’ orders of the said court  or  of
\nthe High Court.\t On April 5, 1954, a preliminary decree\t was
\nmade in the suit, and under that decree the defendants\twere
\ndirected  to deposit a sum of Rs. 18,00,152 in court  within
\nthe prescribed
\n876<\/span>
\ndate  and  in default the plaintiff was given  a  right,  to
\napply  for a final decree for the sale of the assets of\t the
\nspinning mills.\t There was a further direction that in\tcase
\nthe  nett  sale\t proceeds of the said  property\t were  found
\ninsufficient to satisfy the plaintiffs claim, the  plaintiff
\nwould  get a personal decree against defendants 1st set\t and
\ndefendants  2nd\t set  for the balance  of  his\tclaim.\t The
\nReceivers  were directed to continue on the  property  until
\ndischarged.   Under  the preliminary decree,  the  plaintiff
\nbecame\tentitled not only to the sale of the assets  of\t the
\nspinning mills but also to a personal decree against all the
\ndefendants  for recovering any balance that might  still  be
\ndue  to him after the sale of the said properties.  What  is
\nmore, the Receivers were expressly directed to continue till
\nthey were discharged, and as the decree did not specify\t the
\npowers of the Receivers, it must be held that they continued
\nto  exercise  such powers as they had  under  the  previous,
\norders\tof the courts dated August 22, 1949 and December  1,
\n1951.\n<\/p>\n
On March 25, 1955, the learned Civil Judge, Agra, prepared a
\nscheme for the running of the three spinning mills, and\t the
\nparties preferred two appeals to the High Court against\t the
\nscheme.\t On July 22, 1955, a compromise was effected between
\nthe  parties  in the aid two appeals and  the  appeals\twere
\ndisposed of in terms of the compromise by order of the\tHigh
\nCourt dated August 23, 1955.  As the terms of this order are
\nrather\timportant in the context of the\t contentions  raised
\nbefore us, we would read the relevant portions hereof:\n<\/p>\n
\t      Clause  1.  That the  aforesaid  parties\thave
\n\t      without\tprejudice   to\ttheir\trights\t and
\n\t      litigation between them have after  deliberate
\n\t      consideration and as a special effort to\tmake
\n\t      arrangements  for running the Johns Mill\thave
\n\t      decided  that  the three\tspinning  Mills\t and
\n\t      Flour  Mill situate in Agra should be  run  by
\n\t      the  parties in accordance with the terms\t and
\n\t      conditions set forth below.\n<\/p><\/blockquote>\n
(vi) That  the\tlease shall be granted by  the\treceiver  on
\nterms and conditions approved by the Court.\n<\/p>\n
877<\/span><\/p>\n
\t       (ix) If any lessee shall fail to run the Mill
\n\t      after delivery of possession or pay the  lease
\n\t      money  or fail to carry out  the\tarrangements
\n\t      arrived at between the parties for a period of
\n\t      three   months,\tthe  receiver\tshall\ttake
\n\t      possession  of  the Mills and  with  the\tper-\n<\/p>\n
\t      mission  of  the court shall  lease  out\tthat
\n\t      particular   mill\t to  any  of   the   parties
\n\t      excepting\t the party in default who may  offer
\n\t      the highest bid in accordance with the  orders
\n\t      passed by the Civil Judge in this matter.\n<\/p>\n
\t       Clause, 4……………………………
\n\t      The  arrangement embodied in this document  is
\n\t      only  for the purpose of working the mills  by
\n\t      the  petitioners.\t Nothing contained  in\tthis
\n\t      document will affect the rights and obligation
\n\t      of the parties which are or may be the subject
\n\t      matter  of  suit\tNo. 76 of  1949\t or  in\t any
\n\t      litigation    between    the    parties\t and
\n\t      notwithstanding anything contained herein\t but
\n\t      subject  :however to the express provision  in
\n\t      the preceding paragraph of this clause it will
\n\t      be  open\tto  the petitioners  to\t seek  their
\n\t      remedies\tin any manner provided by  law,\t and
\n\t      without prejudice to the rights of the parties
\n\t      to  obtain a stay order from the Hon’ble\tHigh
\n\t      Court or any other Court.”\n<\/p>\n
What  is the effect of this order?  Learned counsel for\t the
\nappellant  contends  that this order  embodies\tan  internal
\narrangement between the defendants for running the mills and
\nthat it does not in any way enlarge the scope of the  orders
\ndated August 22, 1949, and December 1, 1951, under which the
\nReceivers were appointed.  We do not think that the scope of
\nthe  orders is so limited.  The combined effect of the\tsaid
\nearlier orders was that the Receivers should take possession
\nof the entire properties of the two sets of defendants.\t But
\nthe  Receivers\twere not given the power to  run  the  mills
\nwithout\t specific  directions to that effect by\t the  court.
\nThe Civil Judge by his order dated March 25, 1955, evolved a
\nscheme for running the mills, and by that order he laid down
\nthe  conditions\t and  directed the  Receivers  to  advertise
\ncalling for applications from persons, including the Govern-
\nment, who were willing to run the mills.  This order
\n878<\/span>
\nwas  only  confined  to\t the  three  spinning  mills.\t The
\ncompromise order in the appeals covered also the flour mill.
\nThough\t different  mills  were\t to  be\t run  by   different
\ndefendants  by obtaining lease deeds, that was only  a\tmode
\nevolved for running the mills tinder the supervision of\t the
\ncourt.\tUnder the compromise, the leases were to be executed
\nin  favour of the Receiver.  It also provided that  in\tcase
\nthe  lessees did not carry out the terms of the\t lease,\t the
\nReceiver  should take possession of the mill in\t respect  of
\nwhich default was committed and, with the permission of\t the
\ncourt,\tshould lease out the mill to any of  the  defendants
\nother  than  the defaulting party.  The clauses\t saving\t the
\nrights of the parties obviously refer to their rights  which
\nwere the subject-matter of the suit and they could not\thave
\nany reference to the terms agreed upon under the  compromise
\norder.\t Under the compromise order, the courts,  though  by
\nconsent,  gave directions for running the mills\t which\tthey
\nleft  out for future consideration in their earlier  orders.
\nThe  result,  was  that under the earlier  orders,  all\t the
\nproperties  of the defendants were put in possession of\t the
\nReceivers, and under the compromise order, the Receiver\t was
\ndirected to run the mills under the agreed scheme.
\nPursuant  to the terms of the compromise order,\t on  January
\n14,  1956,  the Receiver executed a lease in favour  of\t the
\nappellant in respect of the flour mill for a period of three
\nyears,\t and  under  that  lease  deed\tthe  appellant\t got
\npossession from the Receiver and agreed “To yield up all the
\ndemised\t  premises   with  all\tfixture,   improvement\t and
\nreplacements  thereto  in  good and  tenantable\t repair\t and
\ncondition  in  accordance with the lease covenants  in\tthat
\nbehalf\therein contained upon the expiry of the term  hereby
\ncreated\t or  the sooner determination of these\tpresents  as
\nherein\tprovided.” Whatever ambiguity there may\t have  been,
\nthis  lease  deed dispels it, for under the lease  deed\t the
\nappellant admits the legal possession of the Receiver, takes
\na lease under him, and agrees to put him back in  possession
\nafter  the expiry of the lease.\t On September 29, 1958,\t the
\nappellant  again applied to the court for extension  of\t the
\nlease for three more years, thereby
\n879<\/span>
\naccepting  his\tpossession under the  Receiver,\t though\t the
\ncourt on January 16,1959, dismissed that application on\t the
\nground\tthat  the lease was only a stopgap  arrangement\t and
\nthat it was for the Receiver to make a fresh arrangement for
\nthe future under the supervision and directions of the Civil
\nJudge  under whose preliminary decree he derived  authority.
\nIt  is manifest from the aforesaid orders that the  Receiver
\nwas  put in possession of the entire property of the  defen-
\ndants,\t that  he  was\tnot  empowered\tto  run\t the   mills
\npersonally,  that  by subsequent orders he was\tdirected  to
\nlease out the mills to the parties in the manner  prescribed
\nand  that  under  the  final  order  he\t was  to  take\tover
\npossession  and\t make  other arrangements  for\trunning\t the
\nmills.\tIn the premises, we find it very difficult to accept
\nthe  argument of learned counsel that the Receiver  was\t not
\nput  in possession of the mills, but the mills continued  to
\nbe  in\tthe  possession of tile defendants.  We\t hold  on  a
\nconstruction  of the relevant orders that the flour mill  of
\nthe appellant was also put in the possession of the Receiver
\nand  that the appellant was running the said mill under\t the
\ncompromise formula.\n<\/p>\n
The  second contention of learned counsel for the  appellant
\nis  that the Receiver appointed in the suit ceased to  be  a
\nReceiver qua the rights of the parties when the final decree
\nwas  made  by the Court.  This contention leads\t us  to\t the
\nconsideration  of the question whether a Receiver  appointed
\nin a suit ceases to be such automatically on the termination
\nof  the suit.  Neither s. 51(d) nor Order XL of the Code  of
\nCivil Procedure prescribes for the termination of the office
\nof receivership.. We must, therefore, look for the  solution
\nelsewhere.    Some  of\tthe  authoritative   text-books\t  on
\nreceivers may usefully be consulted in this connection.
\nIn  Halsbury’s\tLaws  of England, 3rd edn.,  Vol.  32  (Lord
\nSimonds),   at\tp.  386\t under\tthe  heading  “Duration\t  of
\nappointment by court”, the following statement occurs:\n<\/p>\n
\t      “When  a receiver is appointed for  a  limited
\n\t      time,  as in the case of interim\torders,\t his
\n\t      office  determines on the expiration  of\tthat
\n\t      time without any
\n880<\/span>
\n\t      further  order  of  the  court,  and  if\t the
\n\t      appointment  is  until  judgment\tor   further
\n\t      order’ it is brought to an end by the judgment
\n\t      in  the action.  The judgment may provide\t for
\n\t      the  continuance of the receiver, but this  is
\n\t      regarded\tas a now appointment.  If a  further
\n\t      order  of the court, though silent as  to\t the
\n\t      receivership,    is   inconsistent   with\t   a
\n\t      continuance of the receiver, it may operate as
\n\t      a discharge.\n<\/p><\/blockquote>\n
\t      When  a  receiver\t has been  appointed  on  an
\n\t      interlocutory application without any limit of
\n\t      time,  it is not necessary to provide for\t the
\n\t      continuance  of his appointment in  the  final
\n\t      judgment.\t  The silence of the  judgment\tdoes
\n\t      not operate as a discharge of the receiver  or
\n\t      determination  of\t his powers.  So,  also\t the
\n\t      appointment  of  a receiver generally  by\t the
\n\t      judgment in an administration action need\t not
\n\t      be   continued   by  the\torder\ton   further
\n\t      consideration.”\n<\/p><\/blockquote>\n
In  Kerr on Receivers, 12th edn., in chapter XII  under\t the
\nheading\t “Discharge  of a Receiver”, the legal\tposition  is
\nexplained thus:\n<\/p>\n
\t      “The appointment of a receiver made previously
\n\t      to  the  judgment\t in an action  will  not  be
\n\t      superseded  by  it,  unless  the\treceiver  is
\n\t      appointed\t only  until  judgment\tor   further
\n\t      order.”\n<\/p><\/blockquote>\n
In  High  on the Law of Receivers, 4th edn.,  the  following
\nobservations appear at p. 985: ,
\n\t      “The functions of a receiver usually terminate
\n\t      with  the\t termination of\t the  litigation  in
\n\t      which  he\t was appointed.\t And when  the\tbill
\n\t      upon   which  the\t appointment  was  made\t  is
\n\t      afterwards dismissed upon demurrer, the duties
\n\t      of  the receiver cease as between the  parties
\n\t      to  the  action………..  And  although\t  as
\n\t      between  the  parties to\tthe  litigation\t his
\n\t      functions\t   have\t   terminated\t with\t the
\n\t      determination   of  the  suit,  he  is   still
\n\t      amenable to the court as its officer until  he
\n\t\t\t    has\t complied  with its directions\tas  to\tth
\ne
\n\t      disposal\tof the funds which he  has  received
\n\t      during\t   the\t    course\tof\t his
\n\t      receivership…………..  But  an  order  of
\n\t      discharge does not necessarily follow, in all.
\n\t      cases,  because  of the determination  of\t the
\n\t      suit, and the court may, upon sufficient cause
\n\t      shown,
\n881<\/span>
\n\t      either  discharge\t or continue  the  receiver,
\n\t      according to the exigencies of the case.”
\nThe  learned author makes a further distinction at    p. 986
\nbetween the following two classes of cases:\n<\/p>\n
\t      “Since  the  final  decree  in  the  cause  is
\n\t      generally\t decisive of the  subject-matter  in
\n\t      controversy,  and determines the right to\t the
\n\t      possession of the fund or property held by the
\n\t      receiver,\t it  is usually the case  that\tsuch
\n\t      decree   supersedes  the\tfunctions   of\t the
\n\t      receiver, since there is then nothing  further
\n\t      for him to act upon, although it would seem to
\n\t      be  still necessary that a formal\t application
\n\t      be made for his discharge.  But when the court
\n\t      by  its decree does not attempt to decide\t the
\n\t      main  question in controversy, and leaves\t the
\n\t      receiver’s  possession undisturbed, it  cannot
\n\t      be  held to have the effect of operating as  a
\n\t      discharge, or of superseding his functions.”\n<\/p><\/blockquote>\n
Woodroffe  in  “The  Law relating to  Receivers\t in  British
\nIndia”, 4th edn., states at p. 22 thus:\n<\/p>\n
\t      O.  XL, r. 1(a) now expressly provides that  a
\n\t      receiver\tmay be appointed whether  before  or
\n\t      after decree.  As long as the order appointing
\n\t      a receiver remains unreversed, and as long  as
\n\t      the suit remains a lis pendens, the  functions
\n\t      of   the\treceiver  continue,  until   he\t  is
\n\t      discharged by order of the Court.”\n<\/p><\/blockquote>\n
The  law  may briefly be stated thus: (1) If a\treceiver  is
\nappointed  in  a  suit until judgment,\tthe  appointment  is
\nbrought\t to an end by the judgment in \/the action. (2) If  a
\nreceiver is appointed in a suit, with. out his tenure  being
\nexpressly  defined, he will continue to be receiver till  he
\nis discharged. (3) But, after the final disposal of the suit
\nas  between  the parties to the litigation,  the  receiver’s
\nfunctions   are\t usually  terminated,  he  would  still\t  be
\nanswerable  to the court as its officer till he\t is  finally
\ndischarged..  (4) The court has ample power to continue\t the
\nreceiver  even after the final decree if the  exigencies  of
\nthe case so require.\n<\/p>\n
Let  us\t now apply the said principles to the facts  of\t the
\ninstant case.  The order appointing the Receivers
\n\tIII
\n882<\/span>
\ndid  not  expressly  state that the  Receivers’\t term  would
\nexpire\t on  the  termination  of  the\tsuit.\t Under\t the
\npreliminary  decree the plaintiff became entitled  to  apply
\nfor  the  passing of the final decree for the  sale  of\t the
\nproperty  charged and also to get a personal decree  against
\nthe  defendants 1st set and 2nd set for the balance  of\t his
\nclaim  remaining due after the sale The\t preliminary  decree
\nexpressly   directed   the  Receivers  to   continue   until
\ndischarged.   Pursuant\tto the preliminary decree,  a  final
\ndecree\tfor  sale of the said properties was made,  but\t the
\nsaid decree did not in any way modify the direction given in
\nthe  preliminary  decree in respect of the  Receivers.\t The
\ncombined effect of the two decrees is that the final  decree
\ndid not terminate the suit, for the plaintiff would still be
\nentitled to get a personal decree in case the sale  proceeds
\nwere  not  sufficient  to  pay off  his\t dues.\t It  cannot,
\ntherefore, be said that the suit has be finally an  disposed
\nof.   That  apart, the preliminary decree in  express  terms
\ndirected   the\t Receivers  to\tcontinue  till\t they\twere
\ndischarged.  In the circumstances, we are definitely of\t the
\nopinion\t that  the Receivers continued\tby  the\t preliminary
\ndecree\tare entitled to function in that capacity till\tthey
\nare discharged.\n<\/p>\n
The  third contention of learned counsel for  the  appellant
\nraises\tthe  question whether in the circumstances  of\tthis
\ncase   the  Receiver  could  recover  possession  from\t the
\nappellant only by instituting a regular suit against him for
\neviction.   The\t facts\tgermane to this\t contention  may  be
\nbriefly\t recapitulated.\t On January 14, 1956, the  appellant
\nexecuted a lease deed in respect of the flour mill in favour
\nof  the\t Receiver and there was an express  recital  therein
\nthat the lessee would deliver possession to the Receiver  of
\nall  the  demised premises upon the expiry of  the  term  of
\nlease.\t The  said lease was executed as a part\t of  a\tcom-
\npromise scheme for running the mills.  The term of the lease
\nhad expired.  Thereafter the court directed the Receiver  to
\ntake possession of the property and auction the same to\t the
\nhighest\t  bidder.   The\t question  is  whether\t under\t the
\ncircumstances a court can dispossess the appellant under,  a
\nsummary process or
\n883<\/span>
\n\t      whether  it could only do so by directing\t the
\n\t      Receiver\tto  file a suit for  eviction.\t The
\n\t      material provisions of Order XL of the Code of
\n\t      Civil Procedure read:\n<\/p>\n
\t      Rule  1. (1) Where it appears to the Court  to
\n\t      be  just\tand  convenient, the  Court  may  by
\n\t      order-\n<\/p>\n
\t       ……………………………\n<\/p>\n
\t      (b)  remove any person from the possession  or
\n\t      custody of the property;\n<\/p>\n
\t       ……………………………\n<\/p>\n
\t      (d) confer upon the receiver all such  powers,
\n\t      as to bringing and defending suits and for the
\n\t      realization,\tmanagement,\t protection,
\n\t      preservation and improvement of the  property,
\n\t      the  collection  of  the\trents  and   profits
\n\t\t\t    thereof
\n\t      (2)  Nothing in this rule shall authorize\t the
\n\t      Court to remove from the possession or custody
\n\t      of  property any person whom any party to\t the
\n\t      suit has not a present right so to remove.\n<\/p>\n
Under  this  Order, a receiver is an  officer  or  represen-
\ntative\tof the court and he functions under its\t directions.
\nThe  court may, for the purpose of enabling the receiver  to
\ntake  possession  and  administer the  property,  by  order,
\nremove\tany  person from the possession or  custody  of\t the
\nproperty.   Sub-r.  (2) of rule 1 of the Order\tlimits\tthat
\npower  in  the case of a person who is not a  party  to\t the
\nsuit,  if  the plaintiff has not a present right  to  remove
\nhim.   But when a person is a party to the suit,  the  court
\ncan direct the receiver to remove him from the possession of
\nthe  property even if the plaintiff has not a present  right
\nto  remove  him.  In the present case, the appellant  was  a
\nparty  to the suit and the court, through the Receiver\ttook
\npossession  of the mill and thereafter the Receiver,  during
\nthe  course of the administration of the property,  under  a
\ncompromise arrangement for running the mills, leaned out the
\nflour  mill to the appellant with an express condition\tthat
\nthe appellant should redeliver the property to the  Receiver
\non  the expiry\tof the lease.  Aamittedly the term  of\tthe,
\nlease  had expired, and the court directed the\tReceiver  to
\ntake possession of the mill.  The court, in our view,
\n884<\/span>
\nwas  legally  competent to confer a power  on  the  Receiver
\nunder  Order XL, r. 1(1)(d), of the Code of Civil  Procedure
\nto recover the property from the appellant.
\nThe decisions cited at the Bar are not of much relevance  to
\nthe  present  case.  Krista Chandra Ghose  v.  Krista  Sakha
\nGhose (1) is a case where a lease was granted by a  Receiver
\nacting\tunder  an order of court and the possession  of\t the
\nproperty  had  been given to the  lessee,  and\tsubsequently
\ncertain parties applied to the court for a declaration\tthat
\nthe lease was invalid on the ground that it was obtained  by
\ncollusion.  There the court held that no summary order could
\nbe passed to set aside the lease and the proper remedy would
\nbe  by\ta  suit against the Receiver and  also\tagainst\t the
\nlessee.\t  In that case the lessee, though he was a party  to
\nthe  suit, acquired a leasehold right under the\t lease\tdeed
\nand  third  parties, who offered a higher  rent,  sought  to
\nquestion  the lease on the ground of collusion.\t  Woodroffe,
\nJ.,  held  that\t the  dispute could only  be  decided  in  a
\nproperly  instituted  suit.   The Rajasthan  High  Court  in
\nNanakchand  v. Pannalal (2) held that a Receiver  could\t not
\nrecover\t the  rent from a lessee in a summary order  of\t the
\ncourt, but should file a suit just like any other  landlord.
\nThe  Allahabad\tHigh Court in Loonkaran v. I. N.  John\t(3),
\nthough\tit conceded that where a lease had been executed  by
\nthe Receiver, the lessee may ordinarily be evicted from\t the
\ndemised\t property  only by a regular suit, held\t that  where
\nafter  the  expiry  of the term of the lease  granted  by  a
\nReceiver, the sub. lessee in possession gave an\t undertaking
\nto the court that he would vacate the premises in favour  of
\nthe prospective lessee if no fresh lease was granted in\t his
\nfavour, the court has power to eject the sub-leessee in\t its
\nsummary\t jurisdiction.\tThe learned Judge observed at p.  59
\nthus:\n<\/p>\n
\t      “By giving an undertaking to the court that he
\n\t      would  vacate  the  Mill\tin  favour  of\t the
\n\t      prospective  lessee  and\tby  bidding  in\t the
\n\t      court-auction  the  appellant,  in  our  view,
\n\t      submitted himself to the
\n(1) (1908) I.L.R. 36 Cal. 52.  (2) A.I.R. 1951 Raj. 152.\n<\/p><\/blockquote>\n
(3) A.I.R. 1961 All. 59.\n<\/p>\n
885<\/span><\/p>\n
\t      jurisdiction  of\tthe  court.   The  appellant
\n\t      could therefore be ejected by summary process,
\n\t      instead of by a suit.”\n<\/p>\n
So too, the High Court of Travancore-Cochin in Sivarajan  v.
\nOfficial  Beceiver, Quilon District (1) held that where\t the
\nperiod\tof  the lease granted to the  receiver\thad  already
\nexpired and as per the express stipulation in the lease deed
\nthe lessee was bound to surrender possession of the property
\nwithout\t raising  any  objection at  all,  the\tCourt  could
\nsummarily  evict him.  The learned Judge made the  following
\nobservations at p. 39:\n<\/p>\n
\t      “Even  though the lease deed stands in  favour
\n\t      of the receiver the express undertaking  given
\n\t      by  the lessee for an unconditional  surrender
\n\t      of   the\t property  is  in  favour   of\t the
\n\t      court……..  The summary enforcement of\t the
\n\t      undertaking thus taken by the court is only a,
\n\t      step  towards the discharge of the  duties  of
\n\t      the court in the management of the estate\t and
\n\t      it cannot be said that the court has lost\t its
\n\t      jurisdiction in that direction merely  because
\n\t      the  property has been in the possession of  a
\n\t      lessee.”\n<\/p><\/blockquote>\n
Further\t citation  would  be  redundant.   These  and\tsuch
\ndecisions  seem to hold that a court cannot evict  a  lessee
\nfrom  a receiver, whether he is a party to the suit or\tnot,
\nin  exercise  of its summary jurisdiction unless  the  lease
\nexpressly conferred a right of re-entry under the lease deed
\non  the\t receiver.   It is not necessary  to  demarcate\t the
\nboundaries  of\tthe  summary  jurisdiction  of\ta  court  in
\nmanaging  an estate through a receiver, for in this case  we
\nare  clearly  of  the  opinion that  the  appellant  was  in
\npossession of the mill under an agreed and integrated scheme
\nfor  running the mills by the different partners, though  he
\nwas put in possession under a document described as a  lease
\ndeed.\tIn  effect the Receiver, during the  course  of\t the
\nmanagement,  entrusted each mill to one of the\tpartners  so
\nthat  the mills might be properly worked  under\t experienced
\nhands.\t The appellant expressly agreed to put the  Receiver
\nin  possession of the mill after the expiry of three  years.
\nNo question of
\n(1)  I.L.R. 1953 T.C. 30.\n<\/p>\n
886<\/span><\/p>\n
deciding  the  conflicting claims of a lessee  and  a  third
\nparty  arises in this case; nor is the court called upon  to
\npronounce on the vested rights of a lessee in conflict\twith
\nthose of the Receiver.\tBut this is a simple case of a court
\nin  the course of its administration of the  estate  through
\nthe agency of a receiver making a suitable provision for the
\nrunning\t of the mills.\tAs the agreed term had expired,\t the
\ncourt, in our view, could certainly direct the appellant  to
\nput the mill in the possession of the Receiver.
\nLastly it has been brought to our notice that an application
\nfor  the discharge of the Receiver is pending in  the  lower
\ncourt.\tAny observations that we have made in this  judgment
\nare  not intended to affect the merits one way or  other  in
\nthe disposal of that application.  That application will  be
\ndisposed of in accordance with law.\n<\/p>\n
In the result, the appeal fails and is dismissed with costs.\n<\/p>\n
\t\t\t\tAppeal dismissed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Hiralal Patni vs Loonkaram Sethiya & Others on 11 April, 1961 Equivalent citations: 1962 AIR 21, 1962 SCR (1) 868 Author: K Subbarao Bench: Subbarao, K. 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-171537","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHiralal Patni vs Loonkaram Sethiya & Others on 11 April, 1961 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/hiralal-patni-vs-loonkaram-sethiya-others-on-11-april-1961\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hiralal Patni vs Loonkaram Sethiya & Others on 11 April, 1961 - 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