The third question which is tried to be urged before us, in our
opinion, has no substance since the Court Receiver is holding the
properties as custodia legis and has acted in the matter as
reasonable prudent trustees used to do in this matter and such
action on the part of the Court Receiver is nothing but for
preservation of the property in question, therefore, the contention
of Mr. Ranjit Kumar on that ground also, cannot have any
substance. {See Harinagar Sugar Mills Co. Ltd.}
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5528
OF 2014
[Arising out of SLP(C) No.30298 of 2010]
Shree Ram Urban Infrastructure Ltd.
(Formerly known as Shree Ram Mills Ltd.)
:Versus:
The Court Receiver, High Court of Bombay
Citation; 2014(4) ALLMR 911 SC
Pinaki Chandra Ghose, J.
1. Leave granted.
2. This appeal has been preferred against the Judgment and
order dated 16th September, 2010 passed by the High Court of
Judicature at Bombay in Civil Revision Application No.452 of 2009,
dismissing the Civil Revision Application filed by the appellant-
tenant. The brief facts, necessary for the disposal of this appeal
are thus: An immovable property known as “Dev Ashish” is a
tenanted property situated at Padam Tekri, Peddar Road, Bombay
(hereinafter referred to as the “suit property”). The respondent
herein was appointed by the Bombay High Court to take charge of
the suit property in Suit No.234 of 1987, which was filed on the
original side of the Bombay High Court, in terms of prayer clause
(a) of the Notice of Motion which reads as follows:
“(a) That pending the hearing and final disposal of
above suit, the Court Receiver, High Court, Bombay or
some other fit and proper person be appointed as a
Receiver of an immovable property known as “Dev
Ashish” situate on Sub-Plot No.1 of Plot No.C.S.S.755 at
Padam Tekdi, Pedder Road, Bombay 400 026, with all
powers under Order XL, Rule 1 of the Code of Civil
Procedure, 1908, including the owner to recover,
receive and collect the rent, income and profits
thereof.”
3.
The respondent, being the Court Receiver in the aforesaid
suit, issued Notice dated July 26, 2001 to the appellant herein to
pay compensation at the rate of RS.1,75,000/- per month from
1.4.2000 and to vacate the suit premises. The appellant replied to
the said notice of the respondent stating that the respondent has
been appointed to control the suit premises and has no right and
power to determine the tenancy of the appellant. Meanwhile, the
appellant was declared as a sick company under the Sick
Industrial Companies (Special Provisions) Act, 1985 (hereinafter
referred to as ‘the SICA’).
4.
The respondent instituted a suit against the appellant-
defendant before the Court of Small Causes, Bombay which was
decreed in favour of the respondent. Being aggrieved by the said
decree, the appellant-defendant filed an appeal before the
Appellate Bench of the Small Causes Court, being Appeal No.837
of 2003. This appeal was dismissed by judgment and order dated
June 12, 2009. The appellant-defendant, therefore, filed a revision
petition before the High Court of Bombay under Section 115 of
the Code of Civil Procedure, being Civil Revision Application
No.452 of 2009. The said civil revision application was dismissed
by the Bombay High Court vide its judgment and order dated
16.9.2010. Aggrieved by the said judgment and order dated
16.9.2010, this appeal, by special leave, has come up before this
Court.
5.
Mr. Ranjit Kumar, learned senior counsel appearing on behalf
of the appellant, challenged the order on the grounds, firstly, that
the Court Receiver did not obtain leave of the court in filing the
suit and without such leave, the eviction suit is liable to be
dismissed. Secondly, he contended that the notice was issued on
July 26, 2001 asking the appellant to vacate the suit premises
immediately, therefore, the notice was defective in view of the
provisions of Section 106 of the Transfer of Property Act. On this
ground also, he contended that the suit is liable to be dismissed.
Thirdly, he contended that the suit is also bad since the owners
are the trustees and are not made parties to the suit.
6.
In support of his contention with regard to the first point that
the suit was liable to be dismissed as it was filed by the Court
Receiver without obtaining leave of the Court, he relied upon the
decision of the courts in C.T. Davis & Ors. vs. Drobomoyi Gupta &
Ors.1
He also relied upon the decisions in Ram Ranjan
Chakravarti vs. A.B. Miller 2, Everest Coal Company (P) Ltd. vs.
State of Bihar & Ors.3, Anthony C. Leo vs. Nandlal Bal Krishnan &
Ors.4, Krishna Kumar Khemka vs. Grindlays Bank P.L.C. & Ors.5,
Balkrishna Gupta & Ors. vs. Swadeshi Polytex Ltd. & Anr.6, and
Harinagar Sugar Mills Ltd., vs. M.W. Pradhan 7.
7.
Lastly, Mr. Ranjit Kumar, learned senior counsel, contended
that the Board for Industrial Financial Reconstruction (hereinafter
referred to as ‘the BIFR’) declared the appellant-company as a
sick company under the SICA. Therefore, without obtaining
permission from the BIFR, the suit could not be proceeded with.
Learned senior counsel further pointed out that in the case of
Ram Ranjan Chakravarti (supra), it has been held that the
Receiver of the High Court does not represent the owner of an
estate. He is an officer of the Court and as such, cannot sue or be
sued except with permission of the Court. In Shyam Lal
1
2
3
4
5
6
7
(1887) ILR 14 Cal 323
(1884) ILR 10 Cal 1014
(1978) 1 SCC 12 = 1958 SCR 333
1996 (11) SCC 376
1990 (3) SCC 669
1985 (2) SCC 167
1966 (3) SCR 948
Page 5
6
Gomatwala vs. Nand Lal & Ors. 8, it had been concluded by the
Court that the permission of the Court was necessary before
institution of a suit by the Court Receiver.
8.
Mr. Ranjit Kumar, learned senior counsel, also relied upon
the decisions in Mt. Mahrana Kunwar vs. E.V. David, Official
Receiver9 and C.T. Davis & Ors. vs. Drobomoyi Gupta & Ors.
(supra) and contended that in the said decisions it has been held:
firstly, that the action for ejectment from the suit property cannot
be maintained by only some of the owners of the undivided
estate; and secondly, it has been held that to authorize the Court
Receiver to issue Court notices determining the tenancy, an
authority has to be obtained from the Court. However, in the case
of Everest Coal Co.(P) Ltd.(supra), it has been held that when a
court puts a Receiver in possession of property, the property
comes under the custody of the Court and the Receiver merely
acts as an agent of the Court. The Court Receiver represents
neither party, being an officer of the court, and for this reason
ordinarily the court accords the permission to sue and failure to
8
9
AIR 1944 All 220
AIR 1924 All. 40
secure such leave to sue till the end of lis may prove fatal. He also
drew our attention to a decision reported in Shanta Ram
Hirachand Danez vs. Narayan Bapusa Fulpagar 10. In the said
decision the court held that filing of the suit without obtaining
leave of the court is an irregularity and can be cured in law and is
not fatal. But the suit filed by the Court Receiver without
obtaining permission does not render the proceedings in the suit
ultra vires if leave is obtained even after filing of the suit by the
Court Receiver. He tried to contend on the question of service of
notice that Section 106 is restricted to cases where the Court
Receiver has let out the premises and further the Court Receiver
cannot have the implied authority to sue a protected tenant in
occupation and according to him, it is necessary to have the leave
from the court before filing the suit and it can also be overcome
only if the leave is obtained when the lis is pending.
9.
With regard to the trust property, his contention is that the
trust property vests in all the trustees. It is, therefore, apparent
that all the trustees have to decide whether or not the suit is to
10
AIR 1999 Bom 16
be filed on behalf of the trust. In the present case, it is not
disclosed anywhere that the notice of termination was served at
the behest of all the trustees. He further pointed out that it is to
be noted that the order appointing the Receiver as already
recorded by the court that prima facie there was a dispute in
respect of appointment of trustees on the Trust and about dealing
of the property by the Trust and in these circumstances, the court
thought it fit to appoint a Court Receiver considering the facts and
circumstances of this case.
10. Per contra, Mr. Soli Sorabjee, learned senior counsel
appearing on behalf of the respondent-Court Receiver, submitted
that the Court Receiver has a right to take all steps in the matter
since the Court Receiver has been appointed with full powers to
administer the property which is custodia legis and furthermore,
he has acted in the matter in his capacity as a Receiver. He also
drew our attention to Order XL Rule 1 of the Code of Civil
Procedure, 1908, which is reproduced hereinbelow:
“1. Appointment of receivers.- (1) Where it appears to
the court to be just and convenient, the court may by
order—
(a) appoint a receiver of any property, whether before
or after decree;
(b) remove any person from the possession or custody
of the property;
(c) commit the same to the possession, custody or
management of the receiver; and
(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, the application and disposal of such
rents and profits, and the execution of documents as
the owner himself has, or such of those powers as the
court thinks fit....”
11. He pointed out that Order XL Rule 1(d) has specifically given
all such powers as to bringing and defending the suits and for the
realization, management, protection and preservation of the
property which the Receiver held on behalf of the court.
According to Mr. Sorabjee, learned senior counsel, the Court
Receiver should be able to take all steps necessary to preserve
and protect the property as a prudent owner of the property
would take. He also drew our attention to the order appointing the
Receiver and contended that if a tenant is in arrears of rent or if
the leased property after recovery of possession can fetch more
income to the estate, the Court Receiver is entitled to take steps
in the matter and can file a suit for recovery of possession. He
further contended that in the instant case, the suit premises are
outside the purview of the Rent Act. He also relied upon the old
decisions in Huri Dass Kundu vs. J.C. Macgregor, Receiver, High
Court11 and submitted that the court held that the terms of the
order appointing the Receiver are sufficient to confer on him the
power to bring a suit to eject a tenant. He also relied on the
decision in Jagat Tarini Dasi vs. Naba Gopal Chaki12, wherein it
was held as follows:
“The receiver, as an officer of the Court, which has
taken control of the property, is for the time being, and
for the purpose of the administration of the assets, the
real party interested in the litigation; there is no
substantial reason, therefore, why the suit should not
be instituted in his own name. We may further add that
there are numerous cases in the books, from which it
appears that a receiver, who has authority to sue, has
been allowed to do so in his own name without any
objection raised on that ground; see, for instance,
Shunmugam v. Moidin [(1884) ILR 8 Mad 229], Gopala
Sami v. Sankara [(1885) ILR 8 Mad 418], Sundaram v.
Sankara [(1886) ILR 9 Mad 334], Drobomoyi Gupta
11
12
(1891) ILR 18 Cal 478
(1907) ILR 34 Cal 305
[318] v. C.T. Davis [(1887) ILR 14 Cal 323], Huri Dass
Kundu v. J.C. Macgregor [(1891) ILR 18 Cal 477] and
W.R. Fink v. Buldeo Dass [(1899) ILR 26 Cal 715]. It
follows, therefore, that the view, that a Court may
authorize a receiver to sue in his own name, and that a
receiver, who is authorized to sue, though not expressly
in his own name, may do so by virtue of his
appointment with full powers under section 503 of the
Civil Procedure Code, is supported by principle and
authority, and is consistent with existing practice. We
must, consequently, hold that the second ground taken
on behalf of the appellant cannot be sustained.”
12. A Division Bench of the Calcutta High Court in Kassim
Mamooji vs. K.B. Dutt & Anr.13, has held that the present Code
empowers the Court to confer upon a Receiver all such powers as
to bringing and defending suits as the owner himself has. It would
suffice to quote the following:
“Originally a Receiver could not sue; this is shown by
the decision of Phear, J., in Wilkinson v. Gangadhar
Sirkar [1871 6 Beng. LR 486]. That decision was in
1871. In 1877, however, was passed the Civil Procedure
Code of that year; and in it was contained the provision
which now finds a place in O. 40 R. 1, of the present
Code (see S. 503 of the Code 1877). The present Code
empowers the Court to confer upon a Receiver all such
powers as to bringing and defending suits as the owner
himself has.”
13
AIR 1916 Cal 51
13. In the aforesaid decisions, it has been held that the words of
Order XL Rule 1 cannot give any narrower construction for holding
that the Code does not empower the Receiver to bring a suit for
recovery of possession of immovable property. In support, he has
relied on all the aforesaid decisions.
14. After considering and analyzing all the decisions, in our
opinion, we cannot give a narrower construction with regard to
the rights/authority given to the Receiver under Order XL Rule
1(d). We have also considered the appointment order in the
present case. In our opinion, the Receiver was given full powers
under the provision of Order XL Rule 1(d) as rightly shown by Mr.
Sorabjee, learned senior counsel and, therefore, the ruling relied
upon by Mr. Ranjit Kumar, learned senior counsel for the
appellant, cannot be of any help to him and, accordingly, we
reject such contention of Mr. Ranjit Kumar, learned senior
counsel, and hold that in the facts and circumstances of this case,
the Receiver has acted in the matter for the purpose of
administering the property. Even we have seen that the Supreme
Court in Harinagar Sugar Mills Co. Ltd. (supra) has held that a
Receiver was appointed pending a suit for partition and the
Receiver filed a winding-up petition for realization of debt. It was
contended that the Receiver had no power to institute a petition
for winding-up of a company. The Supreme Court conceding that
winding-up order is not a normal alternative to sue but held that it
is a form of equitable execution covered by clause (d) of Rule 1(1)
of Order XL of the Code and as such steps could be taken by the
Receiver. It is also to be noted that the power must be conferred
on the Receiver by the Court either expressly or by necessary
implication, as the case may be. In the facts of this case, the
Receiver acted to safeguard the interest of the trustees for
preserving the estate. We also feel that the Receiver acted in the
matter as ought to have been done by the trustees to preserve
the estate.
15. In
Kurapati
Venkata
Mallayya
&
Anr.
vs.
Thondepu
Ramaswami & Co. & Anr. 14, a four-Judge Bench of this Court held
that the Receiver has a right to institute a suit when the authority
has been given to the Receiver to preserve the estate. Such
14
AIR 1964 SC 818
authority is wide enough to empower the Receiver, as he thought
necessary, for preserving the estate and such authority, in our
opinion, includes to institute a suit. as has been held by this
Court.
16. We have considered all the points which have been urged by
Mr. Ranjit Kumar, learned senior counsel appearing on behalf of
the appellant. We are not able to accept his contention that the
Receiver without leave of the court, cannot file a suit in the
factual matrix of this case. We have also taken into account that
obtaining of leave of the court before filing of the suit cannot be
fatal and the same can be cured in law and is merely an
irregularity. We have also considered the decision of this Court in
Kurapati Venkata Mallayya & Anr. (supra) and find that when
authority has been given to the Receiver to preserve the estate, it
empowers the Receiver, i.e., for preserving the estate, he has a
right to institute the suit and, accordingly, in the light of the said
judgment, we express our opinion and accept the reasoning given
by the High Court that the Receiver had the authority to institute
a suit for preserving the estate. Therefore, we do not accept the
contention of Mr. Ranjit Kumar, learned senior counsel, on such
question. The second point urged by Mr. Ranjit Kumar, learned
senior counsel, is that the suit is bad with regard to Section 106 of
the Transfer of Property Act. We have duly considered the said
question, and we find that the suit was filed after six months from
the date of the notice issued under Section 106 of the Transfer of
Property Act, by the Receiver and furthermore, after the
amendment of Section 106(3) which reads as follows:
“(3) A notice under sub-section (1) shall not be deemed
to be invalid merely because the period mentioned
therein falls short of the period specified under that
sub-section, where a suit or proceeding is filed after the
expiry of the period mentioned in that sub-section.”
We have noticed that the High Court duly considered the question
of notice and correctly came to the conclusion that the
Legislature wanted to plug the loopholes and to redress the
mischief by making a change in the law. Therefore, if the notice is
short of the period specified in sub-section (1) but the suit or
proceeding is filed after the expiry of the period mentioned in
sub-section (1), the notice shall not be deemed to be invalid.
Clearly, in this matter, the notice was issued on July 26, 2001 and
the suit was actually filed on February 6, 2002 – after six months
and, therefore, the notice cannot be declared or deemed to be
invalid.
17. The third question which is tried to be urged before us, in our
opinion, has no substance since the Court Receiver is holding the
properties as custodia legis and has acted in the matter as
reasonable prudent trustees used to do in this matter and such
action on the part of the Court Receiver is nothing but for
preservation of the property in question, therefore, the contention
of Mr. Ranjit Kumar on that ground also, cannot have any
substance. [See Harinagar Sugar Mills Co. Ltd. (supra)].
18. Although the point tried to be taken by Mr. Ranjit Kumar,
learned senior counsel, is that the appellant is a sick company but
we do not find that such point was ever urged before the High
Court and, furthermore, it appears that admittedly the tenancy
Page 16
17
was about the residential premises. Therefore, in our opinion,
such point cannot have any substance at this stage.
19. In these circumstances, we find that the reasoning given by
the High Court does not warrant any interference by this Court.
Accordingly, we find no merit in this appeal and the same is
hereby dismissed. However, there shall be no order as to costs.
............................................J.
(Chandramauli Kr. Prasad)
............................................J.
(Pinaki Chandra Ghose)
New Delhi;
May 9, 2014.
Page 17
18
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