The points for consideration which arise in the present petition are whether the institution of a suit for eviction of a tenant in respect of the premises which is in custody of the Court Receiver would be ab initio bad in the absence of leave being obtained prior to the institution of the suit and whether such a leave can be obtained after the disposal of the suit?
The Apex Court In Kanhalydial's case (supra) has held that, "The general rule that property in custodia legis through its duly appointed Receiver is exempt from Judicial process except to the extent that the leave of that Court has been obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts. If a Court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other Courts or Tribunals of co-ordinate or exclusive jurisdiction were to permit proceedings to go on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a likelihood of confusion in the administration of justice and a possible conflict of jurisdiction."
It is also held that,
".... if any Court which is holding the property in custodia legis through a Receiver or otherwise, is moved to grant permission for taking legal proceedings in respect of that 'property, the Court ordinarily would grant such permission if considerations of justice require it. Courts of justice, therefore, would not be a party to any interference with that sound rule."
In the case of Everest Coal Company (supra), the Apex Court has held that.
"....When a Court puts a Receiver in possession of property, the property comes under Court custody, the Receiver being merely an officer or agent of the Court. Any obstruction or interference with the Court's possession sounds in contempt of that Court. Any legal action in respect of that property is in a sense such an interference and invites the contempt penalty of likely invalidation of the suit or other proceedings. But, if either before starting the action or during its continuance, the party takes the leave of the Court, the sin is absolved and the proceeding may continue to a conclusion on the merits."
It was further held therein that,
"... Grant of leave is the rules, refusal the exception. After all, the Court is not, in the usual run of cases, affected by a litigation which settles the rights of parties and the Receiver represents neither party, being an officer of the Court. For this reason, ordinarily the Court accords permission to sue, or to continue. The jurisdiction to grant leave is undoubted and inherent, but not based on black-letter law in the sense of enacted law."
Their Lordships have then observed thus :-
"... Equally clearly, prior permission of the Court appointing the Receiver is not a condition precedent to the enforcement of the cause of action. Nor is it so grave a vice that later leave sought and got before the decree has been passed will not purge it. If before the suit terminates, the relevant Court is moved and permission to sue or to prosecute further is granted, the requirement of law is fulfilled. Of course, failure to secure such leave till the end of the lis may prove fatal."
8. it is thus clear that though it is not a statutory requirement, but a rule of equity based on sound public policy particularly to avoid conflict of jurisdiction between different Courts, that the leave of the Court is to be obtained for any judicial process in relation to the property in custodia legis. It is also by now well established that such leave be generally obtained prior to institution of the suit, but failure thereof can be cured by obtaining the leave during the pendency of the proceedings-
IN THE HIGH COURT OF BOMBAY
Writ Petition No. 4763 of 1987
Decided On: 30.06.2000
M/s Hi-Fi Sound Corporation Vs. M/s. Vinsons, A Firm and Court Receiver, High Court
Hon'ble Judges/Coram:
R.M.S. Khandeparkar, J.
Citation: 2001(2) MHLJ270,2001(1) ALLMR 807
1. The points for consideration which arise in the present petition are whether the institution of a suit for eviction of a tenant in respect of the premises which is in custody of the Court Receiver would be ab initio bad in the absence of leave being obtained prior to the institution of the suit and whether such a leave can be obtained after the disposal of the suit?
2. The facts in brief relevant for the decision are that, the respondent No. 1 landlord issued a demand notice on 22nd August, 1983 in respect of certain arrears of rent and sought to terminate the tenancy of the petitioner in respect of the suit premises, which comprises of 1 /5 Banaji Street, Fort, Mumbai. In reply to the said notice, the petitioner requested the respondent not to take any action on the ground of certain financial difficulties having been faced by the petitioner at the relevant time. However, the respondent No. 1 instituted a suit against the petitioner for the possession of the suit premises on the ground of non-payment of rent, being R.A.E. Suit No. 1159 of 1974. The petitioner resisted the suit on various grounds including the ground that this Court had already appointed the Court Receiver by an order dated 4th October, 1974 and the suit premises were in possession of the said Court Receiver, and therefore, the suit was not maintainable without the leave of this Court. Thereafter, pursuant to the objections raised by the petitioner, the Trial Court allowed to amend the plaint by impleading the Court Receiver as the defendant No. 2 to the suit and on service of summons, the Court Receiver also defended the suit raising various objections, including non-maintainability of the suit on the ground that in view of appointment of Court Receiver the tenancy rights in the suit premises are vested in the Court Receiver. The Trial Court after recording the evidence dismissed the suit on merits by its judgment dated 27th September, 1979. Being aggrieved by the said judgment, the respondent No. 1 assailed the same in Appeal No. 147 of 1979 before the lower Appellate Court, which was allowed by the impugned Judgment dated 12th August, 1987, directing the respondent No. 2, Court Receiver, to hand over the possession of the suit premises to the respondent No. 1 by 30th September, 1987. The said judgment is sought to be impugned in this petition. Though the petition was filed on various grounds, the learned Advocate for the petitioner has restricted the challenge on the ground of non-maintainability of the suit on account of absence of leave being obtained from this Court before institution of the suit or atleast during pendency of the suit, inspite of the fact that the premises were in custody of the Court Receiver pursuant to the order dated 4th October, 1974 of this Court. It is also to be noted at this stage that during the pendency of this writ petition, the respondent No. 1 sought leave of this Court in terms of Rules 126 and 127 of the High Court, Original Side Rules for validating the proceedings instituted for eviction of the petitioner from the suit premises. The learned Single Judge of this Court in Chamber Summons No. 432 of 1974 was pleased to allow provisionally the prayer clause "a" of the Chamber Summons and without prejudice to the rights of the petitioner to raise the relevant issue in this petition. The prayer clause "a" of the chamber summons, was for the leave to the respondent No. 1 to prosecute the proceedings regarding the eviction of the petitioner from the suit premises in R.A.E. Suit No. 1159 of 1974. Appeal No. 149 of 1979 as well as in the present writ petition against the Court Receiver. The said order was passed on 15th September. 1998.
3. The learned Advocate appearing for the petitioner while assailing the impugned judgment submitted that the learned single Judge of this Court by his order dated 4th October. 1974 in Chamber Summons No. 432 of 1974 had appointed Court Receiver in relation to the suit premises and had authorised the Court Receiver to deliver vacant possession of the suit premises together with tenancy rights in the suit premises to the purchaser thereof at the auction sale. The Receiver was appointed in a proceedings taken out by the creditors of the petitioner viz., Deccan Merchants Cooperative Bank Ltd. He further submitted that once the Court Receiver was put in possession of the suit premises, it was not permissible for the respondent No. 1, either to initiate or to continue with the suit for eviction against the petitioner in relation to the suit premises without leave being obtained from this Court in that regard. The respondent No. 1 having failed to obtain such leave either before the institution of the suit or during the pendency of the suit and prior to its termination, the entire proceedings are bad in law and, therefore, the decree for eviction is not sustainable in law.
4. The learned Advocate appearing for the respondent No. 1 on the other hand submitted that the Court Receiver was put in possession of the suit premises after filing of the suit and the suit was filed on 24th January, 1974, whereas the order directing handing over of vacant possession of the suit premises to the auction purchaser was passed on 4th October, 1974. Besides, the Receiver was appointed in relation to the dispute sought to be raised by the creditor of the petitioner with which the respondent No. 1 had no concern and in any case the relationship of the tenant and landlord being governed by the statutory provisions of the Bombay Rent Act. they were not affected in any manner by the appointment of Court Receiver in relation to the assets of the petitioner in proceedings for money claim by its creditors. Reliance is sought to be placed on the decision of the Apex Court in the matters of Kanhaiyalal v. Dr. D. R. Banaji and Ors., Everest Coal Company Put. Ltd. v. State of Bihar and Ors., Anthony C. Leo v. Nandlal Bal Krishnan and Ors., and of this Court In the matter of Mohamed Hanif v. Chunilal Ukabhai,
4. The Apex Court In Kanhalydial's case (supra) has held that, "The general rule that property in custodia legis through its duly appointed Receiver is exempt from Judicial process except to the extent that the leave of that Court has been obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts. If a Court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other Courts or Tribunals of co-ordinate or exclusive jurisdiction were to permit proceedings to go on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a likelihood of confusion in the administration of justice and a possible conflict of jurisdiction."
It is also held that,
".... if any Court which is holding the property in custodia legis through a Receiver or otherwise, is moved to grant permission for taking legal proceedings in respect of that 'property, the Court ordinarily would grant such permission if considerations of justice require it. Courts of justice, therefore, would not be a party to any interference with that sound rule."
5- The learned Single Judge of this Court in the case of Mohamed Hanif (supra), while dealing with the question as to whether the Court has power to grant leave in retrospect once a decree was executed and the possession taken from the hands of the Court Receiver, after considering various judgments including the decision of the Apex Court in the case of Kanhaiyalal (supra), has held that the ratio of authorities cited before him was that although there is no statutory provision which requires a party to take leave of the Court to sue a Receiver, the rule regarding obtaining leave is part of the rules of equity and is based on public policy which requires that when the Court assumes possession of the property in the interest of the litigants, the authority of the Court is not to be disturbed without first taking its leave. However, a party can apply for leave retrospectively, if it has omitted to obtain such leave prior to the filing of the suit or prior to initiating proceedings in execution. The learned Judge has, further observed that.
".,.. It is, therefore, within the competence of the Court to grant such leave in retrospect; the only question being whether the granting of such "subsequent leave" would prejudice any party".
6. The learned Judge in the case of Mohamed Hanif has referred to a judgment of the Madras High Court in the matter of Veerappa Chettiar v. Mohamed Mytheen Mana Pillai, The Madras High Court in the case of Mohamed Mytheen had held that the property being in the possession of the Receiver and, therefore, in custodia legis, no process without the leave of the Court which appointed the Receiver can be levied upon such property and that this aspect is not specifically mentioned by Rule 1 of Order 40 of the Civil Procedure Code but is part of the common law of Receiver. It is further held therein that it is only where 'here is a total lack of jurisdiction to bring the property to sale in execution through Court, it can be said that the sale is void as one without jurisdiction, but, where the Court is otherwise competent, and, has jurisdiction, the sale effected in exercise of that jurisdiction is not rendered void on account of want of leave of the Court which appointed the Receiver.
7. In the case of Everest Coal Company (supra), the Apex Court has held that.
"....When a Court puts a Receiver in possession of property, the property comes under Court custody, the Receiver being merely an officer or agent of the Court. Any obstruction or interference with the Court's possession sounds in contempt of that Court. Any legal action in respect of that property is in a sense such an interference and invites the contempt penalty of likely invalidation of the suit or other proceedings. But, if either before starting the action or during its continuance, the party takes the leave of the Court, the sin is absolved and the proceeding may continue to a conclusion on the merits."
It was further held therein that,
"... Grant of leave is the rules, refusal the exception. After all, the Court is not, in the usual run of cases, affected by a litigation which settles the rights of parties and the Receiver represents neither party, being an officer of the Court. For this reason, ordinarily the Court accords permission to sue, or to continue. The jurisdiction to grant leave is undoubted and inherent, but not based on black-letter law in the sense of enacted law."
Their Lordships have then observed thus :-
"... Equally clearly, prior permission of the Court appointing the Receiver is not a condition precedent to the enforcement of the cause of action. Nor is it so grave a vice that later leave sought and got before the decree has been passed will not purge it. If before the suit terminates, the relevant Court is moved and permission to sue or to prosecute further is granted, the requirement of law is fulfilled. Of course, failure to secure such leave till the end of the lis may prove fatal."
8. it is thus clear that though it is not a statutory requirement, but a rule of equity based on sound public policy particularly to avoid conflict of jurisdiction between different Courts, that the leave of the Court is to be obtained for any judicial process in relation to the property in custodia legis. It is also by now well established that such leave be generally obtained prior to institution of the suit, but failure thereof can be cured by obtaining the leave during the pendency of the proceedings- The Apex Court in the case of Everest Coal Company, (supra) after considering the law has disapproved the decision of the Calcutta High Court in the matter of Pramatha Nath v. Katra Nath, wherein that Court had held that "the leave of the Court to sue a Receiver was a condition precedent to right to sue and that if the leave was not obtained before suit, it could not be granted subsequent to the institution of the suit and the suit should be dismissed." It was held by the Apex Court that the extreme view taken in the case of Pramath Nath by the Calcutta High Court was not a good law and it was further observed that the law laid down In the later case of Banku Behari. (1911) 15 Cal. 54, was the correct proposition of law. The Calcutta High Court in the said Banku Biharl's case had held that,
".. But we are unable to appreciate upon what Intelligible principle the position can be defended that because the suit has been instituted without leave previously obtained it must necessarily be dismissed, and that it is not open to the Court to stay proceedings in the suit with a view to enable the plaintiff to obtain leave of the Court to proceed with the suit against the Receiver."
While approving the said proposition of law laid down by the Calcutta High Court, the Apex Court has held that"... Once amends are made by later leave being obtained, the gravamen Is gone and the suit can proceed. The pity is that sometimes even such points are expanded into important questions calculated to protract Indian litigation already suffering from unhealthy longevity". It therefore follows that there is no bar for obtaining the leave retrospectively and failure on the part of the plaintiff to obtain such leave prior to the institution of the suit would not render the suit ab in to bad but it can be rectified by obtaining such leave after institution of the sutt.
9. It is then contended by the learned Advocate for the petitioner, that such leave is necessarily to be obtained atleast prior to the termination of the suit and in that regard, attention is sought to be drawn to the judgment of the Apex Court in the case of Everest Coal Company (supra). Indeed the Apex Court therein has held that ".. if before the suit terminates, the relevant Court is moved and permission to sue or prosecute further is granted, the requirement of law is fulfilled. Of course, the failure to secure such leave till the end of the lis may prove fatal." According to the learned Advocate, this ruling of the Apex Court clearly restricts the right of the party to obtain leave prior to the termination of the suit. The contention is devoid of substance. It should not be forgotten that in order to understand and appreciate the binding force of a decision it is always necessary to see what were the facts of the case in which a decision was given and what was the point for consideration therein. The Apex Court in the matter of Union of India &Ors. v. Dhanwantidevi and Ors. has clearly held that "No Judgment can be read as if it is a statute and word or a clause or sentence in the Judgment cannot be regarded as full exposition of law". On perusal of the entire decision in Everest Coal Company's case (supra) it is apparent that in the said case the point which was considered by the Apex Court has been clearly stated in the very first para of the decision and it reads thus :-
"Can the Court appointing a Receiver to take charge of the properties grant leave to continue a suit against him when a third party wants to prosecute such action Initiated without such permission? If so, what are the guidelines for grant of such leave?
The aforesaid question was considered in a case where the plaintiff had sued the Receiver for damages after giving notice under Section 80 of the C.P.C. but without obtaining the leave of the Court for initiating action against the Receiver before filing the suit. Although the plaintiff omitted to get leave from the Court before suing the Receiver, he made up for it. on second thought, by applying to the Court for permission to continue the litigation against the Receiver. In those facts the above question was considered by the Apex Court and in that context the above quoted ruling was given. The decision nowhere lays down the law that the moment the suit against Receiver conies to an end without any leave being obtained, the entire proceedings are rendered void. On the contrary, the expression used by the Apex Court is not "the suit" but "lis". This is apparent from the last sentence in para 4 wherein It is observed that "Of course failure to secure such leave till the end of the lis may prove fatal".
The expression "lis" would certainly include the proceedings for execution of a decree and is not restricted to the proceedings in a suit. It will include the proceeding in the appeal as well. No doubt an observation prior to the last sentence in the para 4 of the said decision of the Apex Court does state that "if before the suit terminates, the relevant Court is moved and permission to sue or prosecute is granted, the requirement of law is fulfilled." That was in the facts of the case. From the said sentence in the decision it cannot be concluded that in case of failure on the part of the plaintiff to obtain the leave before the suit is decreed, the entire proceedings would be rendered void. It should not be forgotten that a decision is an authority for what it actually decides.
10. At this stage, it is also worth referring to the another decision relied upon by the learned Advocate for the respondent, viz.. in the matter of Anthony Leo (supra). The Apex Court therein has clearly observed thus :-
"... Where a Rent Act is applicable, the interests and obligations of the landlord and tenant are regulated and controlled by such Rent Act. In areas where any special law governing the incidences of tenancy is not applicable, the law relating to lessor and lessee as envisaged by the general law of the land, namely. Transfer of Property Act, will regulate and determine inter se rights and obligations which a third party may have in respect of a property in which a Receiver has been appointed, the Receiver, like a party to the suit, will have same limitation. The Receiver will be bound by the incidences of tenancy flowing from the statute regulating and determining inter se rights of landlord and tenant. Therefore, there is no manner of doubt that no order for eviction of the tenant can be passed by the Court at the instance of its officer, the Receiver, without taking recourse to appropriate proceedings for eviction of the tenant under the appropriate statute regulating and governing the inter se rights of landlord and tenant. It may also be emphasised here that even apart from an eviction proceeding, any incidence of tenancy which is regulated and controlled by a special statute cannot be altered, varied on interfered with' except. In accordance with the provisions of such statute. The Court in such cases has no jurisdiction to pass orders and direction affecting the right of the tenant protected, controlled or regulated by the Rent Act on the score of expediency in passing some order or direction for the maintenance and preservation of the property in custodia legis."
11. The lower Appellate Court after taking into consideration various decisions as well as the facts of the case has clearly held, and it is an undisputed fact, that the appointment of Receiver was in a proceedings Initiated by the creditor of the petitioner in relation to certain dues by the petitioner to the said creditors and it has nothing to do with the dispute in relation to the tenancy rights and obligations vis-a-vis the respondent No. 1 landlord. This is clearly revealed from the order dated 4th October, 1974 itself. The relevant portion of the said order, which has been quoted in the impugned judgment, reads that "the Court Receiver be and is hereby authorised to deliver vacant possession of shop premises together with benefits of tenancy rights of the said shop to the purchaser thereof at the Court auction". By the said direction in order dated 4.10.1974 the learned Single Judge had nowhere in any manner dealt with the rights and obligations of the petitioner and the respondent No. 1 as the tenant and the landlord in relation to the suit premises. In any case, the said direction of the learned Judge in the order dated 4th October, 1974 cannot be construed as affecting the rights of the landlord and tenant, i.e. the respondent No. 1 and the petitioner, against each other in relation to the suit premises. This view is fortified by the decision of the Apex Court in the case of Anthony Leo (supra).
12. There is yet another relevant factor deserves consideration. The suit was filed on 24th January, 1974. The order directing the delivery of vacant possession along with tenancy rights and benefits to the auction purchaser was dated 4th October, 1974. There is no doubt that prior to that by an order dated 29th June, 1974, the learned Judge while appointing the Court Receiver had ordered that the petitioner was prohibited from transferring or charging his goodwill in the business in the suit premises as well as from transferring his tenancy rights in the suit premises. Considering all these facts and the fact that the respondent No. 1 during the pendency of these proceedings, had sought leave of the Court to prosecute the proceedings, there cannot be any impediment for grant of such leave to the respondent No. 1. Provisional leave was already granted by the learned Judge. I do not find there is any case made out of any prejudice being caused to the petitioner if such a leave is granted to the respondent No. 1 in the facts and circumstances of the case. The petitioner has availed full advantage of contesting the eviction proceedings; he had raised all the available objections against the grant of eviction order and having contested the proceedings, taking part therein, there is no case made out and merely because he failed therein, it cannot be said that it would cause prejudice if leave is granted to the respondent No. 1 to prosecute the proceedings against the Receiver. In this regard, the observations of Justice Krishna Iyer in the case of Everest Coal Co. (supra) are certainly to be borne in mind. It was observed therein that "the pity is that sometimes even such points are expanded into important questions calculated to protract Indian litigation already suffering from unhealthy longevity". Undisputedly, the suit was filed in the year 1974. The respondent No. 1 has succeeded in obtaining eviction order after undergoing full length trial duly contested by the petitioner. Prejudice if any, would cause to the respondent No. 1 if leave to execute such decree is not granted.
13. It should not be ignored that the leave is basically to avoid conflict of jurisdiction between different Courts. It is not to claim any advantage therefrom to either parties to the suit.
14. What emerges from the above discussion is that the institution of suit for eviction of a tenant in respect of the premises which is in the custody of the Court Receiver would not be ab into bad in law for want of leave being obtained prior to institution of the suit and such leave can be obtained even during the pendency as well as after the conclusion of the suit. The leave can be obtained even after the disposal of the suit but before the conclusion of lis. The respondent No. 1 therefore would be entitled to prosecute the decree of eviction obtained against the petitioner. Hence the petition fails. Rule is discharged with no order as to costs.
15. At this stage, the learned Advocate for the petitioner prays for stay of the order. I do not find any justification to grant any such slay as requested. Therefore, the request for stay is rejected. However, time to deliver the possession of the suit premises by the petitioner to respondent No. 1 is extended till 31st December, 2000 subject to petitioner filing an undertaking in this Court within a period of four weeks that the petitioner would deliver vacant and peaceful possession of the suit premises to the respondent No. 1 on or before 31st December, 2000 and till then will not induct any third party in the suit premises nor will create any third party rights therein or will not alienate the suit premises in favour of any other person. In the event, such an undertaking is not filed within the period of four weeks from today the extension granted by this order shall automatically stand vacated without reference to the Court.
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