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Sakamari Steel and Alloys Ltd. Vs. State Industrial and Investment Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberMisc. Petn. No. 1066 of 1978
Judge
Reported inAIR1979Bom66; (1979)81BOMLR434; 1979MhLJ733
ActsTransfer of Property Act, 1882 - Sections 65A, 69-A, 69A(1), 69-A(3) to (8), 69-A(9) and 69-A(10); Code of Civil Procedure (CPC), 1908 - Order 40, Rule 1
AppellantSakamari Steel and Alloys Ltd.
RespondentState Industrial and Investment Corporation and ors.
Appellant AdvocateM.L. Parpia and ;K.P. Khambatta, Advs.
Respondent AdvocateM.J. Mistree, ;D.R. Zaiwalla, ;Manohar and ;Divekar, Advs.
DispositionPetition allowed
Excerpt:
.....receiver only of the income of the of mortgaged property, the powers which may be delegated to the receiver by the mortgagee can only be powers in relation to the income of the mortgaged property. there is, no power conferred upon the receiver by virtue of section 69a to give out the mortgaged property on leave and licence basis.;fisher and lightwood's law of mortgage, eighth edn., p. 259, referred to. - maharashtra scheduled castes, scheduled tribes, de-notified tribes (vimukta jatis), nomadic tribes, other backward classes and special backward category (regulation of issuance and verification of) caste certificate act (23 of 2001), sections 6 & 10: [s.b. mhase, a.p. deshpande & p.b. varale, jj] caste certificate petitioner seeking appointment against the post reserved for member of..........lent and advanced a sum of rs. 29,65,000/- to the petitioners against the mortgage of the said plant. clause 12 (1) of the mortgage document reads as follows:--'(1) the corporation shall have power to appoint in writing a receiver of the mortgaged premises to receive the profits, income and benefits thereof under the provisions of section 69-a of the said transfer of property act and in that event shall be at liberty and entitled to appoint the person then occupyingthe post of its managing director or failing him the person then occupying the post of its secretary at the head office of the corporation as such receiver by writing signed by the corporation or on its behalf and all the powers, provisions and trusts contained in the said s. 69-a of the said t. p. act shall apply to the.....
Judgment:
ORDER

1. This is a petition for the opinion, advice and directions of this Court sought under the provisions of S. 69-A of the T. P. Act, 1882.

2. The petitioners carry on business as manufacturers of steel and alloys and own a mini steel plant at Nagpur. By an indenture of mortgage dated 10th May 1973 the first respondents lent and advanced a sum of Rs. 29,65,000/- to the petitioners against the mortgage of the said plant. Clause 12 (1) of the mortgage document reads as follows:--

'(1) The corporation shall have power to appoint in writing a Receiver of the mortgaged premises to receive the profits, income and benefits thereof under the provisions of Section 69-A of the said Transfer of Property Act and in that event shall be at liberty and entitled to appoint the person then occupyingthe post of its Managing Director or failing him the person then occupying the post of its Secretary at the Head Office of the Corporation as such Receiver by writing signed by the Corporation or on its behalf and all the powers, provisions and trusts contained in the said S. 69-A of the said T. P. Act shall apply to the Receiver appointed by the Corporation.'

A deed of further charge on the said plant was executed on 16th March 1974 in respect of another loan of Rs. 2,49,000/- given to the petitioners by the 1st respondent. The petitioners failed to pay the instalments payable under the said documents. On 17th March 1978 the first respondents appointed the second respondent Receiver of the said plant. By their letter dated 20th March the first respondent informed the petitioners that the second respondent had been appointed Receiver of the said plant to receive the profits, income and benefits thereof under the provisions of S. 69A of the T. P. Act and that he would have all powers contained therein. The petitioners apprehended that the second respondent was about to grant a licence to a third party of the said, plant; accordingly, on 3rd July 1978 the petitioners' attorneys wrote to the 2nd respondent that he had no power to do so. The second respondent by his reply dated 17th July 1978 contended that he had such power. It now appears that an agreement was executed on 2nd Aug. 1978 between the second respondent and the third respondent whereby the second respondent has purported to give to the third respondent leave and licence to use the said plant for a period of 3 years or till the termination of the appointment of the second respondent as receiver, whichever is earlier. I have been informed that the possession of the said plant has not been given over to the third respondent.

3. Mr. Parpia, learned Counsel for the petitioner, urged that under the provisions of Clause 12 (1) of the mortgage document the second respondents' powers were limited to such powers as were conferred by S. 69-A of the Act and that he was appointed receiver under that clause only to receive the profits, income and benefits of the said plant. Mr. Parpia took me through the provisions of Section 69-A of the Act and submitted that the second respondent had no power to deal with or to grant leave and licence to a third party to use the said plant. He urged that even a receiver appointed under the provisions of O. XL R. 1 of the Civil P. C. 1908, had to be given specific power by the Court before, he could give over the property of which he had been appointed receiver on leave andlicence basis. In conclusion, Mr, Parpia urged that in the facts and circumstances of the case, even if I were to hold that the 2nd respondent had the power to grant such leave and licence, I should direct him not to do so.

4. Mr. Mistree, learned Counsel tor the first and second respondents, took me through various clauses of the mortgage document. Under the provision of Clause 11 (i) thereof the first respondent is invested with the power of sale of the said plant; under Clause 12 (b) thereof the first respondent is invested with the power to take over the management of the said plant and transfer it by way of lease or sale Clause 13 (1) needs to be set out; it reads as under;

'(1) After the Corporation shall.....have entered into or taken possession of the mortgaged premises or any part thereof or after a Receiver thereof shall have been appointed as aforesaid it shall be lawful for but not obligatory upon the Corporation or Receiver as the case may be to carry on the business in and with the mortgaged premises or any of them or any part thereof and to manage and conduct the same as it shall or he shall in its or his absolute discretion think fit and proper and for the purpose of the said business to appoint and employ such agents managers, engineers, technical men, solicitors and other legal advisers, accountants, servants and workmen upon such terms and conditions as to remuneration or otherwise as it or he may think fit and proper and to renew, repair and replace such of the plant and effects of the mortgagor company as shall be worn out damaged, lost or otherwise become unfit in any way for use and generally to do or cause to be done all such acts deeds and things and to enter into all such arrangements or contracts respecting the mortgaged premises or the working of the same or any part thereof as it or he could do if it or he were absolutely entitled thereto and without being responsible in any way for any damage which may be occasioned thereby.'

Mr. Mistree contended that under the provisions of Section 69-A sub-section (9) the powers of the receiver could be extended by the mortgage document and that they had in fact been extended by the said Clause IS (1). Mr. Mistree drew my attention to Fisher and Lightwoods' Law of Mortgage, 8th Edition, 0.259 where it is stated that a receiver appointed by a mortgagee haft no power to grant a lease without the sanction of the Court unless the mortgagee has delegated to him fee mortgagee's leasing powers. Mr. Mistree contended that by the said Clause 13 (1) the first respondent haddelegated to the second respondent the power to grant a lease, Mr. Mistree submitted that the second respondent was, therefore, within his rights when he executed die said leave and licence agreement.

5. Mr. Manohar, learned Counsel for the third respondent submitted that, properly construed, the power given to the receiver under the terms of S. 69A Sub-section (1) was the power to do everything in regard to the mortgaged property except sell it. In this connection, he also relied upon the words 'management and administration' used in S. 69A Sub-Section. (10). Mr. Manohar also contended that under the provisions of S. 69A, sub-Section (3) the receiver was the agent of the mortgagor and that, inasmuch as the mortgagor had the power to grant a lease under S. 65A of the Act, the receiver had the identical power.

6. Clause 12 (1) of the mortgage document empowers the first respondent to appoint a receiver of the said plant only for the purposes of receiving its profits, income and benefits and confers upon the receiver only such powers as are contained in S. 69A. From the phraseology employed in Clause 12 (1) of the mortgage deed, it is clear that the provisions of sub-Section. (S) to (8) of S. 69-A are not varied or extended by the mortgage document. The power purported to be conferred upon the receiver by Clause 13 (1) of the mortgage document is far beyond the purpose for which the receiver can be appointed by the first respondent under the terms of Clause 12 (1) of the mortgage document. In any event, the power conferred by CL 13 (1) of the mortgage document upon the receiver is the power to manage and conduct the mortgaged property and business; the clause does not empower the receiver to give out the same on leave and licence or lease.

7. S. 69-A Sub-Section. (1) of the Act entitles a mortgagee having the right to sell to appoint a receiver only of the income of the mortgaged property. Sub-section (3) states that the receiver shall be deemed to be the mortgagor's agent. This does not mean that he has all the powers of the mortgagor; only that in recovering and receiving the income of the mortgaged property he acts as if he were doing so on behalf of the mortgagor. Sub-Section, (4) is important in that it sets out the powers of the receiver; he is empowered to demand and recover all the income of which he is appointed receiver and to give valid discharge for receipt thereof. Sub-Section. (4) clarifies that the receiver may exercise also any power which are, presumably under sub-section (9), de-legated to him by the mortgagee in accordance with the provisions of S. 89A. Since S. 69A deals with the appointment of a receiver only of the income of the mortgaged property, the powers which may be delegated to the receiver by the mortgagee can only be powers it relation to the income of the mortgaged pro-petty. Sub-section (8) lays down how the receiver shall apply the income. Sub-section (9) reads as] follows:--

'(9) The provisions of sub-Section. (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of sub-sees. (3) to (8) inclusive may be varied or extended by the mortgage-deed, and, as so varied or extended, shall, as far as may be operate in like manner and with all the like incidents, effects and consequences, as if such variations or extensions were contained in the said sub-sections.'

The variations or extensions of power that may be conferred upon the receiver by the mortgage deed can only be, as I read S. 69-A, in relation to the income of the mortgaged property, and no more. Sub-sec, (10) gives a party interested the right to move the court for opinion, advice or direction regarding the management or administration of the mortgaged property. Sub-section (10) does not confer the power to manage or administer the mortgaged property. There is, thus, no power conferred upon the receiver by virtue of Section 69A to give out the mortgaged property on leave and licence basis-

8. In this view of the matter, I cannot accept the respondents' contention that the second respondent has the power to grant the said plant on leave and licence basis to the 3rd respondent. It may be, as Mr. Mistree suggested, that the first respondent itself has power under the mortgage document to take over and run or lease the said plant, that is an aspect of the matter with which I am not concerned in this petition.

9. In the result, I hold that second respondent has no power or authority to give the said plant and its machinery to any third party on leave and licence basis. I make the petition absolute, the costs thereof to be paid to the petitioners by first respondents.

10. Ordered accordingly.


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