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Raj Nath Vs. Vijay Nath - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 36 of 1972
Judge
Reported inAIR1973Delhi244; ILR1973Delhi272
ActsCode of Civil Procedure (CPC), 1908 - Sections 148 - Order 43, Rule 1
AppellantRaj Nath
RespondentVijay Nath
Advocates: R.M. Lal,; Arun Mohan and; Sultan Singh, Advs
Cases ReferredIn Mahant Baldeo Dass v. Malik Dharem Chand
Excerpt:
(i)civil procedure code (1908, order 43, rule 1 (s))-conditional order of appointment of a receiver-whether appealable.;the court in the instant case appointed a receiver to take possession of the movable and immovable and properties of partnership firm with a condition that the receiver will not disturb the physical possession of defendant no. 1 from the shop in dispute and from the stock in trade with him provided he furnishes a bank guarantee or other adequate security for a sum of rs. 80,000/- within one month from the date to obey the decree of the court and in pursuance thereof, in particular, to vacate the shop or to pay such compensation for use of the shop and the stock-in trade and other, as may be directed. in his default, the receiver would take possession of the shop and.....avadh behari, j. (1) this is a first appeal from the order of a learned single judge dated may 26, 1972, refusing to extend the time on the application of the appellant (i.a. i of 1972 dated january 3, 1972 which was made under sections 148 and 151 of the code of civil procedure to the court. the material facts so far as they are relevant for the decision of this appeal are as follows :- one musadi lal had five sons, namely, shiv charan lal, lakshmi narain, dina nath, raj nath and vijay nath. he constituted a joint hindu family with his sons and carried on business under the name and style 'premsukhdass jawaharlal'. he died in 1942. in 1949 his sons who continued the business of the joint hindu family firm converted the same into partnership. at that time three elder sons became partners.....
Judgment:

Avadh Behari, J.

(1) This is a first appeal from the order of a learned single Judge dated May 26, 1972, refusing to extend the time on the application of the appellant (I.A. I of 1972 dated January 3, 1972 which was made under Sections 148 and 151 of the Code of Civil Procedure to the court. The material facts so far as they are relevant for the decision of this appeal are as follows :-

ONE Musadi Lal had five sons, namely, Shiv Charan Lal, Lakshmi Narain, Dina Nath, Raj Nath and Vijay Nath. He constituted a joint Hindu family with his sons and carried on business under the name and style 'Premsukhdass Jawaharlal'. He died in 1942. In 1949 his sons who continued the business of the joint Hindu family firm converted the same into partnership. At that time three elder sons became partners and the appellant and the respondent who were then minors were admitted to the benefit of the partnership. A new deed of partnership dated March 19, 1950 was executed in which the appellant became a partner in addition to his three elder brothers. In 1954 another deed of partnership was executed in which Vijay Nath, the respondent became a partner. Subsequently, a new partnership deed was executed on December 20, 1957 which was modified by another deed dated October 22, 1965.

(2) The respondent filed a suit for dissolution of the partnership firm known as 'Premsukhdass Jawahar Lal' and rendition of accounts on August 20, 1969. On the game day an application IA 1350 1969 was made by the respondent under order,40 Rule 1 and other provisions of the Code of Civil Procedure for appointment of a receiver and other reliefs. This application was decided by B.C. Misra, J. on February 18, 1971. B.C. Misra, J appointed the official receiver as interim receiver of the partnership firm and ordered him to take into his possession all the movable and immovable properties of the firm subject to a number of conditions. We are concerned only with one of the conditions which is as follows :-

'(1)He will not disturb the physical possession of defendant No.1 from the shop in dispute and from the stock in trade with him provided he furnishes a Bank guarantee or other adequate security For a sum of Rs. 80,000.00 within one month from the date to obey the decree of the Court and in pursuance thereof, in particular, to vacate the shop or to pay such compensation for use of the shop and the stock-in-trade and others, as may be directed. In his default, the Receiver would take possession of the shop and give it to the plaintiff on his furnishing a Bank guarantee or other adequate security in the sum of Rs. 80,000 to be furnished within one month thereafter, and in the event of his default also, the Receiver will lock up and seal the premises and apply to the Court for directions.'

(3) This part of the order relates to half portion of shop No. 4912 situated at Hauz Qazi, Delhi, which is in the possession of the appellant. The suit is still pending. This order is to remain effective till the decision of the suit. In terms of the order dated February 18, 1971 of B.C. Misra, J., the appellant furnished security of his immovable property situated in Kamla Nagar. Delhi. When the matter came up before the Registrar for the acceptance of the security, objections were raised by the respondent. The Registrar by his order dated April 23, 1971 rejected the security. Against this order of rejection of the security by the Registrar, an appeal was taken to the Judge in chambers and by order dated September, 21, 1971, Prakash Narain, J. held. firstly, that no appeal lay against the order of the Registrar and that, secondly, the immovable property of the joint Hindu family cannot be given in security. In the result the appeal was dismissed, it may be mentioned at this stage that the immovable property security of which was furnished by the appellant came to his share on a partition of the joint family property and, thereforee, this immovable property belonged to the appellant and his two minor sons.

(4) Against the order of the Judge in Chambers, an appeal was filed to two judges of this Court [FAO (OS) 55 of 71]. This appeal was decided by Deshphandc and Rangarajan, JJ. on March 7, 1972. The Division Bench held that an appeal against the order of the Registrar to the Judge in Chambers was competent under Rule 4 of Chapter If of the Delhi High Court (Original Side) Rules, 1967. On the competence of the appeal before them, the learned Judges held that the order of the Judge in Chambers rejecting the appeal against the order of the Registrar was also appealable under Order 43 Rule 1 (s) of the Code of Civil Procedure. The Division Bench observed:-

'FOR,the order of the learned single Judge is one of implementation of the order of the appointment of the receiver inasmuch- as the furnishing of the security was one of the conditions to be fulfillled by the defendant No. 1 according to the said order.'

(5) On the merits of the appeal, the learned Judges of the Division Bench held that they agreed with the contention of the learned counsel for the appellant that the appellant was competent to dispose of the property of a trading family for the purposes of the trade. Nonetheless, the security was not considered to be adequate as it was not easily realisable and free from possibility of litigation. The minor sons of the appellant could challenge the action of their father in giving the joint family property as a security and, thereforee, the Division Bench held that it could not be said that the security furnished by the appellant was free from the likelihood of litigation. In this view of the matter, the appeal was dismissed by the Division Bench on March, 7, 1972.

(6) It appears from the judgment of the Division Bench dated March 7, 1972 that the appellant made a request to the Division Bench to extend the time for furnishing further security, but since the judges of the Division Bench were informed that a separate application under Section 148 of the Code of Civil procedure for extension of time for furnishing security

'WE,however, find that in paragraph 19 of the grounds of appeal (at page 24 of the paper-book) the defendant No. 1 -appellant had stated before the learned single judge that he should be allowed to furnish further security, if necessary. We are further informed that a separate application under Sec. 148 Civil procedure Code for extension of time to furnish security has been also made by the appellant defendant No. 1. Neither the observations made by us in regard to the merits of the appeal nor the dismissal of this appeal by us would, however, prejudice the decision of the said application under Section 148. Civil Procedure Code before the learned single judge.'

(7) After the decision in the appeal the application for extention of time was heard by the learned single judge and, as already noticed above, the learned single judge by order dated May 26, 1972, refused to extend the time in exercise of his discretion and dismissed the application with costs. The respondent had also made an application (I A 415 of 1972 to the learned single Judge praying that the interim receiver should take possession of the shop and the same be handed over to him on his furnishing security in accordance with the order dated February 18, 1971. On this application, the learned single Judge, in view of his conclusion which he had reached on the application of the appellant for extension of time, ordered the interim receiver to take possession of the shop from the appellant and comply with the directions contained in the order dated February 18, 1971 of B .C. Misra, J.

(8) Against the order of the learned single Judge the appellant (defendant No. 1 to the suit) has filed the present appeal. The learned counsel for the respondent has raised at the outset an objection to the maintainability of the appeal. It was urged that as the order of the learned Single Judge is under Section 148 of the Code of Civil Procedure, no appeal there from was competent. The learned counsel for the appellant submits that the order of the learned single Judge is not one under Section 148 of the Code of Civil Procedure simplicitor, but is an order which is in effect and substance under Order 40 Rule 1 of the Code of Civil Procedure and, thereforee, an appeal lies under Order 43 Rule l(s) of the Code of Civil Procedure. At this stage we may read the provisions of Order 40 Rule 1 as well as Order 43 Rule 1 (s) which are as follows :-

0.40R.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 realisatiom, 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. (2) Nothing in this rule shall authorise the Court to remove from the possession or custody of property any person whom any party to the suit has not a present right so to remove.'

O. 43. R. I. (S)

'1.An appeal shall lie from the following orders under the provisions of section 104, namely :- (s) an order under rule I or rule 4 of Order XL. ' In order to decide the question of maintainability of the appeal it is necessary to analyze the order of B. C. Misra, J. The appellant is in possession of the shop regarding which the dispute relates. The order provided :- 1. The possession of the appellant is not to be disturbed if he furnishes a bank guarantee or some other adequate security for a sum of Rs. 80,000.00; 2. If he fails to do so, the interim receiver shall take possession of the shop; 3. If the respondent provides bank guarantee or other adequate security in the sum of Rs. 80,000.00 the possession of the shop will be delivered by the receiver to the respondent; and 4. If the respondent fails to furnish the security then the receiver would lock up and seal the premises and apply to the court for further directions. Now it will be seen that if the appellant defaults in carrying out the directions as given in the order of B. C. Misra, J., the property will pass into the possession of the receiver on such default. In other words, the result will be that under Order 40 Rule l(b) and (c) the appellant will be removed from the possession of the shop and the same shall be committed to the possession, custody and management of the receiver if the appellant does not comply with the directions. This is, thereforee, a conditional order of appointment of a receiver and this is, in our opinion, enough to bring it in the category of appealable orders as contemplated under Order 43 Rule 1 (s).

In Kutoor Vengayil Rayarappan Nayanar v. Kutoor Vengayil Valia Madhavi Amma and others, A. I. R. 195 F. C. 140 it was observed :-

'IT may further be pointed out that the scheme of O.43 in making certain orders appealable is of a twofold character. In a number of cases an appeal has been allowed from all kinds of orders passed under a certain rule, while in other cases the right of appeal has been limited only to certain specific orders passed under a certain rule. Reference in this connection may be made to O.43 R.1 (v) and R.1 (t). In these rules appeal has been allowed against certain specific orders but not against all the orders that could be made under these rules. Order 40 R.1, falls in the category of cases where all orders made under it have been made appealable and it has not been said that the only order appealable is the one appointing a receiver. Whenever an order can be brought within the purview of O.40 R. 1 it at once becomes appealable under the provision of O.43 R.1

(9) In Mahant Baldeo Dass v. Malik Dharem Chand AIR 1946 Lah 642 it was observed :-

'IT may be argued that the orders contemplated by sub cls. (b), (c) and (d) of sub-rl. (1) are incidental to the main order which the Court may pass under cl. (a) appointing a particular person a receiver of a property, but it is possible to think of cases where the Court at first merely passes an order of the appointment of a receiver and reserves further orders of removing a person in possession or conferring powers upon the receiver for a further occasion. The question is whether and if such an order is subsequently passed, can it be appealed from separately or not On giving careful consideration to the matter, I am inclined to think that the answer to the question must be in the affirmative.'

(10) In the present case what we find is this. B. C. Misra, J. has permitted the appellant to continue to remain in possession of the premises on certain terms, in default, the receiver shall take possession of the shop. thereforee, the impugned order clearly falls within clauses (b) and (c) of Order 40 Rule 1 of the Code of Civil Procedure. Since the appellant has failed to furnish security the consequences as indicated in the order dated February 18, 1971 will follow.

(11) In this very litigation it was held by the Division Bench on March 7, 1972 that an order regarding implementation of the order of the appointment of the receiver is appealable in as much as furnishing of the security was one of the conditions to be fulfillled by the appellant according to the order dated February 18, 1971. We are, thereforee, unable to agree with the learned counsel for the respondent that the impugned order is not appealable. In our opinion, the impugned order falls within the purview of Order 40 Rule 1 and is, thereforee. appealable under Order 43 Rule 1 (s). Hence, the preliminary objection is rejected.

(12) Coming to the merits of the appeal, the learned single Judge was of the view that the appellant's conduct was not praiseworthy and, thereforee, he was not inclined to exercise his discretion in favor of the appellant, it is true that the conduct of a party must be taken into account before discretion is exercised in favor of that party by a court, for extension of time cannot be claimed by a party as a matter of right. We will, thereforee, now consider whether the conduct of the appellant is such as disentitles him to an extension of time under Section 148 of the Code of Civil Procedure.

(13) In or about 1967 disputes and differences arose between the parties regarding the dissolution of the firm and they executed an arbitration agreement on November 28, 1961 referring these disputes to Shri Bishambar Dayal who was appointed as the sole arbitrator. The arbitrator proceeded with the reference for some time. The assets of the partnership were divided by the arbitrator into tots and were auctioned between the partners. This was done with their consent. At this occasion, the respondent gave a bid for the shop in dispute for Rs. 63.000.00. This was the highest bid and was accepted. Raj Nath did not get anything at the auction. Other partners were allotted other assets of the partnership. The arbitrator attempted to proceed with the arbitration. Some of the partners felt dissatisfied with the proceedings. A number of applications were made to the court from time to time and these have been discussed by the learned single Judge in his judgment at some length. The outcome of these arbitration proceedings seems to be that the arbitrator who wanted to take possession of the shop in the possession of the appellant was not able to do so. When orders were made in the arbitration proceedings against the appellant that possession be taken from him, it was pleaded by the appellant that he was in possession of the half portion of the shop since September 25, 1968 on the basis of a settlement by which the firm had been dissolved and most of the assets distributed. The whole matter came up before Prakash Narain, J. and he made an order dated May 28, 1969. The learned Judge framed an issue on the plea taken by Raj Nath and ordered it to be tried. On May 29, 1969, the appellant made an application alleging that there had been a complete settlement between the parties resulting in supersession of the arbitration agreement. This application was heard by P. N. Khanna, J. and order dated August 1, 1969 was passed and again it was held that the version of the appellant that there had been a complete settlement of the matter could not be accepted unless as a result of the trial of the issue the settlement is proved. The receiver was also directed by the court to take possession immediately of the assets of the partnership and the parties were directed to assist the receiver in his task and to hand over the possession of the premises to him as and when he demanded the same. If police assistance was required by the receiver the same was to be provided to him by the Registrar of the court. The long and short of all these proceedings was that the receiver was not successful in settling the disputes between the parties. He was not able to get possession of all the assets of the partnership. The arbitration proceedings ended in fiasco and on August 11, 1969 the arbitrator-cum-receiver Shri Bishambar Dayal resigned from his office. In his report to the court he stated that as the parties did not want him to continue as receiver or arbitrator he was submitting his resignation. Dissatisfied with the outcome of the arbitration proceedings the respondent instituted a suit for dissolution of partnership and rendition of accounts on August 20, 1969. In this plant it was averred that the plaintiff and defendants I to 4 were the partners of the firm constituted under a deed of partnership dated December 20, 1957 as modified by a deed dated October 22, 1965 and that it became impossible for them to carry on the partnership business and, thereforee, by agreement dated November 28, 1967 the plaintiff and defendants I to 4 agreed to refer their disputes to the sole arbitration of Shri Bishambar Dayal who was also imp leaded as a defendant to the suit (defendant No. 5). The arbitrator had taken possession of the various assets of the firm and had failed to restore possession of the property and assets of the firm to the various partners. It was said that it was, thereforee, necessary to implead him as a party to the suit as he is also liable to render accounts of the assets which were taken into possession by him. The appellant filed his written statement to the suit and it was asserted by him with regard to the appointment of Shri Bishambar Dayal, defendant No. 5, that he did not act as an arbitrator at all, but acted as a mediator between the said partners. On merits, it was contended that the entire accounts of the partnership have been settled between the parties. It was stated that all the terms of dissolution and settlement of accounts were settled between the parties and according to which the entire assets were allotted and the tenancy premises were also distributed between the parties. A deed of dissolution was drafted which was approved by the parties and was signed by all the partners. It was further stated that after distribution of the partnership assets, half of the premises of shop No. 4912, Hauz Qazi, came to the share of the appellant and that he was in possession in his own right of half of the shop in terms of the settlement effected between the partners. On the pleadings of the parties, the following issues were framed on March 31, 1970:-

1.Is the partnership to be dissolved for the reasons stated in the plaint? O.P.P. 2. Is the plaintiff entitled to rendition of accounts? O.P.P. 3. Is the suit not maintainable in view of the allegations contained in paras 5 to 8 of the written statement as well as paras 13 to 21 appearing under the head 'additional Pleas'? (Onus on deft. No. 1.) (After I have framed the above issue, the learned counsel for the plaintiff has instantly urged that another issue should be added. His submission is that there should be an issue to the effect as to whether the assets of the firm stand distributed and accounts settled between the partners. The following issue is added as issue No. 4). 4. Do the assists of the firm stand distributed and the account settled as alleged by defendant No. 1? If so, what is the effect thereof? (onus on deft. No. 1). (Onus of issue No. 4 has been placed on defendant No. 1 because of the phraseology implied in that issue but it is understood that this onus will be equally resting on the plaintiff. The parties will in any case lead the best evidence available with them on all the issues irrespective of the burden of proof). 5. Relief.

(14) From the pleadings of the parties and the issues framed, it will appear that the matters which were sought to be settled by the arbitrator -cwn-receiver are again being agitated both by the appellant and the respondent. In this state of affairs, we are of the opinion that the conduct of the appellant prior to the institution of the suit should not have been taken into account and the starting point for consideration of the conduct of the appellant should have been the suit which was instituted by the respondent on August 20, 1969. This is true that B. C. Misra, J. did consider the conduct of the appellant and this conduct did weigh with him in making the order of appointment of the receiver in terms which he did. But in our opinion, the conduct of the appellants prior to the institution of the suit had weighed with the court in making an order in which terms were imposed both on the appellant as well as the respondent. This conduct, thereforee, should not be taken into consideration again at the time of deciding the application for enlargement of time. Let us now consider the conduct of the appellant after the suit and it has to be seen whether discretion should be exercised in the circumstances as they obtained after the institution of the suit. What happened after the institution of the'suit is this. An order dated February 18, 1971 was made by B. C. Misra, J. giving various directions regarding the appointment of receiver and furnishing of security. On March Ii, 1971, the security was filed by the appellant of his house No. 6874 on plot No. 171, Block E, Kamla Nagar, Delhi. Objections were filed by the respondent to the security on March 15, 1971. On March 17, 1971, the appellant filed a security bond executed by Ghan Shayam Dass, his father-in-law mortgaging a property bearing No. 61/64 Municipal No. 8225-26, Ward No. 16-W.E.A. Ramjas Road, Karol Bagh, New Delhi. This bond was offered as an alternative to the security bond in case the original security bond is not accepted. Objections were raised by the respondent to the security bond on the ground that this property did not belong to Ghan Shayam Dass and had in fact fallen to the share of his sons in a previous partition suit and that Ghan Shayam Dass had no interest in the property. The counsel for the appellant made a statement before the Registrar that the appellant desired to withdraw the Security submitted by Ghan Shayam Dass. The respondent later on made an application that proceedings be taken against the appellant for prosecution for of Afences committed by him in furnishing false security and making false affidavits etc. This application is still pending (Cr. 0.61 of 1971). We shall say no more advisedly about this security since the matter is. subjudice. Finally, on April 23, 1971, the Registrar rejected the security of the house situated in Kamala Nagar. On April 26, 1971, in the grounds of appeal (para 19 of the grounds of appeal) which was filed against the order of the Registrar, it was stated that the appellant should be allowed to furnish further security, if necessary. The Judge in Chambers, however, did not pass any order on this prayer and dismissed the appear on September 21, 1971. Against this order, an appeal was filed to the Division Bench. The Division Bench by order dated October Ii, 1971 stayed the operation of the order dated September 21, 1971 on condition that the appellant furnishes bank guarantee for Rs. 82.000.00 on or before November 3, 1971 to the satisfaction of the Registrar. The appellant filed the security bond of the Mercantile Bank on November 1, 1971. This security bond was to begin with for a period of one year, that is, till October 22, 1972, but the bank undertook to renew the security year after year before October 22 every year till the disposal of Suit No. 329 of 1969 and until an order of the High Court is made discharging the guarantee. It will, thereforee, be g noticed that though the Division Bench ordered the appellant to furnish a security till the disposal of F. A. 0. (OS) No. 55 of 1971, the appellant furnished the security bond of the Mercantile Bank till the disposal of the suit itself. While this appeal was pending, the appellant also made an application on January 3, 1972 on the original side of the High Court in the suit that the bank guarantee dated November 1, 1971 be either ordered to be treated as the guarantee in the suit in compliance with the order of B. C. Misra, J. dated February 18, 1971 or the appellant be permitted to furnish a fresh security/ bank guarantee. The Division Bench dismissed the appeal on March, 7. 1972. The Division Bench held that the appellant was competent to furnish security which he did as he was the manager of the trading Hindu joint family and as such had authority to sell or give in security the immovable property which belonged to the Hindu joint family of himself and his two minor sons. The appellant was held competent to dispose of this properly of the trading joint Hindu family for the purposes of the trade. But as it was thought that the security was not easily realisable and could breed the germs of litigation, the order of the Registrar was upheld on that ground. In the result the appeal was dismissed. The Division Bench did not find that the security furnished by the appellant was worthless, but it could not be accepted because it might lead to litigation. As regards the prayer that extension of time be granted for furnishing security, the Division Bench left the matter to the decision of the learned single Judge, for the Judges of the Division Bench were informed that the application under Section 148 of the Code of Civil Procedure was pending before the learned single Judge.

(15) Before the learned single Judge it was argued that he had no jurisdiction to enlarge the time as prescribed in the order of B. C. Misra, J. dated February 18, 1971. This argument did not find favor with him and following Mahanath Ram DaS v. Ganga Das, : [1961]3SCR763 the learned single Judge thought that he had jurisdiction to extend the time. We think that he was right in taking this view. On the question whether time should be extended, the learned single Judge was of the view that the conduct of the appellant disentitled him to the exercise of discretion in his favor. He declined to exercise the discretion firstly on the ground that in spite of three orders made by this court on June 24, 1968, May 28, 1969 and August 1, 1969, the receiver-Cum-arbitrator was not able to take possession of the shop and that the appellant had for a period of four years been thwarting the attempts of the receiver to take possession from him. The learned single Judge was also impressed by what B. C. Misra, J. had said in his order dated February 18, 1971, namely, that the appellant is 'trying to remain in unlawful possession of the shop without payment of any money whatsoever and without any adjustment of the purchase money having taken place.'

(16) On this aspect of the case we find that V. S. Deshpande, J. made an order on June 24, 1968 directing the receiver-cum-arbitrator Shri Bishambar Dayal to take possession of all the assets of the firm till the disposal of the arbitration proceedings. The arbitrator did take possession of some of the assets of the firm but he was not able to take possession of the half portion of the shop which was in the possession of the appellant. Subsequently, on May 28, 1969, Prakash Narain, J. again made an order asking the receiver to take possession of the shop in occupation of the appellant. On an application of the appellant Prakash Narain, J. himself on May 29, 1969 ordered that possession be not taken from the appellant if he furnished security in the sum of Rs. 20,000.00 within two days of the making of the order. This security was accordingly furnished by the appellant and was accepted on May 30, 1969. Again on August 1, 1969 P. N. Khanna, J. made a direction to the receiver that he should take into possession all the assets of the partnership. This was to be done by the receiver by August Ii, 1969. On August Ii, 1969, the arbitrator-cum-receiver himself resigned his office. The matter again came up before P. S. Safeer, J. and the learned Judge by order dated May 20. 1970, appointed Shri S. S. Dalal, Advocate as receiver and directed him to take possession only of 'non-controversial assets'. The shop in dispute was a controversial asset and, thereforee, Shri S. S. Dalal was not able to take possession of the shop. The order of P. S. Safeer, J., it seems, modified the order of P. N. Khanna, J. dated August 1, 1969. Shri S. S. Dalal was removed from his office by B. C. Misra, J. by order dated September 24, 1970.

(17) Now it has to be borne in mind that the opinion which B. C. Misra, J. formed of the conduct of the appellant was a tentative opinion formed at a preliminary stage at the time of dealing with the application for the appointment of receiver. B. C. Misra, J. himself said in his order dated February 18, 1971 that 'his conclusions were only tentative and they would have to follow the findings arrived at the trial'. His Lordship was also of the view that 'what was done or remained to be done by the arbitrator on or before or subsequent to March 29, 1968 did not culminate in the award (of the arbitrator) and as such his proceedings cannot in law be called the arbitration proceedings in view of Section 32 of the Arbitration Act.' The learned Judge thought that so far there has been no distribution of the assets of the firm in accordance with law. The learned Judge also observed that 'some blame had to be shared by defendant No. 5 (arbitrator-cum-receiver Bishambar Dayal) as without an agreement between the parties he allowed the parties to take possession of some part of the assets of the firm and when matters became difficult for him he tendered his resignation.' On a consideration of all the facts and circumstances including the conduct of the appellant B. C. Misra, J. thought that the appellant should not be allowed to continue to remain in possession of the shop without payment of money and, thereforee, imposed the term that the appellant, if he wishes to continue to remain in possession of the shop, must furnish security in the sum of Rs. 80,000/. We shall not be justified in taking into account considerations which weighed with B. C. Misra, J. in passing 5HCD/72-8. the order of appointment of the receiver once again in refusing the application of the appellant for extension of time.

(18) What seems right to us is that we should take into account the conduct of the appellant after the making of the order dated February 18, 1971. After the passing of the order of February 18, 1971 we find nothing in the conduct of the appellant which, in our view, will disentitle h im to an extension of time. On the other hand, we find that he was right from March Ii, 1971 till the disposal of the appeal by the Division Bench on March 7, 1972, anxious to furnish security. It is true that the security which he furnished was not accepted and the order of the Registrar throw out was upheld, but the observations made by the Division Bench in their order dated March 7, 1972 do seem to support the contention advanced by the learned counsel for the appellant that though the security was not accepted, it was not a worthless security or a security which he was incompetent to furnish.

(19) The learned single Judge was also of the opinion that there was delay on the part of the appellant and, thereforee, he declined to exercise his discretion in his favor. We find that the prayer for furnishing security was made as early as on April 26, 1971 in ground No. 19 of the grounds of appeal and again by an application under Section 148 of the Code of Civil Procedure on January 3, 1972. The order by B. C. Misra, J. was made on February 18,1971. On March 11, 1971 the security was furnished which was rejected on April 23, 1971. On April 26, 1971, the prayer for furnishing security was made. This was repeated by an independent application on January 3, 1972. The judges of the Division Bench in their order dated March 7, 1972 referred to the prayer made by the appellant in ground No. 19 of the grounds of appeal dated April 26,1971. It is not correct to say that this prayer should be deemed to have been refused as was held by the learned single Judge. We are, thereforee, of the view that there is no delay.

(20) Shri R. M. Lal, the learned counsel for the appellant, made an offer in the course of the arguments that the appellant is prepared to furnish a bank guarantee. We accept this offer and extend the time for furnishing bank guarantee by the appellant in the sum of Rs. 80,000 to the satisfaction of the Registrar of this court within one month from the date of this order.

(21) In the result, we accept the appeal and set aside the order of the learned single Judge dated May 26, 1972 and extend the time as aforesaid. In the circumstances of the case there shall, however, be no order as to costs.


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