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Vishwanath Khanna Vs. Ram Swarup Rastogi and Sons and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberInterim Application No. 2770 of 1981 and Suit Appeal No. 779A of 1981
Judge
Reported in1982(3)DRJ145
ActsArbitration Act, 1940 - Sections 41; Code of Civil Procedure (CPC), 1908 - Order 40, Rule 1
AppellantVishwanath Khanna
RespondentRam Swarup Rastogi and Sons and ors.
Advocates: G.S. Vohra,; M.M. Kalra,; R.K. Makhija and;
Cases ReferredMadhu Lal v. Ramji Das Chironji Lal and
Excerpt:
.....immovable from which the aforesaid claim of the petitioner could ultimately be satisfied that the shilpi theatre lucknow was mortgaged with hindustan commercial bank kanpur and according to the information with the petitioner the respondents were to pay more than rs. its position is at the best that of a general creditor. the main plea raised by the petitioner is that the respondents have no assets movable or immovable from which the aforesaid claim of the petitioner may ultimately be satisfied and the shilpi theatre was mortgaged with hindustan commercial bank kanpur. the mere fact that the respondents have no assets, movable or immovable from which the petitioner's claim could be satisfied in my opinion, is no ground for appointment of a receiver. in para 7 of this judgment it was..........likely to hand over the control to another distributnr mr. b. n. gupta. he consequently filed a suit (suit no. 178/74) in the court of civil judge lucknow against respondent no. 2 from committing breach of the said agreement. in that suit he obtained an ex parte injunction restraining respondent no. 2 from committing breach of certain terms. ram saroop rastogi is father of kuldip rastogi. ram swaroop rastogi his wife, phool mati rastogi and their two sons jagdish kumar rastogi and kamal kumar rastogi on december 8, 74 filed a suit (suit no. 125 of 1974) in the court of civil judge lucknow for dissolution of the firm respondent no. 1 and for accounts against kuldip rastogi. the plaintiff in that suit filed an application for appointment of a receiver which was not opposed by respondent.....
Judgment:

Sultan Singh, J.

(1) This is an application under Section 41 read with Schedule Ii of the Arbitration Act 1940 read with Order 40 rule 1 and section 151 of the Code of Civil Procedure, praying for continuing the appointment/ appointing Shri Y. S. Srivastava Advocate Lucknow as receiver of Shilpi Theatre Lucknow during the pendency of the main petition under Section 20 of the Arbitratio Act with directions to the receiver to continue/take effeclive control of the said theatre and realise the total income of the cinema shows daily and to pay a sum of Rs. 5350.00 per week out of that income tothe respondents and to deposit the remaining amount in an account to be opened in a scheduled bank and to preserve the said amount with him to be available for the satisfaction of the claims of the p etitioner as may ultimately be found under the award which may be made by the arbitrator in the main case.

(2) The respondents are owners of a cinema known as Shilpi Theatre situate at Lucknow. On January 2, 1973 Vishwa Nath Khanna entered into a contract with Kuldip Rastogi. Respondent No. 2 Kuldip Rastogi under this agreement to place the said theatre under the control and disposal of the petitioner for the screening of- Motion pictures to be supplied by the ptitioner for a full period of 156 weeks with an corporation to continue this agreement for a further period of 104 weeks. Out of the box office collections the petitioner was to pay Rs. 5100.00 per week to the respondents for the first 156 and for optional period of 104 weeks the respondents were to be paid a sum of Rs. 5350.00 per week as their fixed share. In pursuance of the said agreement the petitioner took control of the said theatre with effect from June 2, 1973. The arrangement worked satisfactorily for 78 weeks. The petitioner thereafter apprehended that the respondent was likely to hand over the control to another distributnr Mr. B. N. Gupta. He consequently filed a suit (suit No. 178/74) in the court of civil Judge Lucknow against respondent No. 2 from committing breach of the said agreement. In that suit he obtained an ex parte injunction restraining respondent No. 2 from committing breach of certain terms. Ram Saroop Rastogi is father of Kuldip Rastogi. Ram Swaroop Rastogi his wife, Phool Mati Rastogi and their two sons Jagdish Kumar Rastogi and Kamal Kumar Rastogi on December 8, 74 filed a suit (suit No. 125 of 1974) in the court of Civil Judge Lucknow for dissolution of the firm respondent No. 1 and for accounts against Kuldip Rastogi. The plaintiff in that suit filed an application for appointment of a receiver which was not opposed by respondent No. 2 and Ram Swaroop Rastogi was appointed receiver on 11-12-74. The petitioner Vishwa Nath Khanna made an application for being made a party to the said suit and was imp leaded as a party. On his application. Ram Swaroop Rastogi was removed from receivership and Sh. V M Shikia Advocate Was Appointed As Receiver In Place of Ram Swaroop Rastogi. This order wai however, later on set aside.

(3) The petitioner on January 25, 1975 filed a petition (suit No. 52-A of 1975) in this Court for reference of certain disputes to the arbitration of Motion pictures association Delhi on the allegations that disputes had arisen under the contract which provided for arbitration and were referable to the arbitrator. In those proceedings the petitioner made an application for appointment of receiver which was dismissed by Chadha J. The petitioner filed a civil Appeal No. 1325/77 in the Supreme Court. The Supreme Court issued directions that the civil Judge Mohanlal Ganj Lucknow would appoint an independent person as interim receiver. It was further ordered that the interim receiver would be in charge of the takings of the exhibition of the pictures at the theatre and the theatre would be run by respondents I to .3 under the supervision of the interim receiver. Whatever takings were received by respondents 1 to 3 would he handed over to the receiver who would be entitled to demand all such information as he might think fit from respondents 1 to 3. The interim receiver was directed to pay Rs. 5350.00 per week to respondents 1 to 3 without prejudice to the rights and contentions of the parties Rest of the amount was to be deposited in a separate account to be opened by the interim receiver in a scheduled bank. The interim receiver in a scheduled bank. The interim receiver was further directed to obtain directions from the civil judge; Lucknow as to whose pictures should be exhibited at the theatre-whether of the petitioner of Mr. Gupta Certain other directions were also made. This order it is stated was operative till the decision of the suit No. 52-A of 75. The said petition was decided by this court on 14-10-77. The petition was allowed and all the disputes except the dispute regarding the payments made over and above the amount of Rs. 1 lakh were directed to be referred to the arbitration of Motion pictures association.

(4) On the same date the petitioner made an application (IA 3555/77) under Section 41 read with schedule Ii of the Arbitration Act and Section 151 of the Cpc for appointment of receiver. On 14-10-77 this Court directed that the receiver appointed by the Supreme Court shall continue to function on the terms settled by the Supreme Court shall continue to function on the terms settled by the Supreme Court. This order was made absolute on October 25, 1977.

(5) The respondents it appears did not make any payment to the receiver after 5-10-77. The petitioner consequently on 13-2-78 moved an application (1.A. 565/78) under S. 41 read with schedule Ii of the arbitration Act and Order 39 Rule 4 and Order 30 read with S. 151 Civil Procedure Code with the prayer inter alias that the respondents their agents, managers, employees, etc be restrained from committing breach of the terms of the agreement dt. 2-1-73 till the award is made and filed in court. That they be restrained from screening in the said Shilpi theatre any pictures there than those booked & supplied by the petitioner and that the receiver be directed to take control and run the cinema and screen the pictures booked and supplied by the petitioner etc. Ms Joshi, J vide his order dt. 18-5-1978 directed that the respondents shall exhibit at the Shilpi Theatre the pictures booked and supplied by the petitioner only and of no other party, the receiver shall take effective control of the cinema and see to it that the pictures provided by the petitioner only were screed at the said theatre and that the total takings of the shows given to him and out of them the respondents were paid Rs. 5100.00 per week for 66 weeks from the date the order was put into effect and Rs. 5350.00 for 104 weeks subsequent thereto. Rest of the income was directed to be deposited in the petitioner's account after discharge of the tax liabilities, etc. That order was to remain effective till the arbitration proceedings were completed and the award filed in the court or for 170 weeks counted from the date the screening of the petitioner pictures at Shilpi theatre Lucknow was restarted whichever eventually occurred earlier.

(6) The award has not yet been made. The order of Joshi, was, thereforee to remain in force for 170 weeks counted from the date of screening of the petitioner's pictures. This period it appears was to expire on 23-8-8). On 19-9-81 the pettioner filed an application 2647/81 for continuation of the appointment of the receiver on the same terms and conditions as laid down by the Supreme Court with effect from August 24, 1981 till the making of the award. That application was dismissed by this Court on August 28, 1981 and the interim order granted in that application was vacated.

(7) On the same date, i.e. 28-8-81, the petitioner filed a petitioner under Section 20 of the Arbitration Act (Suit 779 of 1981) praying for an order directing filing of the arbitration agreement dt. 2-1-73 in the court and for referring the disputes mentioned in para 14 of the petition to the arbitration of Motion pictures Association. It was pleaded that a sum of Rs. 20000.00 deposited with the respondents was refundable in the month of May, 78 but was ultimately refunded in the month of August, 81 and the petitioner was, thereforee, entitled to an amount of Rs, 1700.00 as interest on the said amount. The petitioner further claimed a sum of Rs. 31214.95 as amount of box office collections alleged to have been withhold by the respondents and another sum of Rs. 8 lacs on account of business loss suffered by the petitioner, during the period May 27, 78 to August 23, 1981 because of the act of the respondents in withdrawing their membership of the Motion Pictures Association. He also claimed a sum of Rs. 47600.00 paid to the receiver a sum of Rs. 5260.00 as full one day's collection on account of closures of the cinema by the respondents on 16-8-81 and for running the cinema for 20 weeks which were spoiled on accounts of the acts ommissions of the respondents.

(8) In these proceedings the petitioner has filed the present application (I.A. 2770/81) for appointment of receiver. It was alleged that the claim of the petitioner amounted to Rs. 999669.35 that the respondents had at no time honestly intended to abide by the terms of the agreement and the petitioner could restrain his control on the Shilpi theatre only after three years hard litigation and even thereafter the respondents in order to cause heavy loss and damages to the petitioner, got themselves dismembered from the Motion Picture Association. It was also alleged that the respondents were of desperate nature and had been found guilty of having committed contempt of court on charges of civil contempt as well as criminal contempt and respondent No. 1 was fined Rs. 2000.00 and respondent was directed to be detained in civil prison for a period of three months and on the charge of criminal contempt respondent No. 2 and his brother Kamal Kumar Rastogi were awarded rigorous imprisonment for seven days each and their appeals were pending in the Supreme Court. They had again committed contempt of this court by dosobeyng the order dated 20-8-81 passed by this court. It was also pleaded that the respondents had no asset movable or immovable from which the aforesaid claim of the petitioner could ultimately be satisfied that the Shilpi theatre Lucknow was mortgaged with Hindustan Commercial Bank Kanpur and according to the information with the petitioner the respondents were to pay more than Rs. 10 lacs to the said Bank. It was also averred that under the similar circumstances the Supreme Court had appointed the receiver and that in the circumstances in the interest of justice the appointment of receiver of Shilpi theatre Lucknow was liable to be continued.

(9) Needless to say that this application was opposed by the respondents. They raised various preliminary objections namely that the main petition was barred under Order 2 Rule 2 Civil Procedure Code that the petitioner's claim were barred by time that these disputes did not touch the exhibition of the pictures and were not thereforee referable that the petition was also barred under S 40(3) of the Specific Relief Act that the suit filed by petitioner in the court of Civil Judge Lucknow had been dismissed and that the present case was barred and the application was malafide. It was further averred that the petitioner had exhibited his pictures for 260 weeks and the agreement had come to an end. It was further pleaded that the matter regarding contempt of court were sub judice and the purpose of mentioning of these matters was to prejudice the court. The allegations regarding the mortgage with the bank were denied.

(10) Prima facie without expressing any opinion, I am of the view that the successive reference can be made and there is no bar. In the Baranagore Jute Factory Co. Ltd. v. M/s Hulaschand Rupchand : AIR1958Cal490 it was held that where the words of the agreement are wide enough to cover all disputes concerning the relevant transaction or contract there can obviously be successive reference under its authority regarding different disputes and even in a case where a fresh dispute arises as to the import or effect of the award made on a reference of the original dispute, a second reference regarding that dispute can be made. Similar view was taken in Seth Kerorimall v. Union of India : AIR1964Cal545

(11) As regards the limitation, prima facie at least some of the claims are within limitation.

(12) Section 41(b) of the Arbitration Act provided that the court shall have for the purpose of an in relation to arbitration proceedings the same power of making or as in respect of any of the matters set out in the second schedule as it has for purpose of and in relation to any proceedings before the court. One of the matters set out in the second schedule is the interim injunction or the appointment of a receiver.

(13) Order 40 Rule 1 of the Code of Civil Procedure empowers the court to appoint receiver of any property whether before or after decree where it appears to the court to bejust and convenient. The object of appointment of receiver is to enable persons who possess rights over property to obtain the benefit of those rights and to preserve the property pending realiation and secondly to preserve the property from some danger which threatens it. Ordinarily the court will not appoint receiver merely because it affords a more convenient method of obtaining payment.

(14) In the present case the petitioner's claim is for damages for beach of contract. Its position is at the best that of a general creditor. In the case of general creditor receiver can be appointed if the petitioner is able to show to the court existence of special circumstances creating the equity in his favor. No such circumstances in my view have been made out. The main plea raised by the petitioner is that the respondents have no assets movable or immovable from which the aforesaid claim of the petitioner may ultimately be satisfied and the Shilpi theatre was mortgaged with Hindustan Commercial Bank Kanpur. This latter allegation has been denied. The mere fact that the respondents have no assets, movable or immovable from which the petitioner's claim could be satisfied in my opinion, is no ground for appointment of a receiver. It may be mentioned that there is no mention that the respondents were threatening to waste the property i.e. the Shilpi theatre to hard the interests of the petitioner or otherwise. The facts of the case in Shavax A. Lal and others. v. Syed Masood Hossain and others Air 1955 And Pra 143 quite different and are not applicable to this case. Similarly the decision in Madhu Lal v. Ramji Das Chironji Lal and others Air 1953 Mad Bha 85 his of no help to the petitioner. In para 7 of this judgment it was observed that the appellant had clearly acquired lien upon any property of the defendant. That being so the receiver cannot be appointed simply because the defendant is delaying the proceedings of the suit by raising all sorts of objections and in the meantime appropriating the rents and profits of the property. These observations in my view go in favor of the respondents. The rights of the petitioner, in my opinion, would be fully safeguarded if a temporary injunction restraining the respondents from alienating the Shilpi theatre in any way was passed. The respondents have no objection to this order being passed.

(15) Reference has also been made to the application regarding the contempt of court alleged to have been committed by respondents. That in my view is not at all relevant or sufficient for appointment of receiver.

(16) It was also averred that the Supreme Court was pleased to appoint receiver in similar circumstances. This is wholly wrong. As observed, under the agreement dated 2-1-73 the petitioner was put in control of the cinema and he was entitled to run his own pictures for a period of 260 weeks. That period had not yet expired. thereforee at that time the situation was entirely different. The petitioner at that time had a right to enjoy the complete control of the arrangement for the screening of the pictures to be exclusively booked and supplied by him. This is not the case now.

(17) For all these reasons I do not find it a fit case for appointment of a receiver and dismiss the appliaction. The respondents are, however, restrained from alineating the Shilpi theatre Lucknow in any way by sale, mortgage or otherwise till the disposal of the main petition suit No. 779-A of 1981. The respondents also would not be entitled to give the cinema on lease or under any other similar arrangement for a period of more than one year without the permission of the court.


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