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Vasantrao Laxmanrao Sahane and anr. Vs. Sanghvi Amritlal Becharlal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1966)7GLR840
AppellantVasantrao Laxmanrao Sahane and anr.
RespondentSanghvi Amritlal Becharlal
Cases ReferredJagmoha v. Jamnadas
Excerpt:
.....to do an act which he has otherwise no right or authority to do, it would be conferment of power on the receiver to do such act. it is well-settled that when a receiver is appointed of property under order 40 rule 1, the property does not vest in the receiver. i am, therefore, of the view that though present case the order passed by the learned trial judge directed receiver to sell the partnership assets, it was an order which conf power on the receiver to sell the partnership assets within the meaning of order 40 rule 1 clause (d) and was, therefore, appealable order 43 rule 1 clause (s). the learned assistant judge was, then clearly in error in rejecting the appeal as incompetent. 6. but the question still remains whether 1 should interfere will order in the exercise of my..........to do such act. the element of discretion is not a sine qua non of the concept of conferment of power. power conferred by statute is not always discretionary. cases abound where having regard to the circumstances in which power is conferred it is regarded as coupled with a duty so that in a given situation the person in whom the power is reposed is bound to exercise it and he has no discretion whether to exercise it or not. as observed by lord cairns in julius v. bishop of oxford (1880) 5 app. cases 214 at page 222: 'there may be some thing in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised,.....
Judgment:

P.N. Bhagwati, J.

1. This Civil Revision Application raises an interes question of law relating to the interpretation of Order 40 Rule 1 Clause (d) of the Code of Civil Procedure. The question is one of some in tance as it is likely to arise frequently in cases where a receiver appointed by the Court of property forming the subject matter of suit or proceeding before it. In order to appreciate the question, necessary to state briefly a few facts giving rise to the Revision Application.

2. By a partnership agreement dated 9th December 1961, the petitioners and the respondent agreed to carry on business in partnersh in the firm name of Ganesh Foundry Works. The business of the partner ship was to manufacture and prepare machinery spare parts, iron components and castings. The respondent was a financing partner who brought in a sum of Rs. 75, 000/- to the capital of the partnership while the petitioners were working partaers who did not contribute a single pie. The petitioners as working partners attended to the business of the partnership and the accounts of the partnership were also written under the directions and supervision of the petitioners. In or about the beginning of 1964 however the respondent found that the petitioners were acting prejudicially to the interests of the partnership and it was not possible to continue the partnership with the petitioners. The respondent therefore, addressed a notice dated 12th May 1964 to the petitioner dissolving the partnership and calling upon the petitioners to make up the accounts of the partnership. The partnership was admittedly a partnership at will and, therefore, it stood dissolved on 15th May 1964 be in the date of the receipt of the notice by the petitioners. The respondent thereafter on 6th July 1964 filed a suit being Suit No. 926 of 1964 in the Court of the Civil Judge, Senior Division, Baroda against the petitioners for winding up the affairs of the partnership and recovery of the amount due at the foot of the accounts. After filing the suit the respondent made an application in the suit for appointment of a receiver of the assets of the partnership and also for an inventory of those assets The learned trial Judge by an order dated 16th July 1964 granted the application and appointed a receiver to take charge of the partnership assets under Order 40 Rule 1 Clause (d) of the Code of Civil Procedure. The petitioners preferred an appeal against the order appointing receiver but the appeal was dismissed by the learned District Judge. Now according to the petitioners there was an arbitration clause in the partnership agreement and under the arbitration clause the parties were bound to refer the dispute forming the subject matter of the suit to arbitration. The petitioners, therefore, preferred an application to the learned trial Judge for stay of the suit under Section 34 of the Arbitration Act. But that application was dismissed on the ground that the dispute forming the subject matter of the suit was not covered by any arbitration agreement. 1 am told that an appeal has been preferred by the petitioners against the order dismissing the application and that appeal is pending before the District Court. The petitioners also adopted another proceeding for enforcing the arbitration clause and that was an application under Section 8 of the Arbitration Act but this application also met with the same fate. The receiver in the meanwhile took charge of the partnership assets which consisted inter alia of machinery located in rented premises. The rent payable to the landlord in respect of the rented premises was running from month to month and the respondent had, therefore, to put the receiver in funds for the purpose of making payment of the amount of such rent. There was also a quota of pig iron which the partnership was entitled to receive and since this quota constituted a valuable assets of the partnership the respondent had to provide a sum of Rs. 6, 815-72 Ps. to the receiver for securing this quota after obtaining the requisite order of the District Court in that behalf. There were also diverse other expenses recurring from month to month such as electric charges, salaries of watchmen etc. which had to be incurred by the receiver and since the receiver had no liquid cash, the respondent had to put the receiver in funds for meeting the same. Having regard to the fact that recurring expenses were thus mounting from month to month and the machinery was also deteriorating by reason of disuse, the respondent made an application to the learned trial Judge for an order that the receiver may be authorised to sell the assets of the partnership by public auction. The respondent pointed out in the application that he as a financing partner had invested Rs. 75,000/- in the capital of the partnership prior to the institution of the suit and that subsequent to the suit also he had had to spend considerable amounts for putting the receiver in funds for the purpose of meeting the recurring expenses as also for the purpose of releasing the quota of pig iron and it was therefore necessary for the protection of his interests that the partnership assets should be sold without any further delay as otherwise his interests would be jeopardized and the money invested by him would be lost. The petitioners opposed the application and there were principally two grounds on which the petitioners contended that the application should not be granted. The first ground was that it was neither competent nor proper for the Court to order sale of the partnership assets before the passing of the final decree and the second ground was that in any event this was not a fit case in which such sale should be ordered. The learned trial Judge on a consideration of the relevant case law on the point came to the conclusion that there was nothing in the law of partnership which precluded the Court in an appropriate case from passing an order of sale of the partnership assets before the making of a final decree and it was, therefore, open to the Court to consider whether this was a fit case in which such order should be made. The learned trial Judge then proceeded to consider the merits of the application and on the merits the learned trial Judge held that there were special circumstances which required that the partnership assets should be sold before the passing of the final decree and he accordingly made the following order dated 22nd April 1965:

(1) The receiver is directed to sell off the assets of the partnership firm including the entire machinery, the good-will, the tenancy rights and all other properties of the firm by public auction. As far as possible by a single lot and if that is not possible, then in different lots as the interests of the parties, in his opinion, so require.

(2). The parties to the suit shall be entitled to bid at such public auction.

(3). The sale by public auction shall be carried out as far as possible under the provisions of Civil Procedure Code.

(4). The plaintiff shall deposit in Court the initial expenses for conducting the sale and on the completion of the sale, the receiver shall pay back to the plaintiff the amount so deposited by him.

The petitioners being aggrieved by this order preferred an appeal to the District Court. At the hearing of the appeal before the learned Assistant Judge a preliminary objection was raised on behalf of the respondent namely, that no appeal lay against the order passed by the learned trial Judge and that the appeal preferred by the petitioners was, therefore, incompetent and liable to be dismissed. The petitioners contended in answer to the preliminary objection that the order passed by the learned trial Judge was an order, under Order 40 Rule 1 Clause (d) and was, therefore, appealable under Order 43 Rule 1 Clause (s) of the Code of Civil Procedure. The learned Assistant Judge upheld the preliminary objection of the respondent and held that the order passed by the learned trial Judge did not confer power on the receiver to sell the partnership assets but merely contained a direction to him to sell the partnership assets and it was, therefore, not an order falling within Order 40 Rule 1 Clause (d) and no appeal lay against it under Order 43 Rule 1 Clause (s). Since in the view taken by the learned Assistant Judge the appeal preferred by the petitioners was incompetent, it was not necessary for him to examine the merits of the order passed by the learned trial Judge but even so the learned Assistant Judge proceeded to discuss the merits of the controversy and came to the conclusion that the order of sale of partner ship assets passed by the learned trial Judge was a proper order save in respect of one point and that related to the granting of liberty to the parties to bid at the public auction. The learned Assistant Judge felt that if the petitioners bid at the public auction, they might be deemed to have submitted to the jurisdiction of the Court and that might prejudice their contention that the suit was liable to be stayed by reason of the arbitration clause in the partnership agreement and, therefore, the petitioners would be virtually precluded from bidding at the public auction and that would give an unfair and unjust advantage to the respondent in the matter of sale of the partnership assets. The learned Assistant Judge therefore-held that the proper order should have been that neither party should be permitted to bid at the public auction and he observed that if he had taken the view that the appeal was maintainable, he would have confirmed the order for sale of the partnership assets with the modification that the respondent should be precluded from bidding at the public auction. The learned Assistant Judge, however, in the view as to the maintainability of the appeal taken by him, dismissed the appeal with costs. The petitioners thereupon preferred the present Revision Application challenging the order made by the learned Assistant Judge.

3. The main question which arises for determination in this Revision Application is whether the appeal preferred by the petitioners against the order passed by the learned trial Judge was competent. Now' it is well-settled that an appeal is a creature of statute and there is no right of appeal unless it is given clearly and in express terms by statute. It would therefore have to be seen whether there is any provision statutory which confers a right of appeal against the order passed by the learned trial Judge. The petitioners relied on Order 43 Rule 1 Clause (s) and contended that an appeal lay against the order of the learned trial Judge under this provision. Order 43 Rule 1 Clause (s) provides that an appeal shall lie under Section 104 from an order under Rule 1 or Rule 4 of Order 40 except an order under the proviso to Sub-rule (2) of Rule 4 of that Order. It was not the case of the petitioners that the order passed by the learned trial Judge was an order under Order 40 Rule 4 and it is, therefore, not necessary to make any reference to that Rule. Order 40 Rule 1 sets out four kinds of orders which may be made by the Court and they are incorporated in Clauses (a) to (d). Clauses (a) to (c) are not material for the purpose of the present Revision Application since no reliance was placed on any of them on behalf of the petitioners. The only clause relied on was Clause (d) which fully read runs as follows:

1. (i) Where it appears to the Court to be just and convenient, the Court may by order-. ... ... ...(d) confer upon the receiver all such powers as bringing and defending suits and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the. application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Court thinks fit.

The petitioners contended that the order passed by the learned trial Judge conferred power on the receiver to sell the partnership assets and was, therefore, an order falling within Order 40 Rule 1 Clause (d) and consequently it was appealable under Order 43 Rule 1 Clause (s). The respondent, however, disputed the validity of this contention and urged that the order of the learned trial Judge merely gave a direction to the receiver to sell the partnership assets and did not confer any power on him and it was, therefore, not an order within the meaning of Order 40 Rule 1 Clause (d) which could be appealed against under Order 43 Rule 1 Clause (s). The question which, therefore, arises is whether the order passed by the learned trial Judge was an order conferring power on the receiver within the meaning of Order 40 Rule 1 Clause (d) and that depends on the true construction of that Clause.

4. It is clear on a plain reading of Order 40 Rule 1 Clause (d) that this clause contemplates an order, conferring upon the receiver all such powers in relation to various matters as the owner himself has or such of those powers as the Court thinks fit. But the question is what is the true meaning of the expression 'confer upon the receiver all such powers'. The respondent contended that conferment of power on the receiver implies that some discretion is left with the receiver to decide for himself whether he would exercise the power in a particular set of circumstances but where as in the present case only a direction is given which the receiver is bound to carry out, it would not be possible to say that any power is conferred on the receiver within the meaning of Order 40 Rule 1 Clause (d). The respondent in support of this contention leaned heavily on a decision of a Division Bench of the Rajasthan High Court in Ajit Singh v. Yamuna Devi Now it is undoubtedly true that in this case a Division Bench of the Rajasthan High Court held that Clause (d) refers to those cases where powers are conferred by the Court on the receiver and conferment of powers implies that the receiver is left with the discretion to decide for himself whether he would exercise those powers in a particular set of circumstances but where the Court merely passes an order or gives a direction which the receiver is bound to comply with, it cannot be said that any power is being conferred on the receiver within the meaning of Clause (d). This decision would certainly appear to support the contention of the respondent but with the greatest respect to the learned Judges who decided this case, 1 find myself unable to subscribe to the reasoning on which the decision is based. I cannot assent to the broad proposition that conferment of power on the receiver must necessarily imply that the receiver is given the discretion to decide whether to exercise the power or not. To read the word 'power' in the context of Clause (d) in such a narrow and constricted manner would be not only to refuse to give full meaning and effect to that word but also to deny the right of appeal in cases where it may be most needed and if denied, might work grave injustice. The word 'power' is, I think, used in the broad sense of authority or capacity to do an act and where an order made by the Court confers such authority or capacity on the receiver to do an act which otherwise he would not have authority or capacity to do, it would be an order conferring power on the Receiver to do such act within the meaning of Clause (d). My reasons for saying so are as follows.

5. It is undoubtedly true that when a question of interpretation arises, it is for the Court to interpret a word in a statute but the Court may in so doing assist itself in the discharge of its duty by any literary help it can find including reference to well known and authoritative dictionaries. Reference to dictionaries affords either by definition or illustration some guide to the meaning of a word in a statute. Webster's New 20th Century Dictionery (Second Edition) gives the following meaning of the word 'power' at page 1412: 'ability to do, capacity to act, capability of performing or producing'. The power to do an act thus clearly connotes ability or capacity to do an act and where the Court confers on the receiver ability or capacity to do an act which he has otherwise no right or authority to do, it would be conferment of power on the receiver to do such act. The element of discretion is not a sine qua non of the concept of conferment of power. Power conferred by statute is not always discretionary. Cases abound where having regard to the circumstances in which power is conferred it is regarded as coupled with a duty so that in a given situation the person in whom the power is reposed is bound to exercise it and he has no discretion whether to exercise it or not. As observed by Lord Cairns in Julius v. Bishop of Oxford (1880) 5 App. Cases 214 at page 222: 'there may be some thing in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so. ' Conceptually also, therefore, conferment of power does not necessarily connote that the person on whom the power is conferred must be left with the discretion to decide for himself whether he would exercise the power or not. The exercise of the power may be discretionary or obligatory having regard to the circumstances referred by Lord Cairns but in either case there would be conferment of power for the person on whom the power is conferred would be enabled to do something which he could not otherwise do. The test which must, therefore, be applied for the purpose of determining whether there is conferment of power on the receiver is not whether the receiver is left with the discretion to decide for himself whether to exercise the power or not but whether he is conferred the ability or capacity to do some act which he could not otherwise do in his capacity as receiver. Even where a direction is given to the Receiver to do a particular act which the Receiver would not otherwise have power to do, there is implicit in the giving of the direction itself investiture of the receiver with authority or capacity to do such act for otherwise the direction would be rendered futile. To illustrate, take for example a case where a receiver is directed by the Court to sell property of which he is appointed receiver. It is well-settled that when a receiver is appointed of property under Order 40 Rule 1, the property does not vest in the receiver. The title to the property continues to vest in the party entitled to the same, but the property becomes custodia legis and is taken possession of by the Receiver as agent of the Court. The receiver would not therefore, have power to transfer any right, title or interest in the property to any person and a fortiori he cannot alienate or sell it. Now when the Court directs the receiver to sell the property, the receiver cannot effectually carry out the direction unless he has the authority or capacity to sell the property. There is, therefore, implicit in the giving of the direction, conferment of authority or capacity on the receiver to sell the property and it is by virtue of such authority or capacity conferred on the receiver that the receiver becomes competent to sell the property in execution of the direction. The receiver has apart from an order of the Court, no power or authority to sell the property and this power or authority is conferred on. him by the Court when the Court gives a direction to him to sell the property. There is thus no antithesis between giving of direction and conferment of power; the former carries with it the latter. It is, therefore, clear that where a direction is given by the Court to the receiver to do a particular act and the act is of such a character that the receiver would not otherwise have the power to do the act, the giving of the direction amounts to conferment of power, that is, authority or capacity, on the receiver to do the act for carrying out the direction. This appears to my mind to be the only correct and logical view and on a plain natural construction of Order 40 Rule 1 Clause (d). If the narrow view contended for on behalf of the respondent were accepted, the result would be that quite a large number of orders which are made by the Court in regard to the management of the property by the receiver would become immune from the scrutiny of the appellate Court and considerable hardship and injury would in many cases be caused to the litigants for want of redress by way of appeal. Moreover such a view would make the right of appeal of a litigant dependent on the manner in which the orftw is framed by the Court. In order to attach finality to the order, all that the Court would have to do would be no use the language of direction or command rather than that of conferment of power. If for example the Court makes an order authorizing receiver to file a suit, the order would be appealable but if, instea Court makes an order directing the receiver to file a suit, the order would not be subject to appeal. That surely could not have been the inte of the Legislature. I am, therefore, of the view that though present case the order passed by the learned trial Judge directed receiver to sell the partnership assets, it was an order which conf power on the receiver to sell the partnership assets within the meaning of Order 40 Rule 1 Clause (d) and was, therefore, appealable Order 43 Rule 1 Clause (s). The learned Assistant Judge was, then clearly in error in rejecting the appeal as incompetent.

6. But the question still remains whether 1 should interfere will order in the exercise of my revisional jurisdiction under Section 115. now well-settled by a series of decisions of several High Courts that High Court is not bound to interfere in revision in all cases in whth is found that the subordinate Court has acted without jurisdiction or f to exercise jurisdiction or acted illegally or with material irregularity the exercise of jurisdiction. The High Court will exercise its revisi powers only, in aid of justice and not merely to give effect to a technic which would not further the ends of justice. Where the High Court that substantial justice has been done between the parties by the of the subordinate Court, the High Court, will not into with such order merely because the case comes within any of three clauses of Section 115. See the decision of this Court in Jagmoha v. Jamnadas, (1965) VI G. L. R. 49. I must, therefore, examine whether ends of justice require that I should set aside the order made by the learned Assistant Judge. The petitioners urged that since the decision of learned Assistant Judge that the appeal before him was not maintain was found to be wrong, the matter should be remanded to him and he should be directed to hear the appeal on merits. The respond however, contended that I should not interfere with the order passed the learned Assistant Judge dismissing the appeal since the learned Assistant Judge had also considered the merits of the appeal and expresse view that the order of the learned trial Judge directing sale of the partnership assets was a proper order and that it would, therefore, be futile set aside the order of the learned Assistant Judge and remand the appeal to him for a fresh hearing. Such a procedure, he submitted, we promote technicality without advancing the cause of justice. It is clear from the order of the learned Assistant Judge that even though he to the view that the appeal did not lie, he proceeded to consider the on merits and observad that the order of the learned trial Judge direct the receiver to sell the partnership assets was a proper order. The on fault which he found with the order was that it gave liberty to the pan to bid at the auction sale. This part of the order in his opinion suffei from aa impropriety in that it gave an advantage to the respondent over the petitioners in the matter of the sale and the advantage was that the respondent would be able to bid at the auction sale whereas the petitioners would not be able to do so by reason of the stand taken up by them that the suit was liable to be stayed under Section 34 of the Arbitration Act. Now in taking the view that the petitioners could not bid at the auction sale without prejudicing their case in regard to the arbitration agreement, the learned Assistant Judge was clearly in error. It is well-settled that even where there is an arbitration agreement and one of the parties has made an application for stay of the suit on the ground that the dispute forming the subject matter of the suit is liable to be referred to arbitration under the arbitration agreement, the Court can certainly make interlocutory orders and participation by the party insisting on arbitration in interlocutory proceedings would not preclude him from prosecuting his application for stay of the suit. If, therefore, the petitioners bid at the auction sale held pursuant to the order made by the learned trial Judge, they would not be prejudiced in so far as their application for stay of the suit is concerned. The learned Assistant Judge was, therefore, wrong in observing that the order of the learned trial Judge granting liberty to the parties to bid at the auction sale gave an unfair advantage to the respondent over the petitioners. Both the petitioners and the respondent could bid at the auction sale and the order of the learned trial Judge actually gave equal opportunity to both to bid at the auction sale. But apart from this, so far as the main part of the order of the learned trial Judge was concerned which directed the receiver to sell the partnership assets by public auction, the learned Assistant Judge was of the view that it was a fair and just order. It is clear from the judgment of the learned Assistant Judge that he would have confirmed the order of the learned trial Judge directing sale of the partnership assets by public auction if he had taken the view that the appeal was maintainable The only modification which he was inclined to make was in regard to that part of the order of the learned trial Judge which gave liberty to the parties to bid at the auction sale but that modification proceeded on a wrong legal hypothesis and was, therefore, clearly unjustified. The order passed by the learned Assistant Judge dismissing the appeal was, therefore, in any event a fair and proper order on merits and even if that order was set aside and the appeal was remanded to the learned Assistant Judge, I have no doubt that the learned Assistant Judge properly instructed in the law would confirm the order of the learned trial Judge. It would, therefore, be futile to set aside the dismissal of the appeal and to remand the appeal for fresh hearing on merits to the learned Assistant Judge and such a course would not promote the ends of justice but would merely give effect to a technicality without advancing the cause of justice. I do not, therefore, see any reason why I should interfere with the order of dismissal of the appeal passed by the learned Assistant Judge.

I therefore, reject the Revision Application and discharge the rule. There will be no order as to posts.


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