(1) An interesting point arises for decision in this matter whether the petitioners (decree-holders) in the court below, who are the appellants here, were entitled to ask the lower court to appoint a Receiver in respect of properties, which were hypotheca covered by a simple mortgage, in pending sale proceedings. It is not necessary to traverse all the facts at length. It is sufficient to note that the decree-holders are unable to bring the interest of all the judgment debtors in the properties to sale, for, with respect to some of them, the matter is still sub judice in pending litigation, and with respect to some alone has a final adjudication of liability been made.
In any event, the question whether in the case of simple mortgage, the mortgagee is entitled to anything more than the right to sell the property even if the interest be in arrears, is an interesting one, which came up before the Allahabad High Court for decision in Bireshwar Banerji v. Sudhansu Shekhar Singh, AIR 1947 All 157. In that decision, the previous English and Indian authorities available were fully discussed, including the Full Bench decision of the Madras High Court in Paramasivan Pillai v. Ramasami Chettiar, ILR 56 Mad 915 : AIR 1933 Mad 570.
Finally Mootham J. who delivered the judgment observed that in the case of a simple mortgage, the property in which the mortgagee has interest was limited to that which he would cause to be sold in the event of default by the mortgagor and that this did not include the rents and profits of the property. He further held that the fact that, prima facie, the interests is in arrears will not alone be sufficient to render the appointment of a receiver of the mortgage property a justified measure. Referring to the Full Bench decision in ILR 56 Mad 915 : AIR 1933 Mad 570, he expressed the view that the real ground in that case the insufficiency of the security to discharge the decree.
(2) A perusal of the full text of the decision in ILR 56 Mad 915 : AIR 1933 Mad 570 including the summaries of the respective submissions of counsel, makes it clear that a court does possess jurisdiction to order the appointment of a receiver in a suit by a simple mortgagee. Obviously, jurisdiction is one thing, and the criteria upon which such an order would be justified in the individual case is a totally different matter. In the present instance, the learned Additional Subordinate judge followed the decision of the Allahabad High Court in AIR 1947 All 157 and held that the relief asked for by the decree-holders could not be granted. In other words, he thought that a court would be in error in appointing a receiver in such a case, whatever the merits may be. This is not the correct view, and the decision in ILR 56 Mad 915 : AIR 1933 Mad 570 is authority for the opposite view that where proper cause is shown, and the relevant circumstances justify such an appointment, a Receiver can be appointed even with regard to properties covered by a simple mortgage, at the instance of the mortgagee.
(3) I do not desire to say anything at this stage, upon the merits of the application. It is also probably undesirable to lay down the criteria which should govern such a matter in a rigid fashion. But, undoubtedly, the sufficiently or insufficiency of the security is one relevant factor, and the fact that interest is in arrears, is also relevant. Equally relevant considerations may be, the economic condition of the mortgagors, the extent to which they are actually subsisting upon the income from the properties, the hardship that may be caused to them by depriving them of rents and profits, or of possession, through the appointment of a receiver etc. With these observations, the appeal is allowed, and the order of the lower court set aside. The application (E. A. No. 126 of 1958) will now be remitted to the lower court for disposal, after a full and proper consideration of the merits. Costs to abide and follow the result.
(4) Appeal allowed.