1.This is an appeal against an order of Mukherji J., dated the 7th June, 1960. The facts are briefly as follows:
2. W.N. Hickie had an interest in a pro petty, which might be called the Sodepur property It consisted of about 16 bighas of land, on which it is said, Hickie erected, or proposed to erect a factory.
3. On or about the 2oth September, 1946, he mortgaged the property in favour of Sm. Santa Debi. Thereafter, he made a second mortgage in favour of Sm. Benarashi Debi. On the 13th January, 1947, Santa Debi instituted a suit for enforcement of her mortgage, making Benarashi Debi, the puisne mortgagee, a party. This suit is Suit No. 108 of 1947.
4. In 1947, Messrs. Mackintosh Burn Ltd., filed a suit against Hickie, being Suit No. 605 of 1947, for the recovery of the amount due to it for certain construction works done in the Sodepur property.
5. On the 14th September, 1949, a preliminary mortgage decree was passed in Suit No. 108 of 1947, mentioned above. By the preliminary decree, it was inter alia, provided that Benarashi Debi would be entitled to Rs. 96,000/-, but if a sum of Rs. 50,000/- was paid to her within 10 years, she would accept that sum in full settlement of her claim. 1 have already mentioned that Messrs. Mackintosh Burn Ltd., had filed a suit against Hickie. In that suit (No. 605 of 1947), a consent decree was passed on the 25th April, 1951, for the sum of Rs. 120,000/- and a charge was declared on the Sodepur property in respect of the said sum. In execution of the said decree, this Court appointed Mr. N. Dutt Mazumdar, Barrister-at-Law, as Receiver of the Sodepur property The Receiver took possession of the said property sometime in September 1952.
6. On the nth February, 1953 an order was made in Suit No. 605 of 1947 by Mukharji, J., directing sale of the Sodepur property by the Receiver. To this order, Benarashi Debi was not a party. However, no effect was given to this order, and on the 18th June, 1953, Mr. Dutt Mazumdar was also appointed Receiver in Suit No. 108 of 1947.
7. On the 1st July, 1953, an order was made in Suit No. 605 of 1947, directing the Receiver appointed also in Suit No. 108 of 1947, to sell the Sodepur property, with the concurrence of Benarashi Debi, and it was directed that oat of the sale proceeds, Rs. 96,000/- was to be paid to Benarashi Debi in full satisfaction of bar claim, unless Hickie instituted a suit within 14 days from the date of such sale to establish any right that he may have against Benarashi Debi. No such suit has ever been filed.
8. Meanwhile, and before the property could be sold, the Receiver carne to know in March, 1954, that the roperty had been sold in a rent suit before the Munsiff. Sealdah Court, and it was purchased by one Sidheswar Mukherji. On title 10th January, 1956, an order was made in Suits No. 605 of 1947 that the property may be sold, but without prejudice to the rights of all the parties in the sale proceeds, including the rights of Sidheswar Mukherji. Accordingly, sometime in June, 1956, the Receiver sold the property, and Messrs. Sulekha Works purchased it for the sum of Rs. 97,000/-. The time therefore came for the disbursement of the amount which the Receiver obtained by the sale of the property.
9. The first thing that happened thereafter was that on or about the 1oth September, 1956, Messrs. Mackintosh Burn Ltd., made an application to Court, saying that it had advanced a certain sum of money amounting to about Rs. 4,000/-to the Receiver and that this should be refunded to them. This application was resisted by the other party, including Benarashi Debi. The stand taken by her was as follows: She said that the money was advanced at a time when the Receiver was appointed, not in her suit but in the suit of Messrs. Mackintosh Burn Ltd. Not only was if so advanced, but it was also expended, before Mr. Dutt Mazumdar came to be appointed as Receiver in her suit. According to her, this amount should not be paid out of the sale proceeds as long as her claim was not satisfied.
10. With regard to this, there appear to have been several orders made by Sarkar, J., and two of his orders are important. The first order is dated the 1st February, 1957 by which he ordered that the Receiver should refund to Messrs. Mackintosh Burn Ltd., half the amount advanced to the Receiver by them. The second order is dated the 4th March, 1957, directing payment of the balance of the sale proceeds to Benarashi Debi, the payment being made to her attorney, Mr. P. Mullick.
11. In the meanwhile, Sidheswar Mukherji, instituted a suit against Benarashi Debi, being Suit No. 509 of 1957. On the 15th April, 1957, this suit was settled. It was agreed that Benarashi Debi will realise Rs. 96,000/-, out of which she will receive Rs. 64,000/- for herself and Sidheswar Mukherji was to receive the balance. In fact, it was admitted that she had already received Rs. 64,000/-, so that any further realisations were to be for the benefit of Sidheswar Mukherji. It was however stipulated that the payments would be received on behalf of the party entitled, by Mr. P. Mullick. At this stage, Mr. P. Mullick started correspondence with the Receiver, stating that the Receiver had paid half the amount advanced by Messrs. Mackintosh Burn Ltd., but he should not retain the other half, which was payable or realisable by Benarashi Debi, and therefore the same should be paid to him. The exact amount of it was Rs. 1636/-.
12. Correspondence went on between the Receiver and Mr. P. Mullick, and it appears that an application was about to be made in Court. Thereupon, the Receiver wrote to Mr. P. Mullick as follows:-
'You may, however, receive the money claimed by you on furnishing the proper voucher and subject to the usual undertaking that you will refund the same if this amount being half the sum of advance made by Messrs. Sandersons and Morgans for necessary costs and expenses, is ultimately not found due to you.'
It appears that Mr. Mullick agreed to receive the money on this condition, and did receive it.
13. The next thing of importance that happened was that, on the 21st May, 1959, a notice of motion was taken out on behalf of Benarashi Debi and Sidheswar Mukherji, alleging that the land had been sold, but there was certain machinery on the land which had not been sold and should therefore be sold in realisation of the dues of the parties, and secondly, that the Receiver should pay the sums of Rs. 1742/- & Rs. 3146/5/- lying in his hands, to Mr. P. Mullick, solcitor for the petitioners. It appears that at a Receiver's meeting, minutes were made about certain disbursements, and, according to the petitioner, these sums were lying in the hands of the Receiver, and were payable to Benarashi Debi and Sidheswar Mukherji.
14. This application was heard by Mukharji, J., and he passed his order on the 17th September, 1959. The order was that the Receiver was to deduct the costs of the sale payable to Messrs. M.M. Chatterji and Co., attorneys, and the balance should be paid to Mr. P. Mullick. About 9 months thereafter, the matter was mentioned by one of the parties, and the learned Judge again re-heard the matter and made a second order dated 17th June, 1960, but directed that it should be incorporated in the earlier order dated the 17th September, 1959. It is this consolidated order against which this appeal has been directed. In this order a further order was incorporated as follows:
'It is further ordered that the said attorney Mr. Mullick do refund the sum of Rupees one thousand six hundred and thirty six to the said Receiver within one week from the seventh day of June next and the said Receiver do thereafter forthwith refund the same amount to Messrs. Sandesons and Morgans attorneys for the plaintiff company.'
15. In the application, I have already mentioned that there were two reliefs claimed, one for the sale of the machinery, and the other for the payment of two sums of money hereinbefore mentioned. In the notice of motion, there was no claim for the sum of Rs. 1636/- to be paid by Mr. P. Mullick. Indeed, up to the time that the first hearing had taken place, the parties canvassed the question of the sale of the machinery. The first batch of affidavits dealt with that aspect of the matter. It appears that, ultimately, two affidavits were filed, one by the Receiver, in which mention was made of the fact that Rs. 1636/- had been paid to Mr. P. Mullick, who had given an undertaking in the manner stated above. No notice of this application was given to Mr. P. Mullick personally, nor was it at any time intimated to him that an order would be asked for against him personally, based on his undertaking. All the affidavits had been completed when the first hearing took place, and no further affidavits were used. The learned Judge, however, thought it fit to reopen the whole matter after a period of 9 months and made this additional order, which was incorporated in the earlier order. It is against this part of order that arguments have been advanced before us.
16. The first objection that has been advanced against the order is that Mr. P. Mullick was not a party to the application in his personal capacity, that no relief was asked for in respect of the sum of Rs. 1,636/- in the Notice-of-Motion and no notice was given to him that an order would be asked against him personally, based on his undertaking. In my opinion these objections are wellfounded. As I have mentioned above, it might be said that during the correspondence Mr. P. Mullick had given an undertaking to repay the sum received by him, if it was found ultimately that this money should not have been paid to him. Regard being had to the correspondence it is obvious that he was giving an undertaking on behalf of his clients. It has been argued before us that such an undertaking given by an attorney in his professional capacity can be enforced without bringing a suit for that purpose and in summary proceedings. Reference has been made to the Annual Practice, Second Volume, 1958 Edition, page 3077, and to the case of United Mining and Finance Corporation Ltd. v. Becher, (1910) 2 KB 396. In that case, Mr. Bechar, a solicitor, gave an undertaking in course of correspondence, and he did so in his capacity as a solicitor acting for one of the parties. The question arose whether this undertaking could be enforced in a proceeding in the form of an Originating Summons. It was argued that it being an undertaking not given to Court or in any proceeding, it could not be so enforced. It was, however, held by Hamilton, J., that such an application, by way of Originating Summons, would lie. But it was also held that the solicitor was entitled to oppose such an application and to set forward grounds upon which the Court might refuse to exercise its discretion in the matter. One of the grounds might be that such an order, in the circumstances of the case, would be oppressive.
17. It is clear, therefore, that when an attorney of this Court gives an undertaking in his capacity as a solicitor, then, even if such an undertaking is not given to Court or in any proceeding, it may be enforced by the Court, but it is only the parties affected that can take proceedings in the matter. In other words, the party to whom the undertaking has been given must come to Court for enforcing the same. It must be on notice to the attorney, who must be given every opportunity of defending himself and of urging grounds to establish that the Court, in the circumstances of the case, should not exercise its discretion in favour of the applicant. In this particular case, the undertaking, if any, was given by the solicitor to the Receiver. The Receiver never made an application for enforcing the undertaking. If this application is considered to be such an application for enforcing the undertaking, which in fact it is not, the solicitor was not a party to it in his individual capacity, and there is no indication in the Notice of Motion that the Court was going to enforce the undertaking against the solicitor personally, in this application. The result was that, the solicitor in his individual capacity had never an opportunity to put forward any objections and he consequence of making the order, as has been made in this case by Mukharji, J., was to make an order against someone who was not a party to the proceeding and in respect of a cause of action which has alien to it.
18. now come back to the merits. It will be remembered that when this property came to be sold and the time for disbursement arrived, Messrs. Mackintosh Burn Ltd., took the precaution of making a specific application for refund of the amount advanced by them. This application was contested by the parties including Benarashi Debi. The objection that was advanced is of substance. According to her, the Receiver took the advance and expended the same at a point of time when she was not in the picture and her mortgage was not the subject-matter of the action in which the Receiver was appointed. One must remember that the amount realised, less the costs, charges and expenses, is not even enough to satisfy the claim of the petitioners, namely Benarashi Debi and Siddheswar Mukherjee. It, therefore, becomes a matter of inportance for them to prevent disbursements being made out of the balance of the purchase-money, to persons who have no higher right than themselves. There can be no dispute on the point that a Receiver, under certain circumstances, is entitled to take advances from the parties having the carriage of proceedings. In most cases, he should take the precaution of taking a direction of the Court in that behalf. If however, such advances have been legitimately taken and expended, then the Receiver would be reimbursed as he is entitled to be reimbursed for all legitimate costs, charges and expenses that he incurs. But the question is as to the party from whom he is entitled to be reimbursed. If in a case a party advances moneys and it is found that the Receiver has no funds, then of course, the loss must fall on him. It is not disputed in this case that when the Receiver took this advance from Messrs. Mackintosh burn Ltd., Benarashi Debi was not in the picture. Messrs. Mackintosh Burn Ltd., held no security against the property, but obtained a charge by consent only at the time of the passing of the decree. Such a charge is obviously subordinate to the mortgage of Benarashi Debi. According to the orders made already, the Receiver had been directed to sell the property and pay a sum of Rs. 96,000/- to Benarashi Debi. Subsequently, it has been directed that the Receiver might set apart and utilise a sum of Rs. 5,000/-as costs. But apart from this, there is no order of Court by which the Receiver has been directed to deduct sums, taken at a point of time when Benarashi Debi was not in the picture, from out of the sale proceeds of the property while her claim had not been paid up. On the contrary, Messrs. Mackintosh Burn Ltd., had taken the precaution of coming to Court at the earliest possible moment and definitely made a claim for refund of the advance, which was stoutly opposed. In this contested application, the learned Judge made an order, namely, that only half of the advance should be repaid out of the sale proceeds, and none of the parties agitated the question any further. That being so, the matter appears to have been concluded, and there is a very serious objection to the Receiver paying any farther sum to Messrs. Mackintosh Burn Ltd., out of the sale proceeds, until Benarashi Debi or Siddheswar Mukherjee have been fully paid. To say that the undertaking given by Mr. P. Mullick should be enforced and the sum of Rs. 1636/- be repaid by him, is merely confusing the issue, It is really making Benarashi Debi repay the said sum which she appears to have the right to receive under orders of the Court already made. In any event, this order could not be made in a summary way, in this application, without giving clear notice to the parties affected and after hearing their objections. That could not possibly be done in this application. With respect, we do not think that this second part of the order should have been made in this application after such a length of time, and the form of the order as it has finally emerged, is defective.
19. That being so, this appeal should be allowed and the order of the learned Judge dated September 17, 1959, incorporating the order dated June 7, 1960, should be set aside. The proper order should be as follows: The Receiver, after deducting his costs, charges and expenses, as are legitimately due to him and for which he should file his final accounts) should pay the balance in his hands to Benarasi Debi or to Mr. P. Mullick, her attorney. This order will be without prejudice to the Receiver taking proceedings as he may be advised, to enforce the undertaking given by Mr. P. Mallick. But such an application should be made in a proper form and with proper notice to the parties concerned. This is also without prejudice to the contentions of the present appellant that the matter of refund is res judicata. If any other party to the proceedings has got any right with regard to the sum of Rs. 1636/- mentioned above, he or she will be at liberty to make a proper application for that purpose on notice to the proper parties.
20. Costs of this appeal and of the application below will be paid by Messrs. Mackintosh Burn Ltd., to the appellants.
21. I agree.