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Hemendra Nath Roy Chowdhury and anr. Vs. Prokash Chandra Ghosh and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1932Cal189,137Ind.Cas.98
AppellantHemendra Nath Roy Chowdhury and anr.
RespondentProkash Chandra Ghosh and ors.
Cases ReferredProtap Singh v. Delhi and Longdon Bank
- .....about which there was some divergence of opinion, namely, whether for execution of a money decree a receiver could at all be appointed. in that case the respondent having obtained a money decree against the appellant applied to attach and sell sixteen villages in execution, and the appellant held the villages under the terms of a compromise deed which provided that he was to hold and possess the villagesyielding a profit of rs. 8,000 a year in lieu of maintenance, without power of transfer during the lifetime of his brother to whom he was to pay rs. 7,872 a year in respect of the government revenue, cesses and malikana.8. the case was one under the new code. their lordships of the judicial committee observed thus:the proper remedy lies in a fitting case in the appointment of a.....

1. These four appeals arise out of certain orders which were passed by the Subordinate Judge, 3rd Court, 24 Pargannas in four Rent execution cases. By these orders the Subordinate Judge purported to appoint a receiver in respect of a defaulting tenure, a patni mahal, for realization of the decrees for rent which the landlords had obtained against the tenure holders. The decretal amounts of these four decrees, together with those of two other decrees which the landlords have also obtained in respect of the same tenure are said to come up to an aggregate of about a lakh of rupees. It is said that there is also another rent suit in respect of the same tenure pending between the parties for a claim of over a lakh of rupees. In these circumstances when dates had already been fixed in two out of the four execution cases for sale of the defaulting tenure--attachment and sale proclamation having been simultaneously issued, and applications for execution had been filed in the other two the decree-holders applied for realization of the decree by the appointment of a receiver. It may also be mentioned that in, the suit for rent that is pending as mentioned above, an application was also-made for the appointment of a , receiver. From the orders so made in the execution cases some of the judgment-debtors have preferred this appeal.

2. It is not necessary to set out in detail the procedure that was adopted by the Subordinate Judge in the matter of the appointment. As far as may be gathered from the papers before us, the complaint made by the appellants is not unfounded that the order of appointment was made before the appellant had a proper opportunity of putting forward their objections to such appointment or of being heard in support of their objections. It will serve-no useful purpose to go further into this complaint because the appellants' objections were in fact considered by the Subordinate Judge at a subsequent stage, and the grievances that they had on that head must therefore be taken to have boon removed.

3. There are four Rules for ad interim stay in connexion with these appeals. They came up before us for hearing on 22nd December 1930, when one of us for personal reasons was unwilling to deal with, them. Under the orders of the Hon'ble Chief Justice they were then put up before another Division Bench for hearing. On 7th January 1931 that Division Bench ordered the Rules to be hoard along with the appeals when they would be ready. The appeals are now ready except as to service of the notice on one of the judgment-debtors respondents, but it is con-coded that his presence now is not very necessary. There is considerable urgency in the matter as all proceedings have been kept in abeyance and all the parties who have appeared in these cases have expressed their desire before us that we should deal with the cases here and now as it would not be convenient for any other Bench to take them up in the near future.. We have accordingly heard these cases.

4. The materials that are before us indicate a position which may be summarized in the following words; The annual rent reserved for the tenure is about Rs. 35,000 and cesses about Rs. 7,000 and the revenue payable by the landlords about Rs. 19,000; and that for a long series of years the judgment-debtors have been hopelessly in arrears, and the landlords while they have not received a pica in the shape of rent have been obliged to pay the revenue out of their own pocket to save their estate. The judgment-debtors are heavily encumbered and they find it more profitable to spend the collections from their property in purposes other than the payment of rent to the landlords. There are no materials on which an assessment can be made 'of the gross collections of the tenure. There are discords and dissensions amongst the judgment-debtors inter se which naturally stand in the way of proper management of the property and of which advantage is naturally taken by the tenants by withholding payment of their rents. It is also likely that a Court sale of the tenure in question may not fetch for it an adequate price.

5. The above substantially are the conclusions of the Subordinate Judge as being the facts disclosed by the evidence in the case. On these facts the Subordinate Judge held that the appointment of a receiver was justified. He expressed his view of the law in these words:

Formerly the right to apply for the appointment of a receiver was a right by way of equitable execution and it was a restricted right. It was then incumbent on the person applying for appointment of a receiver in an execution case to show that legal execution was impossible owing to some impediment arising from the character in law of the judgment-debtor's interest. But now the law is otherwise. Section 51 of the present Civil Procedure Code provides the appointment of receiver as one of the modes of execution. It is a right given to a decree-holder to apply for execution of a decree by appointing a receiver. It is a legal right and not a right by way of equitable execution. I do not think that there can be any reasonable' objection to the exercise of such right by the decree-holder.

6. Section 51, Clause (d) of the Code no doubt recognizes the appointment of a receiver as a mode of execution of a decree, and says that such an order may be made on the application of a decree-holder. The clause only gives legislative sanction to certain decisions under the old Code in which it was held that execution may be had by appointing a receiver where that course is more likely to benefit both the judgment-debtor and the decree-holder than a sale of the attached property, e.g., Partap Singh v. The Delhi and London Bank, Ltd. [1908] 30 All. 393 a case under the old Code. That was a case where a decree-holder in execution of the decree attached two decrees held: by the judgment-debtor against third parties. Other instances may be given where the appointment of a receiver would obviously be a better course and a recourse to the ordinary processes of. execution, e.g., where a decree for maintenance charged upon immovable property has to be realised: Hemangini Dassee v. Kumode Chunder [1899] 26 Cal. 441 or where' a decree has to be realized by attachment; and realization of some other decrees or debts: Toolsa Goolal v. John Antone [1887] 11 Bom. 448 or whore the decree is to be realised from property which is in the possession of a judgment-debtor subject to a charge: Rajendra Narain Singh v. Sundar Bibi .

7. Recently the Judicial Committee in the case of Ma Mya v. Ma Me Kyi A.I.R. 1929 P.C. 246 in which a decree for a one-third share in-certain promissory notes was under execution observed that the right method of working out of the decree would be to appoint a receiver to realize the moneys due on the notes and pay over to the claimant one-third of the recoveries. More recently the Judicial Committee in the case of the Nawab Bahadur of Murshidabad v.Kernani Industrial Bank,, Ltd. upheld the appointment of a, receiver of rents, issues and profits of: certain properties, as a mode of execution in respect of which the judgment-debtor-was an owner with limited rights. The case of Rajendra Narain v. Suda Singh is important. That case may be< taken as a settler on the question about which there was some divergence of opinion, namely, whether for execution of a money decree a receiver could at all be appointed. In that case the respondent having obtained a money decree against the appellant applied to attach and sell sixteen villages in execution, and the appellant held the villages under the terms of a compromise deed which provided that he was to hold and possess the villages

yielding a profit of Rs. 8,000 a year in lieu of maintenance, without power of transfer during the lifetime of his brother to whom he was to pay Rs. 7,872 a year in respect of the Government revenue, cesses and malikana.

8. The case was one under the new Code. Their Lordships of the Judicial Committee observed thus:

The proper remedy lies in a fitting case in the appointment of a receiver for realizing the rents and profits of the properties, paying out of the same a sufficient and adequate sum for the maintenance of the judgment-debtor and his family, and applying the balance, if any, to the liquidation of the judgment-creditor's debt. The High Court point out in their judgment, the appropriate remedy is what is known as equitable execution or indirect execution, namely, the appointment of a receiver who takes the place of the debtor and acts as an officer subject to the directions of the execution Court in collecting and disbursing the debtor's income in accordance with the directions of the execution Court towards the discharge of the claim of the decree-holder. These views appear to their Lordships to be sound.

9. These observations also show sufficiently that the Subordinate Judge's view that by the introduction of Section 51 in the new Code, the decree-holder may as of right and as a matter of course apply for execution by the appointment of a receiver, is not correct, but that, on the other hand, the remedy by the appointment of a receiver is by way of equitable execution or indirect execution, the receiver taking the place of the debtor, in cases in which equitable and special considerations intervene. Rankin, C. J., in the case of Pramatha Nath Malta v. II. V. Low & Co. : AIR1930Cal502 while pointing out what 'equitable execution' is has observed thus:

In India the distinction between legal and equitable interests is not observed in the full sense in which it is part of the law of England. Since 1908, at all events provision has been made by the Code for the appointment of a receiver as a form of execution: Section 51. it is not contended that the appointment of a receiver is a matter of right or that a proper case is not required to justify the exercise of the Courts' discretion to appoint a receiver by way of execution.

10. The question whether in the suit to which reference has already been made, a receiver may be appointed is not really before us in this appeal, but we may point out, as held by this Court in the case of Dharendra Krishna, Deb v. Surendra Krishna Nandi A.I.R. 1930 Cal. 610 that a [simple contract creditor who has no specified charge or no right to be paid out of a specified fund cannot, in general, ask for the appointment of a receiver.

11. The terms of Order 40, Rule 1 of the Code of 1908 are wider than the corresponding Section 502 of the Code of 1882 and do not provide that the appointment of a receiver should be confined to a suit: Asadali Choudhury v. Mahomed Hossain Choudhury [1961] 43 Cal 986. But, Section 51 of the Code of 1908 is to be read with Rule 11, Order 21 and Rule 1, Order 40, and the order is to be regarded as made under the lastmentioned rule and justified if only that rule would justify it: Srinivas Prasad Singh v. Kesho Prosad Singh [1911] 12 I.C. 745. Equitable execution, as its name indicates, was the creation of the Courts of Chancery. Before the merger of the Courts of Common law and of equity by the Judicature Acts a person who had recovered at law a judgment for a sum of money, but who was precluded from getting relief by means of a Common law writ of execution was able to obtain satisfaction of his judgment by instituting a suit in equity and obtaining therein the appointment of a receiver under the law of England, as Rankin, C. J., has pointed out in Pramathanath Malia's case : AIR1930Cal502 :

There is authority for the proposition that a person seeking 'equitable execution' must show that ho was mot by difficulties arising from the nature of the property which prevented his obtaining relief at law,

12. In India the provision for appointment of a manager for purposes of execution came into existence under Section 243 of Act 8 of 1859. That section ran thus:

When the property attached shall consist of debts duo to the party who may be answerable for the amount of the decree, or of any lands, houses or other immovable property, it shall be competent to the Court to appoint a manager of the said property, with power to sue for the debts, and to collect the rents and receipts and other profits of the land or other immovable property, and to execute such deeds or instruments in writing as may be necessary for the purpose, and to pay and apply such rents, profits or receipts, towards the payment of the amount of the decree and costs; or when the property attached shall consist of land, if the judgment-debtor can satisfy the Court that there arc reasonable grounds to believe that the amount of the judgment may be raised by the mortgage of the land, or by letting it on lease or by disposing by private sale of a portion of the land or of any other property belonging to the judgment-debtor, it shall be competent to the Court, on the application of the judgment-debtor, to postpone the sale for such period as it may think proper to enable the judgment-debtor to raise the amount.

13. This provision was extended to rent suits by Act 14 of 1863, Section 6, The Codes of 1877 and 1882 gave a general power for the appointment of a receiver. Under the Code of 1908 appointment of a receiver as a mode of execution was recognized by Section 51 and the words of Order 40, Rule 1 were altered to enlarge the powers of the Court by providing that the Court may appoint receivers not only in suits but in all proceedings, including proceedings in execution of decrees and in every case in which it appears to the Court just and convenient to do so. As regards the circumstances which would justify such appointment, cases under the old Code are not altogether negligible, because they lay down principles which are sound principles of equity and so are generally principles of universal application. One such principle laid down in those cases is to see whether in view of the assets the amount due under the decree is likely to berealised within a reasonable time from the profits of the attached property: see Din Dayal v. Bam Ratan [1871] 16 W.R. 46. What is a reasonable time for that purpose must be determined upon the facts and circumstances of each ease; a period of six months was considered reasonable in Mohini Mohan v. Bam Kant [1871] 15 W.R. 322 while one of fifteen or twenty years was considered unreasonable in Rednun v. Mahomed Amir Khan [1869] 5 M.H.C. 272 and Mohant Ram Rucha v. Doorga Dutt [1870] 13 W.E. 453. An order appointing a manager could be reviewed after some time, and execution in the usual way ordered, if it was found that there was no possibility of satisfaction of the decree within a reasonable period: see Bunwaree Lall Sahoo v. Baboo Girdharee Singh [1871] 16 W.B. 273 and Doorga Dutt v. Bunwaree [1876] 25 W.B. 33. Another principle followed was that such appointment should appear in the circumstances to be the best course both for the creditor and for the debtor [see Bunwaree Lall Sahoo v. Babu Girdharee Singh [1871] 16 W.B. 273] and that, as already stated, was repeated under the Code of 1882 in the case of Protap Singh v. Delhi and Longdon Bank [1908] 30 All. 393. So carefully had the discretion to be exercised under the Old Code, that in case in which a judgment-debtor had asked for the appointment of a manager the following was said by Ainslie and McDonell, JJ.:

It is necessary in a case of this kind not only to show what is the incomes of the particular property which is the subject of attachment and the amount of the decree, bat to go on and show whether the income is unencumbered, and if encumbered, to what extent. The debtor cannot properly ask the Court to make an order under Section 24'! with respect to one single property before disclosing the whole state of his affairs, the ox-tent of his liabilities and the means he has for meeting them. It is then for the Court to judge whether or not an order can be under this section': Dinobandhu v. M acnaqhten [1878] 2 C.L.R. 185.

14. Much more care should be taken to ascertain whether the order should be made in a case whore the decree-holder having the ordinary remedy of execution available to him applies for the appointment of a receiver to pay himself out in respect of his decree, keeping the property fixed upon the judgment-debtor with all his liabilites intact in respect thereof and yet depriving him of its enjoyment and its profits. It should be noted that one of the several positions taken by the judgment-debtors in this case in the Court below in opposing the appointment of a receiver was that there was no reason why the decree-holders should not realize their dues by the ordinary process of putting up the properties for sale.

15. The order which the learned Judge has made under Section 51, Civil P. C, in the case before us, has been made almost as a matter of course, and far from satisfying the requirements of the phrase 'just and convenient' occurring in Order 40, Rule 1, Civil P. C, which must necessarily mean just and convenient in view of the equities in favour of both the parties, is, in our opinion, exactly the reverse, so far as the judgment-debtors are concerned.

16. It is quite true that there are means open to the judgment-debtors of harassing the decree-holders in recovering their dues or getting into possession of the tenure should they themselves happen to purchase the same at the sale, by starting proceedings in opposition which the law allows them to do. But it will be for the Courts before which such proceedings are taken to meet the situation, as and when it arises, by making suitable orders. That apprehension cannot justify the appointment of a receiver which is otherwise entirely unjustifiable.

17. The result is that these appeals are allowed and it is ordered that the orders complained of being set aside execution be allowed to be proceeded with by the sale of the attached tenure or in such other ordinary course as the law provides for. There will be no order for costs. The Rules are discharged with no orders for costs.

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