1. This is an application by the appellant for stay of the order under appeal dated 14th January, 1980 passed by the court of the first instance. By and under the said order the court of the first instance restrained the appellant from dealing with or disposing of its property known as Kumai Tea Estate. By and under the said order the Court of the first instance also directed that an aggregate sum of Rs. 8 lakhs which has been lying with the Union Bank of India at India Exchange Place Branch to be kept separately in Suspense A/c and the appellant was restrained from withdrawing any part of the said amount until the disposal of the suit.
2. Against the said judgment and order this application has been made as stated hereinbefore after preferring an appeal against the said judgment and order of the single Judge for reliefs mentioned in the petition.
3. Mr. Anindya Mitra, learned counsel appearing on behalf of the appellant submitted that the impugned judgment and the order should not have been passed by the learned judge of the court of the first instance on the following grounds --
(i) After the property or assets of the appellant had passed out of the seisin of the court, the court had no power to indemnify the Receiver for any sums that the Receiver was entitled to receive admitting that the Receiver was entitled to any such sum.
(ii) Admittedly in the instant case the properties and assets over which the impugned order has been passed went out of seisin of the court at the time of passing of such order.
(iii) The Receiver was entitled to any of the expenses which he had properly incurred. Until the court sanctions such expenses either before such expenses are incurred or after they are incurred it cannot be said that any money is due to the Receiver as is the case in the instant mutter and as such the Receiver is not entitled to claim any relief from the court in regard to any of his alleged dues.
(iv) In any event, Kumai Tea Estate, the property of the appellant, was there and the value of the said Tea Estate, would be much more than the claim of the Receiver, if any, against the appellant, so the moneys lying in the Bank should be released.
4. Mr. Mitra in support of his submissions relied on Halsbury's Laws of England, volume 32, 3rd Edition--
Page 428 -- Paragraph 710;
Page 438 -- Paragraph 734 and
Page 439 -- Paragraph 735.
5. Mr. Mitra also relied on the case of British Power Traction and Lighting Co. Ltd. in Re, Halifax Joint Stock Banking Co. Ltd. v. British Power Traction mm Lighting Co. Ltd. reported in (1906) 1 Ch 497. Mr. Mitra relied on the observation of Warrington J. appearing in the first paragraph at p. 506 of the said Report. The said observation is as follows:--
'It seems to me the true position in these cases is that the order is intended to limit his general authority, and, if he finds that the fund provided by the Court is not sufficient, it is his duty to cause the matter to be brought before the Court, so that, if it sees fit, it may increase it, or give him leave to incur further expenses or liabilities, which comes to the same thing. If, without such an application being made, he incurs expenses and liabilities exceeding the limit, he is, in my opinion, not entitled to be indemnified against them unless he can show that, having regard to all the circumstances under which they were incurred, he was justified in incurring them without first obtaining leave. If he succeeds in shewing this, then I think the expenses and liabilities would be properly incurred, but not otherwise. What circumstances would justify the conduct of the manager in so increasing such expenses and liabilities without leave cannot, I think, be defined in general terms, but must be determined in each particular case. I will only say that, in my opinion, it would not be enough to show that the expenses or liabilities were incurred bona fide and in the ordinary course of business.'
Mr. Mitra also relied on the case of Boehm v. Goodall (1911) 1 Ch 155 wherein it was decided that the Receiver appointed over a partnership had no right to be indemnified by the partners personally and could only look to the assets under the control of the court for his indemnity.
6. Mr. Mitra next relied on the decision of P.B. Mukharji J. (as his Lordship then was) in Ali Ismail Doodha v. Momin Bibi, : AIR1954Cal386 . The said case had down that a Receiver's Hen is not lost merely because he has been discharged and has handed over the possession of the estate to another receiver appointed in his place. The past receiver is entitled to apply for payment to him such sums of money as have been allowed to him on passing of accounts out of the estate in the hands of the receiver who has succeeded him. It should be noted that in the said case the assets were still in the seisin of the court and in the hands of the present receiver.
7. Mr. Mitra last relied on Kerr on The Law and Practice as to Receivers, 15th Edition and has relied on the statements of law made at the bottom of p. 236 and p. 237 on the right of a receiver to be indemnified out of the assets over which he has been appointed receiver.
8. Mr. Bachawat appearing on behalf of the respondent submitted that: (1) The respondent was entitled to be indemnified out of the assets of the business of the appellant i. e. Kumai Tea Estate and (2) The Receiver in any event has charge as against such assets and has relied on Woodroffe's Law Relating to Receivers, 6th Edition and the observations made by the learned author appearing at pp. 234, 235 and 239 of the said volume. The statements of law as made in the said passages are to the following effect:--
(a) 'The compensation of a receiver is a charge upon the funds which may come into his hands'. .. .
(b) 'The Receivers are entitled to be indemnified even in priority to the claims of persons who have advanced money under an order making the repayment of such advance as the first charge of the assets.'
9. Mr. Bachawat also relied on the statement of law appearing at p. 239 of the said volume to the effect that--
'A Receiver, though discharged, has a lien on the estate for his claims and allowances.'
10. Mr. Bachawat also relied on the above-mentioned case of British Power Traction and Lighting Co. Ltd. in Re. Halifax Joint Stock Banking Co. Ltd. v. British Power Traction and Lighting Co. Ltd., reported in (1906) 1 Ch 497, the same case which was relied on by Mr. Mitra. Mr. Bachawat relied on the following observations appearing at p. 505 of the said judgment in the said report:--
'The law as to the position of a manager appointed by the Court where no special provision is made for meeting expenses and liabilities incurred by him, is not disputed, and is, indeed, beyond dispute. It is, on the one hand, the duty to carry on the business, and for that purpose to enter into proper contracts on his own responsibility, and it is, on the other hand, his right to be indemnified out of the assets against expenses and liabilities properly incurred in the execution of his duty: Burt, Boulton and Hayward v. Bull ((1895) 1 QB 276); Strapp v. Bull, Sons and Co. ((1895)2 Ch 1).'
11. Mr. Bachawat also relied on the statement of law on the subject in Halsbury's Laws of England, volume 32, 3rd Edition--
12. Paragraphs 710 and 734 at pp. 428 and 438. The said statements of law are on the Receiver's right to be indemnified out of the assets of the business in his hand.
13. Prima facie it appears to us that the Receiver's right to be indemnified out of the assets over which he had been appointed Receiver or Manager and had incurred expenses in connection with the discharge of his duties cast upon him by the order of appointment is confined to such assets as remain in the custody of the court and so long as they remain in the custody of the court. In the instant case the properties over which the respondent was appointed manager was not in the seisin of the court and as such the Receiver had no special right or lien on the said properties nor there is any right of the Receiver to be indemnified out of the said assets in particular.
14. The claim in the instant case was made also on the basis of Order 39 Rule 1 of the Civil Procedure Code and the order of the learned trial Judge might have been made on that basis. In any event the order under appeal shall be finally adjudicated upon at the hearing of the appeal but, in our opinion, the justice of the case will be sufficiently met if the following order which we are passing, is passed in this application.
15. The applicant shall be entitled to withdraw a sum of Rs. 4 lakhs out of the monies lying with the Union Bank of India at India Exchange Place solely for the purpose of carrying on its business of tea relating to the Kumai Tea Estate. The appellant shall keep the said sum of Rs. 4 lakhs in a separate account and shall use the same only for the aforementioned purpose. The sale proceeds of the tea crop of the said Kumai Tea Estate shall be deposited in a separate account and out of such sale proceeds monies at the rate of Rs. 2/- per kilogramme should be kept in another separate account until a sum of Rs. 4 lakhs is reached by such sale proceeds. The balance sum of Rs. 4 lakhs out of the said sum of Rs. 8 lakhs which has been kept in a suspense account shall be kept in a short term fixed deposit account and shall be continued to be kept in such short term fixed deposit account until further orders.
16. An abstract of the statement of account shall be sent to the Advocate on record of the respondent in respect of the appellant's dealing with the above, mentioned sum of Rs. 4 lakhs once every month. The said abstract of account shall also indicate the amount of money set apart in terms of this order out of the sale of tea crop of the Kumai Tea Estate.
17. The order under appeal is modified only to the aforesaid extent and the rest of the order of the Court of the first instance shall continue until disposal of the appeal.
18. Costs of this application shall be costs in the appeal.
19. The respondent waives service of the notice of appeal. Settlement of index is dispensed with. Cyclostyled or typewritten or printed paper book shall be filed within three weeks from date. The order under appeal and the order admitting the appeal shall be drawn up with utmost expedition. The respondent shall be entitled to file a cross-objection within a week from date. A copy of the plaint and a copy of the written statement may be included in a supplementary paper book and the admissibility of the same shall be decided at the time of hearing of the appeal.
20. Liberty is given to the parties to apply for early hearing of the appeal as soon as the paper books have been filed.
A.N. Sen, C.J.
21. I agree.