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C.A. Stevenson Vs. Shahzadi Begum Mahmoodi and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1938Cal627
AppellantC.A. Stevenson
RespondentShahzadi Begum Mahmoodi and ors.
- ameer ali, j. 1. in 1905 the official receiver was appointed, at the instance of prince bukhtyar shah's creditors, to take charge of his leasehold property, the dalbhum mining estate, consisting of some 1100 square miles of property in the singh-bhum district. the official receiver was, from the said estate, to pay off the creditors and restore the property to prince bukhtyar shah or his heirs. in these proceedings the latter have been referred to as beneficiaries. they are in a position analogous to mortgagors. in 1922 the balance of the creditors' claim together with interest was ascertained at the figure 3,86,785-9-7. the matter first came to my notice by an application by one of the beneficiaries, prince kamgar shah, on 21st june 1937. the main points raised on that occasion by the.....

Ameer Ali, J.

1. In 1905 the Official Receiver was appointed, at the instance of Prince Bukhtyar Shah's creditors, to take charge of his leasehold property, the Dalbhum Mining Estate, consisting of some 1100 square miles of property in the Singh-bhum District. The Official Receiver was, from the said estate, to pay off the creditors and restore the property to Prince Bukhtyar Shah or his heirs. In these proceedings the latter have been referred to as beneficiaries. They are in a position analogous to mortgagors. In 1922 the balance of the creditors' claim together with interest was ascertained at the figure 3,86,785-9-7. The matter first came to my notice by an application by one of the beneficiaries, Prince Kamgar Shah, on 21st June 1937. The main points raised on that occasion by the beneficiaries may be summarized as follows: (1) that the estate had not been developed; (2) that the estate was not being efficiently administered, i.e., want of activity and want of system; (3) that the Official Receiver had not and was not collecting the amounts properly due to the estate, in particular, from the most important lessee, the Indian Copper Corporation.

2. Substantially the same points are raised by the petitioner in the present application. I was unable, from the information given to me by counsel on behalf of the Receiver, to obtain a clear idea of, nor had I time to go fully into, the matter. Therefore on 30th June 1937, I made what might be called an interim order. By this I called for a report from the Official Receiver. This was supplied, 1st July or August 1937. This report did not appear to me to contain all the information to be expected. At page 7 the Official Receiver appeared to suggest that the prospects of this estate are hopeless. At the bottom of that page he dealt with the minimum rents in a manner which told one very little. How little it told one, or rather how much was concealed from one, has only now become apparent. At the top of p. 8 is the follow-ing statement:

In this connexion I may mention that recently some facts have come to my knowledge regarding the payment of the dues of the Indian Copper Corporation Limited to this estate.

3. It was definitely stated to me by counsel that until 'the facts which had come recently to the knowledge of the Official Receiver' (i. e., the information given by Kamgar Shah) the Official Receiver was under the conviction that only dead rents were realizable. During the hearing of Kamgar Shah's application I expressed the opinion that to deal with this estate a person with qualifications other than those of the Official Receiver himself or of any per. son of his staff were required, i.e. a Chartered Accountant with experience in this branch of work. I probably suggested a name. On the present application the main points raised by the applicant, one of the creditors, and the beneficiaries who support him, are the same as those preferred on the previous occasion.

4. To particularize, see Kamgar Shah's affidavit; para. 28 : 'Except for Bird & Co. Ltd., 1936, all other lessees paying dead rent.' Para. 29 suggests Official Receiver has not taken steps to examine the books. Para. 30: Indian Iron Steel Co. Ltd. working heavily without lease and without paying royalty.

5. The affidavits on behalf of the Official Receiver have been sworn by one Earn Prosad Banerjee, a clerk in the Official Receiver's office. He is a young man said to be 30 years of age and to be receiving a salary of Rs. 50. The outstanding points in Earn Prosad's affidavit are as follows : (1) The amount now due to creditors is stated at p. 5 at the figure 2,20,057. Comment : (This apparently does not include interest as to which see below). (2) Dead rents : This is the most important point, para. 4 (f) of the affidavit:

They (the I. C. C.) paid the minimum royalty until 1936. None of the beneficiaries ever suggested that the Company was liable to pay more than the minimum royalty. As soon as Kamgar Shah brought to my notice that 5 per cent. of the net profits exceeded the minimum royalty, the Official Receiver wrote to the Company, etc. etc.

6. With this should be read the letter of the Official Receiver of 9th July 1937, p. 4, Kamgar Shah's affidavit:

As regards the methods for checking the royalties I have to state that I have followed the procedure of my predecessor in office. As soon as one of the beneficiaries brought the Indian Copper Corporation's matter regarding the payment of their royalties to my notice, I have taken steps to realize the same.

(3) The above introduces the matter of checking royalties. (Comment will follow.)

(4) It is asserted (p. 12 of Ram Prosad's affidavit):

That this particular estate is not a peculiar estate nor does it require anything extraordinary. On the contrary, it is only a case of taking and checking accounts of the various lessees that are working and realizing rents and royalty.

7. In Ram Prosad's second affidavit, paras. 5, 7 he asserts that the Official Receiver 'always called upon the lessees for accounts of realizations'. (Comment will follow.) (5) On this occasion again (see Earn Prosad's second affidavit) the Official Receiver appears to have been pessimistic (see top of p. 2). It is not wholly consistent with the impression conveyed from the statements at the top of p. 5, first affidavit, as to the amount now due. At one place only in Ram Prosad's first affidavit is there an indication of what has ultimately emerged; the three lines at the top of page 9.

8. I refer here to two points made by Mr. B. C. Ghose in argument : first, that if my view as to management is correct, the Official Receiver should not be appointed Receiver of any mining estates. To this I shall reply later. The second point reiterated and pressed was to the effect that under the terms of the leases the Official Receiver was not entitled to make enquiries as to the amounts of royalties and that he was bound by the figures in the Company's balance sheets and published accounts. With regard to this I was read by counsel a passage from one lease and I was told by counsel on instructions given in Court that this was the main lease and that all are in the same form.

9. I pointed out that this attitude was firstly inconsistent with certain statements in the affidavit as to checking the accounts and not easily reconcilable with the belief that the Company was working at a loss. Secondly that it would be most unlikely that the Company would refuse information or to allow facilities for inspection. At a later stage, after matters which I shall now set out, I asked the deponent, Earn Prosad, specifically whether it was correct that the Official Receiver and he himself were, until 1937, never aware that more might be due from the Indian Copper Corporation than the dead rent. He persisted in stating this to be the case. I now come to what is perhaps the most surprising thing of many surprising things in this affair, namely the affidavits and statements on behalf of the creditors opposing the application and supporting the Official Receiver.

10. The first affidavit I deal with is that of Mr. Mealing, a Director of Messrs. Andrew Yule, the Managing Agents of the Midna-pore Zamindary Co. Ltd., creditor to the extent of about one lakh. The points are : (1) Page 3, Pessimism: Mr. Clough for the creditor was the only counsel asking for sale on the ground that the position is hopeless. This creditor's position is somewhat different from that of the others. It is possible that owing to its connexion with other concerns through its managing agents, it might be able in some way to recoup itself for the loss incurred in obtaining a small dividend on sale. The estate was put up for sale in 1934 on the basis that all the lessees were working at a loss and that only dead rents were payable.

11. The second point : Confidence in the Official Receiver's office (para. 11):

I submit that the papers and records in the office of the Official Receiver will show the methods followed by the Receiver for ascertaining the correct amount of royalty. (The wording is curious.)

12. The third point: Efficient management, advertisement for tenders, etc., best methods. Comment: In point of fact advertisements were only issued on one occasion in 1934. As to methods of checking the true facts will appear from what follows : Anukul Chandra Mukherjee does not want to sell, ' the position is not hopeless', and he does not desire a change of management or any further assistance for the Official Receiver. Para. 8 reads as follows:

As soon as the present Official Receiver came to know that more money is due to the estate than what has been paid by the Indian Copper Corporation, he at once took steps. (Wording curious.)

13. Paragraph 11, bottom:

I submit the Official Receiver should at present refrain from disclosing any further facts which may be prejudicial to the interests of the estate. (Wording still more curious.)

14. Next is Gopal Krishna Banerji who considers (para. 5) that the estate is capable of paying off the creditors and who wants a geological expert. He considers the Official Receiver essential as 'an experienced lawyer,' having regard to the pending suits by the superior landlord. Counsel for these deponents or some of them seemed anxious to impress the Court with the fact that only a portion of the profits of the Indian Copper Corporation is attributable to leases from the estate and generally contended that nothing better could have been done.'

15. After hearing the petitioner and the creditors opposing on the afternoon of Wednesday last (23rd February 1938), I had almost decided, notwithstanding my conviction of what was right and necessary, which I expressed, to do nothing. I considered that the creditors should know their own business, alternatively that if they did not know their own interests or were for some reason blinded to them, it was open to me to let them, as the expression goes, 'stew in their own juice'. I was however of the belief that their opinions were either the result of suspicion, or of persuasion and my belief was strengthened from a more careful perusal of the affidavits overnight. Indeed I am now of opinion that in some cases it may be due to interests which supersede their interests as creditors. On Thursday afternoon (24th February 1938) when the matter was again taken up, I therefore put my view again to Mr. B. C. Ghose and asked him to deal with certain specific points arising on the affidavits which I had written down and to which I obtained answers from Mr. Ghose on instructions some of which have already been stated.

16. At the end of Thursday I had come to the conclusion that I should give effect to my own view as to management, but in some form which might leave the Official Receiver in charge of the estate. One alternative was to appoint a Chartered Accountant, e. g. Mr. Davar, whose name I had probably mentioned on the previous occasion as joint Receiver. Another, was to appoint a Chartered Accountant to deal with the royalty question as special officer. At the end of the day I asked to see the file of correspondence, the leases and the reports and balance sheets of the Indian Copper Corporation.

17. These documents I went through so far as time would allow, on the night of Thursday (24th February 1938) with the result that I summoned the parties to be present at 2-30 on Friday and I dictated a summary of the correspondence ending with the letter of the Indian Copper Corporation of 11th December 1936, (which was as far as I had got). This summary will be inserted in its proper place in this judgment. I then asked two questions of Earn Prosad Banerjee. The first related to the figure at top of page 5. I enquired what was now due for interest. He told me that he could not tell me as he was not aware of the rate of interest on the various debts and that there was no interest account. This statement is consistent with his own statement at page 3 of his affidavit. The second question and answer, I have already stated. I dictated the note in order that the Official Receiver might have an opportunity of explaining, if he so desired, how it was that both by his report of 1937 and the affidavits of Ram Prosad Banerjee and by the statements of counsel on his instructions I had been led to believe in a state of affairs far removed from the truth, namely that the Official Receiver had never been aware that there was a question of royalty payable from the Indian Copper Corporation. The significance of this question will become apparent from the correspondence which I am about to summarize.

18. I now set out the result of my perusal of the papers. First, as to leases. It appeared to me from the Official Receiver's report, Ram Prosad's affidavit and the answers to my questions, that the Official Receiver is much at sea with regard to the leases. This is not extraordinary because I infer that with regard at any rate, to the most important, the Boshabani lease, no copy was in the office. This I gather from the correspondence and from the copy which has been handed to me. Moreover the Official Receiver has not in his possession a map or plan upon which leases are systematically marked. There is a volume of one inch survey maps on which certain of the leases have been outlined. With regard to the most important lease (the Boshabani lease) I infer that the excellent map handed up to me, I. C. C. No. 237, was obtained from the Indian Copper Corporation in December 1937.

19. The more important leases may be tabulated as follows : (1) Piggot's lease, Phosphates - dated 29th January 1926. Original counterpart available, with plan. Dead rent Rs. 250; royalty on tonnage and sale value; provision for inspection of books, etc. Official Receiver's report 1937 shown as disputed. No further particulars are given. Earn Prosad's affidavit (p 14). Bengal Iron and Steel assignee of Piggot. Indian Iron and Steel new company. I am not clear from any information given whether the dead rent has been collected. I have no correspondence to show that any enquiry was made. The applicant states that the Indian Iron and Steel have recently raised 200,000 tons phosphates. No information from Official Receiver; (2) Lease to Bird & Co. Ltd. - Kyanite -dated 29th March 1936, retrospective from 1934. Original counterpart and plan available. Dead rent and pitmouth royalty. Provision for inspection of books, etc. So far as I know no check or information except that some royalty paid for 1936; (3) Indian Copper Corporation leases and licenses : A. - Sidheswar mining lease - Copper-dated 10th November 1921. Original counterpart available, 1333 l/3rd acres. Minimum rent - Rs. 2000. Royalty - 5 per cent, of the annual net profits earned by the lessee from the said minerals. Definition of 'net profits'-since shown in the annual balance sheet of the lessees to the credit of the profit and loss account as certified by the auditors, etc. B.-Moosaboni Copper lease - dated 7th January 1925, 4281 acres. Original counterpart not available, but plan supplied in 1937 by Indian Copper Corporation. Areas marked M 1, 2 and 3. On this plan the area of lease A is shown to the northwest in pink.

C.-Sidheswar Refractory Lease. All minerals other than Refractory minerals. Original counterpart available-dated 29th September 1929. Area-2666 2/3rd acres, including 1333 l/3rd acres of lease A. This explains the delineation: two concentric areas on the plan annexed to this lease. Eoyalty-7 1/2 per cent. on raisings. Provisions for inspection of books, works, etc.

D.-Moosaboni prospecting license. Rent -Rs. 1500. I have not seen this.

20. I now come to the correspondence and I will confine the summary substantially to matters relating to the Indian Copper Corporation leases A B and C. I have not gone earlier than July 1932, because that is the date of the first correspondence which I have seen, and the present Official Receiver was not appointed until the middle of 1931.

21. Where I use the word 'statement' this refers to the particular statement containing information indicating how the net profits for the purpose of royalty is arrived at by the Corporation for the previous year. It should be distinguished from the Company's balance sheets, profit and loss accounts and reports. On 14th July 1932 the Indian Copper Corporation sent a ' statement' for the year 1931 with a copy of the Company's report. They state there is again a loss and no royalty although the profit as per report is 51,000. That letter is not acknowledged and has never been acknowledged. On 12th October 1933 is the letter for that year enclosing a' statement' for the year ending 31st December 1932 with an account. This showed after various large deductions which may or may not be permissible, a net profit for royalty 34,558. This letter asks the Official Receiver to check these figures and accept them as correct upon which a cheque for the royalty will be sent.

22. A reminder to this letter was sent on 12th April 1934 upon which I see written in handwriting, which I presume to be the Official Receiver's, but I do not know, 'Ramprosad Babu.' Apparently a reference to this gentleman. I find no receipt for that year or the year after for minimum royalty on the file. I have been subsequently informed that they are available. In point of fact, receipts for minimum royalty were often not sent for some months, but I find no receipt at all for the year ending 1932 and for the year ending 1933. The next receipt I find is for minimum rent for the year ending December 1934. On 12th February 1935 there is a letter from the Company saying: ' I presume you have accepted our figures,' I should have said that the important letter of 12th October 1933, the one offering to pay royalty on the basis of actual net profit of 34,558 was never acknowledged or answered. The next letter I deal with is 1st March 1935 enclosing the 'statement' for the year ending 31st December 1933. It should have been submitted sooner. It again purported to show a profit in the report of 73,621 and a deficit for the purpose of paying royalty 21,450. This letter is never acknowledged or replied to.

23. The first and only person to deal with these different ' statements ' submitted by the Company was the Company itself on 12th February 1936 by a letter in which they refer to their two previous letters of 12th October 1933 and 1st March 1935 sending an amended return for these two years in which the royalty offered for 1932, originally Rs. 16,496, is reduced to a sum of Rs. 11,983. This statement again, the statement for 1933, indicates a profit but a loss for the purposes of royalty. This letter also offers a cheque for the royalty conceded by the company to be due for the year 1932.

24. Comment. - No reply having been received to the statement showing profit for the year 1932 the purposes of royalty, it is hardly to be expected that the Company would make extraordinary efforts to show profits for subsequent years.

25. On 7th March 1936 the Company sent a reminder in which they say in substance: 'Please do something, We want our liability agreed up to 12th December 1934.' No reply. On 27th November 1937 a beneficiary asked the Receiver to obtain the reports of the Indian Copper Corporation and the Official Receiver (this is the first letter demanding any information) asking for copies. Some in fact had already been sent to him by the Company. There is a letter of 9th December 1936, which may have a bearing on the matter, from the Official Receiver not in this file. I now come to the letter of 11th December 1936. This letter refers to a letter of the 9th from the Receiver which is not on his file. I should like to read the last paragraph:

I note that you ask us to treat' this matter as extremely urgent and remind you that it cannot be so urgent as attention to the matter of royalties due by this Company which are outstanding since the year 1932 and regarding which we have been unable to obtain any reply from your office. You will I am sure realize such a state of affairs is most unsatisfactory and I will be glad if you will go into our letter on this subject as early as possible and treat the matter as extremely urgent.

26. (It is open to the Official Receiver in the circumstances to explain why I was told in the affidavit that the Official Receiver was unaware that there was any question of excess royalty until it was brought to his notice by one of the beneficiaries. The Official Receiver should be given a copy of this note.) On 21st December 1936 the Official Receiver

offered to accept royalties due since 1932 without prejudice to the right of the estate to get more, if the statements of account sent by you are subsequently found to be incorrect.

27. On 22nd December the Indian Copper Corporation replied stating that they had sent complete statements for 1932, 1933 and 1934, as the fact was, and enclosed a cheque for Rs. 12,732-9.6 being royalty for 1932. On 28th December 1936 the Indian Copper Corporation sent the statement for 1935 with a cheque for the royalty for Rs. 13,299-10-0. On 21st January 1937, the Official Receiver acknowledged the cheque for Rs. 12,732-9-6, with a letter which reads as follows:

I would request you to know definitely what the amount represents for? Is it royalty for the year 1932 or the royalties for the years 1932, 1933 and 1934? If the amount represents the royalty for the year 1932, please send me the amounts for 1933 and 1934 with a statement of account. The same should also be accepted without prejudice . . . . if at a future date the statement of account submitted by you is found to be incorrect.

28. Comment on this letter is contained in the letter of the Indian Copper Corporation dated 22.1-1937 and is fully justified. Letter No. 312537 of the 19th March from the Official Receiver to the Indian Copper Corporation is missing. It appears however that the Official Receiver in this game of 'blind man's buff' was getting what is called 'warm', as I find on 25th March 1937 that the Indian Copper Corporation put the matter in the hands of their solicitors Messrs. Orr Dignam & Co. to be dealt with. The sequel will be seen in the letter of 18th May 1937 from the Indian Copper Corporation, enclosing the opinion of Mr. Tucker, an English counsel, on the difficult points of construction and accounting involved in ascertaining the royalty of the Indian Copper Corporation.

29. Based upon this opinion the Indian Copper Corporation submitted a revised statement of account for the years 1932 to 1935 inclusive, showing an amount due to the Official Receiver of Rs. 33,028.12-0 for these years. Thus the Indian Copper Corporation put themselves into a favourable and tenable position for the dispute which, they very frankly point out to the Official Receiver, must somehow or other be decided. This important communication of 18th May 1937 is apparently answered on 14th June 1937 by the Official Receiver with a reiteration of the words 'without prejudice' and a request to see the ease for opinion in its entirety.

30. On 17th June 1937 the Indian Copper Corporation declined to pay without prejudice, without reference to their London Office. At about this time the Official Receiver was being pressed to do something. Kamgar Shah, having got some wind of the matter, wrote through his attorneys Messrs. B. N. Bose on 14th June 1937 to the Official Receiver to take steps, 'to have the matter of the Indian Copper Corporation royalties decided'. This letter appears at p. 4 of Bibhuti Banerjee's affidavit in reply. Thereafter ensued the application of Kamgar Shah, already referred to, on 30th June 1937, upon which I made the order of 31st June 1937, directing inter alia that the opinion of counsel should be obtained within a fortnight, and calling for a report.

31. To continue with the correspondence with the Indian Copper Corporation on 12th July 1937 the Indian Copper Corporation wrote stating their London Office's view as to the statements submitted with the Indian Copper Corporation's letter of 18th May 1937. The Indian Copper Corporation in accordance with this view now submitted amended returns showing an amount due not of Rs. 33,028 but only of Rs. 9171.15.6. They therefore occupied a more advanced position. On 14th July 1937, the Official Receiver acknowledged the amended statement and asked for supply of papers in order to enable him to take counsel's opinion. The Official Receiver wrote again on 21st July.

32. The letter of 22nd July 1937 from Messrs. Orr Dignam & Co. to the Official Receiver and Mr. B. N. Bose indicates the nature of the Official Receiver's demands. I gather that the Official Receiver had not. then in his possession or was unable to lay his hands on the mining leases. He did not seem aware or he ignored the fact that full 'statements' had already been submitted. The letter of 24th July from the Official Receiver Indicates that my inference as to the Official Receiver's knowledge of the. leases was as I have stated. In his letter dated 21st July, the Official Receiver had) threatened the Indian Copper Corporation with an application to cancel the lease. The comment on this contained in Messrs. Orr Dignam's letter of 22nd July 1937 is, I think, fully justified. It was ridiculous.

33. Indeed, it seems to me that the conduct of the Indian Copper Corporation so far as the correspondence goes has been throughout perfectly correct. That there is a very serious question as to the amount which they should have been paid as royalty is obvious. Indeed it is the Indian Copper Corporation which have been pressing the Official Receiver to have this matter investigated. It is the Corporation which has been pressing upon the Official Receiver information with which he was unable to cope. If the Indian. Copper Corporation have gained an advantage it is entirely the doing of the estate. If they have so adjusted their 'statements'' as to show no profits in years subsequent to 1932, it must be remembered that the statement for 1932 showing a net profit of 35,000 odd was never considered by the. Official Receiver or even acknowledged.

34. In recording this correspondence I have for the most part, refrained from comment. It is obvious however that a large number of difficult questions arise. In summarizing my view as to what should be done I will dispose of some points and disregard for the time being others. A point disposed of is the complaint that the Official Receiver paid a sum of Rs. 8000 in addition to the sum of Rs. 14,000 paid by the previous Official Receiver for a geological report, which was never furnished. The latter sum was, I am satisfied, paid on an order of Court, and no blame attaches to the Official Receiver on this ground. Since going into this matter I am however less convinced that the report was never submitted; it may have been submitted and have subsequently disappeared.

35. The main matters which I have taken into consideration are as follows : (1) Piggot's lease : Does it exist? What is due on it? (2) Sidheswar Refractory Lease. What steps taken to ascertain the amounts due? (3) Bird & Co's - since 1934 - ditto - (4) Indian Copper Corporation's leases A and B, in particular B. Moosaboni lease.

36. The questions arising may be classified as follows : (a) What deductions to ascertain profits are permissible, (i) Question of construction of both leases, (ii) Question of accounting and of fact, (b) How if at all should the profits of the Indian Copper Corporation be separated into those attributable to the mine and those attributable to other sources

37. Questions under these heads called insistently for answers. The suggestion that they were ignored because the Official Receiver felt himself bound by the figures in the balance sheet or profit and loss account is both futile and untrue. The Indian Copper Corporation was not relying upon these figures. It was in fact challenging them. Year by year the reports and balance sheets showed a net profit for the concern. It was the Official Receiver who should have relied upon them to challenge the 'statements.'

38. I refer again to the fact that I was read a clause in the lease which, whatever its real effect, appeared to define the 'actual net profits' as being the amount shown to the credit of the profit and loss in the company's balance sheets. I was told on instructions, which I am satisfied were given to counsel here, that it was the clause 'in the main lease,' and that the other leases were in the same form. That is not true. The clause that was read to me is that contained in the Sidheswar mining lease and not in one of the other leases. The clause in the main lease is different. The main lease contains the fullest provision for investigation of books and accounts and ascertaining the correct figure of the profits. The most charitable explanation of the matter that I can give is that the original lease was not in the office, or that the Official Receiver had not time to consider it. I am inclined to think, as I have said, that a copy of the lease was not with him.

39. Before reading this correspondence and the leases, I had made all allowances for the difficulties of the Official Receiver. It is to be remembered, as I believe that the Official Receiver has requested Government to supply his office with an accountant and without success. He is not an accountant himself. If there has therefore been negligence, as I think there has, I am prepared to charge the Government of this Province with abetment of that offence. As I said before, and I say again, it is wholly unfair to set people to work upon responsible and difficult tasks with inadequate salaries and resources. If the offences of negligence or breach of trust are not committed, that is the good fortune of the State and to the credit of the persons appointed. They have at any rate been encouraged. He has a great volume and variety of work, and so far as I know his staff consists of eight ordinary clerks. In this matter however, it is he himself who declines to see the difficulties of his situation. I answer the question of Mr. B. C. Ghose as to the Official Receiver and Mining Estates in one way. As at present manned and equipped, the Official Receiver's office is not competent to manage. The correspondence I set out above either is or is not proof of this opinion.

40. Before reading the correspondence, although I considered, as I stated, that the Official Receiver's view that he was not called upon to take any steps or to do anything until pressed by the beneficiaries or creditors, was not the correct view, and although I considered that there had been apathy and want of system in his management, I attributed the situation mainly to his own difficulties.

41. Since reading the correspondence I am unable to regard the matter in the same light. I consider: (1) That the true position was not disclosed to the Court in the report of the Official Receiver of July 1937; (2) That it was concealed from the Court on this application; (3) That the Official Receiver was wholly incapable of dealing with the 'statements' regarding royalty submitted by the Indian Copper Corporation. This in itself is not extraordinary; (4) The Official Receiver however made no attempt whatever to have them dealt with. He ignored the whole problem, I am unable to see that there is any explanation for this; (5) In the year 1934, the estate was put up for sale and sold upon the basis that all lessees were working at a loss and only dead rents were being realized. The Official Receiver knew at the time that this did not truly represent the position. It is possible that one or more of the creditors were also aware of this fact. The attorneys for the Midnapore Zamindary Company are also the attorneys of the Indian Copper Corporation, and it was an assistant in the firm of attorneys who purchased the estate in 1934; (6) The Indian Copper Corporation's conduct as regards the correspondence as to royalties cannot be criticized. The Company may or may not be right on the question of amount, either as to principal or quantum. That has yet to be decided; (7) If the Company has now been placed in a position of advantage, it is the doing of the Receiver; (8) I consider the situation as it now exists much worse for the estate than it would have been if proper action had been taken. Whether actual loss has been incurred remains to be seen; (9) It follows that I do not consider the Official Receiver capable of extricating the estate from the position which it now occupies, or dealing with the (situation; (10) Upon the facts above stated, I consider that I would be wrong in allowing the management of the estate to continue in the present hands; (11) I do not see that the Official Receiver's legal knowledge is of any advantage. As regards information, he knows nothing of the matter except what appears in documents, and not by any means all of that; (12) I propose therefore to take the course which originally appealed to me and which now I am the more convinced is the proper one.

42. It was suggested by the creditors that I should appoint some young accountant on a settled fee of Rs. 200 or Rs. 300 for, say a year's work. I expressed my view. It is needless to say, I consider the remedy totally inadequate to the disease.

43. The order is as follows : (1) The Official Receiver discharged; (2) Mr. M. A. Davar appointed Receiver of the estate; (3) Usual security subject to any special directions or arrangement; (4) Usual remuneration plus necessary out-of-pocket expenses. Extra remuneration for special work to be settled by Registrar or Judge after the work or a substantial part of it done; (5) Establishment-directions will be given; (6) Ad. ministration-directions will be given on application by letter in first instance of the Receiver; (7) The applicant will take his costs as of a Chamber application out of the estate, and may be paid by the new Receiver. Certified for counsel. The Official Receiver's costs will be reserved. The question of his costs will be considered by me after it has been ascertained whether or not actual loss has been caused to the estate by what has taken place. No other creditor will get any costs; (8) Order to be drawn up within a week; (9) The new Receiver may give security before the order is drawn up. I fix the security for Rupees one lakh; (10) The new Receiver may receive all books and papers relating to the estate and may act generally before giving security and before the drawing up of the order, except that he will not receive any moneys or operate on the accounts of the estate before security is given.

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