Skip to content


Ali Ismail Doodha and ors. Vs. MomIn Bibi and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation;Property
CourtKolkata High Court
Decided On
Case NumberSuit No. 119 of 1927
Judge
Reported inAIR1954Cal386
ActsLimitation Act, 1908 - Schedule - Article 61; ;Code of Civil Procedure (CPC) , 1908 - Order 40, Rule 1; ;Calcutta High Court Rules (Original Side) - Rules 17, 21 and 22
AppellantAli Ismail Doodha and ors.
RespondentMomIn Bibi and ors.
Appellant AdvocateU.C. Law, Adv.
Respondent AdvocateMohamad Azim, Adv., ;P. Mandal, Adv. for ;Mulla Dawood, Adv., ;Ramen Datta, Adv. for ;Ali Ismail Doodha and ;A.C. Bhabra, Adv. for ;Zaniab Ali Doodha, Adv.
DispositionApplication allowed
Cases ReferredBoehm v. Goodall
Excerpt:
- .....mohammad saleji a past receiver of the estate of ariff bham deceased, for an order directing the present receiver in this suit to pay him the sum of rs. 11,4237- due to the applicant and also the costs under the orders dated 8-12-1947 and 22-4-1952 when taxed out of the said estate. the applicant also asks that the bond furnished by the applicant jointly with his sureties, the bharat fire and general insurance co., ltd., do stand cancelled, & for the discharge of the sureties.3. on 5-7-1927 the applicant's father was appointed receiver of the estate. he died in july 1943. by an order dated 31-8-1944, the applicant was appointed receiver subject to his furnishing security to the satisfaction of the registrar. he furnished security with bharat fire and general insurance co., ltd., and.....
Judgment:

P.B. Mukharji, J.

1. This Chamber Summons raises an important question on the nature and character of Receiver's lien and possession.

2. The application is made by Mohammad Azim Mohammad Saleji a past Receiver of the estate of Ariff Bham deceased, for an order directing the present Receiver in this suit to pay him the sum of Rs. 11,4237- due to the applicant and also the costs under the orders dated 8-12-1947 and 22-4-1952 when taxed out of the said estate. The applicant also asks that the bond furnished by the applicant jointly with his sureties, the Bharat Fire and General Insurance Co., Ltd., do stand cancelled, & for the discharge of the sureties.

3. On 5-7-1927 the applicant's father was appointed Receiver of the estate. He died in July 1943. By an order dated 31-8-1944, the applicant was appointed Receiver subject to his furnishing security to the satisfaction of the Registrar. He furnished security with Bharat Fire and General Insurance Co., Ltd., and the bond was signed on 2-8-1946. By another order dated 8-12-1947 the applicant was discharged from further acting as such Receiver and was directed to pass his final accounts. By the said order Mr. Bonbehari Das was appointed the Receiver.

4. Now the accounts were filed by the applicant as Receiver on 4-9-1951 for the period from 7-7-1943 to 8-12-1947, showing a total sum of Rs. 16,423/- as loan by the applicant to the estate.

It will be noticed here that the accounts were passed long after the applicant had been discharged from his office as Receiver. On 22-4-1952 the accounts came up before me on Receiver's passing of accounts when by consent of all parties appearing it was ordered that out of the total expenditure incurred by the applicant as Receiver and as shown in the accounts the sum of Rs. 5,000/- was disallowed and the rest of such expenditure, that is, the sum of Rs. 11,423/- was allowed. The order passing accounts, as settled, reads as follows :

'It is ordered by and with the consent of the parties appearing as aforesaid that out of the total expenditure incurred by the said Receiver as shown in the said accounts, the sum of Rs. 5,0007- be and the same is hereby disallowed and that the rest of such expenditure be and the same is hereby allowed.'

This consent order was made on 22-4-1952 and filed on 12-6-1952.

5. The point of the present summons is that the applicant now wants this sum of Rs. 11,423/- allowed under that order to be paid to him by the present Receiver. Although the accounts were passed and although the order passing such accounts was by consent of parties appearing, it is unfortunate that there is now opposition to the payment of this sum of money to the former Receiver. The objections when analysed are more technical than meritorious.

6. The first objection is that a discharged Receiver is not entitled to apply to this Court for such payment but must bring a regular suit. The second objection which follows from this is that the applicant was discharged in 1947 and he was basing now his claim on accounts which are more than 3 years old and although passed would be barred by limitation today if a suit were filed. For this purpose Article 61, Limitation Act is invoked.

7. The estate is still in the hands of the Receiver and the Court is still administering the estate through the Receiver although it is a new receiver. The possession of the Receiver, as I understand, is always the possession of the Court. While the estate is in possession of the Court, it is difficult to see why Court's own officer, as Receiver, should not be entitled to apply for payment of moneys which the Court itself has allowed merely on the ground that he has been discharged from his office as receiver. If a present Receiver can apply for direction, so can a past Receiver. Receiver is only an emblem and agency of the Court, and from that point of view the Court continues its possession irrespective of the personality of an individual Receiver. The right of a present Receiver to apply is on the basis that the Court can always move 'suo motu' and the Court does so and it takes only the excuse of being formally moved by its own officers. That is how a present receiver gets the right to apply for Court's directions because the Court acts in its own management. There is no other statutory right for this procedure by way of application ay the Receiver as distinguished from a suit. I do not see why the same notion should not apply in the case of a receiver who is discharged but where nevertheless the Court continues its management through another Receiver. For instance the present receiver could certainly have applied to this Court for direction to pay to the past receiver the amounts allowed on the latter's passing of accounts by the Court. In that event no objection to the procedure of applying could have been raised.

8. So far as remedies against a receiver are concerned, it appears that the law does not make any difference between a discharged receiver and an existing receiver. Sir John Woodroffe in his Tagore Law Lectures on the Law relating to Receivers, 4th Edition, p. 254 states:

'The same remedies appear to be available against a Receiver after he has been discharged.'

This is based on the English decision of -- 'Harrison v. Boydell', (1833) 6 Sim 211 (A). Indeed at p. 254 of Woodroffe on Receivers, a reference is made to a case in -- 'K. B. Dutt v. Shamaldhone Dutt', AIR 1914 Cal 744 (B). That was a suit instituted by the receivers of an estate against the former receivers (before the accounts of the latter had been passed by the Court) for the recovery of a certain sum which the plaintiffs alleged the defendants had failed to realise on behalf of the estate. Fletcher J. held that no such suit was maintainable. In the latest edition of Kerr on the Law and Practice as to Receivers being the Twelfth edition, edited by Raymond Walton and A. Wilfred Sarson, 1952, the learned editors state the law at p. 311 in the same way and observe:

'the remedies which have been indicated remain for the most part available against a receiver even after he has been discharged.'

The law is stated in the same form in volume 7 of Hailsham Edition of Halsbury at p. 91 Article 183.

9. If remedies against the past and present receiver are the same, I do not see why and in what manner and on what principle remedies of the receiver after he has been discharged should be different. It is true the applicant is no longer an officer of the Court and the right to apply which belongs to an officer does no longer belong to him as such. But then the fact remains that the claim put forward in the application arises out of his administration as receiver on the basis of his accounts as receiver duly passed by the Court. Even when third party rights are involved in the course of Court's management, the Court allows such third party to initiate pro interesse suo proceedings, by application. In such a pro interesse suo application where no difficult question of fact or title arises court makes an order without a suit. As was said in -- 'Re. Regent Canal Iron Works', (1876) 3 Ch D 411 at pp. 416, 419 (C) and in -- 'Davy v. Scarth', (1906) 1 Ch D 55 at p. 57 (D), nothing short of the 'honour of the Court' is involved in seeing that the ex-receiver of this Court gets the money that is his due on the passing of accounts by the Court. Warrington, J. in -- 'Boehm v. Goodall', 1911-1 Ch 155 (E) observed at p. 161:

'I think it is of the utmost importance that receivers and managers in this position should know that they must look for their indemnity to the assets which are under the control of the Court. The Court itself cannot indemnify receivers but it can and will do so out of the assets so far as they extend for expenses properly incurred.'

Here the assets are still in the possession and control of this Court, and what the applicant now seeks is to be indemnified out of the assets of the estate and ask to be paid out of the funds in the hands of the present receivers. I will in any event hold that a past receiver can in these circumstances apply pro interesse suo.

10. My attention has been drawn to the amended rules relating to receivers on the Original Side. I do not find that there is anything in those rules which prevents an ex-receiver to come and apply to the Court for payment of money to him on the basis of accounts passed. It is said that under Rule 17 a receiver's account shall show what the balance in hand is, whether any, and if any, what portion thereof is required for the purposes of the estate and how much may be paid into Court, and shall be filed in the Accounts Department of the Registrar's Office, together with an affidavit verifying the same in Form No. 2. Under Rule 21 where no objections are filed or taken by the examining officer, the Court or Judge shall, where otherwise satisfied, pass such accounts. Where objections are filed or taken by the examining officer, the Judge, upon hearing such objections, shall make such order as may be proper. Then follows Rule 22 saying that the Judge on the passing of the accounts, may make such order as to the payment of the balance, appearing due on the accounts, or any part thereof, either into Court or in such other manner as may seem proper. On this it is argued that the 'balance' under Rule 22 means only such balance as is shown under Rule 17. In this case the balance shows 'nil' after setting off the loans advanced by the applicant to the estate. Therefore, it is argued that the sum of Rs. 11,423/- which is allowed on the passing of the accounts was not a sum which could be ordered to be paid as a balance. Now, in this case this appears to me to be a point worse than a technical point. Even on the accounts as passed it will mean that the Court sanctioned the loans which are shown by the applicant's account to have been paid by the applicant to the estate. Therefore, in passing such accounts the Court sanctions such loans as justified. Therefore, although the balance is shown as 'nil' on the accounts it is only on the basis that the loans are proper and have the sanction and approval of the Court.

11. What does a Court do when it passes accounts of a receiver? As I understand this process, it means that the Court through its machinery calls upon the receiver first to produce and file his accounts which are checked with proper vouchers and other proofs before the accounting officer and thereafter they are placed before the Judge who passes them. In passing such accounts the Court must be taken to approve and sanction both the credit and debit entries made in that account. The Court, therefore, in this case sanctioned the entries which the Receiver showed in the accounts as loans advanced by him to the estate. When the Court thus gives authority to the receiver to advance money for the benefit of the estate of which he is the receiver and sanctions such advance he is in law entitled to an indemnity out of the assets for that advance, and in some cases he is even given a charge. That is the law as I have always understood it and that is how I find it is put in Woodroffe's work on receivers, 4th edition 1929 p. 235 and by Warring-ton J. in -- 'Boehm v. Goodall (E)' which I have already quoted. The Court by passing the accounts authorised and sanctioned the loans in this case and the receiver therefore is entitled to be indemnified out of the estate to the extent of such loans.

12. Then the argument on behalf of the respondents is that while the Court sanctions both the debit and the credit entries in the receiver's account, it does not order any payment. It is true that the order itself did not direct payment but why should not the Court order payment now? It is just this payment order that is now sought on this application. What the Court did in the order of 22-4-1952, with the consent of parties was to say that

'out of the total expenditure incurred by the said receiver as shown in the said accounts the sum of Rs. 5000/- be and the same is hereby disallowed and the rest of such expenditure be and the same is hereby allowed.'

To allow an expenditure in one breath and thereafter to say that such expenditure cannot be recovered is to indulge in the barest sophistry and should not be allowed to defeat Court's process and Court's officers. Having allowed the sum of Rs. 11,423/- as a legitimate expenditure incurred by the receiver, I cannot see any reason why I should refuse to use the Court's machinery and procedure for payment of that legitimate sum to the past receiver. It is said that if a suit was brought by a receiver, then he would be faced with limitation. But no suit is necessary in this case. Article 61, Limitation Act only applies to a suit for recovery of money payable but the present proceeding is not a suit and therefore not hit by this special limitation.

13. If the particular receiver had the estate in his possession, then the question of limitation would have been irrelevant because by exercising his own lien he could have recouped himself out of the estate and paid himself the amount allowed on the passing of accounts. Is it going to be different because he has parted himself with the possession of the estate without insisting on his being paid and is the Court going to assent to the proposition that as the particular receiver has lost his own lien for having parted with the possession of the estate he should go without the money which the Court itself has allowed him? In my view the answer must be in the negative.

14. There is in my view a great misconception on the question of receiver's lien. When a Court appoints a receiver of an estate the possession is not so much of the receiver as of the Court. The lien therefore belongs to the Court and the Receiver is only the human agency through which it operates. So long as the Court retains possession the individuality of the receiver is to my mind an irrelevant consideration. Receivers may come and go, but so long as there is a receiver and so long as the Court possesses the estate in its 'custodia legis', it cannot in my view be said that this lien of a receiver is lost by one individual receiver parting with the possession but replaced by another receiver. As the possession belongs to the Court, the Court will see that so long it has the lien no officer as receiver will go unpaid on accounts which the Court has passed on the ground that the particular receiver has been discharged. The doctrine of Common law lien as co-existing with possession must in this context be understood with reference to Court's possession. This of course is subject to the overriding postulate first that the Court continues to retain possession of the estate when the past receiver makes the application and the Court itself has not parted with the possession of the estate by handing it over to parties, and secondly that the Court has passed the account on the basis of which the Receiver asks to be paid. When these two considerations are satisfied, a past receiver in my judgment can apply to be paid such sums as have been allowed on his passing of accounts.

15. I will, therefore, direct that the present receiver do pay in terms of Clause (a) of the Summons the sum of Rs. 11,423/- to the applicant and when the other two orders are taxed, the present receiver will also pay the taxed costs there under within a fortnight of being served with a letterof demand from the applicant stating the taxedcosts. It is agreed by all parties also, that securities in the hands of the present receiver willbe sold only to the extent of the satisfying thesums sanctioned in Clause (a) of the Summons andthe costs of this application. There will also bean order for canceling the Bond and dischargingthe sureties in terms of Clause (b) of the Summons.The costs of all parties appearing in this application including those of the applicant will comeout of the estate. Certified for counsel.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //