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(Raja) Promothanath Malia Vs. H.V. Low and Co. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1930Cal502
Appellant(Raja) Promothanath Malia
RespondentH.V. Low and Co.
Cases ReferredJugadomba v. Puddomoney
- .....not held by the registrar and also because the colliery being within the district of burdwan, a sale in execution could only be obtained by transfer of the decree for that purpose to the local court. these objections being taken (together with certain others which are without substance and to which i need not refer) the plaintiffs proposed to amend their application by asking in the alternative:that a receiver may be appointed of the said properties with libarty to him to sell the same by public auction to the highest bidder.3. the learned judge has made an order appointing a member of the bar to be receiver of the colliery with power to him to get in and collect the outstanding debts and claims due in respect thereof. he has ordered the defendant to deliver up quiet possession.....

Rankin, C.J.

1. This is an appeal from an order made by Lord-Williams, J., appointing a receiver by way of execution of a colliery called the Challeulpur colliery belonging to the defendant. The plaintiffs on 25th August 1925 obtained a consent decree against the defendant for the sum of four lakhs with certain interest payable by certain instalments. The suit was only a money suit, but the consent decree provided that the decretal amount should be secured by a first charge upon the Challeulpore Colliery with all fittings and fixtures and that in default of payment of any instalment, the plaintiffs should be entitled to execute the decree and

at their option to have the said colliery which is hereby charged sold in execution of the decree made in this suit.

2. The plaintiffs on 5th January 1929 applied for execution of the decree and asked by their tabular statement for an order directing a sale by the Registrar of this Court of the said colliery. This application was clearly misconceived both because sales in execution are not held by the Registrar and also because the colliery being within the district of Burdwan, a sale in execution could only be obtained by transfer of the decree for that purpose to the local Court. These objections being taken (together with certain others which are without substance and to which I need not refer) the plaintiffs proposed to amend their application by asking in the alternative:

that a receiver may be appointed of the said properties with libarty to him to sell the same by public auction to the highest bidder.

3. The learned Judge has made an order appointing a member of the Bar to be receiver of the colliery with power to him to get in and collect the outstanding debts and claims due in respect thereof. He has ordered the defendant to deliver up quiet possession together with all account books, papers etc., relating thereto. He has also directed the receiver to take possession and to collect the issues an profits and has further ordered that the receiver do forthwith sell the said property by public auction to the best purchaser or purchasers that can be got for the same provided he considers that a sufficient sum has been offered.

4. The defendant on this appeal contends that the property not being situate within the ordinary original jurisdiction and the defendant not being resident within the jurisdiction of this Court, the learned Judge had no jurisdiction to appoint a receiver by way of execution or at all; secondly that if the learned Judge had jurisdiction no case can be made to the effect that there was any legal or practical difficulty in procuring the sale in execution in the ordinary course, namely by transfer of the decree for execution to the local Court, and that the order passed is improper and uncalled for.

5. Now while there does not appear to be in the Code any express provision to the effect that immovable property shall only be sold by the Court within whose territorial jurisdiction it is situate and while it cannot be contended that there are not exceptions to this principle, it has frequently been held that the course contemplated by the Code is that sales of immovable property in execution shall be carried out by the local Courts. The leading ease on this point is Prem Chand v. Mokhoda [1890] 17 Cal. 699 (F.B.). Following that case in Begg Dunlop & Co. v. Jagannath [1912] 39 Cal. 104 it was said:

These provisions of Section 38 read along with those of Section 39 plainly indicate the acceptance by the legislature of the general principle that no Court can execute a decree in which the subject-matter of the suit or of the application for execution is property situated entirely outside the local limits of its jurisdiction.

6. In Sivakanda Raju v. Raja of Jeypore A.I.R. 1927 Mad. 627, (at p. 886 of 50 Mad.) the balance of authority is summarized as follows:

The proposition generally laid down in the reported authorities is that a Court his no power to sell property outside its territorial jurisdiction. Territorial jurisdiction is a condition precedent to the Court selling property.

7. Again, in the recent ease of Ambiha Ranjan v. Manikganj Loan Office Ltd. : AIR1929Cal818 it was said:

Where it is necessary in execution of a decree for money to sell property not within the local limits of the jurisdiction of the Court which passed the decree, the sale of the property can only be effected by the Court within the local limits of which the property is situate.

8. These dicta, however, have a primary though not exclusive reference to execution which takes the form defined in Clause (b), Section 51, namely, execution

by attachment and sale or by sale without attachment of any property.

9. When a Court appoints a Receiver, the order merely operates to put the Receiver in possession of the interest of one or more of the parties and a sale by the Receiver is clearly a very different thing from a sale by the Court itself. The principle by which the action of a Court in effecting sales in execution is confined to immovable or other property within its territorial jurisdiction is prima facie not applicable to a sale by a Receiver which need not necessarily be a sale by public auction as distinct from private treaty.

10. Again, as regards the contention that this Court has no jurisdiction in any case to appoint a Receiver of immovable property situated outside its local jurisdiction, it must be conceded that this Court has always made such orders and that authority is against the appellant. There is the decision of Markby, J., in Juggodamba v. Puddomoney [1875] 15 B.L.R. 318, followed recently by Mitter, J., in the case referred to by the learned Judge (Suit No. 145 of 1927). There is, in my opinion, no ground for the proposition that the defendant, although a resident of the District of Burdwan, can resist the appointment of a Receiver upon the ground that he is not ordinarily resident within the limits of the ordinary original jurisdiction of this Court.

11. In England the appointment of a Receiver is often regarded as a form of equitable execution, but in re, Sheppard [1889] 43 Ch. D. 131, the Court of appeal pointed out that the expression tends to error. What a creditor gets by the appointment of a Receiver is not execution but a substitute for execution, a form of equitable relief which is granted on the ground that there is no effective remedy by execution at law. Accordingly there is authority for the proposition that a person seeking 'equitable execution' must show that he was met by difficulties arising from the nature of the property which prevented his obtaining relief at law. In India the distinction between legal and equitable interests is not observed in the full sense in which it is part of the law in 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 for the respondents on this appeal 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 Court's discretion to appoint a Receiver by way of execution. The question which demands our consideration is in my opinion the question whether there were in evidence before the learned Judge circumstances which called for the appointment of a Receiver and justified the learned Judge in doing so at his own hand instead of leaving the plaintiff to apply in the local Court.

12. The main difficulty arises from the circumstance that the respondent's application was amended and converted into an application for a Receiver without any proper statement of facts being included in the affidavits so as to make a case for that form of relief. The evidence before the learned Judge was extremely meagre. From the consent decree itself it would appear, however, that the plaintiffs had been managing agents of the colliery in question. It may be taken, therefore, that the reference to the colliery in the consent decree is a reference to something which has been a going concern and which is, potentially at all events, a going concern. In these circumstances I cannot doubt that the most appropriate method to employ in order to realize plaintiff's decree out of the colliery is the appointment of a Receiver. In the muffasil no doubt it would not be unusual to sell a colliery by the ordinary process of attachment and Court sale without the intervention of a Receiver. This, however, is not a methol which has any merits and it may well be highly improvident again. The agreement between the parties was in substance that the plaintiffs should have a charge and should be able to realize that charge without bringing another suit for the purpose. To enforce a charge by a Court sale in execution is again an ordinary feature of muffasil practice though I am glad to say that it is not a procedure normally applicable under the rules of the original side of this High Court. I am not prepared to read the consent decree as though the only right given to the plaintiffs was a right to have a Court sale of the colliery. It seems to me that it is open to the Court to have the colliery sold in execution in such way as the Court may think most appropriate to the circumstances of the case.

13. Upon the question whether the learned Judge had materials before him upon which to exorcise a sound discretion to appoint the Receiver at his own hand, it appears to me that this aspect of the matter has been overlooked and that there is little or nothing in the evidence before the learned Judge bearing jupon this question. Where the sole purpose of an application is to have immovable property realized by sale, I consider that even where it appears that the appointment of a Receiver with power to sell will be the most appropriate course, prima facie at all events, this application should be made as an application in execution to the Court within whose territorial jurisdiction the property is situate. The Receiver of a colliery, and indeed many other persons interested therein or affected by his appointment directly or indirectly, may have occasion to apply to the Court which appointed the Receiver for directions upon any one of a large number of matters. If the Receiver is appointed by this Court any directions that may be required must be obtained here. There may be all sorts of reasons for which attorneys of this Court and their clients seeking the appointment of a Receiver may find it not inconvenient that any person dissatisfied with any act of the Receiver and desirous of obtaining a direction from the Court should be obliged to incur the additional delay, trouble and expense involved in coming to Calcutta for the purpose. The same reasons, which have induced the Courts to regard with disfavour any departure from the general scheme of the Code even as regards, e.g., the attachment of debts in execution : cf. Begg Dunlop & Co. v. Jagannath ([1912] 39 Cal. 104, apply to an application for appointment of a Receiver, when the main purpose of the appointment is to effect a sale in execution. It is the duty of this Court on its original side to be both careful and sparing in the exercise of its power to make such appointments where the primary subject matter is immovable property outside its jurisdiction. I think it right to lay the greatest stress upon this because I consider that any looseness in practice upon such a matter is likely to lead to confusion and abuse. In the present case I cannot say that upon the evidence there is any proof that it was necessary or even advantageous that this Court should make the appointment of a Receiver.

14. The learned Counsel for the respondents contended at the Bar that it was no more than common knowledge or common sense to say that the sale of a colliery was much more likely to be effected at a proper price if conducted in Calcutta. This certainly seems reasonable, though it is not clear to me that a Receiver appointed by the local Court could not, if necessary, be given by that Court proper directions as to the place of sale. Another consideration, however, is that the machinery of this Court on its original side, if properly applied, would be more effective for the purpose of controlling the Receiver. Thus, it would be possible to direct that the Receiver should act under the directions of the Registrar in getting a proper valuation made of the property in deciding whether the highest bid was sufficient and in other matters. The order under appeal, it may be noted, leaves everything to the Receiver from which I gather that the advantages I have mentioned were not any part of the reasons for which this Receiver was appointed by the High Court. The appointment, so far as I can gather was made because it was the only form of execution open to this Court and it was made, I should judge, on the footing that this Court, as the Court which passed the decree, would enforce its decree if it could as a matter of course. In my judgment, for the reasons I have given, this is not quite the position.

15. It appears to me that it may well be of great importance to both parties that this colliery should be sold in the manner most calculated to produce its true value and that before disposing of this appeal, we should give to the plaintiffs a chance by a further affidavit to show us good reasons why the Receiver should be appointed by this Court. The plaintiffs; will have ten days from this date in which to file their affidavit, the defendant within six days thereafter may file an affidavit in answer and the plaintiffs within four days thereafter may file an affidavit in reply. This case will stand adjourned to Monday, 12th August next.

C.C. Ghose, J.

16. I agree with my Lord in the order proposed to be made by him and it is unnecessary for me to set out once again the facts giving rise to this appeal. In view, however, of the importance of the questions which were argued before us, I desire to say a few words.

17. It was contended on behalf of the defendant-appellant that this Court on its original side has no power to execute a decree like the one in question, because it was a money decree and the defendant was a resident outside Calcutta and this Court is incompetent to realize the decretal amount by the appointment of a Receiver to take charge of immovable property outside the territorial jurisdiction of the Court. It was further argued that although a receivership order may be made by way of 'equitable execution,' the circumstances present on this record did not and could, not justify the Court in making the order which is the subject matter of the appeal. On the other hand, it was contended on behalf of the respondent company that the procedure adopted by them is one which is sanctioned by the Civil Procedure Code in Section 51 thereof and that the circumstances showed that it was just and convenient that execution should be levied by means of the appointment of a Receiver.

18. No doubt the appointment of a Receiver has often been described as one by way of 'equitable execution,' but 'equitable execution' is not execution within the strict meaning of the term. It is really not execution but it is equitable relief which the Court gives because execution at law cannot be had: see in this connexion Morgan v. Hart [1914] 2 K.B. 183; In re, Shephard Atkins v. Shephard [1889] 43 Ch. D. 131; and Levasseur v. Mason and Barry [1891] 2 Q.B. 73. Lord Coleridege, C.J., observed as follows:

A receivership order has been called a step or process of equitable execution. Using language which, to my mind, is plainer and less likely to mislead, I should say that it is an order which shews that, in the judgment of the Court, the person obtaining it would be entitled to execution, but that from some legal impediment execution cannot bo had.

19. Lord Bsher, M.R. in the same case observed as follows:

Formerly the judgment-creditors under such circumstances as these, would have gone to the Court of Chancery, and would have said : 'There is a difficulty a fact existing which prevents us getting the execution to which we should be entitled at common law. Will you assist us to get that which belongs to us subject to the lien? We cannot get it by the sheriff's execution, and we require a process which will enable us to get it otherwise.' The process adopted by the Court of Chancery was to make a receivership order and appoint a Receiver. The Receiver could not, of course, get the goods until the lien-was satisfied, but the moment it was satisfied he could get them. The object of the process was to remove the difficulty of the judgment-creditor being unable to get possession of that to which he had a right, and the moment the difficulty was removed to give the thing in question to the judgment-creditor. That process has been called 'equitable execution.' In one sense it is not execution at all. It is a process which gives to the judgment creditor that to which the judgment has given him a right, and does away with the difficulty of his getting possession of it.

20. It has, however, been held that it, is not always necessary that legal] execution should be exhausted before the appointment of a Receiver by way of 'equitable execution' can be obtained. For instance, if it is shown that legal execution would be futile, but that there is property which could be reached by 'equitable execution,' a Receiver may be appointed without legal execution being issued : see in this connexion Hills v. Webbar [1901] 17 T.L.R. 513. No doubt in this country there has not been for many years past that rigid distinction between law and equity as used to prevail, in England; but there can be no doubt that the rule holds good in India that under ordinary circumstances 'equitable execution' ought not to be allowed to be resorted to where there is no impediment to execution being levied in the ordinary way as provided by the statute.

21. Turning now, however, to the provisions of the Civil Procedure Code, it may be stated at once that at any rate since 1908 execution may be had by the appointment of a Receiver : see Section 51, Civil P.C., but, in my opinion, it is clear that the provisions of Section 51 must ordinarily be read along with the provisions of Sections 38 and 39 of the Code. In other words, in ordinary circumstances territorial jurisdiction is a condition precedent to a Court executing a decree. I do not propose to go through the cases on this subject as they have been very fully dealt with by the learned Chief Justice in the judgment he has just delivered, In this case, however, the parties agreed that the respondent company would have a first charge on the colliery mentioned in the terms of settlement embodied in the decree for the purpose of satisfying the decretal amount and, further, that they would be entitled to have the colliery sold in execution of the decree made in this suit subject to what is hereinafter stated. If the decree-holder in such circumstances makes an application for the appointment of a Receiver and obtains an order as prayed for, such an order in my opinion is not a step or process of 'equitable execution.' In England it has been held that whore a person has a right to payment out of a particular fund the Court could protect the fund in question by an injunction or by the appointment of a Receiver. That this was so held before the Judicature Act of 1873 is clear from the case of Kearns v. Leaf [1864] 1 H. & M. 681. In the case of Cummins v. Perkins [1899] 1 Ch. D. 16, Lindlay M.R. refers to the case of Kearns v. Leaf [1864] 1 H. & M. 681, which was decided, by Vice-Chancellor Page Wood. In Cummins v. Perkins [1899] 1 Ch. D. 16 judgment had been given against the plaintiff, a married woman, for the payment of the defendants' costs which were by the judgment to be payable out of her separate property. As a matter of fact, she had no separate property, except a share to which she was entitled under her sister's will, which was admitted to belong to her for her separate use. Kekewich, J., before whom the matter came in the first instance held that a Receiver should be appointed and, accordingly, appointed a Receiver of the fund. The matter was taken to the Court of appeal and Lindley, M.R. observed as follows;

The learned Judge did that which I think he had ample jurisdiction to do, he appointed a receiver to protect the fund and to preserve it in order that it may be applied in accordance with the judgment which the defendants had obtained. It is said that this order was wrong. It is said that it amounts to 'equitable execution,' and there has been some discussion upon that footing. But we are dealing with equitable estates and a judgment that a debt is to be and out of a particular equitable estate. That being so, the authorities, which were very familiar 35 or 40 years ago, show plainly that, quite independently of the Judicature Act, 1873, if a plaintiff had a right to be paid out of a particular fund he could in equity obtain protection to prevent that fund from being dissipated so as to defeat his rights. He might not have had a specific charge on the fund so as to give him priority, but, after a long series of decisions, there was some doubt about it at one time, the Court settled that a person who had a right to be paid out of a particular fund could obtain an injunction (and if an injunction, it followed on principle that he could obtain a Receiver) in a proper case to protect the fund from being misapplied.

22. In the sam6 case Chitty, L.J., observed as follows:

It seems to me that the appointment of a receiver falls within the principle of the case to which the Master of the Rolls referred during the argument : Kearns v. Leaf [1864] 1 H. & M. 681. No doubt in that case the right to be paid out of the fund was by contract, but I can see no difference in principle between such a case and one in which the right is conferred by an order of the Court.

23. I have referred to these cases for the purpose of shewing that the appointment of a receiver in such circumstances is not a step or process of 'equitable execution,' but the present case is stronger in this that the respondent company had under the decree of this Court got a fir3t charge on the colliery in question. The question, therefore, reduces itself into this whether the decree in question could be executed by the sale of the colliery which, admittedly is outside the jurisdiction of this Court on its original side. At this distance of time it is unnecessary to go into the history of the powers of this Court on its original side. This Court succeeded the Supreme Court and on its original side it had and has all the powers which the>supreme Court had.

24. The supreme Court was a Court of equity and under Clause 18, Letters Patent of the supreme Court, it assimilated its powers and authority to the Court of Chancery in England, The process of the Court of Chancery was in its origin against the person in order to enforce a decree, but in time from experience of the evils attendant on this mode of procedure, it had recourse to a species of process against the property itself by means of writs of sequestration, The supreme Court adopted these processes and exercised its jurisdiction over immovable property situate outside the limits of Calcutta. In other words, the supreme Court executed its decrees by the appointment of receivers of immovable property outside Calcutta.

25. This practice was adopted by this Court Ion its original side and has been exercised in numerous cases: see in this connexion the remarks of Markby, J., in Jugadomba v. Puddomoney [1875] 15 B.L.R. 318. The view I take, therefore, is that this Court on its original side can in a proper case appoint a Deceiver of property outside its territorial jurisdiction. Whether, however, a proper case has been made out in the present instance is another matter. It is unnecessary for me to elaborate that question because it has been referred to very fully by the learned Chief Justice. I entirely agree with him, if I may say so, that the present record shows a striking lack of materials upon which the appointment of a receiver could be justified, but in view of the peculiar nature of the property proposed to be sold by the appointment of a Receiver, I think an opportunity should be given to the parties to adduce before us fresh materials.

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