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Madheshwar Singh Vs. Mohamaya Prasad Singh and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in9Ind.Cas.1027
AppellantMadheshwar Singh
RespondentMohamaya Prasad Singh and ors.
Cases Referred and Shunmugam v. Moidin
Excerpt:
receiver - mortgaged properties--sale in execution of mortgage-decree--appointment of receiver after sale, whether legal--civil procedure code (act v of 1908), order xl, rule 1, sub-rule (1), clause (4)--common manager--bengal tenancy act (viii of 1885), section 95--appointment of common manager as receiver, whether legal. - .....20th march 1905. the properties covered by the decree are of considerable value and extent and a common manager has been appointed by the district judge under the provisions of section 95 of the bengal tenancy act. payments were made from time to time by the common manager towards the satisfaction of the mortgage decree but at the time the last application for execution was made a sum in excess of rs. 1,00,000 was due to the decree-holders. the decree-holders apprehended that the sale-proceeds might not be sufficient to satisfy the judgment-debt, and on the 2nd august 1910 they applied for the appointment of a receiver. during the pendency of this application the properties were sold on the 17th september 1910 and were purchased by the decree-holders. the judgment-debtors forth with.....
Judgment:

1. This appeal is directed against an order by which the Court below has appointed a Receiver under Rule 1, Order XL of the Code of 1908 in respect of properties sold in execution of a mortgage-decree. The decree under execution was obtained so far back as the 20th March 1905. The properties covered by the decree are of considerable value and extent and a common manager has been appointed by the District Judge under the provisions of Section 95 of the Bengal Tenancy Act. Payments were made from time to time by the common manager towards the satisfaction of the mortgage decree but at the time the last application for execution was made a sum in excess of Rs. 1,00,000 was due to the decree-holders. The decree-holders apprehended that the sale-proceeds might not be sufficient to satisfy the judgment-debt, and on the 2nd August 1910 they applied for the appointment of a Receiver. During the pendency of this application the properties were sold on the 17th September 1910 and were purchased by the decree-holders. The judgment-debtors forth with applied for reversal of the sale under Rule 90 of Order XXI of the Code. On the 5th December 1910, when the application for the appointment of a Receiver came up for consideration, it was argued that no Receiver could be appointed, first, because the sale had already taken place, and secondly, because the properties, were in the possession of the common manager. The Subordinate Judge overruled these objections and made an order for the appointment of a Receiver. The Subordinate Judge, however, thought that as the properties were in the possession of the common manager appointed by the District Judge, a reference to him was desirable. The District Judge declined to remove the common manager, but thought that if the common manager was appointed the Receiver, the difficulty might be solved. Thereupon the Subordinate Judge on the 3rd January 1911 appointed Mr. Finch, the common manager, as Receiver of the properties.

2. The propriety of this order has now been assailed on behalf of the judgment-debtors substantially on two grounds, namely, first, that as the sale had already taken place, it was not competent to the Court to appoint a Receiver; and secondly, that as the properties were in the possession of a common manager appointed by the District Judge under the provisions of the Bengal Tenancy Act, it was not competent to any other Court to appoint a Receiver. The questions raised are of some novelty, but after a careful consideration of the arguments which have been addressed to us on both sides, we are of opinion that they ought to be answered in favour of the respondents.

3. In so far as the first ground urged on behalf of the appellants is concerned, Order XL Rule 1, sub-rule (1), Clause (4), provides that where it appears to the Court to be just and convenient, the Court may by order appoint a Receiver of any property, whether before or after decree. With reference to this provision, it has been argued by the learned Vakil for the judgment-debtors that it refers only to cases in which the appointment of a Receiver may be necessary to give effect to the decree and that no Receiver can be appointed after the suit has terminated. Let us assume that the restrictive interpretation suggested is reasonable: we are not prepared to adopt as well-founded the contention of the appellants that a mortgage suit terminates as soon as the sale has taken place. In the case before us, the sale has not been confirmed. The judgment-debtors have presented an application to contest its validity. If that application succeeds and the sale is reversed, it will be obligatory upon the decree-holders to revive the execution of the decree and bring the properties to sale again. In fact it is well-settled that for the purposes of the application of the doctrine of lis pendens, a mortgage-suit continues after the decree till the sale has become final see Surjiram Marwari v. Barhamdeo Persad 2 C.L.J. 288; Parsotam Narain v. Cheda Lal 29 A. 76 : 3 A.L.J. 675 : A.W.N. (1906) 283; Kinisman v. Kinisman 1 Russ. & M. 617; Taml. 399 : 9 L.J. (N. s.) Ch. 276; Higgins v. Shaw 2 Dr. & War. 356 : 1 Con. & L. 400. The view we take is also supported by the decision of a Full Bench of this Court in the case of Bibijan Bibi v. Sachi Bewah 31 C. 863 where it was held that the security is not extinguished till the sale has become absolute, so as to make the proceeds available for distribution. As Sir George Jessel observed in the case of Salt v. Cooper 16 Ch. D. 544 at p. 551 : 50 L.J. Oh. 529 : 43 T.T. 682 : 254 W.R. 553 a cause may be still pending even though there has been final judgment given and the Court has very large powers in dealing with a judgment until in is fully satisfied. It may stay proceedings on the judgment either wholly or partially and the cause is still pending for this purpose and must be considered as pending although there may have been final judgment given in the action, provided that the judgment has not been satisfied. To similar effect is the observation of the same learned Judge in In re Clagett's Estate 20 Ch. D. 637 that a cause is said to be pending in a Court of Justice when any proceeding can be taken in it. The case of Wills v. Luff 38 Ch. D. 197 : 36 W.B. 571 : 57 L.J. Ch. 568 upon which reliance was placed by the learned Vakil for the appellants is clearly distinguishable. There it was ruled that after judgment for foreclosure absolute, as the action is at an end, the plaintiff cannot obtain an order for appointment of a Receiver of the mortgage properties, even though the conveyance to the plaintiff remains to be settled. That principle has obviously no application to cases of decrees for sale, where after Sale, as here, its validity may be questioned, and a fresh sale rendered necessary by reason of successful objections on the part of the judgment-debtor. Even if we hold, therefore, that under Rule 1 of Order XL of the Code, the Court can appoint a Receiver after decree only when such appointment is needed to enable the decree-holder to realise the fruits of his decree, the appointment in the case before us may be amply justified. Here it cannot be affirmed in any sense of the term that the mortgage-suit has terminated; if, therefore, a case is made out for the interference of the Court, a Receiver may be properly appointed in respect of what must still be deemed the subject-matter of the litigation. The essential test is, whether the action is pending Salter v. Salter (1896) P. 291 : 65 L.J.P. 117 : 75 L.T. 7 : 45 W.R.7 and Shunmugam v. Moidin 8 M. 229 at p. 233. In the events which have happened, it cannot be seriously questioned that there is still a pending action in which a Receiver may be appointed. The first contention of the appellants must, therefore, be over ruled. In so far as the second contention of the appellants is concerned, it has been argued that it is not competent to the Subordinate Judge to appoint a Receiver in respect of properties which are already in the possession of the common manager appointed by the District Judge under Section 95 of the Bengal Tenancy Act. It has been suggested that if such an appointment were allowed there might be a conflict of authority between the Receiver and the common manager, and that in any event it would not be competent to the Receiver to remove from possession the common manager, inasmuch as under Order XL, Rule 1, sub-rule (2), the defendants have not a present right to remove him. It has further been argued that as the properties are in charge of the common manager, they are in one sense in the custody of the law and that consequently the appointment of a Receiver is needless. We are not prepared to accept as well-founded the broad contention that the provisions of Order XL, Rule 1 of the Code, are controlled by those of Section 95 of the Bengal Tenancy Act. In our opinion, there may arise cases where a Receiver may have to be appointed in respect of the properties for which a common manager has previously been appointed. The object and scope of the two appointments are entirely distinct. A common manager is appointed by the District Judge where, by reason of disputes between the co-owners of an estate or tenure as to the management thereof, inconvenience to the public or injury to private right is likely to ensue. A Receiver, on the other hand, is appointed by a Court for the protection of the rights of the parties to the litigation. The appointment of a common manager may save the property from mismanagement, but good management may not always be sufficient for the protection of parties who are litigating in respect of that property. Assuming that a property in the possession of the defendant in a suit to enforce a security is well managed, yet for the protection of the rights of the plaintiff mortgagee, the appointment of a Receiver may be essential. If, therefore, a Receiver is appointed in respect of property which is already in the possession of a common manager, the possession of the common manager need not necessarily be disturbed. The common manager under the direction of the District Judge may have to apply a certain portion of the income for the benefit of one or more of the co-sharers. If the interest of such co-sharers in the joint estate is the subject matter of the litigation in which the Receiver is appointed, the effect of the appointment of the Receiver is to entitle him to obtain from the common manager whatever is payable to the co-sharers in question. Such sum, when paid to the Receiver, would be paid by him into Court to the credit of the suit in which he has been appointed. Consequently, it is conceivable that a Receiver may very well be appointed in respect of property which is already in the hands of a common manager and such appointment may be essential for the protection of persons who could not otherwise obtain any control, for the protection of their own rights, over the assets in the hands of the common manager. We are unable to appreciate how there must be a conflict of interest or authority between the Receiver so appointed and the common manager. In the case before us, however, even the possibility of any conflict has been avoided by the obviously reasonable course adopted by the Subordinate Judge. The common manager has been appointed Receiver; as common manager he manages the property under the direction of the District Judge, but the funds in his hands which belong to the judgment-debtors in the mortgage-suit must be applied by him as Receiver under the direction of the Subordinate Judge. The second ground taken on behalf of the appellants consequently fails.

4. The result, therefore, is that the order of the Court below must be affirmed and this appeal dismissed with costs. We assess the hearing fee at five gold mohurs.


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