Case: Anthony C. Leo Vs. Nandlal Balkrishnan

with the provisions of such statute. The Court in such cases has no jurisdiction to pass orders and direction affecting the right of the tenant protected, controlled or regulated by the Rent Act on the score of expediency in passing some order or direction for the maintenance and preservation of the property in custodia legis.18. It is to be indicated that though a tenant of a property in custodia legis cannot be deprived of statutory protection of the rights of tenant vis-a?-vis landlord, a tenant cannot claim protection of any assumed right not flowing from the incidences of tenancy. For example, if a tenant starts making some unauthorised construction in the tenanted premises threatening safely and security of the tenanted premises or of the building as a whole, the landlord can certainly prevent such activities by the tenant by bringing appropriate action in Court seeking prohibitory and mandatory order against the tenant without seeking his eviction. Such right of the landlord must be held to be in addition to his right to seek eviction under the appropriate tenancy law, if permitted.19. In our view, if a tenant resorts to unauthorised and illegal activity in respect of tenanted premises when such premises is in custodia legis, for prevention of such illegal and unauthorised activities not consistent with any right flowing from the incidence of his tenancy, it may not be necessary to institute a suit for preventing the tenant from such illegal activities, but the Court, being apprised by the receiver of such illegal activities of a tenant, thereby obstructing the Courts overall supervision and concern for preserving or maintaining the property in custodia legis, will be within its right to pass suitable order or direction against the tenant for prevention of illegal and unauthorised activities after giving the tenant reasonable opportunity, to place his defences against allegation of unlawful and illegal activity. What should be the reasonable opportunity must depend on the facts of each case. The Court, in such a case, should ensure broadly that the tenant is not deprived of the reasonable opportunity to which he would have been entitled if an action against him in a Court of law had been brought on such complaint. 20. It appears to us that since the Court must be presumed to be fully unbiased in deciding the allegation of unauthorised and illegal activities of a tenant causing prejudice against the lawful owner in the matter of preservation and maintenance of the property pendente lite, the necessity of adjudication of such dispute by another Court by bringing a legal action before it, as a matter of course, is neither necessary nor expedient. It, however, should be made clear that if for the purpose of deciding the dispute of unauthorised and illegal activity affecting maintenance and preservation of the property in custodia legis it becomes necessary, to determine any right claimed under a statute or flowing from some action inter parte as may he pleaded and required to be decided, it is only desirable that the Court would refrain from such determination in the summary proceeding initiated before it on the complaint of the receiver or a party to the suit and the court will direct the receiver to seek adjudication of the dispute before a competent Court by bringing appropriate legal action. Save as aforesaid, it will not be correct to contend that in no case the Court exercising control and supervision of the property in suit by appointing a receiver will be incompetent even to pass direction against a third party for the purpose of preservation of the property, once such third party pleads defence in justification of his action. The question of summary adjudication by the Court appointing the receiver or relegating the receiver to a regular suit for adjudication of the dispute concerning third party will depend on the nature of dispute and the defence claimed by the third party.21. In the facts of the case, however, it appears, to us that the appellant tenant has come out with a specific case that the structures in question were there before his induction as a tenant. In support of such contention, a number of supporting affidavits have been filed. The appellant has also contended that the landlords and the receiver were fully aware of the existence of the structures long back, and according to the appellant, at one point of time an agreement was reached between the landlords and the appellant for payment of a sum of Rs, 120/- for such construction covering about 60 sq. ft. besides further amount on account of additional premium to be paid by the landlords and an Advocates letter was sent to the receiver apprising the receiver of such understanding between the parties.22. The appellant has also claimed right to operate in a portion of the tenanted premises a permit room for serving liquor to the customers of the hotel after obtaining licence from the statutory authority on the footing that such right is incidental and ancillary to his right to operate an eating house or restaurant. Such contentions should not be decided in a summary proceeding to dispose of reports of the receiver or a complaint by a party to the suit about alleged illegal activities by a tenant in a property in suit. Any summary disposal of such dispute on the claim of some legal right by the tenant is likely to seriously affect the tenant, because once some constructions in the tenanted premises are removed on a finding that such constructions were made illegally and unauthorisedly by the tenant, the tenant not only suffers the said direction of removal at present but becomes liable to be evicted from the suit premises for such unauthorised construction by him. Similarly, the finding against the tenant on the question of running a permit room cannot but seriously affect the tenants right to operate a permit room and is also likely to expose him to the risk of being evicted from the suit premises.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]20. It appears to us that since the Court must be presumed to be fully unbiased in deciding the allegation of unauthorised and illegal activities of a tenant causing prejudice against the lawful owner in the matter of preservation and maintenance of the property pendente lite, the necessity of adjudication of such dispute by another Court by bringing a legal action before it, as a matter of course, is neither necessary nor expedient. It, however, should be made clear that if for the purpose of deciding the dispute of unauthorised and illegal activity affecting maintenance and preservation of the property in custodia legis it becomes necessary, to determine any right claimed under a statute or flowing from some action inter parte as may he pleaded and required to be decided, it is only desirable that the Court would refrain from such determination in the summary proceeding initiated before it on the complaint of the receiver or a party to the suit and the court will direct the receiver to seek adjudication of the dispute before a competent Court by bringing appropriate legal action. Save as aforesaid, it will not be correct to contend that in no case the Court exercising control and supervision of the property in suit by appointing a receiver will be incompetent even to pass direction against a third party for the purpose of preservation of the property, once such third party pleads defence in justification of his action. The question of summary adjudication by the Court appointing the receiver or relegating the receiver to a regular suit for adjudication of the dispute concerning third party will depend on the nature of dispute and the defence claimed by the third party.21. In the facts of the case, however, it appears, to us that the appellant tenant has come out with a specific case that the structures in question were there before his induction as a tenant. In support of such contention, a number of supporting affidavits have been filed. The appellant has also contended that the landlords and the receiver were fully aware of the existence of the structures long back, and according to the appellant, at one point of time an agreement was reached between the landlords and the appellant for payment of a sum of Rs, 120/for such construction covering about 60 sq. ft. besides further amount on account of additional premium to be paid by the landlords and an Advocates letter was sent to the receiver apprising the receiver of such understanding between the parties.22. The appellant has also claimed right to operate in a portion of the tenanted premises a permit room for serving liquor to the customers of the hotel after obtaining licence from the statutory authority on the footing that such right is incidental and ancillary to his right to operate an eating house or restaurant. Such contentions should not be decided in a summary proceeding to dispose of reports of the receiver or a complaint by a party to the suit about alleged illegal activities by a tenant in a property in suit. Any summary disposal of such dispute on the claim of some legal right by the tenant is likely to seriously affect the tenant, because once some constructions in the tenanted premises are removed on a finding that such constructions were made illegally and unauthorisedly by the tenant, the tenant not only suffers the said direction of removal at present but becomes liable to be evicted from the suit premises for such unauthorised construction by him. Similarly, the finding against the tenant on the question of running a permit room cannot but seriously affect the tenants right to operate a permit room and is also likely to expose him to the risk of being evicted from the suit premises.Giving our careful consideration to the facts and circumstances of the case and submissions made by the learned counsel for the parties, it appears to us that a receiver is appointed by the Court when the Court entertains a view that for preservation of the properties in suit, till the rights of parties to the suit are finally adjudicated, such properties should be preserved by exercising control and supervision of the same through the officer of the Court, the receiver. The Court becomes custodia legis of the properties in suit in respect of which receiver is appointed. Such de Jure possession of the Court through its receiver, however, does not bring about vesting of the properties in receiver or in Court free from incumbrances even pendente lite. Despite appointment of a receiver, rights and obligations of third parties in respect of properties in custodia legis remain unaffected. Where a receiver appointed by the Court is in actual physical possession of a property, no one, whoever he may be, can disturb the possession of the receiver and the Court may hold such person who disturbs receivers possession as guilty for committing contempt of Court. A man, who thinks he has a right paramount to that of receiver, must, before he takes any step of his own motion, apply to the Court for leave to assert his right. Grant of leave in such case is the rule and refusal to grant leave is exception (Everest Coal Company Pvt. Ltd. v. State of Bihar. The rule that receivers possession will not be disturbed without leave of the Court is, however, not applicable if the receiver is not in actual physical possession of the property.16. Since the properties in a suit is being managed, maintained and administered by the Court through receiver, the receiver is under an obligation to take all reasonable steps for preservation and maintenance of such properties. If for such preservation, action in civil on criminal Court is necessary, receiver is to draw the attention of the Court of relevant facts necessitating such legal action and take leave of the Court to institute appropriate legal proceedings for the preservation of the property. As the property does not vest free from incumbrances in custodia legis by annulling all rights and obligations attached to the property, the receiver cannot interfere with any right of the third party.(2) of Rule 1 of Order 40 of the Code of Civil Procedure provides : "Nothing in this rule shall authorise the Court to remove from possession or custody of property any person whom any party to the suit has not a present right to remove."Suchclearly indicates that the Court and its officer, the receiver, does not possess any right higher than the right a party to the suit possesses.17. Where a Rent Act is applicable, the inter se rights and obligations of the landlord and tenant are regulated and controlled by such Rent Act. In areas where any special law governing, the incidences of tenancy is not applicable, the law relating, to lessor and lessee as envisaged by the general law of the land, namely, Transfer of Property Act, will regulate and determine inter se right and obligations which a third party may have in respect of a property in which a receiver has been appointed, the receiver, like a party to the suit, will have same limitation. The receiver will be bound by the incidences of tenancy flowing from the statute regulating and determining inter se rights of landlord and tenant. Therefore, there is no manner of doubt that no order for eviction of the tenant can be passed by the Court at the instance of its officer, the receiver, without taking recourse to appropriate proceedings for eviction of the tenant under the appropriate statute regulating and governing the inter se rights of landlord and tenant. It may also be emphasised here that even apart from an eviction proceeding, any incidence of tenancy which is regulated and controlled by a special statute cannot be altered, varied on interfered with except in accordance with the provisions of such statute. The Court in such cases has no jurisdiction to pass orders and direction affecting the right of the tenant protected, controlled or regulated by the Rent Act on the score of expediency in passing some order or direction for the maintenance and preservation of the property in custodia legis.18. It is to be indicated that though a tenant of a property in custodia legis cannot be deprived of statutory protection of the rights of tenantlandlord, a tenant cannot claim protection of any assumed right not flowing from the incidences of tenancy. For example, if a tenant starts making some unauthorised construction in the tenanted premises threatening safely and security of the tenanted premises or of the building as a whole, the landlord can certainly prevent such activities by the tenant by bringing appropriate action in Court seeking prohibitory and mandatory order against the tenant without seeking his eviction. Such right of the landlord must be held to be in addition to his right to seek eviction under the appropriate tenancy law, if permitted.19. In our view, if a tenant resorts to unauthorised and illegal activity in respect of tenanted premises when such premises is in custodia legis, for prevention of such illegal and unauthorised activities not consistent with any right flowing from the incidence of his tenancy, it may not be necessary to institute a suit for preventing the tenant from such illegal activities, but the Court, being apprised by the receiver of such illegal activities of a tenant, thereby obstructing the Courts overall supervision and concern for preserving or maintaining the property in custodia legis, will be within its right to pass suitable order or direction against the tenant for prevention of illegal and unauthorised activities after giving the tenant reasonable opportunity, to place his defences against allegation of unlawful and illegal activity. What should be the reasonable opportunity must depend on the facts of each case. The Court, in such a case, should ensure broadly that the tenant is not deprived of the reasonable opportunity to which he would have been entitled if an action against him in a Court of law had been brought on such complaint.