Case: Hiralal Patni Vs. Loonkaram Sethiya &amp; Others

to the suit and the court, through the Receiver took possession of the mill and thereafter the Receiver, during the course of the administration of the property, under a compromise arrangement for running the mills leased out the flour mill to the appellant with an express condition that the appellant should redeliver the property to the Receiver on the expiry of the lease. Admittedly the term of the lease had expired, and the court directed the Receiver to take possession of the mill. The court, in our view, was legally competent to confer a power on the Receiver under Order XL, R. 1 (1)(d), of the Code of Civil Procedure to recover the property from the appellant.14. The decisions cited at the Bar are not of much relevance to the present case. Krista Chandra Ghose v. Krista Sakcha Ghose, ILR 36 Cal 52 is a case where a lease was granted by a Receiver acting under an order of court and the possession of,the property, had been given to the lessee, and subsequently certain parties applied to the court for a declaration that the lease was invalid on the ground that it was obtained by collusion. There the court held that no summary order could be passed to set aside the lease and the proper remedy would be by a suit against the Receiver and also against the lessee. In that case the lessee, though he was a party to the suit, acquired a leasehold right under the lease deed and third parties, who offered a higher rent, sought to question the lease on the ground of collusion. Woodroffe, J. held that the dispute could only be decided in a properly instituted suit. The Rajasthan High Court in Manakchand v. Pannalal, AIR 1951 Raj 152 , held that a Receiver could not recover the rent from a lessee in a summary order of the court, but should file a suit just like any other landlord. The Allahabad High Court in. Loonkaran v. I. N. John, AIR 1961 All 59 , though it conceded that where a lease had been executed by the Receiver, the lessee may ordinarily be evicted from the demised property only by a regular suit, hold that where after the expiry of the term of the lease granted by a Receiver, the sublessee in possession gave an undertaking to the court he would vacate the premises in favour of the prospective leassee if to fresh lease was granted in his favour the court has power to eject the sub-leasee in its summary jurisdiction. The learned Judge observed at p. 59 thus :"By giving an undertaking to the court that he would vacate the Mill in favour of the prospective lessee and by bidding in the court-auction the appellant, in our view, submitted himself to the jurisdiction of the court. The appellant could therefore be ejected by summary process, instead of by a suit."So too, the High Court of Travancore Cochin in Sivarajan v. Official Receiver, Quilon District, ILR (1953) Trav-Co. 30 : (AIR 1953 Trav-Co. 205), held that where the period of the lease granted to the receiver had already expired and as per the express stipulation in the lease deed the lessee was bound to surrender possession of the property without, raising any objection at all the court could summarily evict him. The learned Judge made the following observations at p. 39 (of ILR Trav-Co) : (at p. 208 of AIR) :"Even though the lease deed stands in favour of the receiver the express undertaking given by the lessee for an unconditional surrender of the property is in favour of the court .... . . . . .. . . The summary enforcement of the undertaking thus taken by the court is only a step towards the discharge of the duties of the court in the management of the estate and it cannot be said that the court has lost its jurisdiction in that direction merely because the property has been in the possession of a lessee."Further citation would be redundant. These and such decisions seem to hold that a court cannot evict a lessee from a receiver, whether he is a party to the suit or not, in exercise of its summary jurisdiction unless the lease expressly conferred a right of re-entry under the lease deed on the receiver. It is not necessary to demarcate the boundaries of the summary jurisdiction of a court in managing an estate through a receiver, for in this case we are clearly of the opinion that the appellant was in possession of the mill under an agreed and integrated scheme for running the mills by the different partners, though he was put in possession under a document described as a lease deed. In effect the Receiver, during the course of the management, entrusted each mill to one of the partners so that the mills might be properly worked under experienced hands. The appellant expressly agreed to put the Receiver in possession of the mill after the expiry of three years. No question of deciding the conflicting claims of a lessee and a third party arises in this case; nor is the court called upon to pronounce on the vested rights of a lessee in conflict with those of the Receiver. But this is a simple case of a court in the course of its administration of the estate through the agency, of a Receiver making a suitable provision for the running of the mills. As the agreed term had expired the court, in our view, could certainly direct the appellant to put the mill in the possession of the Receiver.15. Lastly it has been brought to our notice that an application for the discharge of the Receiver is pending in the lower court. Any observations that we have made in this judgment are not intended to affect the merits one way or other in the disposal of that application. That application will be disposed of in accordance with law.

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

Explanation:
0[ds]Whatever terminology may have been used, the fact remains that the Receivers were put in charge of the entire property of defendants 1st set, which includes their share in the mills, though it was equally made clear that the Receivers could not directly run the mills without further directions in thatdo not think that the scope of the orders is so limited. The combined effect of the said earlier orders was that the Receivers shall take possession of the entire properties of the two sets of defendants. But the Receivers were not given the power to run the mills without specific directions to that effect by the court. The Civil Judge by his order dated March 25, 1955. evolved a scheme for running the mills, and by that order he laid down the conditions and directed the Receivers to advertise calling for applications from persons, including the Government, who were willing to run the mills. This order was only confined to the three spinning mills. The compromise order in the appeals covered also the flour mill. Though different mills were to be run by different defendants by obtaining lease deeds, that was only a mode evolved for running the mills under the supervision of the court. Under the compromise, the leases were to be executed in favour of the Receiver. It also provided that in case the lessees did not carry out the terms of the lease, the Receiver should take possession of the mill in respect of which default was committed and, with the permission of the court, should lease out the mill to any of the defendants other than the defaulting party. The clauses saving the rights of the parties obviously refer to their rights which were the subject-matter of the suit and they could not have any reference to the terms agreed upon under the compromise order. Under the compromise order, the courts, though by consent, gave directions for running the mills which they left out for future consideration in their earlier orders. The result was that under the earlier orders, all the properties of the defendants were put in possession of the Receivers, and under the compromise order, the Receiver was directed to run the mills under the agreedis manifest from the aforesaid orders that the Receiver was not in possession of the entire property of the defendants, that he was not empowered to run the mills personally, that by subsequent orders he was directed to lease out the mills to the parties in the manner prescribed and that under the final order he was to take over possession and make other arrangements for running the mills. In the premises, we find it very difficult to accept the argument of learned counsel that the Receiver was not put in possession of the mills, but the mills continued to be in the possession of the defendants. We hold on a construction of the relevant orders that the flour mill of the appellant was also put in the possession of the Receiver and that the appellant was running the said mill under the compromiseS. 51(d) nor order XL of the Code of Civil Procedure prescribes for the termination of the office of receivership.We law may briefly be stated thus : (1) If a receiver is appointed in a suit until judgment, the appointment is brought to an end by the judgment in the act on (2) If a receiver is appointed in a suit, without his enure being expressly defined, he will continue to be receiver till he is discharged, (3) But, after the final disposal of the suit as between the parties to the litigation, the receivers functions are terminated, he would still be answerable in the court as its officer till he is finally discharged. (4) The court has ample power to continue the receiver even after the final decree if the exigencies of the case so require.12. Let us now apply the said principles to the facts of the instant case. The order appointing the Receivers did not expressly state that the Receivers term would expire on the termination of the suit. Under the Preliminary decree the plaintiff became entitled to apply for the passing of the final decree for the sale of the property charged and also to get a personal decree against the defendants 1st set and 2nd set for the balance of his claim remaining due after the sale. The preliminary decree expressly directed the Receivers to continue until discharged. Pursuant to the preliminary decree, a final decree for sale of the said properties was made, but the said decree did not in any way modify the direction given in the preliminary decree in respect of the Receivers. The combined effect of the two decrees is that the final decree did not terminate the suit, for the plaintiff would still be entitled to get a personal decree in case the sale proceeds were not sufficient to pay off his dues. It cannot, therefore, be said that the suit has been finally disposed of. That apart, the preliminary decree in express terms directed the Receiver to continue till they were discharged.In the circumstances, we are definitely of the opinion that the Receivers continued by the preliminary decree are entitled to function in that capacity till they arecourt, in our view, was legally competent to confer a power on the Receiver under Order XL, R. 1 (1)(d), of the Code of Civil Procedure to recover the property from the appellant.14. The decisions cited at the Bar are not of much relevance to the presentcitation would be redundant. These and such decisions seem to hold that a court cannot evict a lessee from a receiver, whether he is a party to the suit or not, in exercise of its summary jurisdiction unless the lease expressly conferred a right of re-entry under the lease deed on the receiver. It is not necessary to demarcate the boundaries of the summary jurisdiction of a court in managing an estate through a receiver, for in this case we are clearly of the opinion that the appellant was in possession of the mill under an agreed and integrated scheme for running the mills by the different partners, though he was put in possession under a document described as a lease deed. In effect the Receiver, during the course of the management, entrusted each mill to one of the partners so that the mills might be properly worked under experienced hands. The appellant expressly agreed to put the Receiver in possession of the mill after the expiry of three years. No question of deciding the conflicting claims of a lessee and a third party arises in this case; nor is the court called upon to pronounce on the vested rights of a lessee in conflict with those of the Receiver. But this is a simple case of a court in the course of its administration of the estate through the agency, of a Receiver making a suitable provision for the running of the mills. As the agreed term had expired the court, in our view, could certainly direct the appellant to put the mill in the possession of the Receiver.15. Lastly it has been brought to our notice that an application for the discharge of the Receiver is pending in the lower court. Any observations that we have made in this judgment are not intended to affect the merits one way or other in the disposal of that application. That application will be disposed of in accordance with law.