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1959 DIGILAW 375 (KER)

Jacob v. Subramonia Iyer

1959-11-19

S.VELU PILLAI, SANKARAN

body1959
Judgment :- 1. The revision petitioner claims to be a lessee of the suit properties, under a receiver appointed by court, who cultivated them in the year 1134, M. E. When the receiver advertised for making fresh arrangements for the cultivation of the properties in the year 1135 M. E., the petitioner contended, that he cannot be evicted, by reason of S.4 of the Kerala Stay of Eviction Proceedings Act, 1957, which may hereafter be referred to as the Act. The contention was over-ruled by the order sought to be revised on the ground, that S.4 of the Act is applicable only to a lease which was subsisting on the date of the commencement of the Act, and not to a lease which came into existence afterwards. Clearly, this reasoning cannot be sustained on the terms and provisions of the Act, and counsel for the respondent-receiver in this Civil Revision Petition, was unable to support it. P.T. Raman Nayar, J., by whom this Civil Revision Petition was heard in the first instance, referred it to a Division Bench for decision, as he considered that "the question whether a lease granted by a receiver of court comes within the mischief of Act I of 1957 - quite apart from whether such a receiver can be brought within the term "Official Receiver" so as to make the exemption in S.3 (b) of the Act applicable - is one of general importance". 2.The relevant part of S.4 of the Act is in these terms: "Notwithstanding anything to the contrary, contained in any other law for the time being in force or in any contract, with effect on and from the commencement of this Act, no suit or other proceedings for eviction of a person from his holding shall lie in any court and all suits, proceedings in execution of decrees or orders and other proceedings pending in the courts at such commencement for such eviction shall be stayed". A holding has been defined thus, in S.2 (1) of the Act:-"In this Act, unless the context otherwise requires [1] "holding" means any immovable property held under a single transaction by which a leasehed right in the property is created and possession of the property is transferred by one person in favour of another and includes Kanapattam". A holding has been defined thus, in S.2 (1) of the Act:-"In this Act, unless the context otherwise requires [1] "holding" means any immovable property held under a single transaction by which a leasehed right in the property is created and possession of the property is transferred by one person in favour of another and includes Kanapattam". Wherever the Transfer of Property Act applies, a lease of immovable property, as defined by S.105 of that Act, must be held to involve "a transfer of a right to enjoy such property.' A lease so defined has other characteristics too, but they are not germane to the controversy before us, and need not be considered. It is undoubted that a transfer of a right to enjoy property is a transfer of an interest in property; this was also held in Korah Punnen v. Parameswara Kurup Vasudeva Kurup,1955 K.L.F. 924 (F. B.). A lease was held to be a conveyance and not a mere contract in Ragoonathdas v. Morarji,16 Bombay 568 and in Kandasami Pillai v. Ramaswami Mannadi, 42 Madras 203 (F. B). It may be said to create a right in rem. The right or estate transferred to the lessee, is called the leasehold. Where therefore there is no leasehold, there is no "holding" as defined in the Act. 3. An arrangement of the kind entered into by the petitioner for the cultivation of properties under a court receiver is called a lease in some districts; in others, it is described or referred to as a sale by auction, where auction is held, of the right to collect the usufructs of the properties for a specified period, generally one year, and in some others, as a mere licence. But the terms "lease" and "sale" are used only in a general and loose way. The text-books also make mention of leases by receivers under orders of court. All this, however, is without reference to the definition of "holding", which is a new concept introduced into the Act and into some other enactments in the State of a similar nature. It seems to us, that unless a transaction falls strictly within the definition of a "holding" in the Act, S.4 cannot be made applicable, to it. All this, however, is without reference to the definition of "holding", which is a new concept introduced into the Act and into some other enactments in the State of a similar nature. It seems to us, that unless a transaction falls strictly within the definition of a "holding" in the Act, S.4 cannot be made applicable, to it. A similar view was taken by this court in Rajappa Pillai v. Ponnammal,1958 K.L.T. 844 where in repelling the argument, that the Act does not prescribe, that the lease should be by a person having an interest in the property, T.K. Joseph J. observed as follows: "A lease of immovable property creates an interest therein, and this presupposes that the lessor has some interest in the property which would enable him to convey to the lessee an interest in the property". We endorse this opinion of the learned judge, founded as it is, on the definition of a lease. "A receiver appointed under the general power of the court does not, by the mere fact of his appointment, become vested with any title or estate in the property involved." (Corpus Juris Secundum, volume 75, page 748, Art.105;. "the general rule is, that.; of itself operate to change any title, right or interest or to vest any title or estate in the receiver" (American Jurisprudence volume 45, page 125, Art.151). In India too, the position is not different, and has been stated thus by Mukerjee J., in E M. & Agency & co. v. Fazlul Karim, A. I. R.1926 Calcutta 385: "The property in his [the receiver's] hands is in custodia legis for the person who can make a title to it. In India too, the position is not different, and has been stated thus by Mukerjee J., in E M. & Agency & co. v. Fazlul Karim, A. I. R.1926 Calcutta 385: "The property in his [the receiver's] hands is in custodia legis for the person who can make a title to it. He collects and receives the rents, issues and profits, not upon his own title but upon the title of some persons, parties to the action." The distinction between the case of a receiver under the Insolvency Act and that of receivers appointed under the Civil Procedure Code was stated in Satyanaryana Banerji v. Kalyani Prosad, A.I.R. 1945 Calcutta 387 to be, that "the legal estate in the property of an insolvent is vested in the receiver in insolvency, whereas no property is vested in a receiver appointed under the Code, who is merely the manager appointed by the court of the properties in question." Under the English Law, though a receiver appointed by the court can grant a lease with the consent of the court, " the lessee will not obtain a legal estate unless the legal owner is party to the lease" (Halsbury's Laws of England, 3rd Edition, Volume 23, page 424, Art.1013). 4. It was contended, that under 0.40, R.1 (c) of the Civil Procedure Code, the court can "commit" the property to "the possession, custody or management" of the receiver, and that this implies, that in law, a receiver can have "possession" of the property, as distinguished from mere custody. Even so, it does not follow, that a lease by the receiver constitutes a "holding" within the meaning of the Act. What after all, is the nature of the possession of a receiver? The possession of a receiver is as has been repeatedly stated in several cases, "that of all parties to the action according to their title." The "custody and possession (of the receiver) is that of the law or the court, and is like that of a temporary occupant or caretaker" (American Jurisprudence, Volume 45, page 128 Art.152). In Paterson v. Gas Light & Coke Co. (1896) 2 Ch. In Paterson v. Gas Light & Coke Co. (1896) 2 Ch. Division 476, the relation of a mill company to its receiver appointed by court was stated by Lindley, L. J. to be "not the relation of outgoing and incoming tenant, nor of vendor and purchaser, but that of owner & caretaker", and by Lopes L.J., to be that of "mere custodians placed there by the order of the court; they are mere caretakers". The effect of the appointment of a receiver "is not to oust any party of his right to possession of the property, but merely to retain it for the benefit of the party, who may ultimately appear to be entitled to it." See Basu on Receivers, 1937 Edition page 757. The appointment of a receiver places the property in the physical possession or custody of the receiver as a ministerial officer of the court, having charge of the receivership and accountable to the court, and he has been referred to in some cases "as an arm" in other cases, "as a hand" of the court, and in still others, as "part of its machinery." Thus, in Raja of Venkatagiri v. Isakanalli Subbiah, 26 Madras 410 the actual or physical possession of a property by a Magistrate, by reason of an attachment under S.146, Crl. P.C. was held not to amount to dispossession of either party or to discontinuance of his possession, the seisin or legal possession, being with the true owner during the attachment. The same view was taken in Brojendra Kishore Roy v. Bharat Chandra Roy, 31 Indian. Cases 242. The character of the possession of a receiver who is put in possession pursuant to an order under 0.40, Rule I. C. P. C., cannot be different. In Morrell v. Nayes, 56 M. C. 458-96 Am. Dec. 486, the court observed: "the utmost effect of his [receiver's] appointment is to put the property from that time into his custody, as an officer of the court, but not to change the title or even the right of possession in the property. It The learned counsel for the receiver contended, that notwithstanding the generality of the terms as above, employed in 0.40, R.1 (c), C.P.C., the possession of the court or the receiver is not juridical possession. It The learned counsel for the receiver contended, that notwithstanding the generality of the terms as above, employed in 0.40, R.1 (c), C.P.C., the possession of the court or the receiver is not juridical possession. The Court, of course, is not a juridical person and it cannot take property; this was so decided in Raj Raghubir Singh v. Jai Indra Bahadur Singh, 42 Allahabad 158 and Medhi Alikhan v. Chunni Lal, A.I.R. 1923 Allahabad 834. It was accordingly ruled in The Jaya Motion Pictures Ltd. v. A. Ramakrishna Iyer, 1957 K.L.T. 754, that a receivership for a building does not operate as an order of eviction, as contemplated by the provisions of the Lease and Rent Control Order. 5. The remedies available to a receiver, under a "lease" granted by him, are not all of them, available to a landlord. Where the property is in the possession of a lessee who has accepted the lease with knowledge of the appointment of the receiver, the latter may obtain possession by summary proceedings. Sivarajan v. Official Receiver I.L.R. (1953) T.C. 30 decided, that an express undertaking in the lease deed to surrender the property, can be summarily enforced by the court, the undertaking being really in favour of the court, the principle being, that "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 put in the possession of a lessee it is perfectly within the competence of the court to summarily enforce that undertaking and to evict the lessee from the property". Similarily, where a lease was obtained by fraud, and with the connivance of a receiver appointed under S.146, Crl. P.C., it was set aside summarily, in Meyappa Chettiar v. Nagammai Achi, A.I.R. 1933 Madras 67. Misrepresentation or concealment, of material facts in obtaining a lease from courts is sufficient to justify a summary order cancelling it, as held in Sirish Chandra v. Debendra Nath, A.I.R. 1929 Calcutta 828. In Surendra Keshub Roy v. Doorgasoandery Dosee,15 Calcutta 253, Trevelyan, J, maintained, that "a court has complete power to enforce summarily a contract made by it, when managing or administering an estate, whatever, that contract may be." 6. In Surendra Keshub Roy v. Doorgasoandery Dosee,15 Calcutta 253, Trevelyan, J, maintained, that "a court has complete power to enforce summarily a contract made by it, when managing or administering an estate, whatever, that contract may be." 6. The position may now be summed up. A court or receiver taking possession of property in suit does riot thereby derive any title to it, much less any interest in it, not even a right of possession, except for administering or managing or preserving it for the benefit of the party rightfully entitled to it; if so, there is no interest to transfer or to convey. In administering the property, a court cannot act directly, but has perforce to function through the agency of others; in this respect unlike the court, a receiver can, if he so intends or if the circumstances warrant, act by himself, but in the generality of cases he may find it necessary or expedient not to do so, but only through others To us, it seems inconceivable, that the legislature had intended, by enacting a provision like S.4 of the Act, to interfere with and thereby paralyse the administration of the properties committed to the court, unless there are very strong grounds to believe, that this was intended. The reasons which might conceivably have induced the legislature to curtail or suspend a landlord's right of eviction, do not appear to us to have any application, to that of a court or its officer, who is in no sense a landlord, but who merely preserves the property for the benefit of the party who may be found entitled to it. Confronted with this, the learned counsel for the petitioner had to contend, that the so called 'lease' subsists only during the continuance, and must come to an end upon the termination, of the receivership, relying on the observations of the Travancore-Cochin High Court in Eappen Mathen v. Narayana Iyer Krishna Iyer, A.I.R. 1953 T.C., 268 that a lease by a mortgagee will be determined upon the redemption of the mortgage by the mortgagor. We are not called upon to make a pronouncement on this, but must state, that we are by no means certain, as the learned counsel appeared to be, that once the provisions applicable to a lease are extended to transactions of the character before us, there can be a half-way house in that process, apart from clear legislative provisions. 7. It was next argued, that whereas the Kerala Stay of Eviction Proceedings Ordinance, 1957, which preceded the Act had made an express provision in S.3 (b) exempting "rights created by the Official Receiver or by any officer appointed by a court under the provisions of any law, or by any person holding under or deriving title from any such officer", from the operation of the Ordinance, the corresponding provision in S.3 (b) of the Act has exempted only "rights created by Official Receiver" from the operation of the Act, and that this indicates a conscious departure by the Legislature, from what was intended by the Ordinance. We are free to admit, that the argument is plausible, but must say, that it cannot prevail, unless the basic assumption can be maintained, that the term "Official Receiver", occurring in the Ordinance and in the Act, has the same connotation, and means an "Official Receiver" appointed by Government under S.59 (1) of the Travancore-Cochin Insolvency Act, 1955. The provisions of that Act are clear, that a receiver, not necessarily an Official Receiver, can be appointed by court, in whom property will vest under the law of insolvency. S.59 (1) itself makes provision, that only "such persons as they (Government) think fit" may be appointed Official Receivers, implying that there can be receivers outside that category S.59 (2) specially empowers the court to appoint anyone, other than an Official Receiver, to be a receiver or an interim receiver S.58 makes elaborate provisions for the appointment of receivers in general, for requiring them to furnish security, and for the manner in which they shall exercise their functions S.60 contemplates a case, where the court itself shall have all the rights, and may exercise all the powers of the receiver and under S.78 (ii) the court itself is constituted a receiver. It is impossible to hold, that such receivers, who are not Official Receivers, were left out of the scope of S.3 (b) of the Act. It is impossible to hold, that such receivers, who are not Official Receivers, were left out of the scope of S.3 (b) of the Act. If this is so, the necessary foundation for the argument is lacking; there is neither logic nor reason to limit the extended meaning of the term "Official Receiver", within the confines of the Travancore-Cochin Insolvency Act, 1955. It may well be, that the term was given a wider connotation by the Act. We therefore consider, that the argument is not conclusive. We do not think, that the requirements as observed, of a strict compliance with S.4 of the Act, is satisfied by the arrangement under which the properties in this case were entrusted to the petitioner, by the court receiver. We, therefore, hold, that S.4 is inapplicable to arrangements which are entered into by a court or by a receiver appointed by it, for the cultivation and realisation of the properties involved in a suit. This revision petition is therefore dismissed with costs.