JUDGMENT 1. This is an application on behalf of Mill Stores and Cotton Company (Private) Limited, inter alia, for an order that Mr. Probhat Kumar Pal, the Receiver appointed in extra-ordinary suit No. 7 of 1955 (United Bank of India Limited v. Mahaluxmi Cotton Mills Limited (In Liquidation), do out of the assets in his hands pay to the petitioner the sum of Rs. 58,605. 35 or such other sum as he may be directed to pay by this Court in preference to all other creditors of the Mill. 2. It appears that on January 10, 1955 the Mahaluxmi Cotton Mills Limited, hereinafter called "the company" was ordered to be wound up by this Court. On the 25th January, 1955, Mr. P. K. Pal, Barrister-at-Law, was appointed the company's official liquidator. By an order dated the 3rd February, 1955 the Official liquidator was given leave, inter alia, to carry on the business of and to run the mill of the company. Leave was also granted to the liquidator to buy and enter into contracts for purchase of (i) cotton, (ii) stores, (iii) coal, (iv) dye-stuff and other chemicals and (v) all other articles and accessories that would be required for running the mill and to pay the price thereof from the funds of the company. Thereafter on November 28, 1955, an order was made in extra-ordinary suit No. 7 of 1955 [united Bank of India Limited v. Mahaluxmi Cotton Mills Limited (In Liquidation) and Ors. ] appointing Mr. P. K. Pal, the liquidator, as Receiver in the suit. The Receiver was directed to work the mills on the same terms and conditions as were mentioned in the order relating to the running of the mill and made in the liquidation proceedings. While the Receiver under Order of this Court was running the mill he placed diverse orders with the petitioner from time to time for supply of various quantities of cotton at agreed rates. The petitioner made supplies to the Receiver in terms of his orders. The petitioner submitted bills to the Receiver who also made various part payment from time to time. After appropriating these payments on the 5th July, 1960, according to the petitioner, a sum of Rs. 58,608. 35 became due and payable by the Receiver. By letter dated the 29th December, 1960 the Receiver acknowledged his liability for the sum of Rs. 38,813. 40 only. After appropriating these payments on the 5th July, 1960, according to the petitioner, a sum of Rs. 58,608. 35 became due and payable by the Receiver. By letter dated the 29th December, 1960 the Receiver acknowledged his liability for the sum of Rs. 38,813. 40 only. I learned Counsel for the petitioner has submitted to me that his client is willing to accept this sum of Rs. 38,813. 40 in full settlement of his client's claim. On July 6, 1959, the Official Liquidator was directed to sell the mill On the 18th March, 1960 the sale of the mill to one Gajraj Pannalal for Rs. 13. 00 000/- was confirmed by this Court. The sale proceeds are now in the hands of the Receiver. The first contention on behalf of the United Bank of India Limited is that it was the mortgagee of the mill in question and its claim has priority over the claim of the petitioner. A similar question arose in the case of K. Rajagopalachari v. Jamal Ayisha Bibi (1) A. I. R. 1925 Madras 571. In this case a landlord had a decree for arrears of rent against a tenant who carried on a printing press in the premises. A Receiver was appointed in the course of the execution of the decree and was directed by the Court in the presence of all the parties to sell the press for the best price obtainable and meanwhile to keep it running as a going concern and to pay the rents due to the landlord. Another person held a mortgage on the stock-in-trade of the press. Though not a party to the landlord's suit he became aware of the appointment of a Receiver and applied to the Court that the Receiver appointed in the suit for rent should be appointed Receiver in his own mortgage suit. He opposed the removal of the press from the landlord's premises and asked that the defendant should be restrained by an injunction from removing it. It was held that the mortgagee acquiesced in the housing of the property in the landlord's premises and in the employment of a Receiver to preserve the property and he took the benefit of its being preserved. It was held that the mortgagee acquiesced in the housing of the property in the landlord's premises and in the employment of a Receiver to preserve the property and he took the benefit of its being preserved. he could not afterwards claim to have the properties without paying any rent and his claim to the proceeds of the mortgaged property could not be given precedence over the landlord's claim for rent for the period during which the property was in the Court's management and over the claims of the Receiver for his remuneration and expenses of management. 3. The observations in this case of the learned Judges of the Madras High Court are relevant to the point urged before me. At page 572 Spencer, C. J. has said that if in pursuance of the Court's order the Receiver had mortgaged the press for raising a fund to defray the costs of his management that mortgage would have taken precedence over the mortgagee's security. At page 573 Srinivasa Aiyangar, J. observes as follows:- ". . . . When property is placed in custodian legist by the appointment of a Receiver, all the orders passed by the Court for the management of such property will be binding on all persons who, if not actual parties to the suit, have so conducted themselves, either with regard to the liquidation, or with regard to the management of the property, under the directions of the Court as to make themselves virtually or constructively parties to the suit, or have otherwise submitted themselves to such management by the Court. " 4. With respect I agree with these observations. In the instant case at first the liquidator was asked by the Court to carry on the business of the Company and to run the Company's mill. Then in the suit of the United Bank itself the same person is appointed the Receiver and is empowered to run the mill on the same terms and conditions as he was directed to run as a liquidator. This Order in the suit of the United Bank is binding on the bank and it is idle for it to contend that the expenses incurred by the Receiver in running the mills should not have priority over the bank's claim, if any. This Order in the suit of the United Bank is binding on the bank and it is idle for it to contend that the expenses incurred by the Receiver in running the mills should not have priority over the bank's claim, if any. The bank has taken full advantage of the Receiver's running of the mill which had been sold as a going concern and had obviously fetched a much larger price than would have been the case if the mill had been closed. In these circumstances the bank, in my opinion, cannot say that debts incurred by the Receiver in running the mill in pursuance of the order of this Court should not have precedence over the bank's alleged claim. It has also been urged on behalf of the bank that there are reasons to doubt the genuineness of the petitioner's claim and the petitioner should be relegated to a suit. According to learned counsel for the bank the sale of the mill to Gajraj Pannalal was confirmed on March 18, 1960; but it appears from the annexure to the petition that the major portion of the petitioner's claim arose on the 31st March, 1960 and thereafter. Secondly, the petitioner has claim in this application a sum of Rs. 58,608. 35; but strangely enough it is now willing to accept only Rs. 38,830. 40 admitted by the Receiver. 5. The summons in this application was taken out and served on the Bank's solicitors on the 18th February, 1961. The petition in support of the summons was also verified by one Siddhartha K. Dey, Director-in-Charge of the petitioner on the 18th February, 1961. In paragraphs 10, 11 and 12 of the petition the claim for Rs. 58,608. 35 has been made; the Receiver's letter of the 29th December, 1960 acknowledging liability for the sum of Rs. 38,813. 40 has been referred to; and it is said that as the petitioner's dues arose out of working of the mill and form part of the Receiver's costs of management they were payable in priority to all other dues of the company. 6. More than a month after the service of a copy of the summons on the bank's solicitors Hiralal Gupta the agent of its Royal Exchange Branch affirmed his affidavit-in-opposition on the 24th March, 1961. 6. More than a month after the service of a copy of the summons on the bank's solicitors Hiralal Gupta the agent of its Royal Exchange Branch affirmed his affidavit-in-opposition on the 24th March, 1961. In this affidavit there is no direct challenge either to the quantum of the petitioner's claim or to the amount admitted by the Receiver. All that is said in paragraphs 5 and 6 of this affidavit is that the deponent has no knowledge of the statements made in paragraphs 10 and 11 of the petition and does not admit the same. Then, with reference to paragraph 12 of the petition the deponent denies that the petitioner's alleged dues are payable in priority to all other dues or to the dues of the bank. The Receiver, however, has stated in paragraph 10 of the affidavit affirmed on the 27th February, 1961 as follows:- "the allegations contained in paragraph 11 of the said petition are substantially correct. I say that on taking of account the amount due to the petitioner is Rs. 38,813. 40. The petitioner did not receive payment of his dues as the correct bills were not submitted and the petitioner's claimed amounts were much in excess of the petitioner's real dues. I crave leave to refer to the statement of account of the petitioner as kept in my office at the time of the hearing of the application. " Since learned counsel for the petitioner is now willing to accept this sum of Rs 38,813. 40 in full satisfaction of the petitioner's claim and there are no allegations against the Receiver, I see no justification for a further enquiry into the amount due purely on suspicions sought to be raised at the hearing. 7. The next contention of the bank is that in paragraphs 2 and 3 of his affidavit-in-opposition affirmed on the 27th February 1961 the Receiver has stated that on the 19th January 1961 and the 1st February 1961 two several applications were made by the petitioner for the same reliefs but these have net yet been disposed of. In the premises, the present application, according to learned counsel for the bank is not maintainable. I have looked into the summons taken out on the 19th January 1961 and the one which the petitioner took out on the 1st February 1961. These were applications against Mr. In the premises, the present application, according to learned counsel for the bank is not maintainable. I have looked into the summons taken out on the 19th January 1961 and the one which the petitioner took out on the 1st February 1961. These were applications against Mr. Probhat Kumar Paul not in his capacity as Receiver but in his capacity as Official Liquidator of the Company. Learned counsel for the petitioner has also submitted to me that both of them have been abandoned. When a party abandons a summons, which has been served with notice of his intention to use any affidavit, he shall pay to the other party, or to each of the other parties entitled to separate costs, such costs as may be allowed by the Taxing Officer, who is required to tax such costs on production to him of the copy of the summons left at the time of service, without any formal order being drawn thereon directing such taxation; Vide Ch. VI, Rule 20 of the Original Side Rules. For reasons aforesaid I am of opinion that this contention of the bank ought to be overruled. 8. I now come to the point which has been strenuously urged on behalf of the United Bank of India Ltd. Mr. Mitter, learned counsel for the bank, has argued that in this application the petitioner is asking for a decree in its favour which can be passed only on an application under Ch. XIIIA of the Original Side Rules or on an application for final judgment. In course of their arguments learned counsel for the parties have invited my attention to a number of authorities. I propose in this judgment to refer to some of them which, to my mind, are relevant for deciding the points raised. In Kerr on "receivers", 12th Edition, at page 189, it is observed as follows :- "a person who is not a party should apply by summons in the action for payment out of a fund in court or by the Receiver personally of a debt due to him, where the Receiver is personally liable for the debt and where it may be ultimately payable by subrogation out of the fund. " In the foot note to this observation two cases have been mentioned, namely, re: Ernest Hawkins and Co., (2) 31 T. L. R. 247 Brockle Bank v. E. London Railway, (3) 12 Ch. Division 839. 9. Mr. Mitter contends that none of these two cases lends any support to the proposition of the learned editors of this text book. I shall, first deal with Brockle Bank's case. This was a debenture-holder's action in which a Receiver of the defendant's undertaking was appointed. The Receiver was ordered to pay all expenses for maintenance, management and working of the undertaking and any party was to be at liberty to apply as to any payments to be made by the Receiver. The Great Eastern Railway Company which was not a party to the suit, obtained a judgment for 800/- for two years' rent, 415/4 for expenses and 10,000/- for two years' toll under an agreement. The G. E. R. Company took out a summons in the debenture-holder's suit for a direction on the Receiver to pay out the decretal amounts to it. Fry, J. at pages 842 and 843 observed as follows:- "but it is said on the part of the plaintiffs, and I think rightly, that such an order gives no right to every person to whom the Receiver may owe money for expenses, still less to every person to whom the Company may owe money for expenses, to come and ask for payment of his claim, brevi manu, out of the funds in Court the produce of the profits received by the Receiver. It is evident that if such a construction could be given to the order, it would be somewhat extraordinary that liberty should be expressly given to the parties to the action to apply as to any payments to be made by the Receiver, because then every person but the parties to the action would be entitled to apply without having liberty expressly given to him. Such a construction would lead to great inconvenience and it is certainly, according to my view, not the proper construction to be put on such an order. The parties have liberty to apply in order that the Receiver, if he is not doing his duty, may be called to account by any of them, but third parties have no right to be Judges of the directions given to the Receiver. The parties have liberty to apply in order that the Receiver, if he is not doing his duty, may be called to account by any of them, but third parties have no right to be Judges of the directions given to the Receiver. I think the inconvenience of holding otherwise would be very great indeed. . . . . . Further then that it is to be observed that their claim is not against the Receiver in any proper sense but against the company in respect of a judgment which has been recovered against them. " 10. The head note of this case is as follows :- "a person who is not a party to an action is not entitled to apply by motion for payment of money to him by a Receiver appointed in the action, even though his claim is made in respect of a debt properly payable out of the funds in the receiver's hands. " This head note has been quoted in Daniell's Chancery Practices, 8th Edition, Volume II at page 1483 and again at page 1491. The distinguishing features of this case are that (1) the Receiver was appointed on the 14th November, 1878 and the applicant's claim was in respect of an agreement entered into on the 17th December, 1869 with the Company: the debt was not incurred by the Receiver: (2) it was provided by the Order appointing the Receiver that any party was to be at liberty to apply as to any payment to be made by the Receiver, and generally as he may be advised, in other words liberty to apply was specially and expressly given to the parties to the action; and (3) the applicant had no specific right in the funds in Court (vide page 843) Brocklebank's case has been noted in the third edition of Halsbury's Laws of England (Volume 32) at page 422 under Article 693. The article opens with the proposition that a judgment creditor may be granted either an order on the Receiver for payment of what is due to him or leave to levy execution. Reference is made to Brocklebank's case in the footnote and it is observed that the order will not, however be made brevi manu where title receiver of a railway undertaking has been directed to pay working expenses with liberty to the parties to apply as to payments. Reference is made to Brocklebank's case in the footnote and it is observed that the order will not, however be made brevi manu where title receiver of a railway undertaking has been directed to pay working expenses with liberty to the parties to apply as to payments. This decision therefore, is not, in my opinion, contrary to the general principles enumerated in Kerr on 'receivers' I have quoted above. 11. The other case referred to in that Book is In res Ernest Hawkins and Company Limited (2) 31 T. L. R. 247. This was also a debenture-holder's action against a company and a receiver and manager was appointed who was Empowered by an order made in the action to borrow not more than 300 to carry on the business. The Receiver and Manager gave an order for goods on the understanding that he was not to be personally liable. In giving this order he was contracting in excess of the sum of 300. During the proceedings in the action a summons was taken out by the creditor for an order that the Receiver and Manager should pay him out of the assets or out of his moneys. At page 248 Astbury, J. observes as follows:- "here the applicant, in the middle of proceedings in the action, has taken out a summons to make the Receiver and Manager personally liable contrary to the terms of the contract and knowing that it was doubtful if his and similar debts would be paid in full out of the assets. The applicant had no right at this stage to try to obtain payment in this way. These and other matters will be investigated when the Receiver's accounts are taken in the action. " 12. The applicant in this case, it appears, took out a summons and wanted to make the Receiver personally liable. The Court did not say that the procedure was incorrect but that the application could not be entertained at that stage in the middle of the proceedings. It is from this point of view, I think that, the learned Editors of Kerr on 'receivers' have made the above observations. I. was referred to the judgment of Sale, J. in Coomar Sattya Sankar Ghosal and others v. Ranee Golapmonee Dabee and others (4) 5 C. W. N. 223. This case is not relevant to the matter under consideration. It is from this point of view, I think that, the learned Editors of Kerr on 'receivers' have made the above observations. I. was referred to the judgment of Sale, J. in Coomar Sattya Sankar Ghosal and others v. Ranee Golapmonee Dabee and others (4) 5 C. W. N. 223. This case is not relevant to the matter under consideration. The learned Judge has held that if there is any liability attaching to the Receiver other than that which appears on the face of the accounts the proper course is to sue the Receiver for the purpose of establishing that liability. It is impossible on an application to pass a Receiver's accounts to go into serious questions with regard to his liability and responsibility, which are really not dependent upon the accounts filed by him, but arise independently of his accounts. Questions of this sort can only be satisfactorily dealt with by suit. The reason for this decision, as stated by Sale, J, is that, the only question which properly arises on an application by a Receiver to pass his accounts is as to the items of that particular account and involves the enquiry whether all his collections, made on behalf of the properties of which he is the Receiver, are duly entered into the accounts, and next whether all his disbursements are payments properly made in respect of the estate of which he is the Receiver. These are the only matters which can be conveniently dealt with on an application to pass accounts. 13. Mr. Mitter also relied on re May-fair and General Property Trust Limited (5) 1945 2 All E. R. 523. Here the applicants were the rating authority for the district in which certain properties belonging to the company were situated. The properties were let at 'inclusive rentals', i. e., the rates as between landlords and tenants were to be discharged by the landlords. The company was a subsidiary of another company and the properties wore subject to a charge for securing the stock issued by the other company. On March 5, 1940, in an action brought by the debenture stockholders, the Court appointed a Receiver and Manager of the properties subject to the charge. The applicants took out a summons in the action asking that they might obtain payment of their unpaid rates on the properties for the half year ending September 30, 1940. On March 5, 1940, in an action brought by the debenture stockholders, the Court appointed a Receiver and Manager of the properties subject to the charge. The applicants took out a summons in the action asking that they might obtain payment of their unpaid rates on the properties for the half year ending September 30, 1940. It was contended for the applicants that (1) since the Receiver had received as rent an aggregate sum exceeding by the amount of the rates the sum payable as rent if the rates had been payable by the tenants, it would be unconscionable for an Officer of the Court to retain this additional benefit; (2) by the applicants not exercising their proper remedies of distraint the interests of the stockholders had been benefited. It was held that the claims of the rating authority could not be put higher than the claims of the ordinary creditors when in competition with the rights of secured creditors. The application, therefore, failed. 14. It seems this case does not help Mr. Mitter at all. As has been pointed out in the 'editorial Note' this case is an application of the principle laid down in re British Fullers' Earth Company (6) (1901) 17 T. L. R. 232, that a rating authority has no right to bank ahead of the ordinary creditors against sums in the hands of the Receiver for debenture holders, since the appropriate remedy is by distress. Here such sums included moneys attributable to rates, paid by tenants in an 'inclusive rental'. The procedure of applying by summons has not been deprecated in the judgment of Vaisey, J. From the above discussion it is clear that apart from Brocklebank's case, which I have distinguished, no authority has been placed before me which lays clown that a third party who claims moneys due by a Receiver cannot apply for payment by summons in the action in which the Receiver was appointed. On the contrary I find there are both English and American authorities in support of the proposition that, such an application is maintainable. Whether or not the Court will make an order on the application is a different matter altogether. On the contrary I find there are both English and American authorities in support of the proposition that, such an application is maintainable. Whether or not the Court will make an order on the application is a different matter altogether. In Halsbury's Laws of England, 2nd Edition, (Volume 28) Article 99 at page 58 is as follows:- "on any application by a stranger to enforce his rights, the Court will examine the claim and either give effect to it by an order in the action or, if this is impracticable, allow any necessary proceedings to be taken outside the action. " This very passage also appears in the 3rd Edition in its 32nd Volume at page 421 as Article 690. 15. Coming now to the American practice the opening words of Article 2546 at page 299 in High on the 'law of Receivers', 4th Edition are as follows :- "the more common practice, and that which has been generally commended by the Courts, is to hear and determine all rights of action and demands against the Receiver by petition in the cause in which he was appointed without remitting the parties to a new and independent suit. And it rests wholly within the discretion of the Court to grant leave to bring an independent action against its Receiver or to determine the controversy upon petition in the Original cause, directing, if necessary an issue to be tried by a jury as to questions of fact or of damages. " 16. It may now be relevant in this connection to quote the observations of Mukherji, J. in Eastern Mortgage and Agency Co., Ltd. v. Fazlul Karim (7) 51 C. L. J. 571 at page 586 which are as follows :- "it can not be doubted that a person who is prejudiced by the conduct of a Receiver appointed in an action ought not, without leave of the Court, to commence an action against him for adequate reliefs; more ordinarily would his remedy lie in an application to the Court in the course of the action itself. But, if an application had been made in the partition suit by the present plaintiff to hold the Receiver accountable for the moneys paid by him as alleged, the Court would in all probability have found itself unable to decide the question on his accountability in such proceeding, inasmuch as it involved a determination of the rights and liabilities between the companies on the one hand and the plaintiff on the other, a matter entirely outside the scope of the suit in which the Receiver had been appointed. Where the accountability of a Receiver depends upon debatable questions not easy to be dealt with at the passing of the Receiver's account the Court often declines to go into the matter in such proceeding. As an instance of this class of cases may be quoted the case of Coomar Sattya Sankar Ghosal v. Ranee Golapmonee Debee (4) 5 C.W.N. 223. The Court dealing with the suit for partition would have passed the account on the view that the arrears were justly due by the estate and the Receiver was justified in paying them off out of the moneys in his hand. The objection therefore, in my opinion, is not well founded, and the suit as framed was clearly maintainable. " Upon reviewing all these authorities I am unable to accept the contention of learned Counsel for the United Bank of India Limited. To my mind a person to whom a Receiver owes money may apply in the suit in which the Receiver was appointed for a direction on the Receiver to make payments of his dues to him. It is up to the Court either to adjudicate upon the rights of the parties on the application itself or to give leave to the applicant to sue the Receiver to establish his rights, if any, in that suit. Where the Receiver's liability is doubtful or debatable or depends upon investigation into complicated questions of fact the Court in its discretion may choose the latter course. But that does not mean that the application itself is not maintainable. Indeed, my attention has been drawn to two Orders of this Court made by S. R. Das Gupta, J. (In O. T. Suit No. 22/1953 Calcutta National Bank Limited (in liqn.) v. Sailendra Prosad Das and Ors. But that does not mean that the application itself is not maintainable. Indeed, my attention has been drawn to two Orders of this Court made by S. R. Das Gupta, J. (In O. T. Suit No. 22/1953 Calcutta National Bank Limited (in liqn.) v. Sailendra Prosad Das and Ors. (8) on the 27th February, 1956 and G. K. Mitter, J. in Suit No. 2083 of 1954 (Kshitish Chandra, Banerjee and Ors. v. Sukumar Sengupta and Ors.) (9) on the 15th May, 1958. In both the matters applications were made by summons by third parties in the suits in which Receivers were appointed or payments of moneys due to the respective applicants and orders were made in their favour. I have now dealt with all the contentions of learned counsel for the bank. I direct the Receiver Mr. Probhat Kumar Pal to pay to the petitioner the sum of Rs. 38,813. 40 out of the sale proceeds of the mill in his hands. 17. This application was heard by me on the 20th September last. I delivered a judgment directing the Receiver to make the payment aforesaid. On the 21st September learned counsel for the bank appeared and submitted to me that, upon re-consideration of the matter he felt that his contention as to the maintainability of the application should be heard by me again as the point was of considerable importance. I agreed to recall my order made on the 20th September, 1961 on condition that the United Bank of India Ltd., would bear the costs of the re-hearing, if I came to the same conclusion as I did on September 20, 1961. Since the bank has not been successful it would pay to the applicant and the Receiver their costs of the re-hearing on the 27th September, 1961. The other costs incurred by the applicant up to September 20, 1961 would be paid by the Receiver out of the funds in his hands. The Receiver will retain his own costs up to September 20, 1961 out of the assets. He may also retain his costs for September 27, 1961 out of the assets in the first instance. Certified for counsel.