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1981 DIGILAW 426 (ALL)

Pratap Narain Agarwal v. Ram Narain Agarwal

1981-05-11

M.SHUKLA, N.N.MITHAL

body1981
JUDGMENT M. Shukla, J. - These two appeals arise out of the order dated 29-3-1979 passed by the II Additional Civil Judge, Agra on the plaintiff's application dated 30-8-1978 (636-C) in Suit No. 16 of 1970. The prayer made in the application was that defendant No. 1 (Receiver) be directed to pay the amount deposited by him towards profits of the share of the late Rai Bahadur Kanhaiya Lai. It was submitted in the application that a sum of Rs. 2,66,000/- had been deposited by him towards profits for the years 1970 to 1976. It was stated that without admitting the correctness of the amount and subject to final accounting by the Accounts Commissioner as per terms of the compromise the plaintiff and defendant Nos. 2 to 6 were entitled to withdraw the above amount along with interest thereon. 2. Defendant No. 1 filed objection saying that the amounts of profits deposited by him with regard to the share of the deceased partner were gross profits and the liabilities of that share had not yet been determined, that the question of payment of the remuneration of defendant No. 1 for running the factory as a surviving partner still remained to be decided, that the plaintiff had no right to ask for any amount on behalf of the other heirs of the deceased partner, namely defendants Nos. 2 to 6 who themselves had not made any claim and that the court had no jurisdiction to direct the Receiver to make any payment to the plaintiff. 3. The Court below allowed the application and held that the plaintiff was entitled to receive profits of the share of late Rai Bahadur Kanhaiya Lal deposited by the defendant/judgment-debtor (Receiver) in the Court on furnishing security in respect of the said amounts. The order explicitly said that the plaintiff would be paid the said amount on behalf of other defendants only after furnishing their no objection and subject to the decision on the report of the Accounts Commissioner which was to be filed in the case. On these conditions defendant No. 1 was directed to pay the amount to the plaintiff. Aggrieved by this order the defendant filed First Appeal From Order No. 272 of 1979 praying that the order of the Court below dated 29-3-1979 be set side and the plaintiffs application 636 C be dismissed. On these conditions defendant No. 1 was directed to pay the amount to the plaintiff. Aggrieved by this order the defendant filed First Appeal From Order No. 272 of 1979 praying that the order of the Court below dated 29-3-1979 be set side and the plaintiffs application 636 C be dismissed. On the other hand, the plaintiff, preferred First Appeal From Order No. 346 of 1979 claiming the relief that the order of the Court below dated 29-3-1979 be modified. Firstly, it was contended that the learned Additional Civil Judge had acted illegally in directing that the plaintiff was entitled to share the profits only up to 3-5-1975. Secondly, it was submitted that the amount deposited by defendant No. 1 (Receiver) was certainly due to the share of the late Rai Bahadur Kanhaiya Lal and was payable to the plaintiff without furnishing any security and the contrary view of the Court below was erroneous. It was suggested that the only possibility on accounting was of a larger sum being found due to the plaintiff and defendants Nos. 2 to 6, that hence no question arose of furnishing any security nor had the lower appellate Court stated any reasons in its order for directing the plaintiff to furnish security. Both appeals can be conveniently disposed of by a single order. 4. As regards defendants First Appeal From Order No. 272 of 1979 after hearing the learned counsel for the appellant we find no force in the same. We have already held in our judgment in Civil Revision No. 3 of 1980 : (reported in 1981 All LJ 591 that the compromise decree passed in this Court was an executable decree and that the appointment of Receiver for determining the accounts followed as a corollary from the compromise. That point stands concluded by our judgment in the said case. It is also not correct on the part of the defendant-appellant to contend that unless the accounts were finally determined the court had no jurisdiction to pass an order for payment to the plaintiff of any amount deposited by defendant No. 1. In fact, in the very objections filed by the defendant No. 1 to the plaintiff's application No. 636 C it was recited that "in all a sum of Rs. In fact, in the very objections filed by the defendant No. 1 to the plaintiff's application No. 636 C it was recited that "in all a sum of Rs. 2,32,520.34 has been deposited by this defendant-receiver in bank on account of the profits or the share of the deceased partner for the period from 1970 till 1975". Thus, admittedly the aforesaid amount was the amount of profits of the share of the deceased Rai Bahadur Kanhaiya Lal and hence payment of the same to the plaintiff and other heirs (defendants Nos. 2 to 6) of Rai Bahadur Kanhaiya Lal could not be refused on any technical ground. It was not disputed that the plaintiff and defendants Nos. 2 to 6 were the legal representatives of the late Rai Bahadur Kanhaiya Lai. It is also noteworthy that admittedly the defendant-judgment debtor had withdrawn the amount of profits belonging to his own share and hence it did not lie in his mouth to say that a different criterion should be applied to the plaintiff's claim to his share. There is also no force in the defendant's objection that the amount deposited by the Receiver represented only the gross profits of the plaintiff's share and not the net profits. The Receiver's report dated 3-5-1971 indicates that the statements of accounts filed by him on that date and similar statement filed thereafter were the "final profit and loss statement for the period 1970 to 1974" In fact, these statements of accounts contained large deductions on account of the expenses incurred. Hence, it is not correct to suggest that they represented only the gross profits. Equally without force is the defendant's contention that his claim of remuneration for working the factory as the surviving partner had not yet been decided and hence it was not proper that the amount in question be paid over to the plaintiff. By his order dated 15-2-1976 the III Additional Civil Judge, Agra had rejected the defendant's plea that he was entitled to remuneration as the surviving partner at the rate of 20 per cent on the share profits of the deceased Rai Bahadur Kanhaiya Lal. The defendant's Civil Revision No. 1112 of 1976 against that order was also dismissed by this Court on 6-12-1978. Thus, the defendant's claim for remuneration had been finally rejected. The defendant's Civil Revision No. 1112 of 1976 against that order was also dismissed by this Court on 6-12-1978. Thus, the defendant's claim for remuneration had been finally rejected. Hence, nothing remained for accounting which was likely to effect the plaintiff's admitted share of profits adversely. 5. The point was raised on behalf of the defendant-appellant that all events the plaintiff had no right to claim profit, on behalf of the other heirs of the deceased partner i.e. defendants Nos. 2 to 6 in Suit No. 16 of 1970, particularly when the latter had not themselves made any such claim or proved it. We have already referred to the fact that according to the recitals in the defendant's objection also the amount deposited by the Receiver represented the share of the deceased partner Rai Bahadur Kanhaiya Lal. We have also emphasised the fact that admittedly defendants Nos. 2 to 6 were the other heirs of Rai Bahadur Kanhaiya Lal, apart from the plaintiff. It is important that the other heirs never turned up to raise any objection to the plaintiff being paid their share of profits. On the other hand, those heirs filed their no objection certificate. 6. Learned counsel for the defendant-appellant relied on the provisions of Section 11 of the U.P. Court-fees Act which provides that no final decree shall be passed in a suit for accounts when the amount decreed exceeds the amount claimed until the difference between the Court-fee actually paid and the Court-fee which would have been payable had the suit comprised the whole of the profits or amount so decreed was paid to the proper officer. Of course the plaintiff in the present suit had paid Court-fee only on the value of his estimated share of profits and not that of all the heirs of Rai Bahadur Kanhaiya Lal, but it must be clearly understood that the impugned order is merely a direction to the Receiver (defendant No. 1) to pay the amount deposited by the plaintiff and is not a final determination of the liabilities. The order itself recites that it is "subject to the decision on the report of the accounts Commissioner which has to be filed in the case." In Shyamacharan Raghubar Prasad Tiwari v. Sheojee Bhai Jairam Chattri, (AIR 1971 Madh Pra 120) the plaintiff had wrongly deposited Court-fee on the amount which the defendant had deposited in Court for payment to the plaintiff under the orders passed on the compromise when the appeal against the order of the appointment of Receiver was decided. The trial Court had passed an order that the Court-fee on the amounts so deposited by the defendant be realised from the plaintiff. The High Court held that the order was illegal. Bishambhar Dayal C.J. was of the view (at p. 124):- "In a suit for mesne profits Court-fee is payable under Section 11 of the Court-fees Act on the amount decreed before the decree is executed. Up to this stage of the suit no decree having been passed determining the amount due to the plaintiff, there was no question of demanding Court-fee from the plaintiff. If the defendant pays any amount to the plaintiff during the pendency of the suit it has to be given credit when passing the ultimate decree and Court-fee will be payable only on the amount which is ultimately decreed and for which the plaintiff has to file an execution application against the defendant." Moreover, the objection that the plaintiff did not represent the other heirs of Rai Bahadur Kanhaiya Lal is no longer competent after the passing of the compromise decree. Paragraph 1 of the compromise application recites "that all the heirs of Rai Bahadur Kanhaiya Lal who are respondents in the appeals aforesaid shall release, transfer and convey all their rights and interests whatsoever which they have as heirs and legal representatives of the deceased partner R.B. Kanhaiya Lal in the assets of dissolved partnership ........ to Shri Pratap Narain Agarwal, surviving partner in consideration of Rs. 5,14,800/-. The High Court's order dated 3-4-1975 also says that it had been agreed between the parties that a bank draft in the name of Ram Narain Agarwal, plaintiff for Rupees 5.14,800/- will be handed over to him at the time of the registration of the sale deed. to Shri Pratap Narain Agarwal, surviving partner in consideration of Rs. 5,14,800/-. The High Court's order dated 3-4-1975 also says that it had been agreed between the parties that a bank draft in the name of Ram Narain Agarwal, plaintiff for Rupees 5.14,800/- will be handed over to him at the time of the registration of the sale deed. The order also makes it clear that the compromise had been received back from the Court below after due verification and that the parties have amicably settled heir disputes. It is also a fact that the draft sale-deed had been signed by all the heirs of Rai Bahadur Kanhaiya Lal. 7. The next oral submission made in the Court by the defendant's learned counsel was that gratuity and depreciation etc. had not been adjusted in the statement of accounts submitted by the Receiver and hence the direction about payment of any amount to the plaintiff was illegal. Obviously no question of gratuity could arise unless the services of somebody were terminated. Similarly when all the assets had been valued at Rs. 5,00,000/- and odd in the compromise the question of depreciation etc. as a separate item hardly arose. Moreover, the depreciation benefits could be claimed in the Income-tax Department. 8. The last point urged on behalf of the defendant-appellant was that the direction for payment of the amount deposited by the defendant/Receiver to the plaintiff fell outside the scope of the provisions of Order 40 of the Code of Civil Procedure. That provision authorises the court to confer upon the Receiver all such powers as to the 'preservation and improvement of the property, the collection of the rents and profits, thereof,.... as the Court thinks fit, The order dated 4-1-1971 appointing the Receiver in the instant case expressly contained a direction that he shall "go on depositing the entire profits relating to the share of Rai Bahadur Kanhaiya Lal and others either in court or in some Bank". as the Court thinks fit, The order dated 4-1-1971 appointing the Receiver in the instant case expressly contained a direction that he shall "go on depositing the entire profits relating to the share of Rai Bahadur Kanhaiya Lal and others either in court or in some Bank". The compromise application filed in this Court also incorporated the term that "all the above mentioned amounts will remain in deposit under the control of the court below to be deposited towards profits of the share of the heirs of the deceased partner from the date of his death till the date of the termination of the appointment of Receiver." So there was no fetter on the powers of the court to order disbursement of the amount so deposited to the parties concerned respectively even before preparation of the final decree, In fact, the defendant's own understanding of the Court's order appointing Receiver was similar namely, that both parties could be allowed by the court, if satisfied, to withdraw their respective shares of profits. That is why the Receiver. (Defendant No. 1) in his own application dated 2-2-1979 had made the prayer that he be permitted to withdraw from the factory's account a total sum of Rupees 1,14,976.45 on account of his share of profits for the years 1976 and 1977. The same application also contained the prayer that the defendant/Receiver be permitted to withdraw Rs. 50,545.64 on account of his share of profits of the deceased partner in order to invest the same in fixed deposits etc. It is also not disputed that the defendant No. 1 did actually succeed in withdrawing his own share of profits and that too without furnishing any security. The fact is clearly borne out by the statement of profits of the share of defendant No. 1 as shown in the chart filed by the Receiver in court. In the circumstances the defendant cannot be heard to say that the plaintiff and other heirs of Rai Bahadur Kanhaiya Lal should not be permitted to withdraw their share of profits deposited by the Receiver. Nor can there be any legal objection to the court issuing further directions to the Receiver after his initial appointment. In the circumstances the defendant cannot be heard to say that the plaintiff and other heirs of Rai Bahadur Kanhaiya Lal should not be permitted to withdraw their share of profits deposited by the Receiver. Nor can there be any legal objection to the court issuing further directions to the Receiver after his initial appointment. As held in Secretary of State v. Komaragiri Janardhana Rao AIR 1917 Mad 746 (2) "the powers of a Receiver appointed by a Civil Court under O. 40, R. 1 Civil P.C. are entirely conditioned by the terms of his appointment, subject to any subsequent modification by the Court under which he holds the appointment." In the same case it was also laid down that "where an appointment confers on a Receiver general powers of management authorising him to do such acts as may be necessary for the efficient administration of the property subject to the control of the Court, he has all the powers of a proprietor within the meaning of S. 4 of Act 2 of 1894 and is entitled to nominate persons to karnamships under S. 10 of the Act. There is absolutely no legal bar to a court giving supplementary directions to the Receiver which may include the disposal of rent and profits etc. Sir Jhon Woodroffe in 'Tagore Law Lectures, 1897 (Sixth Edition) observed at page 217. "When the ascertainment of an estate has been placed by the decree in the hands of a Commissioner it is inconvenient and irregular to ask a Judge to decide that there is a particular charge upon it, or debt due in respect of it. In many cases it might cause injustice to others for a Judge to make such an order. If the decree does not contain a direction to the Commissioners to ascertain what are the charges on the property and the debts due in respect of it, the proper, course is to obtain a supplementary direction to that effect." Thus in Motivabu v. Premvabu (1892) ILR 16 Bom 511 a receiver had been appointed but no power had been reserved to him to pay debts due by the estate. An application was made by the plaintiff praying for an order that the receiver appointed in the suit should satisfy out of the moneys in his hands to the credit of the suit the claims of two creditors. The prayer was refused. An application was made by the plaintiff praying for an order that the receiver appointed in the suit should satisfy out of the moneys in his hands to the credit of the suit the claims of two creditors. The prayer was refused. The plaintiff then asked for an order that the above claims may be paid out of the plaintiff's half share of the moneys in his hands leaving the question whether they ought to be paid out of the whole estate to be determined in the office of the Commissioner when the proper time for ascertaining that fact arrived. Upon such application the Court (Farran, J.) held:- "I have, I think, undoubted jurisdiction to make an order for payment of these sums out of the plaintiff's share. From early times it was the practice of the Court of Chancery in England to make such orders, but the Court seems to have exercised the power very sparingly, and only in very special cases, and under special conditions. The authorities are collected in Deniell's Chancery "practice (6th Ed.) P. 988, note (o) The Statute 15 and 16 Vice-A. C. 86 S. 57 widened and extended this power of the Court by enacting that whenever any real or personal property forms the subject of any proceedings in Chancery, and the Judge is satisfied that the same is more than sufficient to answer all the claims thereon which ought to be provided for in such proceedings, the Judge, may at any time after the commencement of such proceedings allow to the parties interested therein or to any one or more of them, the whole of part of the annual income of the real estate or part of such personal property, or a part or the whole of the income thereof." Similarly an order may be passed requiring the receiver to advance a sum of money to one of the parties to the suit, for his defence. Ordinarily, when money is so advanced provisions is ultimately made for it in the decree. If the plaintiff succeeds in a suit, the money which he has been required to advance for the defence conducted on behalf of a minor defendant is recoverable as part of the costs of the plaintiff. See Kuppusami v. Rathnavelu (1901) ILR 24 Mad 511. Ordinarily, when money is so advanced provisions is ultimately made for it in the decree. If the plaintiff succeeds in a suit, the money which he has been required to advance for the defence conducted on behalf of a minor defendant is recoverable as part of the costs of the plaintiff. See Kuppusami v. Rathnavelu (1901) ILR 24 Mad 511. In the present case the direction by the Court to the Receiver for payment of the share of profits of the plaintiff and the other heirs of the deceased of Rai Bahadur Kanhaiya Lal fell clearly within the ambit of Order 40, Rule 1 of the Code of Civil Procedure. Thus, none of the points raised in First Appeal From Order No. 272 of 1979 succeeds. 9. As regards First Appeal From Order No. 346 of 1979 filed by the plaintiff the first relief claimed therein cannot be allowed. The inevitable result of the compromise decree was that the plaintiffs interest in the partnership came to an end on 3-5-1975 as held by us in Civil, Revision No. 3 of 1980 between the parties. Consequently, the plaintiff was dis-entitled from claiming any profits thereafter. The second relief, however in the plaintiff's appeal must be allowed. It is clear that the amount deposited by the Receiver admittedly related to the share of profits of the heirs of the deceased partner Rai Bahadur Kanhaiya Lal. Hence, the contesting defendant could not legitimately object to the payment of such amount to the plaintiff and the other heirs of Rai Bahadur Kanhaiya Lal. As we have already observed, defendant No. 1 himself had been permitted to withdraw his share of the profits and that too without furnishing any security. It will be ridiculous on his part to prescribe a different standard for the plaintiff. We have already discussed in detail how there was no apparent likelihood even on accounting of the admitted share of the plaintiffs profits as represented by the amounts deposited by the Receiver being reduced. In the circumstances there could be no justification for the court asking the plaintiff to furnish security particularly in view of the fact that all the heirs of Rai Bahadur Kanhaiya Lal were parties to the compromise which had been received in this Court after due verification from the court below. 10. In the circumstances there could be no justification for the court asking the plaintiff to furnish security particularly in view of the fact that all the heirs of Rai Bahadur Kanhaiya Lal were parties to the compromise which had been received in this Court after due verification from the court below. 10. In the result First Appeal From Order No. 272 of 1979 is dismissed but First Appeal From Order No. 346 of 1979 is partly allowed and the impugned order is modified to this extent that the condition requiring the plaintiff to furnish security for the withdrawal of the amount deposited by the Receiver towards profits of the share of the late Rai Bahadur Kanhaiya Lal is deleted. In the circumstances of the case the parties are directed to bear their own costs.