JUDGMENT - S.M. JHUNJHUNUWALA, J.:---In the suit filed by the plaintiffs to recover from defendants 1,2 and 3 the sum of Rs. 12,90,56,879/- with interest due thereon and for enforcement and sale of mortgaged and hypothecated securities and for other reliefs, as mentioned in the plaint, the defendants, 1, 2 and 3 have taken out the present Notice of Motion for discharge of the Receiver appointed by this Court on 13st February, 1990 and in alternative for directions to the Receiver to hand back to the 1st defendants the possession of the 1st defendants' factory premises taken on 12th August, 1991. It is also prayed that the sum of Rs. 20 lakhs deposited by the 2nd defendant and lying in this Court should not be disbursed but should be utilised in such manner as may be directed by BIFR for rehabilitation of the 1st defendants. 2. Since according to the plaintiffs the 1st defendants have been in tremendous financial difficulties their net worth having become negative, their liabilities being far in excess of the real assets, their share capital having been wiped out and they having stopped carrying on any business, the plaintiffs had taken out Notice of Motion bearing No. 479 of 1990 in this suit for appointment of Court Receiver, High Court Bombay as Receiver of the mortgaged properties described in the schedule Ex. A to the plaint, moveables described in the schedule Ex. B to the plaint and current assets described in the schedule Ex. C to the plaint (hereinafter referred to as 'the suit properties') with all powers under Order XL, Rule 1 of the Code of Civil Procedure, 1908, including the power to sell the said moveables and current assets described in the schedules Exhibits B and C to the plaint and to pay over the net sale proceeds and/or net recovery thereof to the plaintiffs in or towards their claim in the suit and also for an order of injunction restraining the 1st defendant by themselves, their servants and agents from in any manner disposing of or alienating or transferring or parting with possession of or creating any third party title or interest in respect of the suit properties. On 13st February, 1990, Cazi, J., appointed ad-interim Receiver in terms of prayer (a) of the said Notice of Motion excluding the power of sale. On 13st February, 1990, Cazi, J., appointed ad-interim Receiver in terms of prayer (a) of the said Notice of Motion excluding the power of sale. Accordingly by the said order dated 13th February, 1990, the Court Receiver High Court Bombay, was appointed Receiver of the suit properties without the power of sale and with directions to him not to dispossess the 1st defendants provided the 1st defendants enter into an agency agreement with usual terms and conditions with the Receiver without security. Ad-interim injunction in terms of prayer (b) of the said notice of motion restraining the 1st defendant from in any manner disposing of or alienating or transferring or parting with possession or creating any third party rights in respect of the suit properties except in the ordinary course of business was also granted. An appeal from the said order dated 13th February, 1990 was preferred by the 1st defendants and on 21st February, 1990, Mukherjee, C.J., and Sugla, J., upheld the order of Cazi, J., subject to modification that pending the hearing and final disposal of the notice of motion, the Receiver was directed not to put up his board. Compensation payable by the 1st defendant was ordered to be determined but was ordered not to be payable for a period of 3 weeks from that date. Accordingly, the Receiver took possession of the suit properties situated at sub-village Vadvali, Village Rajawadi, Taluka Khandala, Sub-District Phaltan, District Satara on 23rd February, 1990 and took inventory of the suit plant and machineries and other moveables. The 1st defendants agreed and undertook to hold the suit properties as agents of the Receiver. The Receiver fixed the royalty amount payable by the 1st defendants for the use and occupation of the suit properties as agents of the Receiver at Rs. 11,60,000/-. The Receiver calculated arrears of royalty which the 1st defendants became liable to deposit with the Court Receiver at the said rate which amount aggregated to Rs. 1,45,00,000/-. According to the 1st defendants the reasonable amount of royalty which the Receiver ought to have fixed was Rs. 1,08,000/- per month. 11,60,000/-. The Receiver calculated arrears of royalty which the 1st defendants became liable to deposit with the Court Receiver at the said rate which amount aggregated to Rs. 1,45,00,000/-. According to the 1st defendants the reasonable amount of royalty which the Receiver ought to have fixed was Rs. 1,08,000/- per month. Since the 1st defendants did not comply with the directions of the Receiver, a report dated 26th April, 1990 was submitted by the Receiver to this Court for following directions: a) that the defendants No. 1 may be directed to deposit with the Receiver the arrears of monthly royalty at the rate of Rs. 11.60 lakhs from the date of the order appointing the Receiver as the Receiver in the matter viz., 13th February, 1990 upto date and 3 months security deposit within such time as may be stipulated by this Court; b) in the event of the defendants No. 1 not complying with the directions contained in prayer (a) above, Receiver may be directed to take back possession of the suit properties from defendants No. 1 if necessary, with the help of police; c) ...... d) ... On this report, Dhanuka, J., on 3rd May, 1991 directed the 1st defendants to deposit the sum of Rs. 10 lakhs within one week and further sum of Rs. 10 lakhs within 4 weeks thereafter on account and without prejudice. Further consideration on the said report was deferred till 12th June, 1991. 3. Defendants 1, 2 and 3 took out a notice of motion, being Notice of Motion No. 1235 of 1991 for directions to the Court Receiver to enter into the agency agreement with the 1st defendants at a monthly royalty amount of Rs. 1,08,000/- and not to make payable the royalty amount from 13th February, 1990 but with effect from signing of such agency agreement. On 29th July, 1991, Dhanuka J., in the said Notice of Motion No. 1235 of 1991, recorded an undertaking of the chief executive of the 1st defendants to deposit the sum of Rs. 10 lakhs on or before 1st August, 1991 and further sum of Rs. 10 lakhs on or before 7th August, 1991. No amount was deposited by the 1st defendants in pursuance of the said undertaking. 10 lakhs on or before 1st August, 1991 and further sum of Rs. 10 lakhs on or before 7th August, 1991. No amount was deposited by the 1st defendants in pursuance of the said undertaking. On 7th August, 1991, suo motu notice for contempt was ordered to be issued to the chief executive of the 1st defendants and to all the directors of the 1st defendants. The Receiver was directed to take back possession of the suit properties from the 1st defendants in view of default in depositing the said sum of Rs. 20 lakhs committed by the 1st defendants. On 12th August, 1991, the Receiver has taken back the possession of the suit properties from the 1st defendants as per the said order passed by this Court. On 13th August, 1991, the contempt notice which was ordered to be issued as aforesaid was heard and on 2nd defendant giving an undertaking to deposit the sum of Rs. 10 lakhs forthwith and further sum of Rs. 10 lakhs before 17th September, 1991, the same was discharged. 4. On 16th May, 1991, the 1st defendants made an application to the Board of Industrial and Financial Reconstruction (for short hereinafter called 'BIFR') under sub-sections (1) and (2) of section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 (for short hereinafter called as 'the said Act') which was registered with BIFR on 3rd June, 1991 and given registration No. 69 of 1991. Enquiry under section 16 of the said Act commenced. On 8th August, 1991, BIFR passed an order and it was held that the 1st defendants Company would not be able to revive and make its net worth positive within a reasonable time on its own. It was further held that in public interest, it is expendient to the revive the unit. Accordingly, the plaintiffs were appointed as operating agency for preparing a scheme for rehabilitation of the 1st defendants Company, if possible in terms of sub-section (3) of section 17 of the said Act. The present Notice of Motion has been taken out on 21st October, 1991 for the reliefs as aforesaid. 5. Mr. Accordingly, the plaintiffs were appointed as operating agency for preparing a scheme for rehabilitation of the 1st defendants Company, if possible in terms of sub-section (3) of section 17 of the said Act. The present Notice of Motion has been taken out on 21st October, 1991 for the reliefs as aforesaid. 5. Mr. Zaiwalla, the learned Counsel appearing for the defendants 1, 2 and 3, has submitted that in view of the order dated 8th August, 1991 passed by BIFR, the proceedings for appointment of Receiver in respect of the properties of the 1st defendants do not lie and cannot be proceeded with and as such, the Court Receiver, High Court, Bombay, appointed Receiver of the suit properties is liable to be discharged. He has further, submitted that continuation of appointment of Receiver despite the said order of BIFR would be contrary to the scheme of the said Act and would defeat its objects and as such, the Receiver is liable to be discharged. He has further submitted that the Receiver had not taken physical possession of the suit properties prior to the said order passed by BIFR and as such Receiver cannot take physical possession after passing of the said order of 12th August, 1991. He has endeavoured to draw distinction between Receiver taking formal possession and physical possession. Alternative, Mr. Zaiwalla has submitted that the order appointing the Receiver is liable to be stayed. In support of his aforesaid submissions, Mr. Zaiwalla has relied upon the following cases: a) (Central Bank of India v. Tauras Foundry Pvt. Ltd. ors.)1, A.I.R. 1985 Calcutta 35; b) (Venubai Annantrao v. Prabhabai G. Jamkar others)2, A.I.R. 1984 Bom. 403; c) (S.B Industries, Freegunj anr. v. United Bank of India ors.)3, A.I.R. 1978 AII. 189; d) (Testeels Ltd. Ahmedabad v. Radhaben Ranchhodlal Charitable Trust, Ahmedabad)4, A.I.R. 1988 Guj. 213; e) (Hig Temp Chemicals P. Ltd. v. Satya Steel Strips (P.)Ltd.)5, (1991)72 Com.Cases 447. 6. Mr. Tulzapurkar, the learned Counsel appearing for the plaintiffs, has submitted that on 13th February, 1990, the Court Receiver, High Court, Bombay, was appointed receiver of the suit properties with all powers under Order XL, Rule 1 of the Code of Civil Procedure, 1908, but without the power of sale and with directions not to dispossess the 1st defendants provided the 1st defendants entered into the agency agreement with the Receiver on usual terms and conditions but without security. No such agency agreement has been entered into by the 1st defendants with the Receiver. He has further submitted that since 23rd February, 1990 the possession of the 1st defendants in respect of the suit properties was not absolutely in their own rights but merely as agents of the Receiver. On the appointment of the Receiver as aforesaid, and the Receiver taking possession of the suit properties on 23rd February, 1990 ad aforesaid, the suit properties became custodia legis. Mr Tulzapurkar has further submitted that the capacity of the person in possession of a property as agent of the Receiver is different than the capacity as owner thereof. In the submission of Mr. Tulzapurkar, in the facts and circumstances of the case, section 22 of the said Act has no applicability. Mr. Tulzapurkar further submitted that the suit properties have been in possession of the Court and the 1st defendants were merely holding the same as the agents of the Court Receiver. When the Receiver took possession, it did not make any difference whether it was a formal possession or otherwise. It was possession of the Court. In his submission, in the facts and circumstances of the case, there is no question of Receiver being either appointed after the commencement of enquiry proceedings under the said Act or the Receiver taking possession of the suit properties after the said order was passed by BIFR. Any act done by the Receiver to ensure restoration of his possession is not violative of the provisions of the said Act. In the submission of Mr. Tulzapurkar, the 1st defendants had ceased to be in possession of the suit - properties as owners thereof on the possession thereof being taken by the Receiver as aforesaid. As regards the said sum of Rs 20 lakhs lying deposited with this Court, Mr. Tulzapurkar has submitted that the said amount has been deposited pursuant to the undertaking given and towards the payment of the royalty charges. It is not an asset of the 1st defendants so as to form part of the scheme of BIFR. 7. In the case of A.I.R. 1985 Calcutta 35 (supra) on which reliance has been placed by Mr. Zaiwalla, the plaintiff Bank had filed a suit against the Company and made an application for appointment of the Receiver to take possession of the hypothecated goods and sell the same. 7. In the case of A.I.R. 1985 Calcutta 35 (supra) on which reliance has been placed by Mr. Zaiwalla, the plaintiff Bank had filed a suit against the Company and made an application for appointment of the Receiver to take possession of the hypothecated goods and sell the same. The trial Court had directed the Receiver to take only symbolic possession, In Appeal, the High Court held that the actual relief granted to the plaintiff by the trial Court by appointing Receiver was illusory as the Receiver was to remain only in symbolic possession of the hypothecated goods and the defendant was left free to deal with the goods as it liked. Such is not the situation in the facts and circumstances of the present case and as such, it can not be said that the appointment of the Receiver of the suit properties has been illusory. In cases reported in A.I.R. 1978 Allahabad 189 (supra) and A.I.R. 1984 Bombay 403 (supra) it has been held that in a general way, a Receiver has no power except such as are conferred upon him by the order by which he is appointed. It is open to a Court not to confer all those powers stated in Order XL, Rule 1 of the Code of Civil Procedure., 1908. It may confer upon him only such powers as may be necessary to preserve the property pending the litigation so that it may not be damaged or dissipitated. Correct principles of law have been laid down in these cases. In the instant case, while appointing the Receiver, all powers under Order XL, Rule 1 of the Code of Civil Procedure, 1908 excepting the power of sale have been conferred. The 1st defendants were permitted to retain and use the suit properties only as the agents of the Receiver and subject to their entering into an agency agreement with the Receiver in respect thereof and not otherwise. The Gujrat High Court in the case reported in A.I.R. 1988 Gurjat 213 (supra) has interpreted section 22 of the said Act. It has been held therein that under section 22 of the said Act, the winding up proceedings already started against an industrial company can be dismissed. The Gujrat High Court in the case reported in A.I.R. 1988 Gurjat 213 (supra) has interpreted section 22 of the said Act. It has been held therein that under section 22 of the said Act, the winding up proceedings already started against an industrial company can be dismissed. According to the view taken by the Gurjat High Court, the words `be proceeded with further' in section 22 of the said Act cannot be interpreted to mean that the winding up proceedings already started should be kept in abeyance without further proceedings in the matter. The words `or be proceeded with' occurring in section 22 of the said Act cannot, in any way, restrict the meaning that has to be given to the words `no proceedings shall lie'. In the case reported in (1991)72 Company Cases, 447 (supra) it has been held that the said Act operates as a self contained Code for various steps to be taken in respect of a company which is declared as a sick industrial company under section 3 (1)(c) of the said Act and since BIFR had passed an order declaring the company a sick industrial company as defined under section 3(1)(c) of the said Act, no proceedings for winding up the company under the provisions of The Companies Act, 1956 would lie by virtue of section 22 of the said Act. Mr. Tulzapurkar has drawn my attention to the judgment of our Court delivered by Dhanuka, J., in Company Applications Nos. 314 of 90, 315 of 90, 316 of 90, 317 of 90, 318 of 90 and 342 of 90 respectively in Company Petitions Nos. 512 of 90, 513 of 90, 515 of 90, 516 of 90, 517 of 90 and 514 of 90 wherein in both these authorities cited by Mr. Zaiwalla have been considered and after considering the same, Dhanuka, J., has held that it was possible to subscribe to the views taken by the said courts. It has been further held that unless winding up order is passed by the Company Court, the corporate existence of the Company is intact. Mr. Zaiwalla has fairly invited my attention to the case of (The Gram Panchayat anr. It has been further held that unless winding up order is passed by the Company Court, the corporate existence of the Company is intact. Mr. Zaiwalla has fairly invited my attention to the case of (The Gram Panchayat anr. v. Shree Vallabh Glass Works Ltd. ors.)6, reported in (1990)2 S.C.C. 41, where the Hon'ble Supreme Court on interpretation of section 22 of the said Act has held as under : "7 Section 22(1) provides that in case the enquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration by the Board or any appeal under section 25 is pending then certain proceedings against the sick industrial company are to be suspended or presumed to be suspended. The nature of the proceedings which are automatically suspended are: (1) winding up of the industrial company: (2) proceedings for execution, distress or the like against the properties of sick industrial company and (3) proceedings for the appointment of Receiver. The proceedings in respect of these matters could, however, be continued against the sick industrial company with the consent or approval of the Board or of the Appellate Authority as the case may be". Mr. Zaiwalla then submitted that on the said order being passed by BIFR there was automatic suspension of all proceedings against the 1st defendants in relation to appointment of Receiver and as such, the Receiver could not have taken possession of the suit properties from the 1st defendants on 12th August, 1991. 8. It is clear from the provisions of the said Act that in case the inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration by BIFR or any appeal under - section 25 is pending, then certain proceedings including proceedings for the appointment of Receiver against the industrial company are to be suspended. The marginal note to section 22 of the said Act provides an indication that the proceedings in question are merely required to be suspended. Operative part of section 22(1) of the said Act provides that such proceedings may continue with the consent of the Board or, as the case may be, the Appellate Authority. The marginal note to section 22 of the said Act provides an indication that the proceedings in question are merely required to be suspended. Operative part of section 22(1) of the said Act provides that such proceedings may continue with the consent of the Board or, as the case may be, the Appellate Authority. If the proceedings can continue with the consent of the board or, as the case may be, the Appellate Authority or in the event or in the event of the condition precedent prescribed under section 22(1) of the said Act ceasing to exist, there is no reason as to why proceeding for the appointment of Receiver against the 1st defendants must necessarily abate or be dismissed. Even though the said Act operates as self contained Code for various steps to be taken in respect of a company which is declared as sick industrial company under the provisions thereof, it is not that no proceedings for winding up of such industrial company or for execution, distress or the like against any of the properties of such industrial company or for the appointment of Receiver in respect thereof be at all proceeded with. Following the decision in the case of Shree Vallabh Glass Works Ltd ors. (supra) and the judgment of our Court delivered by Dhanuka, J., in the aforesaid Company Applications, which is binding on me being the judgment of Court of Co-ordinate jurisdiction, I am unable to subscribe to the view taken by the Gujrat High Court and the Andhra Pradesh High Court in the aforesaid two authorities cited by Mr. Zaiwalla. 9. Mr. Zaiwalla then submitted that the decision of Dhanuka, J., in the said Company Applications has no application to the facts and circumstances of the case, there being no question of Receiver or Liquidator being involved in these company applications. He has further submitted that the case before Dhanuka, J., pertained to grant of ad-interim injunction and section 22 of the said Act in terms do not cover such contingency whereas the questions pertaining to appointment of Receiver are specifically covered by the provisions of section 22 of the said Act. It is correct that the facts in the said Company Applications decided by Dhanuka, J., were different than the facts in the instant case before me. However, the ratio laid down in the said judgment is clear and binding on me. It is correct that the facts in the said Company Applications decided by Dhanuka, J., were different than the facts in the instant case before me. However, the ratio laid down in the said judgment is clear and binding on me. Dhanuka J., has in terms declined to follow the said two authorities cited by Mr. Zaiwalla for the reasons stated therein which I accept as correct. 10. The appointment of Court Receiver, High Court, Bombay, as Receiver of the suit properties was made on 13th February, 1990. The Receiver had taken possession of the suit properties on 23rd February, 1990. The suit properties became custodia legis through its duly appointed Receiver on 23rd February, 1990. The distinction sought to be drawn by Mr. Zaiwalla between `formal' and `physical' possession by the Receiver, in the facts of the case, is of no legal consequence. The 1st defendants were permitted to retain and use the suit properties as the agents of the Receiver and not in their absolute or own rights as owners thereof. As per the order, dated 7th August, 1991, the agency of the 1st defendants stood terminated and the 1st defendants became disentitled to retain or use the suit properties. Accordingly, on 12th August 1991, the Receiver restored the possession to himself which the 1st defendants held as agents of the Receiver. It is correct that under section 22 of the said Act, the proceedings are to be suspended. However, in the facts and circumstances of the case, the appointment of the Receiver in respect of the suit properties of the 1st defendants as well as Receiver taking possession thereof from the 1st defendants were much prior to even institution of inquiry under the provisions of section 16 of the said Act. The 1st defendants had no independent possession of the suit properties in their own rights as lawful owners thereof as on 12th August, 1991 and as such, section 22 of the said Act did not apply. The continuation of Receiver, in the facts of the case, is not contrary to the scheme or objects of the said Act. 11. In the results, the Notice of Motion is dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs of the Notice of Motion. Order accordingly. *****