Howrah Trading Company P. Ltd. v. Pramila Jalan — 1994 DIGILAW 204 (CAL)

Judgment : Sri Hanuman Steel Rolling Mills Company Limited (hereinafter referred to as the petitioner) has filed this application for being examined in the suit filed between the parties pro interesse suo in respect of his tenancies under the plaintiff no. 1 from the receiver as mentioned in paragraph 4 of his petition. The petitioner has also claimed an injunction restraining the receiver from demanding or receiving any rent from any of the petitioners sub-tenants. 2. The suit was filed on December 5, 1972 on the allegation that the de sets of the plaintiff no. 1 had wrongly been taken possession of by one Debi Prasad Jalan. Reliefs have been claimed inter alia regarding such assets. In the suit an interlocutory application was moved on December 7, 1972. That application was disposed of by an order dated May 30, 1973 of S. K. Roychowdhury, J. His Lordship was pleased to appoint Joint Receivers without security over the assets of Howrah Trading Company P. Ltd., the plaintiff no. 1 herein (hereinafter referred to as the company) for the purpose of carrying on business of the company till the disposal of the suit with all the powers provided under Order XL, Rule 1, Clause (d) of the Code of Civil Procedure as also the power to collect outstanding debts and claims due in respect of the properties of the company. The Joint Receivers were given the power to take possession of the properties and to collect the issues and profits thereof. The Joint Receivers were given power to bring and defend suits in their own names. 3. It is further ordered that the receipt or receipts of the Joint Receivers shall be sufficiently discharged for all sums paid to or delivered to the Joint Receivers. The Joint Receivers were to be assisted by an Advisory Board consisting of the plaintiff no. 2 and the then defendant, Debi Prasad Jalan, (since deceased) who were at liberty to assist the Joint Receivers in the management of the Company and its affairs. The Joint Receivers were empowered to act solely at their discretion and the plaintiffs and the defendants were prohibited and restrained from acting as Directors of the Company. The Company had also been restrained from holding any meetings. The Joint Receivers were empowered to act solely at their discretion and the plaintiffs and the defendants were prohibited and restrained from acting as Directors of the Company. The Company had also been restrained from holding any meetings. The entire tenure of the order shows that the Joint Receivers were given full and absolute control to represent and act on behalf of the Company and to manage the affairs of the Company. Liberty was also given to the parties to apply to Court for necessary directions as they may be advised. 4. The personnel of the Joint Receivers were changed from time to time. In 1981 the Joints Receivers were two members of the Bar. The present Receiver, Mr. R. S. Sureka, was appointed on 12th March, 1982 at the instance of both the plaintiffs and the defendants in terms of the agreed minutes filed in Court Mr. R. S. Sureka is still the Receiver in respect of the assets of the Company. 5. It is the petitioner's case that in 1969 the petitioner was granted tenancy of god owns no. 8A, 9, 10, and 6 at West Jute Press, Howrah by the Company. On 21st June, 1971 the petitioner was granted a tenancy in respect of a plot of land and sheds at Premises No. 52/D/2, J. N. Mukherjee Road, Ghusury, Howrah. On 22nd June, 1972 the petitioner has claimed that it was granted tenancy of a plot of land at premises no. 29, Silkia School Road, Howrah. It is the petitioner's case that on 28th August, 1972 it was granted tenancy in respect of Godown Nos. 1, 2 and 3 at 28/6, Salkia School Road, Howrah. In support of the creation of each of these tenancies the petitioner has relied on here separate documents addressed to the petitioner by the plaintiff signed by D. P. Jalan on behalf of the Company. 6. It is the petitioner's further case that after the tenancies were granted the petitioner had been paying rent to the Company and subsequently to the Joint Receivers. Reliance has been placed on rent receipts issued by the Company and the Joint Receivers in this context. 7. It appears that in 1974 differences arose between the petitioner and the Joint Receivers in respect of the tenancy with regard to the premises no. 62/8/2, J. N. Mukherjee Road (referred to as the premises). Reliance has been placed on rent receipts issued by the Company and the Joint Receivers in this context. 7. It appears that in 1974 differences arose between the petitioner and the Joint Receivers in respect of the tenancy with regard to the premises no. 62/8/2, J. N. Mukherjee Road (referred to as the premises). The petitioner made an application Pro interesse suo complaining that the Receivers were seeking to collect rents from the petitioner's subtenants by-passing the petitioner. This application was opposed by the Joint Receivers who filed an affidavit-in-opposition on 12th May, 1981 as well as by the plaintiff no. 3 who filed an application on 8th June, 1981. The Joint Receivers contended that the petitioner was not a tenant in respect of the entire portion of the premises but only of a portion. it was further contended by the Joint Receivers that the tenancy agreement in respect of the premises dated 21st June, 1971 could not be accepted as genuine as it had not been signed by any of the Directors of the Company. The Joint Receivers, however, admitted that the petitioner was found in possession of a portion of the premises. The Joint Receivers said that they never accepted nor demanded rent from the petitioner in respect of the entirety of the premises. 8. After hearing the submissions the Court found that the application could not be disposed of on an affidavit alone as the facts were disputed. It was further said that the petitioner had not come out with full facts and particulars of his tenancy or of payment of rents. The Court felt that the matter should be decided on oral evidence and gave liberty to the petitioner to file a suit against the Receivers in this connexion. 9. After this order was passed as already observed, by consent of the parties the present Receiver was inducted as a "party Receiver". Soon after his appointment as Receiver on 2.4.82 the Receiver wrote a letter to the persons concerned whom the petitioner claimed to be the petitioner's sub-tenant in respect of the premises No. 62/D/2, J. N. Mukherjee Road, Howrah. The Receiver said that he after taking over charge scrutinised the records and bad found that the sub-tenants had been wrongly advised by the previous Joint Receivers to withhold payment of rent which the sub• tenants had been paying to the petitioner. The Receiver said that he after taking over charge scrutinised the records and bad found that the sub-tenants had been wrongly advised by the previous Joint Receivers to withhold payment of rent which the sub• tenants had been paying to the petitioner. By the letter he intimated the sub-tenants that such sub-tenant were not the tenants of the company and as such, were not liable to pay any rent to the Company. It was further clarified that the sub-tenants were always the tenants of the petitioner and they should pay rents due to the petitioner as it bad been doing in the past since the commencement of its tenancy. It was further made clear that the company bad no claim on the rents due from such sub-tenants. 10. On the basis of this letter the petitioner started collecting rents from all the persons claimed by it to be its sub-tenants in respect of the premises no. 62/D/2, J. N. Mukherjee Road, Howrah till 1991. 11. The petitioner also paid rent as tenant in respect of the said premises to the Receiver. It appears from the correspondence annexed to the petition that the petitioner committed default in making payment of rent from December, 1987. The Receiver has also claimed that Municipal Taxes had not been paid by the petitioner in respect of the period from 4th quarter 1967 to 1968 to 3rd quarter 1991-92. 12. On 9.8.91 the Receiver on the letter head of the Company wrote to each of the sub-tenants informing the sub• tenants that his letter dated 2.4.82 regarding payment of monthly rent to the petitioner should be treated as cancelled. He also requested the sub-tenants concerned to pay monthly rent to the Company which has been described as "Principal Landlord" by the Receiver, directly in place of the petitioner. 13. Subsequent to the receipt of that letter by the sub-tenants payments were not made to the petitioner and on 16th September, 1991 the petitioner wrote to the Receiver stating that it had been informed regarding the direction of the Receiver to the sub-tenants not to make payment to the petitioner. A discussion was also recorded in the letter regarding the arrears of rent. The petitioner, accordingly, offered to pay the arrears of rent payable by the petitioner to the Receiver in instalments subject to the withdrawal of the letters written by the Receiver to the petitioner's sub-tenants. A discussion was also recorded in the letter regarding the arrears of rent. The petitioner, accordingly, offered to pay the arrears of rent payable by the petitioner to the Receiver in instalments subject to the withdrawal of the letters written by the Receiver to the petitioner's sub-tenants. The letters written by the Receiver to the tenants claimed as sub-tenants by the petitioner were, however, not withdrawn. 14. On 15.4.92 the petitioner wrote to the Receiver protesting the Receiver's calling upon the sub-tenants to make payment to the company. The letter also records that the petitioner is not willing to pay the Municipal Taxes as demanded by the representative by the Company recently. 15. In this letter it also appears that the petitioner has recorded that certain disputes had arisen between the Company and tile petitioner with regard to the tenancy in the adjoining premises and that several tenants of the adjoining premises have not been making payment of rent to the petitioner. According to the petitioner these adjoining premises are the other properties described in the Judgement in respect of which tenancies were granted to the petitioner by the Company; particulars of the amounts not paid by the tenants of the adjoining premises have been given in that letter. The letter was received on 15.4.92 on the same date. 16. It was replied to on 14.5.92 by the Receiver. In that letter the Receiver significantly has described himself in the plural "we". In the letter the Receiver has asked for the copy of the tenancy agreement. He has also denied receiving any sum from any of the petitioner's tenants till date. He has also said that the quarterly Municipal Tax had risen from Rs. 1,971/- per quarter to Rs. 26,862.85 per quarter whereas the monthly rent was Rs. 2000/- per month from the beginning and that this matter had been brought to the petitioner's notice time and again and inspite of the petitioner's repeated personal assurances to look into the matter nothing had been done. The Receiver, accordingly, quantified the amount payable on account of the outstanding rent and Municipal Taxes payable by the petitioner to the Company. It is further stated that by not paying the outstanding rent and Municipal Taxes as claimed the petitioner "had continued to remain as defaulter and liable to be evicted through proper proceedings in the Court of Law". 17. It is further stated that by not paying the outstanding rent and Municipal Taxes as claimed the petitioner "had continued to remain as defaulter and liable to be evicted through proper proceedings in the Court of Law". 17. Incidentally this letter has been exhibited by the Receiver in the affidavit affirmed in this proceedings in to to. The statements contained in the letter have been repeated and reiterated and all the allegations to the contrary have been denied. 18. On 20.7.92 the petitioner replied to the Receiver disputing the amounts claimed by the Receiver and the petitioner's liability to make payment of the Municipal Taxes. A copy of the tenancy agreement was also forwarded to the Receiver. No reply appears to have been received by the petitioner to this letter from the Receiver. However, between 22nd August, 1992 and 26th August, 1992 there are about 16 letters of various concerns written to the Receiver in identical language referring to the letter dated 9th August, 1991 and subsequent clarifications relating to the payment of rent and enclosing the amounts on account of the rent to the Receiver. Copies of each of these identical letters have been forwarded to the petitioner. 19. In this back-ground of the facts, the petitioner made this application on 23rd November, 1992. It appears from the flat that the endorsements have been made that the matter had been heard in part on several days by S. K. Hazari, J. before being released by His Lordship in December, 1993. The matter has, thereafter, appeared before this Court in the normal course. 20. The petitioner in the facts of this case has submitted that he is being prejudiced by the actions of the Receiver as the Receiver was seeking to realise rents from his sub-tenants thus ousting the petitioner from the premises in respect of which the petitioner was claiming tenancy under the Company. It is also submitted that there are sufficient materials to show that the petitioner's right as tenant in respect of the premises in question has been accepted by all the parties to the proceedings including the Receiver acting on behalf of the plaintiff no. 1. 21. An affidavit-in-opposition bas been affirmed only by the Receiver on 22.2.93. It is also submitted that there are sufficient materials to show that the petitioner's right as tenant in respect of the premises in question has been accepted by all the parties to the proceedings including the Receiver acting on behalf of the plaintiff no. 1. 21. An affidavit-in-opposition bas been affirmed only by the Receiver on 22.2.93. No affidavit has been affirmed by any other party, although at the hearing a prayer was made on behalf of the plaintiffs to affirm an affidavit-in-opposition to the application. It was conceded that such a prayer had been made before S. K. Hazari, J. at an earlier point of time but that prayer had been negatived. I am of the view that the interest of the parties have, in fact, been protected by the Receiver who has been authorised by the order appointing him to act on the basis of the advice given by the plaintiffs as well as the defendants. The stand taken by the Receiver would also show that the Receiver is really pleading the cause of the plaintiffs. There is no allegation by the plaintiffs nos.2 and 3 that the Receiver has ever acted otherwise than in accordance with their instructions or contrary to the advice given by them. 22. This fact in addition to the fact that another learned Judge of this Court had in his discretion rejected the prayer of the plaintiffs to file an affidavit have persuaded me not to accept the prayer of the plaintiffs to file an affidavit-in- opposition. 23. The Receiver has submitted that the application is barred by res judicata. It is said that an identical application had been made in 1981 which had been disposed of by a Judgment and Order dated 17th August, 1981 passed by D. K Sen, J. as His Lordship then was. It is said that the basis of the claim is the Letter of Tenancy dated 21st June, 1971 both in the previous application as well as in this application and, as such, this Court should not entertain this application. In this context reliance has been placed on the decision of the Supreme Court in (1) Shivashankar Prasad Sah v. Baikunth Nath Singh and Others reported in AIR 1969 SC 971 . 24. In this context reliance has been placed on the decision of the Supreme Court in (1) Shivashankar Prasad Sah v. Baikunth Nath Singh and Others reported in AIR 1969 SC 971 . 24. Secondly, it is submitted that the Receiver has no right to create any tenancy and even assuming he had accepted rent from the petitioners, this would not create any right against the parties. In this context reliance has been placed on the decision of the Supreme Court in (2) Krishna Kumar Khemka v. Grindlays Bank P. L. C. and Others reported in AIR 1991 SC 899 as well as on the decision of the Madras High Court in (3) Arumugha Gounder v. Ardhanari Mudaliar and Others reported in AIR 1975 Madras 231. 25. Thirdly, it is submitted that the prayer relating to other properties was not maintainable as the Receiver had never disputed the right of the petitioners in respect of other properties. 26. The plaintiffs who have appeared through. Counsel have adopted the stand of the Receiver and have submitted in addition that the application was liable to be rejected because of lack of diligence on the part of the petitioners in filing the application. It is said that after the letter had been issued by the Receiver to the sub-tenants of the petitioners, more than 1 year and 3 months had elapsed before the petitioners made this application to Court. In this context reliance has been placed on the decisions reported in (4) AIR 1972 Cal. 345 (Central Bank of India v. Srish Chandra Guha and Another), (5) 14 CWN 444 (Bajranglal Khemka and Others v. Smt. Sheila Devi and Others) and (6) 41 CLJ 197 (Sreedhar Chaudhury v. Nilmoni Chaudhury and Others). 27. After the submissions were complete it appeared from the records, produced under the direction of this Court, that the suit had, in fact, been settled out of Court and was accordingly dismissed on 10th March, 1986 It appeared that none of the Counsel appearing for the parties were aware of this fact. On behalf of the Receiver it was stated that he was, in fact, being asked to submit accounts by the department and had been continuing as Receiver till date. He has said that since the parties had not taken him in confidence regarding settlement, he should be discharged. On behalf of the Receiver it was stated that he was, in fact, being asked to submit accounts by the department and had been continuing as Receiver till date. He has said that since the parties had not taken him in confidence regarding settlement, he should be discharged. The learned Counsel appearing on behalf of the plaintiffs has said that his clients had not inforce him of the settlement at all. 28. In law the position appears to be that despite the suit having been settled and dismissed for non-prosecution, the Receiver will continue until specifically discharged by Court (see the decision of the Supreme Court in (7) Hiralal Patni v. Loonkaran Sethiya and Others reported in AIR 1962 SC 21 , as well as the decision of the Mysore High Court in (8) Bhinappa Tinnappa Kivedi v. Girappa Lanmappa Kivedi reported in AIR 1969 Mysore 173). The Court is not minded to discharge the Receiver in respect of the property at this stage without an application being made specifically for such purpose. 29. Since the Receiver is still continuing over the assets of the plaintiff-Company, the application pro interesse suo is maintainable. 30. The opposition to the petitioner's application, in my view, cannot be sustained. On the question of res judicata it is well established that the principle will not apply if there are new facts which were not before the Court when the initial order was passed. There was no determination of any issue as such. The res judicata will only apply when an issue has been heard and determined. It was held by D. K. Sen, J. on 17th August, 1981 that on the basis or materials before His Lordship then, it was not possible to decide the matter on an Affidavit evidence. Subsequent to His Lordship's decision there had been various facts by which it can be taken that the disputes between the parties have been resolved. The first fresh fact is the letter of R. S. Sureka, Receiver, dated 2nd April, 1982 as well as the letter dated 14th May, 1992 also written by R. S. Sureka Receiver. It may be noted that in the earlier application His Lordship was persuaded by the opposition to the petitioners' case by the Receiver. The disputes raised by the Receiver were resolved by these letters dated 2nd April, 1982 and 14th May, 1992. It may be noted that in the earlier application His Lordship was persuaded by the opposition to the petitioners' case by the Receiver. The disputes raised by the Receiver were resolved by these letters dated 2nd April, 1982 and 14th May, 1992. The basis of the Judgment and Order dated 17th August, 1981, therefore, was taken away. 31. Secondly, the Receiver collected rents from the petitioner-Company for a period of about 10 years on the basis that the petitioner was a tenant in respect of the premises and also allowed the petitioner to collect rents from its sub-tenants for a period of 10 years without any objection by any party at all. In the earlier order dated 17th August, 1981 it was stated that according to the plaintiffs, the Receiver had collected rents under mistake or misapprehension. If this was so, then the mistake should have been clarified on the date of the Order, that is, 17th August, 1981. Despite such clarification when the Receiver has hereafter collected rents for such a long period of time, the action cannot still be passed off as mistake or misapprehension. It is also noteworthy that in the letter dated 9th August, 1991 the Receiver has referred to the plaintiff-Company as "Principal Landlord". This question of "Principal Landlord" would not arise unless there were an 'Inferior Landlord', namely the petitioner. The position is in any event concluded by the affidavit of the Receiver affirmed in this proceedings. In that affidavit the Receiver has categorically admitted that the petitioner is the tenant in respect of the property claimed by him (See Paragraphs 8, 9 and 13 of the affidavit of R. S. Sureka, Receiver, affirmed on 22nd February, 1993). In paragraph 14 the Receiver has reserved his right to take appropriate action against the petitioner for its wrongful and illegal failure to pay rent. In paragraph 17 the Receiver has said that the petitioner was holding onto a valuable tenancy for an insignificant consideration and had not made payments towards arrear rents and had purported to raise a dispute regarding Municipal Rates and Taxes. None of those facts was before D. K. Sen, J. when the order was passed on 17th August, 1981. There cannot be said to be any dispute regarding the plaintiffs' tenancy in the facts of this case. The first submission of the Receiver and the plaintiffs is accordingly rejected. 32. None of those facts was before D. K. Sen, J. when the order was passed on 17th August, 1981. There cannot be said to be any dispute regarding the plaintiffs' tenancy in the facts of this case. The first submission of the Receiver and the plaintiffs is accordingly rejected. 32. The second submission relates to the rights of the Receiver to create a tenancy. In this case it is not the Receiver who claims to have created the tenancy. It is the petitioner's case which has been accepted by the Receiver that the petitioner was a tenant in respect of the premises much prior to the Receiver being appointed. There is, therefore, no question of the parties being prejudiced by the Receiver letting out the premises over which the Receiver has been appointed. 33. It cannot be said that there is no dispute regarding the other properties justifying the submissions of the plaintiffs and the Receiver that there was no cause of action for filing an application by way of pro interesse suo. The letters dated 15th April, 1992 and 20th July, 1992, written by the petitioner to the Receiver would show that there is an existing dispute regarding the other properties in respect of which the petitioner has made a claim in this application. Besides, the case of the petitioner regarding the other properties has been categorically stated in paragraph 4 of its petition. Paragraph 4 of the petition has been dealt with in the Receiver's affidavit by saying that he did not admit the authenticity of the Chart and he craves leave to refer to the relevant records at the time of hearing. This is an inadequate traverse (See the decision in (9) Sahu Jain Ltd. v. Deputy Secretary, Ministry of Finance and Others, reported in 70 CWN 399 at 404. Besides, no records were produced by the Receiver before this Court, as stated by him in his affidavit, to controvert the Chart and the case made out by the petitioner in paragraph 4 of the petition. 34. This brings us to the final point which has been argued by the plaintiffs regarding diligence. It appears from the correspondence that subsequent to the first denial to the letter written on 9th August, 1991 correspondence was exchanged between the parties which sought to resolve the disputes. 34. This brings us to the final point which has been argued by the plaintiffs regarding diligence. It appears from the correspondence that subsequent to the first denial to the letter written on 9th August, 1991 correspondence was exchanged between the parties which sought to resolve the disputes. The letter dated 14th May, 1992 clearly shows that the dispute was not regarding the tenancy right of the petitioner but as to the alleged failure of the petitioner to make payment of the Municipal Rates and Taxes and Rents. On 20th July, 1992 the letter of the Receiver was replied to setting out the petitioner's case. 35. There was no response to this letter till the petitioner was given copies of the letters written by the sub-tenants to the Receiver, all bearing the date 22nd August, 1992. It was only then that the petitioner came to know that the Receiver was persisting in dispossessing the petitioner from its position as tenant in respect of the property in question. Significantly in the letter dated 14th May, 1992 the Receiver has stated that if the rents and Municipal dues were not paid by the petitioner, it would be a defaulter and 'liable to be evicted through proper proceedings in the Court of Law'. There is no proceeding which has been filed by the Receiver for dispossessing the petitioner and it must be held in the facts and circumstances of this case that realisation of rents directly from the petitioner's sub-tenants is, in fact, a dispossession of the petitioner as tenant in respect of the property in question. It cannot, therefore, be said that there has been any lack of diligence as far as the petitioner is concerned justifying the Court in exercising its discretion against the petitioner in this case. 36. The application is, accordingly, allowed. There will be an order in terms of prayers (a), (b) and (c) of the petition. It is being made clear that this order does not preclude the Receiver from taking any action against the petitioner for dispossessing it or for recovery of any alleged arrear of rents or other dues as he may be entitled to in law. The costs of this application, assessed at 100 G. Ms., will be borne by the plaintiffs in equal share. The costs of this application, assessed at 100 G. Ms., will be borne by the plaintiffs in equal share. All parties concerned including the Receiver are to act on a signed xerox copy of this Judgment and Order on the usual undertaking.