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2002 DIGILAW 414 (CAL)

DHIRENDRA NATH DAS v. SHRIMATI MENOKA DAS

2002-06-28

D.K.SETH, JYOTESH BANERJEE

body2002
D. K. SETH, J. ( 1 ) THIS appeal is directed against order No. 100 dated 17th April, 2000 passed by the learned Civil Judge, Senior Divsion, Durgapur in Title Suit No. 61 of 1995. Facts: ( 2 ) THE plaintiff, in a suit for partition, is the appellant before this Court. The case has a chequered career. An application for appointment of Receiver filed by the plaintiff was allowed by the learned trial Court by an order dated 23rd May, 1996. One learned advocate was appointed Receiver by an order dated 20th June, 1996. The learned advocate had signified his unwillingness on 31st July, 1996. The sole defendant was appointed Receiver by an order dated 7th August 1996. Against the order dated 23rd May 1996 and 20th June 1996, the sole defendant preferred FMAT No. 2189 of 1996. This appeal was dismissed by this Court by an order dated 10th September 1996. In the said order, the Receiver was directed to deposit 50% of the collection in Court every month and to file quarterly statement of account. The trial Court by an order dated 7th February 1997 directed the Receiver to deposit 50% of the total collection in Court, in default the Receiver would be removed and one of the plaintiffs would be appointed Receiver. It appears from the record that the Receiver did not deposit the 50% of the collection made by him. The defendants preferred FMAT No. 1241 of 1997 against the order dated 7th February 1997. In FMAT No. 1241 of 1997, this Court by an order dated 18th September 1997 issued certain directions to the Receiver, which are quoted below:-1. WE direct the defendant-Receiver to file an application in the trial Court explaining his failure to comply with the order of the trial Court with regard to deposit of half of the amount of rent within one month after the Puja vacation. 2. IF such an application is filed, the trial Court shall dispose of the same in accordance with law. At the time of disposal of the said application, if filed, the trial Court may also consider all adjustments that the defendant-Receiver may be claiming in respect of deposit of rent in the trial Court. 2. IF such an application is filed, the trial Court shall dispose of the same in accordance with law. At the time of disposal of the said application, if filed, the trial Court may also consider all adjustments that the defendant-Receiver may be claiming in respect of deposit of rent in the trial Court. ( 3 ) IT is made clear that we have not gone into the merits of the claims and/or accounts made by the parties, which shall be dealt with by the trial Court while deciding the said application if filed. ?the Receiver made an application before the learned trial Court seeking permission to deposit 50% of the rent collected after deducting the incidental charges. The learned trial Court by an order dated 27th November 1997 directed the Receiver to comply with the order of this Court. Against order dated 27th November 1997, the defendants preferred a revisional application being C. O. No. 2025 of 1997, which is alleged to be pending. The plaintiffs/appellants filed an application under Order 40 Rule 4 of the Code of Civil Procedure (CPC) praying for attachment of the properties of the defendant No. 1 Receiver on account of his failure to comply with the order of the High Court. By an order dated 3rd December 1997, the Receiver was asked to show-cause why his properties should not be attached and be put to sale. On 28th January 1998, the sole defendant being the Receiver Anil Kumar Das died. By an order dated August 5, 1998, the heirs of the deceased sole defendant were substituted. One Gan Sankar Chatterjee filed an application under Order 1 Rule 10 CPC of his addition as a party/defendant on the ground that one Tinkari Chattoraj had allegedly executed a Will in respect of one of the suit property in his favour and that a probate case in respect of the said Will is pending adjudication. This application also allowed by an order dated 5th August 1998. On May 18, 1999, the added defendant filed an application for stay of further proceeding of the suit till disposal of the probate case. By an order dated 11th August 1999, this application for stay was rejected. This application also allowed by an order dated 5th August 1998. On May 18, 1999, the added defendant filed an application for stay of further proceeding of the suit till disposal of the probate case. By an order dated 11th August 1999, this application for stay was rejected. THEREAFTER, by an order dated 7th September 1999, the trial Court had recorded that the Receiver (the sole defendant) was asked by the learned Court to show-cause as to why his property shall not be attached and shall not be put to sale. But, before showing cause, the Receiver being the sole defendant died. His legal heirs were substituted. Since the sole defendant was the Receiver of the suit and he had collected the rent, but did not deposit the same, therefore, the legal heirs substituted in place of the sole defendant are bound to comply with the order of this Court on account of their having stepped into the sues of the sole defendant. The substituted heirs of sole defendant being the defendant Nos. 1, 2 and 3, now cannot be absolved from their liability to deposit 50% of the rent and other dues in terms of the direction of this Court. Therefore the said substituted defendants were directed to deposit 50% of the rents and other dues already collected since the filing of the suit till the date of the order before 5th October 1999. In default, law would take its own course. C. O. No. 2269 of 1999 was preferred against the order dated 11th August 1999 rejecting stay of the suit. This civil order was dismissed by order dated 16th September 1999. IN these circumstances, the appellant/plaintiff had made an application on 22nd December 1999 praying for appointment of Receiver in place of the deceased Receiver. The Court had rejected the said application by an order dated 17th April 2000. It is this order out of which this appeal arises. Submission on behalf of the Appellants:learned counsel for the appellants points out that after the death of the Receiver, the Receiver is to be appointed. Though the prayer for appointment of the plaintiff No. 3 has since been made by the plaintiff No. 3 as Receiver, but it was incumbent upon the Court to appoint the Receiver. Submission on behalf of the Appellants:learned counsel for the appellants points out that after the death of the Receiver, the Receiver is to be appointed. Though the prayer for appointment of the plaintiff No. 3 has since been made by the plaintiff No. 3 as Receiver, but it was incumbent upon the Court to appoint the Receiver. The further contended that after the death of the Receiver, the heirs of the defendant No. 1 could not collect the rent. Such collection was without any authority. Therefore, in such circumstances, appointment of Receiver was incumbent. He further point out that he is ready and willing to participate in the final hearing of the suit, which has nothing to do with interlocutory matter. Since there was no stay operating in the matter of disposal of the suit, it could have been disposed of in the mean time. Submission on behalf of the Respondents: ( 4 ) MR. Gopal Chandra Mukherjee, learned counsel for the respondents, on the other hand, contends that he has no instruction as to whether the substituted heirs of the defendant No. 1 had been collecting rent or not. However, in his usual fairness, he contends that until and unless the substituted heirs of the defendant No. 1 are appointed Receiver, they cannot collect rent. Be that as it may, he points out that since the suit is ready, the same should be disposed of finally. There is no necessity of proceeding with the interlocutory matter any further. ( 5 ) HAVING regard to the facts and circumstances of the case, it seems that the appeal and application has since been directed to appear for final disposal and the preparation of Paper Book was dispensed with. Therefore, by consent of parties, the appeal is taken up for hearing. Receiver is an Officer of the Court: ( 6 ) THE guiding principles governing the appointment and continuation in office of a Receiver may be referred to, before we embark upon the question that emerges in the present case. A Receiver is an Officer of the Court. He is not an agent of any party to the suit, even though his ultimate possession may enure to the benefit or possession of the successful party on the termination of the suit (Lakshmi Reddy v. Lakshmi Reddy, AIR 1957 SC 314 : 1957 SCR 195 : 1957 SCJ 248 ). A Receiver is an Officer of the Court. He is not an agent of any party to the suit, even though his ultimate possession may enure to the benefit or possession of the successful party on the termination of the suit (Lakshmi Reddy v. Lakshmi Reddy, AIR 1957 SC 314 : 1957 SCR 195 : 1957 SCJ 248 ). The Receiver is appointed for the benefit of all concerned. He is the representative of the Court as well as that of the parties interested in the litigation. (Jagat Tarini Dasi v. Naba Gopal, (1907)34 Cal 305 at p. 317 ). The appointment of Receiver is made by the Court in the interest of justice. Receiver is an officer or representative of the Court subject to its orders. His possession is the possession of all the parties to the proceedings according to their respective titles. Any money in his hands is custodia legis for the person, who can make a title to them (Gopal Khattey v. Phulchand Purshottamdas, AIR 1946 Cal 357 : 50 CWN 229; Orr v. Muthia, (1894)17 Mad 501 at p. 503; Administrator-General v. Prem Lall, (1895)22 Cal 1011 at p. 1015 : 22 IA 203; Dwijendra v. Joges, (1924)39 CLJ 40 : 79 IC 520 : AIR 1924 Cal 600. Continuation of office: ( 7 ) THE Receiver holds office not by virtue of his own right, but by reason of the pleasure of the Court supported by judicial principles. When a Receiver is appointed in a suit until judgment, he continues in his office until the termination of the suit by delivery of judgment. A Receiver appointed without the tenure being defined, he continues till he is discharged. After the final disposal of the suit, the Receiver's functions are terminated. But still he would be answerable to the Court as its officer until he is finally discharged. The Court has power to continue the Receiver in the exigencies of circumstances even after the final decree. A Court while appointing the Receiver may provide that the office would continue permanently after the decree or for so long at the Court may deem fit and proper (Mathusri v. Mathusri, (1896)19 Mad 120 : 23 IA 28 ). The Court has power to continue the Receiver in the exigencies of circumstances even after the final decree. A Court while appointing the Receiver may provide that the office would continue permanently after the decree or for so long at the Court may deem fit and proper (Mathusri v. Mathusri, (1896)19 Mad 120 : 23 IA 28 ). There is no automatic discharge of a Receiver on the termination of the proceedings in which he is appointed if the object for which the appointment was made is not achieved (Ram Charan v. Shridhar, 1961 (2) All 191 : AIR 1962 All 610 ). Receiver's liability to account: ( 8 ) THE Court appointing a Receiver in a suit has incidental authority or jurisdiction to ask for account from the receiver even if the suit may not be pending any longer (Administrator-General v. Prem Lall, (1895)22 Cal 1011 : 22 IA 203 ). The Court may require accounts from a Receiver and allow parties to examine the accounts. The Court may deal with all matters connected with the management by the Receiver (Chandreswar Prasad v. Bisheshwar, 58 IC 405 ). Consequences of removal or death of a Receiver: ( 9 ) IN case after the appointment of the Receiver, a Receiver is removed from the office without recalling the order of appointment of Receiver, a new Receiver is to be appointed in the office. IN case a person appointed as Receiver dies before he is discharged, in that event, his office becomes vacant. His legal representatives cannot claim any right to succeed to the office. However, they are not precluded from applying before the Court for appointment of themselves or any one of them as Receiver. Even though they cannot succeed to the office of the Receiver, yet the legal representatives of the person being Receiver are bound to account for the amounts in the hands of the Receiver in case any loss is occasioned by the Receiver and such amount is due from such Receiver. The office of the Receiver is constituted by order of Court. It does not vest by succession. The legal representative of the deceased Receiver does not possess status of Receiver (Krishnaswami v. Naranappa, AIR 1959 Mad 209 : 1956 (2) MLJ 429 ). The office of the Receiver is constituted by order of Court. It does not vest by succession. The legal representative of the deceased Receiver does not possess status of Receiver (Krishnaswami v. Naranappa, AIR 1959 Mad 209 : 1956 (2) MLJ 429 ). IN a case where Receiver has collected money and failed to render the accounts to the Court and failed to deposit such amount as directed by Court, he is liable to account for and show-cause as to why his properties shall not be attached for realization of the property in his hands as Receiver. In case a Receiver dies after such notice is issued, but before he had accounted for or the order for sale after attachment could be implemented, in such a case, such property continues to remain under attachment and liable to be sold. Persons at whose hands such property comes are equally liable for rendering of accounts. The death of the Receiver in such a case does not absolve such properties from the control of the Court by which the successors inheriting such property would be bound. As between Court and the Receiver, it is a relation of a Court and its officer over whom the Court has every control. As between the person appointed as Receiver and the legal representative of such person is a personal relation on account of which they are bound to account for the act of such person, if any of the properties or assets of such person in his individual capacity comes to the hands of such legal representative. Such legal representatives are also bound to account for any amount at their hands, which form part of the Receiver's account or was held by such person as Receiver. Unless the legal representative is made bound, the Court would be powerless and loose its control. The property held by Receiver in the capacity of an officer of the Court is in the custody of the Court. Such property if comes at the hands of the legal representative of the person holding the office of Receiver, such person has no right to deal with such property and is bound to account for the same to the Court. WHEN a Receiver is appointed in respect of a particular property, the Court takes control of such property within its power and administers the same through its officer being the Receiver. WHEN a Receiver is appointed in respect of a particular property, the Court takes control of such property within its power and administers the same through its officer being the Receiver. If someone takes advantage of such property, otherwise than the Court's direction, either in the hands of the Receiver or in his absence, the Court is not powerless to deal with such cases in the suit itself, particularly, when such persons are parties to the proceedings, may be they are legal representatives of the deceased party. Preservation of the suit properties: Scope and applicability: ( 10 ) THE purpose and object of appointment of Receiver is for preservation of the subject matter involved in the suit pending determination of the rights of the parties thereto (Satyanarayan Banerjee v. Kalyani Prasad, AIR 1945 Cal 387 : 49 CWN 558; Jagat Tarini Dasi v. Naba Gopal, (1907)34 Cal 305 at p. 316 ). UNDER Order 41 Rule 1 CPC, the primary thing the Court has to look into is as to how best the suit properties could be preserved without being wasted. The responsibility of the Court becomes greater if competing parties vie between themselves to possess the suit properties. Receiver is appointed to create a harmony and not to ferment disharmony. This is a well-settled principle of law. The primary intention of Order 40 Rule 1 is to keep such harmony between the parties and may vest the property to safeguard interest of all parties. Application of the principle: ( 11 ) HAVING regard to the above principle, now we may deal with the case at our hands. In the facts and circumstances, it appears that defendant No 1 was appointed Receiver. At one point of time, he was asked to deposit 50% of the rent so collected in Court. Against such order, he preferred an appeal in which this Court issued directions as quoted above. It further appears that defendant No. 1 Receiver did not comply with the direction of this Court. Therefore, he was asked to show-cause as to why his properties should not be attached and sold. In the mean time before any cause is shown, the Receiver died. The heirs of the defendant No. 1 were asked to furnish the statements of accounts and deposit 50% of the amount collected by the defendant No. 1. Therefore, he was asked to show-cause as to why his properties should not be attached and sold. In the mean time before any cause is shown, the Receiver died. The heirs of the defendant No. 1 were asked to furnish the statements of accounts and deposit 50% of the amount collected by the defendant No. 1. In view of the principle discussed above, we are not inclined to interfere with such order. BUT as soon the application for appointment of Receiver was made after the Receiver is dead, it was incumbent on the Court to decide the question as to whether the case was a fit one for appointment of Receiver or not. Who could be appointed Receiver was a matter that ought to have been considered after it is decided by the Court that the Receiver would be appointed. It could not have rejected the application for appointment of Receiver only on the ground that the parties are not interested, in getting the suit finally decided or to participate in its peremptory hearing. Every application is to be disposed of on its own merit. No extraneous consideration can preclude the Court from deciding the matter on its merit. IN the present case, the Receiver was not discharged. It appears from the facts disclosed that the appointment of Receiver and continuation in its office is just and proper. In the present case, the order of appointment of Receiver has not been recalled. Thus, on the death of the person appointed as Receiver, there appears to be a vacuum in the office of the Receiver. Such office cannot be kept in vacuum. It has to be filled up. Order 40 Rule 3 CPC prescribes the liability of the Receiver in respect of statement of accounts according to the direction of the Court and to pay the amount due from him as the Court may direct and be responsible for any loss occasioned to the property by his willful default or gross negligence. In terms of Rule 4 of Order 40 CPC, the Court may direct enforcement of Receiver's duties if he fails to submit accounts as directed by Court or to pay the amount due from him according to the direction of the Court or occasions loss to property by his willful default or gross negligence. In terms of Rule 4 of Order 40 CPC, the Court may direct enforcement of Receiver's duties if he fails to submit accounts as directed by Court or to pay the amount due from him according to the direction of the Court or occasions loss to property by his willful default or gross negligence. In exercise of such power, the Court may direct the Receiver's property to be attached and may sale such property and apply the proceed to make good any amount due from him or any loss occasioned by him. HAVING regard to the facts and circumstances of this case, as discussed above, it appears that there was already a Receiver, who had failed to comply with the direction issued by the trial Court as well as by this Court. At the same time, it would have made the Receiver liable to be removed. But once the Receiver is removed by a more powerful Court, this Court cannot revive him to enforce its orders. Thus, there has been a void, which is to be dealt with having regard to the facts and circumstances of the case. IN the facts and circumstances of this case, we feel that it is a case where the Receiver ought to have been appointed. Having regard to the fact that the defendant No. 1 since deceased, did not comply with the order and that the substituted heirs of the defendant No. 1 has not come up with any case that they would comply with the order of the Court, namely, the order dated 7th September 1999 and Mr. Mukherjee having not volunteered anything on that account, we do not think that any of the substituted heirs of the defendant No. 1 could be considered for being appointed as Receiver. Their case is further aggravated by the allegation of the plaintiff/appellant that they are collecting rent. However, this is disputed by the learned counsel for the respondents, Mr. Gopal Chandra Mukherjee. It has not categorically denied by the respondents though such allegation was made in the application itself. The heirs of the defendant No. 1 have not asserted that they are not collecting rent. No affidavit-in-opposition seems to have been filed by them in respect of the application dated 22nd December 1999 filed before the trial Court on behalf of the plaintiff. The heirs of the defendant No. 1 have not asserted that they are not collecting rent. No affidavit-in-opposition seems to have been filed by them in respect of the application dated 22nd December 1999 filed before the trial Court on behalf of the plaintiff. In any event, the heirs of the defendant No. 1 cannot continue to act as Receiver, they can neither collect the rent meant for collection of the Receiver on the death of the Receiver. So long the Receiver is not discharged, the heirs of the person appointed Receiver are liable for the liabilities in respect of the property at their hands and the accounts of such person held as Receiver or otherwise. In case any amount collected is not held in the account of the Receiver but in personal account, in that event, heirs of such persons are equally liable and cannot escape their liability. IN the circumstances, we do not consider them to be appropriate persons for being appointed as Receiver. A lawyer was appointed as Receiver but he had declined. In the circumstances of the case, in our opinion, the application dated 22nd December 1999 should have been allowed. Order: ( 12 ) THE appeal is allowed. The order No. 100 dated 17th April 2000 passed by the learned Civil Judge, Senior Division, Durgapur, in Title Suit No. 61 of 1995 is hereby set aside. WE allow the prayer made in the application dated 22nd December 1999 appointing the plaintiff No. 3 as Receiver with effect from this date. The rent that will be collected by him shall be deposited, after deducting necessary collection charges and other official expenses, in an Account to be opened by the Receiver in the State Bank of India, City Centre Branch, Durgapur, subject to orders and directions of the learned trial Court. The Receiver shall not be entitled to withdraw any amount from that account without the leave of the trial Court. The amount shall be deposited month by month which shall be invested by the Bank in some recurring or fixed deposit earning handsome interest and shall be renewed from time to time as may be directed by the trial Court or until the trial Court otherwise direct. The amount shall be deposited month by month which shall be invested by the Bank in some recurring or fixed deposit earning handsome interest and shall be renewed from time to time as may be directed by the trial Court or until the trial Court otherwise direct. The Receiver shall furnish Statement of Accounts of the rent collected and deposited in Bank and the usual expenses incurred by him to the Court every three months, copies whereof are to be furnished to the respective counsel for the respective parties. Compliance of order dated 7th September 1999:so far as the compliance of the order dated 7th September 1999 and such other orders that have been passed by the trial Court, shall be proceeded with by the learned trial Court as it may deem fit and proper in order to ensure deposit of the amount collected by the deceased Receiver. The heirs of the defendant No. 1 or any other party, plaintiff or defendant, whoever have collected the rents after the death of the defendant No. 1 shall deposit such amount to the Court. The Court will direct investment of such amount in such fixed deposit accounts in the same Bank subject to its control. The Receiver shall file affidavit in the learned trial Court stating as to who had collected the rent and shall also furnish Statement of Accounts of such collection along with such facts if collected by such persons or by any other persons as the case may be. The rent so collected by the defendant No. 1 or his heirs and the Receiver shall be deposited in Court subject to further order by the trial Court which will invest such amount in such account, as it might deem fit and proper so as to enable the account to earn handsome interest from any nationalized Bank. All the parties shall file their respective affidavits in terms of this order within a month from date before the learned trial Court. The trial Court shall deal with the same accordingly and take proper steps, as it may deem fit and proper. Hearing of the Suit:the consideration of the question with regard to the collection of such rent and the matters relating to appointment of Receiver or matters ancillary thereto will not prevent the learned trial Court from deciding the suit and continuing with the peremptory hearing thereof. Hearing of the Suit:the consideration of the question with regard to the collection of such rent and the matters relating to appointment of Receiver or matters ancillary thereto will not prevent the learned trial Court from deciding the suit and continuing with the peremptory hearing thereof. The learned trial Court shall issue appropriate direction and pass appropriate order in respect of this matter relating to Receiver and collection or rents within two months from the date of communication of this order. It is expected that the learned trial Court shall dispose of the said suit within three months from the communication of this order. No adjournment shall, however, be allowed to either of the parties in respect of the peremptory hearing or matters relating to Receiver or relating to collection or deposit of rent or the attachment and sale unless it is absolutely unavoidable. THE appeal and the application both are thus disposed of. There will be no order as to costs. Urgent xerox certified copy of this order, if applied for, office is directed to deliver the same within seven days. J. Banerjee, J.- I agree. Appeal disposed of