IMPORTANT POINT
The liabilities incurred by a statutory Receiver in the course of management of the Sugar Mill are liabilities attached to assets or properties of the Sugar Mill.

Headnote:Uttar Pradesh Sugar Undertakings (Acquisition) Act No. 23 of 1971-Section 3-U.P. Zamindari Abolition and Land Reforms Act, 1950-Section 279(1)(g) rw/s 286A-Acquisition of respondent Sugar Mill by appellant Corporation-On the date of coming into force of the Act, Sugar Mill was under management of Receiver appointed on 4.3.1970 by the Collector-Contract entered into by the plaintiff firm with the Receiver-Receiver neither sent the quantity of sugar nor returned the advance price paid by the plaintiff-Plaintiff filed suit for recovery of damages against Mill owner and appellant Corporation-Corporation repudiated the claims made in two suits pleading that there was no privity of contract between the plaintiff and the Corporation as the Receiver was managing the Mill on the date of alleged non supply of quantity of sugar-Writ petition filed by owner of Sugar Mill challenging constitutional validity of the Ordinance in which operation of the Ordinance was stayed-Suits decreed holding that the Corporation cannot avoid its liability towards claim of plaintiff-Writ petition questioning validity of the Ordinance/Act was dismissed-What is the legal effect of vacation of the order of stay on ultimate dismissal of writ petition-What was the position of Receiver who was managing the Sugar Mill.
       Held : The entry at Serial No. 4 in Column Nos. 2 & 3 of Schedule I attached to the Act, shows the Sugar Mill named Maheshwari Khetan Sugar Mills (Pvt.) Ltd., Ramkola, District Deoria stands acquired and vested in the Corporation on the appointed day on payment of fixed compensation of Rs. 11,00,000/-. From the aforesaid provisions of the Act of 1950 and the Ordinance/Act, it is clear that the Receiver who was in the management of the Sugar Mill on the appointed day was not a Receiver appointed by any Court. He was a Receiver appointed by the Collector under the Act of 1950 and on the vesting of the Sugar Mill on the appointed date 3.7.1971, was in possession and management of the Sugar Mill not as an agent either of the erstwhile Sugar Mill owner or the corporation. He was a statutory Receiver appointed under section 279(1)(g) read with section 286-A of the Act of 1950 for the purpose of recovery of dues of the cane-growers in the manner as arrears of land revenue. He was allowed to continue in management of the Sugar Mill by the High Court on the terms and conditions imposed in the order of stay passed during pendency of the writ petition. The liabilities incurred by a statutory Receiver in the course of management of the Sugar Mill are liabilities attached to assets or properties of the Sugar Mill because neither the erstwhile owner nor the Corporation, which later acquired the Sugar Mill, was responsible for the alleged losses or damages caused to the plaintiff by the alleged breach of contract committed by the receiver in non-supply of the quantity of sugar. The general rule is that a receiver takes the rights, causes, and remedies which were in the individual or estate whose receiver he is, or which were available to those whose interests he was appointed to represent. Ordinarily none of the parties to the suit in which a receiver was appointed is personally responsible for losses and liabilities incurred in the administration of the receivership, but, except as the receiver may be personally liable therefor, such losses and liabilities fall on the estate. (Paras 27 to 30)
       A statutory Receiver is merely the legal representative of the property placed in his hands as such. In determining his liability the court will only determine the liability of the property. It is not material whether the liability existed before or has accrued since his appointment. A contractual liability arising against the receiver during the course of management of the property for acts or omissions committed by him for the benefit of the property, is not merely enforceable against the receiver but is a liability attached to the property in his receivership, which can be recovered from the property and through the person in whom the property vests. (Para 32)
       The legal status and position of a receiver appointed by the Court and a Receiver appointed under in a Statute are different. In the instant case, the receiver appointed under the Act of 1950 and continued by the High Court on terms and conditions contained in the stay order during pendency of the writ petition, was a statutory receiver and his rights and liabilities were attached to the property for the management of which he was appointed. The receiver was not an agent of either of the parties. For his acts and omissions, a third party could raise a claim against the party in whom the property stood vested and to which the liability was attached. (Para 37)
       None of the parties i.e. the erstwhile owner of the Corporation is personally liable for the breach of contract committed by the receiver in the course of management of the Sugar Mill, the contractual liability of the receiver towards the plaintiff is recoverable from the property of the Sugar Mill, and therefore, through the Corporation in whom the property stands vested under the Act. (Para 39)

JUDGMENT

Dharmadhikari, J.-By Uttar Pradesh Sugar Undertakings (Acquisition) Ordinance, 1971 which later became an Act No. 23 of the same name [hereinafter referred to shortly as the Ordinance/Act ], M/s Maheshwari Khetan Sugar Mill Pvt. Ltd., [Respondent No. 2 herein] at Ramkola, District Deoria in the State of Uttar Pradesh, was acquired by the appellant U.P. State Sugar Corporation [shortly referred to as the Corporation ].

2. On the date of coming into force of the Ordinance, the Sugar Mill was under management of Receiver appointed on 4.3.1970 by the Collector for recovery of dues of cane-growers as arrears of land revenue in accordance with section 279(1)(g) read with Section 286A of the U.P. Zamindari Abolition and Land Reforms Act, 1950 [shortly referred to as the Act of 1950 ].

3. M/s Mahalchand M. Kothari which is a partnership firm carrying on trade in Guwahati in the State of Assam filed two suits in the Court of Assistant District Judge, Guwahati for recovery of damages caused to it as a result of non-supply of sugar under the contract entered into by the plaintiff firm with the Receiver who was managing the Sugar Mill. The orders were placed by the plaintiff for supply of different quantities of sugar in the year 1979 and advance money was paid to the Receiver for timely supply. The prices of sugar having gone up in the period of supply under the contract, the Receiver neither sent the quantity of sugar nor returned the advance price paid by the plaintiff. Both the suits Nos. 11 & 27 were filed in the year 1982. The erstwhile Mill owner and the appellant Corporation were made defendants to the suits because by that time, Sugar Mill already stood transferred to, vested in and been in actual possession of the Corporation in accordance with section 3 of the Act.

4. The Corporation repudiated the claims made in the two suits pleading inter alia that there was no privity of contract between the plaintiff and the Corporation; the Receiver was managing the Sugar Mill on the date of alleged non-supply of quantity of sugar; the erstwhile owner of the Sugar Mill had filed writ petition in the High Court of Allahabad challenging the constitutional validity of the Uttar Pradesh Sugar Undertakings (Acquisition) Ordinance, 1971 in which operation of the Ordinance was stayed and the possession of the Sugar Mill was restored to the erstwhile owner on specified terms and conditions of the order of stay.

5. The Assistant District Judge, Guwahati by two separate judgements, decreed both the suits holding inter alia that the Corporation cannot avoid its liability towards the claims of the plaintiff as the Sugar Mill stood transferred to and vested in it from the appointed day i.e. 3.7.1971 under Section 3 of the Act.

6. The Corporation had preferred two appeals to the High Court of Guwahati which were allowed on 26.6.1996 solely on the ground that the suits were not maintainable as the plaintiff was not a registered partnership firm and was, therefore, incompetent to sue as a firm. The plaintiff then had approached this Court by Civil Appeal Nos. 3057 and 3058 of 1997 which were allowed on 25.7.1997 as it was pointed out that original certificate showing registration of the firm had been produced before the trial Court. This Court, therefore, remitted the appeals to the High Court for their decision on merits.

7. The Division Bench of the High Court by the impugned judgment dated 16.7.1998 dismissed both the appeals of the Corporation and confirmed the decrees granted by the trial court in the two suits in favour of the respondent/plaintiff.

8. The Corporation, therefore, after seeking leave is before this Court in these two appeals.

9. Learned counsel appearing for the Corporation has taken us through the relevant dates and proceedings of the Allahabad High Court in the writ petition which was filed challenging the Ordinance/Act. It is strenuously urged that there was no privity of contract between plaintiff and the Corporation.

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Judicial Analysis

SupremeToday

2004 Supreme(SC) 1369

IMPORTANT POINTThe liabilities incurred by a statutory Receiver in the course of management of the Sugar Mill are liabilities attached to assets or properties of the Sugar Mill.

Judicial Analysis

IMPORTANT POINT
The liabilities incurred by a statutory Receiver in the course of management of the Sugar Mill are liabilities attached to assets or properties of the Sugar Mill.