2010 Supreme(SC) 377

2010 (4) Supreme 137
SUPREME COURT OF INDIA
R.V. Raveendran and R.M. Lodha, JJ.
Amal Kumar Ghosh & Ors. — Appellants
versus
Basanta Kumar Almal — Respondent
Civil Appeal No. 4035 of 2010
[Arising out of SLP(C) No.14199 of 2009]
Decided on : 28-4-2010

IMPORTANT POINTS
1. When any money belonging to the parties is entrusted to the Receiver,he should deal with it as per the directions of the court. If a Receiver pays the amount belonging to vendor-defendant, to someone else without the authority of the court or authorization from the vendor-defendant, it will amount to gross negligence or wilful default on his part.
2. When courts appoint Receivers either during pendency of the proceedings or post decree, the courts should ensure that Receivers submit periodical reports and that once their assigned task is completed, they are discharged.

Headnote:Suit for Specific Performance-Appointment of Receiver in terms of Settlement- Non payment of balance amount to appellants as provided in ‘Terms of Settlement’ –Challenge thereagainst-When any money belonging to the parties is entrusted to the Receiver,he should deal with it as per the directions of the court- If a Receiver pays the amount belonging to vendor-defendant, to someone else without the authority of the court or authorization from the vendor-defendant, it will amount to gross negligence or wilful default on his part- Paragraph 7 of the ‘Terms of Settlement’ required the balance amount to be paid to appellants- That was not complied with- Appellants had instructed the Receiver to pay Rs.3,00,000/- to Park Services Pvt. Ltd. towards statutory liabilities and other outgoings in regard to property- But the Receiver did not comply with the said instructions as he admitted that the sum of Rs.3,00,000/- was not paid by him to the Park Services Pvt. Ltd.-. Nor did Park Services Pvt. Ltd make a demand for payment of said amount by Receiver- No explanation from Receiver as to why he directly paid Rs.1,08,341.64p. to Calcutta Municipal Corporation as that was not part of the instructions-Receiver should have either complied with the terms of settlement or should have complied with the instructions contained in the letters - He did neither-On the other hand, he chose to release the amount to the plaintiff in the suit acting on the request of his counsel - Neither consent decree nor appellants’ authorization required the amount to be paid to the `purchasers’ or respondent1- There was also no order of the court to pay the amount to respondent1-Impugned Order of High Court held unsustainable as it had not examined these aspects-Matter remitted back to High Court to examine afresh the entire issue as to whether Receiver had discharged his functions properly and complied with Directions- Appeal allowed. (Paras 10 to 15)

       Receivers appointed by court-Powers of- Receivers appointed by court are expected to submit periodical accounts/reports to the court with copies to parties- If their assigned task is completed, they should seek discharge- They cannot continue as Receivers for decades, without doing anything and holding on to the amounts entrusted to them in trust- When courts appoint Receivers either during pendency of the proceedings or post decree, the courts should ensure that Receivers submit periodical reports and that once their assigned task is completed, they are discharged- If it is not done, it will cause unnecessary hardships and may give room for avoidable irregularities- Each court will have to keep track of Receivers (as also commissioners) appointed by it and ensure that they duly perform their functions in time and thereafter discharge them. (Para 12)

       Facts of the Case :

       In a Suit for Specific Performance, a consent decree was passed herein in the instant case and Receiver was appointed in terms of Settlement. Receiver did not pay balance amount to appellants as provided in ‘Terms of Settlement’.

       Findings of the Court :

       The Court held that When any money belonging to the parties is entrusted to the Receiver,he should deal with it as per the directions of the court. If a Receiver pays the amount belonging to vendor-defendant, to someone else without the authority of the court or authorization from the vendor-defendant, it will amount to gross negligence or wilful default on his part. Paragraph 7 of the ‘Terms of Settlement’ required the balance amount to be paid to appellants. That was not complied with. Appellants had instructed the Receiver to pay Rs.3,00,000/- to Park Services Pvt. Ltd. towards statutory liabilities and other outgoings in regard to Property.But the Receiver did not comply with the said instructions as he admitted that the sum of Rs.3,00,000/- was not paid by him to the Park Services Pvt. Ltd. Nor did Park Services Pvt. Ltd make a demand for payment of said amount by Receiver. No explanation from Receiver as to why he directly paid Rs.1,08,341.64p. to Calcutta Municipal Corporation as that was not part of the instructions.Receiver should have either complied with the terms of settlement or should have complied with the instructions contained in the letters . He did neither.On the other hand, he chose to release the amount to the plaintiff in the suit acting on the request of his counsel . Neither consent decree nor appellants’ authorization required the amount to be paid to the `purchasers’ or respondent1. There was also no order of the court to pay the amount to respondent1.Impugned Order of High Court was held unsustainable as it had not examined these aspects. Matter was remitted back to High Court to examine afresh the entire issue as to whether Receiver had discharged his functions properly and complied with Directions. Appeal was allowed.