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IN THE HIGH COURT OF BOMBAY
F.I. Rebello, J.
ICICI Limited ..... Plaintiffs.
Versus
Alpine Industries Ltd. others ..... Defendants.
Suit No. 5501 of 1998, decided on 5-4-1999.
Advocates appeared :
Ms. Rajni Iyer with Birendra Saraf and Sunil Tilokchandani i/by Manilal Kher Ambalal Co., for plaintiffs.
Girish Desai, for defendant No. 1.
Lalit Jain i/by M. Dhruva Co., for the defendant No. 3.
Order XL, Rule 1-Expression custodia legis-For property to be in custody of Court, Receiver must take possession-Once the receiver takes possession, the property is custodia legis.
Sections 16 and 22-Civil Procedure Code, 1908, Order XL, Rule 11-Appointment of Receiver to take possession of property-Inquiry under Section 16 commenced-Court declined to direct Receiver to take possession as property does not become custodia legis till possession was taken by Receiver.- The property to be in custody of the Court, the Receiver must take possession. Once the Receiver takes possession, property is custodia legis. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. Once proceedings are registered all proceedings covered by Section 22 must stand stayed and or not proceeded with. This is in order to enable BIFR or the Appellate Authority find out whether the Unit can be rehabilitated. Apart from staying the proceedings, no coercive process against the assets of the company can also be proceeded. By the present judges order what the plaintiffs are seeking is an order from this Court to permit the Receiver to take possession by force in another words a coercive step. By virtue of Section 22, this Court would be prohibited from so doing. By a Judges order the Court is not merely passing an administrative order, the Court is judicially deciding an issue before it. In order to decide that issue, it will have to continue the proceedings before it, which jurisdiction is ousted by the language of Section 22 as now interpreted. The effect of operation of Section 22 is not as if the plaintiffs are barred from taking any steps. All that the law requires is for the plaintiffs to move BIFR and seek permission to proceed with the proceedings. It is for the BIFR then to decide whether the plaintiffs should be permitted to proceed with the proceedings or not.
Section 22-Operation of provisions of Section 22-Effect-Proceedings covered by Section 22 stand stayed and cannot be proceeded with -Board to be moved to seek permission to proceeded with the proceedings. 1993 (78) Com Cas 803 and 1998 (3) SC 715, Relied on.
Section 22(1)-Suit for money recovery-Order for appointment of receiver-But possession of property could not be received by receiver - Prayer for receiving possession by force--Whether such prayer can be granted-Held, there being bar of Section 22(1) of Act Court has no jurisdiction to pass order for taking possession by force by receiver.-Section 22 of Sick Industrial Companies (Special Provisional Act, 1985 as interpreted by the Apex Court in Real Value Appliances and also in Maharashtra Tubes Ltd. is clear. Even if the argument with the property is custodia legis is to be accepted which to my mind if is not a property to be custodia legis in a case where the defendant is in possession would require dispossession of the defendants and taking over possession by the receiver. The order of this Court is clear that pending the Receiver taking possession the defendant has been restrained by an injunction with dealing with the property. If the property vested in the Receiver by his appointment there would have been no need or necessity for this Court to grant the ad interim relief in terms of prayer clause (b). Therefore, alternatively on the facts of the present case, it is the defendant who is in possession, until possession is legally taken by the Court Receiver.
"That pending the hearing and final disposal of the suit, Court Receiver, High Court , Bombay, be appointed Receiver of all the immoveable properties of Defendant No. 1 including properties situate at Pithampur, District Dhar in the State of Madhya Pradesh and more particularly described in Exhibit 'A' to the plaint, the movable properties described in Exhibit 'B' to the plaint, with all powers under Order XL, Rule 1 of the Civil Procedure Code, 1908."
Pursuant to the said order, the Court Receiver, High Court, Bombay, by letter dated 22nd February, 1999 fixed 9th March, 1999 as the date for taking possession of the suit securities. The Advocate for the plaintiffs received a letter dated 22nd February, 1999 wherein they were informed that the proceedings have been registered before B.I.F.R. under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. The defendants have received the communication dated 12th March, 1999 intimating that the reference dated 19th February, 1999 was registered as Case No. 58 of 1999. It is also clear that this Court by Order dated 11th December, 1998 had granted ad-interim injunction in terms of prayer Clause (b) till the Court Receiver takes possession. Admittedly, it is the defendant who is in possession of the property. In affidavit in support of the Judge's Order, the plaintiffs have set out that when the Court Receiver pursuant to the communication dated 22nd February, 1999 went to take possession on 9th March, 1999 the defendants declined to hand over possession on the ground that proceedings have been registered before B.I.F.R. By the present Judge's Order, the plaintiff's seek an Order that the Court Receiver be directed to take forcible physical possession of the suit property from the 1st defendant or any other person found in possession and/or occupation thereof by breaking open the lock and if necessary with the help of the Police. It is contended on behalf of the plaintiffs that the property being custodia legis, the subsequent act of proceedings being registered against the Company is of no consequence. It is also pointed out that the bar of section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 would not apply on the facts of this case. Once a Receiver is appointed in so far as the parties are concerned, the property vests in the Receiver. At the highest only third parties who have taken steps in respect of the property before taking possession by the Receiver could in law have taken steps against the property. Learned Counsel has relied on various authorities which will be referred to hereinafter.
2.On the other hand on behalf of the defendant No. 1, it is contended that once proceedings are registered under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985, all further proceedings stand suspended and this Court would not have jurisdiction to pass any order. It is further pointed out that the property would be custodia legis only on the Receiver taking possession. In the instant case, possession had not been taken and consequently it cannot be said that the property was custodia legis. This is apparent it is pointed out in view of the interim injunction granted pending the Receiver taking possession.
3.With the above background, the present Judge's Order can now be disposed of. Order dated 11th December, 1999 is clear. This Court by ad-interim relief granted the prayer appointing Court Receiver with all powers under Order XL, Rule 1 of Civil Procedure Code, 1908. It is further clear that pending possession by the Receiver there was an ad-interim injunction in terms of prayer clause (b). Prayer clause (b) was to restrain the defendants from alienating, encumbering, parting with possession, c
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