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1937 Supreme(Mad) 284

IN THE HIGH COURT OF MADRAS
Horwill, J.
S.A. Subramanyam Chettiar and Anr.
Versus
K.G. Ethirajulu Chettiar and Anr.
Decided On : 16.09.1937

The main legal point established in the judgment is the necessity of the Receiver being able to manage the property and collect rents and profits against the obstruction of the mortgagor in a mortgage suit.

Headnote:

Receiver - Mortgage Suit - The court discussed the appointment of a Receiver in a mortgage suit and the power of the Receiver to manage the property and collect rents and profits against the obstruction of the mortgagor. The court rejected the contention that a Receiver should not be appointed on behalf of a simple mortgagee and emphasized the necessity of the Receiver being able to lease the property and seek the aid of the Court to remove the mortgagor if obstructed.

Fact of the Case:

The appellants mortgaged the property to the respondents. The respondents obtained a decree, but due to various applications and tactics by the appellants, the sale did not take place. The respondents applied for the appointment of a Receiver, and a Receiver was appointed. The appellants were allowed to remain in possession of part of the house, but were later ordered to vacate that part as the Receiver was unable to realize any rent for the benefit of the mortgagees.

Finding of the Court:

The court found that the appellants' reliance on a previous case from another court was not applicable in the current presidency. The court rejected the contention that the mortgagee was estopped from applying to eject the mortgagor based on the principle of constructive res judicata. The court also found that the mortgagor's conduct justified the lower court's order to vacate the property.

Issues: The issues involved the appointment of a Receiver in a mortgage suit, the applicability of a previous court decision from another presidency, and the contention of estoppel based on constructive res judicata.

Ratio Decidendi: The court held that a Receiver can be appointed in a mortgage suit and emphasized the necessity of the Receiver being able to lease the property and seek the aid of the Court to remove the mortgagor if obstructed. The court also found that the mortgagee was not estopped from applying to eject the mortgagor and that the mortgagor's conduct justified the lower court's order.

Final Decision: The appeal was dismissed with costs of the contesting respondent.

JUDGMENT

Horwill, J.

1. The appellants mortgaged the property in question to the respondents. The respondents obtained a decree; but because of the various applications that the appellants made in this Court and other tactics that they adopted, the sale has not taken place even now. The respondents thereupon put in an application for the appointment of a Receiver and a Receiver was appointed. Certain allowances were given to the appellants for their expenses; and they were allowed to remain in possession of that part of one of the houses in which they lived. Subsequently, the present order was passed ordering them to vacate that part of the house also, because the Receiver was unable to realise any rent for the benefit of the mortgagees. Hence this appeal.

2. The learned Counsel for the appellants places reliance on Anandi Lal v. Ram Swarup AIR1936All495 , a Full Bench case of that Court. Their Lordships in that case came to the conclusion that although the first part of Order 40, Rule 1 was wide enough to enable a Receiver to be appointed in all cases; yet Clause 2 of that rule meant in practice that a Receiver could not be appointed on behalf of a simple mortgagee the reason being that the mortgagee was hot entitled to immediate possession and that the Receiver could not be appointed as there was no use in appointing a Receiver if he could not enter into possession. This decision meant that a Receiver should not be appointed on the application of a simple mortgagee. It is conceded that the finding that a Receiver should never be appointed on behalf of a simple mortgagee is not the law current in this presidency; but it is contended that this Court, although holding in the Full Bench case Paramasivan Pillai v. Ramaswami Chettiar AIR1933Mad570 following older cases that a Receiver could be appointed in such suits, this Court has nowhere given a finding that the second, clause of Order 40, Rule 1 did not apply to the possession and dispossession of the mortgagor. It is seen however from a reading of the Allahabad case that the principal reason why the Allahabad High Court came to the conclusion that a Receiver ought not to be appointed in suits on a simple mortgage, is that Clause (2) of Order 40, Rule 1 did not permit of a Receivers dispossessing the mortgagor. Their Lordships of the Allahabad High Court expressed dissent from the judgment of the Full Bench of this High Court in Paramasivan Pillai v. Ramaswami Chettiar AIR1933Mad570 where the opinion was held that the appointment of a Receiver was not dispossession at all as the Receiver held possession on behalf of the mortgagor, and merely preserved the profits from the property for the benefit of the mortgagee in case the mortgaged property was not found sufficient. I cannot therefore, in the face of Paramasivan Pillai v. Ramaswami Chettiar AIR1933Mad570 , accept the reasoning in the Allahabad case which formed the basis of a decision completely at variance with that in Paramasivan Pillai v. Ramaswami Chettiar AIR1933Mad570 . If, as is the law in this presidency, a receiver can be appointed it is a necessary concomitant of his office that he should be able to lease the property and that if he is obstructed by the mortgagor he can seek the aid of the Court to remove him. If the arguments of the learned Counsel for the appellants were correct a Receiver in a mortgage suit would be able to do nothing at all if the mortgagor chose to resist him; for the mortgagor could remain on his-property and because he was in possession he could not be dispossessed. Even if he did not occupy the whole of the property himself but leased it to some other person, that other persons possession would be possession of the mortgagor, and the Receiver and the Court would be equally powerless to collect rent from that other person if he desired to pay the rent to the mortgagor himself. Clause (d) of Order 40, Rule 1 confers upon the Receiver power to manage the property and to collect the rents and pro



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