1974 Supreme(All) 93
Allahbad High Court
YASHODANANDAN,M.P.MEHROTRA
Seth Loonkaran Sethiya - Appellant
Versus
Ivan E. John - Respondent
Decided On : 04/15/1974
S.P. Srivastava, for Appellant ; Radha Krishna, for Respondents.
Headnote:
ORDER 40 RULE 1(D) CIVIL PROCEDURE CODE - RECEIVER - POWER TO CONFER - APPEALABILITY OF ORDER - POWER AND DIRECTION - DISTINCTION - ORDER DIRECTING RECEIVER TO PAY CERTAIN AMOUNT TO DEFENDANT OUT OF GRINDING CHARGES - WHETHER APPEALABLE - ORDER 31 MAY 1968 - ORDER 3 APRIL 1970 - ORDER 24 APRIL 1970 - EFFECT - ORDER 2 FEBRUARY 1973 - WHETHER VALID.
Fact of the Case:
In a suit for recovery of money by sale of assets of the company, the court appointed a receiver. The receiver took possession of the properties of the defendants. The court directed the receiver to pay a sum of Rs. 58,295.49 to the defendant-respondent No. 5/2, Nirmal Kumar Patni. The plaintiff-appellant filed an appeal against the order.
Finding of the Court:
The court held that the impugned order was appealable as it was passed under Order 40 Rule 1(d) Civil Procedure Code, which confers upon the receiver the power relating to the application and disposal of the rents and profits of the property. The court further held that the order dated 31 May 1968, which provided for a 50% sharing of the net profits between the estate and Patni, was no longer effective as the subsequent orders had modified the basis of payment. The court also held that the order dated 2 February 1973, which directed the receiver to pay a certain amount to Patni out of the grinding charges, was not valid as it was based on the erroneous assumption that the order dated 31 May 1968 was still effective.
Issues: 1. Whether the impugned order was appealable? 2. Whether the order dated 31 May 1968 was still effective? 3. Whether the order dated 2 February 1973 was valid?
Ratio Decidendi: 1. The impugned order was appealable as it was passed under Order 40 Rule 1(d) Civil Procedure Code, which confers upon the receiver the power relating to the application and disposal of the rents and profits of the property. 2. The order dated 31 May 1968 was no longer effective as the subsequent orders had modified the basis of payment. 3. The order dated 2 February 1973, which directed the receiver to pay a certain amount to Patni out of the grinding charges, was not valid as it was based on the erroneous assumption that the order dated 31 May 1968 was still effective.
Final Decision: The court allowed the appeal and set aside the order dated 2 February 1973.
MEHROTRA, J.:- This is the plaintiff' appeal against the order of the trial Court directing the Receiver to pay a sum of Rs. 58,295.49 to the defendant-respondent No. 5/2, Nirmal Kumar Patni. The plaintiff has prepared and produced a bound paper book which, for the facility of reference, has been referred to by us as paper book, Vol. No. 1 and the defendant-respondent No. 5/2, Nirmal Kumar Patni, has similarly prepared and produced an unbound paper book which has been referred to by us as paper book Vol. No. 2.
2. In Volume 1 at page 23 a reference has been made to the judgment of the Supreme Court in Civil Appeal No. 110 of 1961 reported in AIR 1962 SC 21 and we think the short background of the litigation can be usefully reproduced from the judgment of the Supreme Court after suitable amendments:
3. At Agra, there were three spinning mills and one flour mill, all of which together were described as the John Mills, and originally the John family or their predecessors were the owners of all these mills. At the relevant time other persons had acquired interest therein. Such persons were Hira Lal Patni, the original defendant No. 5 and Munni Lal Mehra, the original Defendant No. 6, Gambhirmal Pandya Pvt. Ltd., the original defendant No. 3, M/s. John Jain Mehra and Co. The plaintiff-appellant before us, Seth Loonkaran Sethiya, advanced large amounts to Messrs. John and Co., defendant-respondent No. 4 on the security of its business assets and stocks. On April 18, 1949, the said Loonkaran Sethiya filed original Suit No. 76 of 1949 in the court of the Civil Judge.
Agra against John and Co., for the recovery of the amount due to him by sale of the assets of the said Company. To that suit the partners of Messrs. John and Co., for convenience described as "defendants first set" and the partners of M/s. John, Jain and Mehra and Co., who were for convenience described as defendants second set, were made parties. Pending the suit the said Loonkaran Sethiya plaintiff filed an application under Order 40, Rule 1, Civil Procedure Code for the appointment of a Receiver. By an order dated May 21, 1949, the learned Civil Judge appointed two joint Receivers. The said order dated May 21, 1949, was modified in appeal by this Court and the order of appointment of Receiver was confined to the share of Messrs. John and Co., in John, Jain and Mehra and Co. Subsequently, the trial Court by its order dated December 1, 1951, directed the Receivers to take possession of the share of the defendants second set also. The combined effect of the said orders was that the Receivers took possession of the entire properties of the two sets of the defendant. On August 23, 1955, the High Court discharged the Receivers appointed by the learned Civil Judge and appointed another Receiver in their place.
4. On April 5, 1954, the trial Court passed a preliminary decree against the defendants directing them to deposit the decretal amount in court within the prescribed time and in default the plaintiff was given a right to apply for a final decree for sale of the business assets of the defendants. The decree also gave a right to apply for a personal decree in case the sale proceeds were not sufficient to discharge the decree. The preliminary decree directed that the Receivers should continue on the property until discharge.
5. Against the preliminary decree passed in Suit No. 76 of 1949, two appeals were filed in this Court and they were numbered as First Appeal No. 465 of 1954 and First Appeal No. 65 of 1955. Both were connected and disposed of by a common judgment by a Division Bench of this Court. Some relevant passages from the said judgment have been reproduced in the paper book Vol. No. 1 at pages 257 to 262. The operative portion of the judgment has been reproduced in paper book Vol. No. 2 at pages 66 to 69. The suit has been decreed against the defendants first set (defendants Nos. 1, 2, 3 and 4) for a certain sum. It has been dismissed against the defendant se