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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5528 OF 2014

[Arising out of SLP(C) No.30298 of 2010]

Shree Ram Urban Infrastructure Ltd.

(Formerly known as Shree Ram Mills Ltd.) ….. Appellant

:Versus:

The Court Receiver, High Court of Bombay …… Respondent

J U D G M E N T

Pinaki Chandra Ghose, J.

1.Leave granted.

2.This appeal has been preferred against the Judgment and

order dated 16

th

September, 2010 passed by the High Court of

Judicature at Bombay in Civil Revision Application No.452 of 2009,

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dismissing the Civil Revision Application filed by the appellant-

tenant. The brief facts, necessary for the disposal of this appeal

are thus: An immovable property known as “Dev Ashish” is a

tenanted property situated at Padam Tekri, Peddar Road, Bombay

(hereinafter referred to as the “suit property”). The respondent

herein was appointed by the Bombay High Court to take charge of

the suit property in Suit No.234 of 1987, which was filed on the

original side of the Bombay High Court, in terms of prayer clause

(a) of the Notice of Motion which reads as follows:

“(a) That pending the hearing and final disposal of

above suit, the Court Receiver, High Court, Bombay or

some other fit and proper person be appointed as a

Receiver of an immovable property known as “Dev

Ashish” situate on Sub-Plot No.1 of Plot No.C.S.S.755 at

Padam Tekdi, Pedder Road, Bombay 400 026, with all

powers under Order XL, Rule 1 of the Code of Civil

Procedure, 1908, including the owner to recover,

receive and collect the rent, income and profits

thereof.”

3.The respondent, being the Court Receiver in the aforesaid

suit, issued Notice dated July 26, 2001 to the appellant herein to

pay compensation at the rate of RS.1,75,000/- per month from

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1.4.2000 and to vacate the suit premises. The appellant replied to

the said notice of the respondent stating that the respondent has

been appointed to control the suit premises and has no right and

power to determine the tenancy of the appellant. Meanwhile, the

appellant was declared as a sick company under the Sick

Industrial Companies (Special Provisions) Act, 1985 (hereinafter

referred to as ‘the SICA’).

4.The respondent instituted a suit against the appellant-

defendant before the Court of Small Causes, Bombay which was

decreed in favour of the respondent. Being aggrieved by the said

decree, the appellant-defendant filed an appeal before the

Appellate Bench of the Small Causes Court, being Appeal No.837

of 2003. This appeal was dismissed by judgment and order dated

June 12, 2009. The appellant-defendant, therefore, filed a revision

petition before the High Court of Bombay under Section 115 of

the Code of Civil Procedure, being Civil Revision Application

No.452 of 2009. The said civil revision application was dismissed

by the Bombay High Court vide its judgment and order dated

16.9.2010. Aggrieved by the said judgment and order dated

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16.9.2010, this appeal, by special leave, has come up before this

Court.

5.Mr. Ranjit Kumar, learned senior counsel appearing on behalf

of the appellant, challenged the order on the grounds, firstly, that

the Court Receiver did not obtain leave of the court in filing the

suit and without such leave, the eviction suit is liable to be

dismissed. Secondly, he contended that the notice was issued on

July 26, 2001 asking the appellant to vacate the suit premises

immediately, therefore, the notice was defective in view of the

provisions of Section 106 of the Transfer of Property Act. On this

ground also, he contended that the suit is liable to be dismissed.

Thirdly, he contended that the suit is also bad since the owners

are the trustees and are not made parties to the suit.

6.In support of his contention with regard to the first point that

the suit was liable to be dismissed as it was filed by the Court

Receiver without obtaining leave of the Court, he relied upon the

decision of the courts in C.T. Davis & Ors. vs. Drobomoyi Gupta &

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Ors.

1

He also relied upon the decisions in Ram Ranjan

Chakravarti vs. A.B. Miller

2

, Everest Coal Company (P) Ltd. vs.

State of Bihar & Ors.

3

, Anthony C. Leo vs. Nandlal Bal Krishnan &

Ors.

4

, Krishna Kumar Khemka vs. Grindlays Bank P.L.C. & Ors .

5

,

Balkrishna Gupta & Ors. vs. Swadeshi Polytex Ltd. & Anr .

6

, and

Harinagar Sugar Mills Ltd., vs. M.W. Pradhan

7

.

7.Lastly, Mr. Ranjit Kumar, learned senior counsel, contended

that the Board for Industrial Financial Reconstruction (hereinafter

referred to as ‘the BIFR’) declared the appellant-company as a

sick company under the SICA. Therefore, without obtaining

permission from the BIFR, the suit could not be proceeded with.

Learned senior counsel further pointed out that in the case of

Ram Ranjan Chakravarti (supra), it has been held that the

Receiver of the High Court does not represent the owner of an

estate. He is an officer of the Court and as such, cannot sue or be

sued except with permission of the Court. In Shyam Lal

1

(1887) ILR 14 Cal 323

2

(1884) ILR 10 Cal 1014

3

(1978) 1 SCC 12 = 1958 SCR 333

4

1996 (11) SCC 376

5

1990 (3) SCC 669

6

1985 (2) SCC 167

7

1966 (3) SCR 948

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Gomatwala vs. Nand Lal & Ors.

8

, it had been concluded by the

Court that the permission of the Court was necessary before

institution of a suit by the Court Receiver.

8.Mr. Ranjit Kumar, learned senior counsel, also relied upon

the decisions in Mt. Mahrana Kunwar vs. E.V. David, Official

Receiver

9

and C.T. Davis & Ors. vs. Drobomoyi Gupta & Ors .

(supra) and contended that in the said decisions it has been held:

firstly, that the action for ejectment from the suit property cannot

be maintained by only some of the owners of the undivided

estate; and secondly, it has been held that to authorize the Court

Receiver to issue Court notices determining the tenancy, an

authority has to be obtained from the Court. However, in the case

of Everest Coal Co.(P) Ltd.(supra), it has been held that when a

court puts a Receiver in possession of property, the property

comes under the custody of the Court and the Receiver merely

acts as an agent of the Court. The Court Receiver represents

neither party, being an officer of the court, and for this reason

ordinarily the court accords the permission to sue and failure to

8

AIR 1944 All 220

9

AIR 1924 All. 40

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secure such leave to sue till the end of lis may prove fatal. He also

drew our attention to a decision reported in Shanta Ram

Hirachand Danez vs. Narayan Bapusa Fulpagar

10

. In the said

decision the court held that filing of the suit without obtaining

leave of the court is an irregularity and can be cured in law and is

not fatal. But the suit filed by the Court Receiver without

obtaining permission does not render the proceedings in the suit

ultra vires if leave is obtained even after filing of the suit by the

Court Receiver. He tried to contend on the question of service of

notice that Section 106 is restricted to cases where the Court

Receiver has let out the premises and further the Court Receiver

cannot have the implied authority to sue a protected tenant in

occupation and according to him, it is necessary to have the leave

from the court before filing the suit and it can also be overcome

only if the leave is obtained when the lis is pending.

9.With regard to the trust property, his contention is that the

trust property vests in all the trustees. It is, therefore, apparent

that all the trustees have to decide whether or not the suit is to

10

AIR 1999 Bom 16

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be filed on behalf of the trust. In the present case, it is not

disclosed anywhere that the notice of termination was served at

the behest of all the trustees. He further pointed out that it is to

be noted that the order appointing the Receiver as already

recorded by the court that prima facie there was a dispute in

respect of appointment of trustees on the Trust and about dealing

of the property by the Trust and in these circumstances, the court

thought it fit to appoint a Court Receiver considering the facts and

circumstances of this case.

10.Per contra, Mr. Soli Sorabjee, learned senior counsel

appearing on behalf of the respondent-Court Receiver, submitted

that the Court Receiver has a right to take all steps in the matter

since the Court Receiver has been appointed with full powers to

administer the property which is custodia legis and furthermore,

he has acted in the matter in his capacity as a Receiver. He also

drew our attention to Order XL Rule 1 of the Code of Civil

Procedure, 1908, which is reproduced hereinbelow:

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“1. Appointment of receivers.- (1) Where it appears to

the court to be just and convenient, the court may by

order—

(a) appoint a receiver of any property, whether before

or after decree;

(b) remove any person from the possession or custody

of the property;

(c) commit the same to the possession, custody or

management of the receiver; and

(d) confer upon the receiver all such powers, as to

bringing and defending suits and for the realization,

management, protection, preservation and

improvement of the property, the collection of the rents

and profits thereof, the application and disposal of such

rents and profits, and the execution of documents as

the owner himself has, or such of those powers as the

court thinks fit….”

11.He pointed out that Order XL Rule 1(d) has specifically given

all such powers as to bringing and defending the suits and for the

realization, management, protection and preservation of the

property which the Receiver held on behalf of the court.

According to Mr. Sorabjee, learned senior counsel, the Court

Receiver should be able to take all steps necessary to preserve

and protect the property as a prudent owner of the property

would take. He also drew our attention to the order appointing the

Receiver and contended that if a tenant is in arrears of rent or if

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the leased property after recovery of possession can fetch more

income to the estate, the Court Receiver is entitled to take steps

in the matter and can file a suit for recovery of possession. He

further contended that in the instant case, the suit premises are

outside the purview of the Rent Act. He also relied upon the old

decisions in Huri Dass Kundu vs. J.C. Macgregor, Receiver, High

Court

11

and submitted that the court held that the terms of the

order appointing the Receiver are sufficient to confer on him the

power to bring a suit to eject a tenant. He also relied on the

decision in Jagat Tarini Dasi vs. Naba Gopal Chaki

12

, wherein it

was held as follows:

“The receiver, as an officer of the Court, which has

taken control of the property, is for the time being, and

for the purpose of the administration of the assets, the

real party interested in the litigation; there is no

substantial reason, therefore, why the suit should not

be instituted in his own name. We may further add that

there are numerous cases in the books, from which it

appears that a receiver, who has authority to sue, has

been allowed to do so in his own name without any

objection raised on that ground; see, for instance,

Shunmugam v. Moidin [(1884) ILR 8 Mad 229], Gopala

Sami v. Sankara [(1885) ILR 8 Mad 418], Sundaram v.

Sankara [(1886) ILR 9 Mad 334], Drobomoyi Gupta

11

(1891) ILR 18 Cal 478

12

(1907) ILR 34 Cal 305

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[318] v. C.T. Davis [(1887) ILR 14 Cal 323], Huri Dass

Kundu v. J.C. Macgregor [(1891) ILR 18 Cal 477] and

W.R. Fink v. Buldeo Dass [(1899) ILR 26 Cal 715]. It

follows, therefore, that the view, that a Court may

authorize a receiver to sue in his own name, and that a

receiver, who is authorized to sue, though not expressly

in his own name, may do so by virtue of his

appointment with full powers under section 503 of the

Civil Procedure Code, is supported by principle and

authority, and is consistent with existing practice. We

must, consequently, hold that the second ground taken

on behalf of the appellant cannot be sustained.”

12.A Division Bench of the Calcutta High Court in Kassim

Mamooji vs. K.B. Dutt & Anr.

13

, has held that the present Code

empowers the Court to confer upon a Receiver all such powers as

to bringing and defending suits as the owner himself has. It would

suffice to quote the following:

“Originally a Receiver could not sue; this is shown by

the decision of Phear, J., in Wilkinson v. Gangadhar

Sirkar [1871 6 Beng. LR 486]. That decision was in

1871. In 1877, however, was passed the Civil Procedure

Code of that year; and in it was contained the provision

which now finds a place in O. 40 R. 1, of the present

Code (see S. 503 of the Code 1877). The present Code

empowers the Court to confer upon a Receiver all such

powers as to bringing and defending suits as the owner

himself has.”

13

AIR 1916 Cal 51

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13.In the aforesaid decisions, it has been held that the words of

Order XL Rule 1 cannot give any narrower construction for holding

that the Code does not empower the Receiver to bring a suit for

recovery of possession of immovable property. In support, he has

relied on all the aforesaid decisions.

14.After considering and analyzing all the decisions, in our

opinion, we cannot give a narrower construction with regard to

the rights/authority given to the Receiver under Order XL Rule

1(d). We have also considered the appointment order in the

present case. In our opinion, the Receiver was given full powers

under the provision of Order XL Rule 1(d) as rightly shown by Mr.

Sorabjee, learned senior counsel and, therefore, the ruling relied

upon by Mr. Ranjit Kumar, learned senior counsel for the

appellant, cannot be of any help to him and, accordingly, we

reject such contention of Mr. Ranjit Kumar, learned senior

counsel, and hold that in the facts and circumstances of this case,

the Receiver has acted in the matter for the purpose of

administering the property. Even we have seen that the Supreme

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Court in Harinagar Sugar Mills Co. Ltd. (supra) has held that a

Receiver was appointed pending a suit for partition and the

Receiver filed a winding-up petition for realization of debt. It was

contended that the Receiver had no power to institute a petition

for winding-up of a company. The Supreme Court conceding that

winding-up order is not a normal alternative to sue but held that it

is a form of equitable execution covered by clause (d) of Rule 1(1)

of Order XL of the Code and as such steps could be taken by the

Receiver. It is also to be noted that the power must be conferred

on the Receiver by the Court either expressly or by necessary

implication, as the case may be. In the facts of this case, the

Receiver acted to safeguard the interest of the trustees for

preserving the estate. We also feel that the Receiver acted in the

matter as ought to have been done by the trustees to preserve

the estate.

15.In Kurapati Venkata Mallayya & Anr. vs. Thondepu

Ramaswami & Co. & Anr.

14

, a four-Judge Bench of this Court held

that the Receiver has a right to institute a suit when the authority

has been given to the Receiver to preserve the estate. Such

14

AIR 1964 SC 818

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authority is wide enough to empower the Receiver, as he thought

necessary, for preserving the estate and such authority, in our

opinion, includes to institute a suit. as has been held by this

Court.

16.We have considered all the points which have been urged by

Mr. Ranjit Kumar, learned senior counsel appearing on behalf of

the appellant. We are not able to accept his contention that the

Receiver without leave of the court, cannot file a suit in the

factual matrix of this case. We have also taken into account that

obtaining of leave of the court before filing of the suit cannot be

fatal and the same can be cured in law and is merely an

irregularity. We have also considered the decision of this Court in

Kurapati Venkata Mallayya & Anr. ( supra) and find that when

authority has been given to the Receiver to preserve the estate, it

empowers the Receiver, i.e., for preserving the estate, he has a

right to institute the suit and, accordingly, in the light of the said

judgment, we express our opinion and accept the reasoning given

by the High Court that the Receiver had the authority to institute

a suit for preserving the estate. Therefore, we do not accept the

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contention of Mr. Ranjit Kumar, learned senior counsel, on such

question. The second point urged by Mr. Ranjit Kumar, learned

senior counsel, is that the suit is bad with regard to Section 106 of

the Transfer of Property Act. We have duly considered the said

question, and we find that the suit was filed after six months from

the date of the notice issued under Section 106 of the Transfer of

Property Act, by the Receiver and furthermore, after the

amendment of Section 106(3) which reads as follows:

“(3)A notice under sub-section (1) shall not be deemed

to be invalid merely because the period mentioned

therein falls short of the period specified under that

sub-section, where a suit or proceeding is filed after the

expiry of the period mentioned in that sub-section.”

We have noticed that the High Court duly considered the question

of notice and correctly came to the conclusion that the

Legislature wanted to plug the loopholes and to redress the

mischief by making a change in the law. Therefore, if the notice is

short of the period specified in sub-section (1) but the suit or

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proceeding is filed after the expiry of the period mentioned in

sub-section (1), the notice shall not be deemed to be invalid.

Clearly, in this matter, the notice was issued on July 26, 2001 and

the suit was actually filed on February 6, 2002 – after six months

and, therefore, the notice cannot be declared or deemed to be

invalid.

17.The third question which is tried to be urged before us, in our

opinion, has no substance since the Court Receiver is holding the

properties as custodia legis and has acted in the matter as

reasonable prudent trustees used to do in this matter and such

action on the part of the Court Receiver is nothing but for

preservation of the property in question, therefore, the contention

of Mr. Ranjit Kumar on that ground also, cannot have any

substance. [See Harinagar Sugar Mills Co. Ltd. (supra)].

18.Although the point tried to be taken by Mr. Ranjit Kumar,

learned senior counsel, is that the appellant is a sick company but

we do not find that such point was ever urged before the High

Court and, furthermore, it appears that admittedly the tenancy

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was about the residential premises. Therefore, in our opinion,

such point cannot have any substance at this stage.

19.In these circumstances, we find that the reasoning given by

the High Court does not warrant any interference by this Court.

Accordingly, we find no merit in this appeal and the same is

hereby dismissed. However, there shall be no order as to costs.

…………………..…………………J.

(Chandramauli Kr. Prasad )

…………………..…………………J.

(Pinaki Chandra Ghose )

New Delhi;

May 9, 2014.

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