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CASE NO.:

Appeal (civil) 39 of 2000

PETITIONER:

USHA HARSHAD KUMAR DALAL

RESPONDENT:

ORG SYSTEMS AND ORS.

DATE OF JUDGMENT: 06/01/2000

BENCH:

S.P. KURDUKAR & SYED SHAH MOHAMMED QUADRI

JUDGMENT:

JUDGMENT

2000 (1) SCR 57

The Judgment of the Court was delivered by S.P. KURDUKAR, J. Leave granted.

This civil appeal arises out of an order dated December 8/9, 1997, passed

by the learned single Judge of the Bombay High Court on Chamber Summons

(for short Ch/S) taken out by the appellants defendant Nos. 2, 7, 8, 11 and

13 to 26. By this Ch/S the appellants sought a direction to the respondent

No. 1 i.e.. M/s. ORG Systems to handover quiet, vacant and peaceful

possession of the premises in their occupation forthwith. The dispute in

this Ch/S is restricted to the fourth floor premises in 'Shreenikatan'. It

is alleged by the appellants that M/s. ORG Systems have been in illegal and

unauthorise occupation of the premises in question as they have been

inducted in the premises when the property was in posses-sion of the Court

Receiver without leave of the court.

It would be necessary to summarise briefly a few facts to indicate as to

how the present Ch/S was required to be taken out by the appellants.

Usha Harshadkumar Dalai filed Suit No. 120 of 1978 on the Original side of

the Bombay High Court for partition of the said property against Manibhai

Jhaverbhai Patel & Ors. seeking partition and possession of her share in

the said property. Obviously since it was a suit for partition amongst the

co-owners the first respondent, namely, M/s. ORG Systems as well as second

respondent Suhrid Geigy Trading Limited were not arrayed as defendants

since they were not concerned with the partition of the joint family

property. The appellant took out a Notice of Motion No. 115/78 in the said

suit for various interim reliefs including the appointment of the Court

Receiver. The learned single Judge vide its order dated 13th February,

1978, passed an ad interim order whereby Court Receiver, the Bombay High

Court, was appointed as a Receiver of the suit property with a direction to

take possession of the suit property and manage the same and do all other

incidental things in relation thereto. Admittedly when the Court Receiver

came to be appointed the premises in question was found to be in actual

possession of Suhrid Geigy Trading Limited and, therefore, the Receiver

took symbolic possession without disturbing the possession of Suhrid Geigy

Trading Limited. The ad interim order was confirmed by the learned single

Judge on July 24, 1978.

On September 7,1970 (prior to suit) a Leave and Licence Agreement between

the co-owners of a building called Shreeniketan Building was entered into

with Suhrid Geigy Trading Limited whereby the said Suhrid Geigy Trading

Limited was permitted to occupy the premises in question admeasuring 4850

square feet on terms and conditions set out therein. The relevant clause of

the said agreement is as under:

"7. If the Licencees shall be desirous of having this licence renewed for

further term of five years and shall at least three months before the

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expiration of the period of the Licence have given to the Licensors in

writing a notice of their intention to take such renewed licence, the

Licensors shall upon receiving such notice and if there shall not be at the

time of such request by the Licensees any existing breach, non- performance

or non-obser-vance of any of the covenants and conditions on the part of

the Licensees herein contained grant to the Licensees a fresh Licence of

the Licensed Premises for a further period of 5 years at the same Licence

fee or compensation (at the rate of Rs. 1,50 paise per sq. ft. for part of

fourth floor) hereby demised and upon the same terms and conditions as are

herein contained provided how-ever that such fresh licence shall not

contain a covenant for renewal." There does not seem to be any dispute that

the said agreement was not renewed for any further period. Other relevant

clause in the said agreement is as under :

"11. The Licensees shall be entitled to give the licensed Premises or any

part thereof terms and conditions not inconsistent with the provisions

hereof to their subsidiary associate concerns or affiliate Companies and

establishments in Sarabhai Group of Companies including Suhrid Geigy

Limited, Karamchand Prem-chand Private Limited, Ahmedabad Mfg. & Calico

Printing Co. Ltd. Sarabhai Sons Private Limited, Sarabhai Management Cor-

poration Ltd., Sarabhai Technological Development Syndicate Pvt. Ltd.,

Bakubhai Ambalal Private Limited, Shilpi Advertising Ltd., Sercon Pvt,

Ltd., Sarabhai M. Chemicals Ltd., Standard Phar-maceuticals Ltd., Systrocix

Ltd., Synbiotics Ltd,, Telerad Private Limited, Travelers Ltd., for use by

way of sub- licence without being required to obtain the licensors consent

to such sub-licence and the Licensees shall continue to be responsible to

the Licensors for the performance and discharge of their obligations

hereunder".

Before the expiry of the licence period of five years on 1st February,

1973, an amendment in the Bombay Rents, Hotel and Lodging House Rates

Control Act, 1947 (Bombay Rent Act) was introduced whereby all subsisting

licensees became protected tenants and were governed by the provisions of

the Bombay Rent Act. Section 15(1) of the Bombay Rent Act provides that

subject to any contract to the contrary it shall not be lawful for any

tenant to sub-let the whole or any part of the premises let to him or to

assign or transfer in any other manner. The Bombay Rent Act provides that a

landlord shall be entitled to recover possession of any premises if the

Court is satisfied that the tenant has unlawfully sub-let the whole or part

of the premises or assigned or transferred in any other manner his interest

therein. The Leave and Licence Agreement came to be terminated on September

7, 1975 and the occupation of the said premises by Suhrid Geigy Trading

Limited was governed by the provisions of the Bombay Rent Act.

Some of the co-owners took out Ch/S No. 436 of 1996 on 17th April, 1996,

bringing to the notice of the High Court that when the Court Receiver took

symbolic possession the Suhrid Geigy Trading Ltd. was in occupation but now

the said premises are being occupied by the first respondent ORG Systems,

The applicants in the said Ch/S sought ap-propriate orders from the court

directing the Court Receiver to submit a report to the High Court and

recover possession of the said premises from the first respondent ORG

Systems. The High Court while passing the order directed the Court Receiver

to submit a report relating to the use, occupa-tion and possession of the

premises in question. On April 22, 1996, the Court Receiver submitted the

report stating therein ;

(a) The sign board on the said premises was in the name of ORG Systems.

(b) The Section Officer met one Mr. Patwardhan, the accounts officer of

the said ORG Systems and one Mr. R. Veershlin-gam an employee of ORG

Systems, both of whom expressed their inability to state the manner in

which the said ORG Systems came to occupy the said premises.

(c) Both the officers, however, informed the Section Officer that the

entire premises were in the possession of ORG Systems under their lock and

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keys and they would furnish relevant documents on April 18,1996. The

Section Officer submitted his report to the court Receiver on 20th April,

1996.

(d) The Court Receiver thereafter submitted his report to the court

annexing a letter dated March 16, 1994, addressed by one S.G.

Pharmaceuticals stating that the said S.G. Phar-maceuticals and the said

ORG Systems were companies within the Sarabhai Group.

While opposing the Ch/S the first respondent ORG Systems filed four

affidavits stating therein :

That Suhrid Geigy Trading Limited gave exclusive possession of the said

premises to ORG Systems, In November 1979, the name of Suhrid Geigy Trading

Limited changed to S.G. Chemicals and Pharmaceuticals Ltd. By an order

dated 27th March, 1981 passed by the Gujarat High Court, a scheme of

amalgamation was approved whereby the said S.G Chemicals and

Pharmaceuticals Ltd. (Transferor) was amalgamated into Ambalal Sarabhai

Enterprises Ltd. (Transferee). Pursuant to the said amalgamation of S.G.

Chemicals and Phannaceuticals Ltd. with Ambalal Sarabhai Enterprises Ltd.

in March 1981, ORG Systems which was the electronics division of Ambalal

Sarabhai Enterprises Ltd. was given pos-session of the said premises. The

amalgamation scheme was sanctioned by the Gujarat High Court by an order

dated 24th December, 1987 and because of this amalgamation scheme their

possession cannot be said to be unauthorised. The first respondent ORG

Systems also raised a contention that the present Ch/S was taken out after

a lapse of 16 years which would indicate that the applicants in the Ch/S or

any other co-owner had no objection to the possession of ORG Systems of the

premises in question, It was also contended that as the Court Receiver

alone could take ap-propriate action in accordance with law, the applicants

had no right to take out such Ch/S.

Both the parties in support of their rival contentions filed the af-

fidavits. The learned Single Judge of the High Court vide judgment and

order dated 8/9th December, 1997, held as under:

"Hence, so far as chamber summons is concerned, the same is not

maintainable and, therefore, stands rejected. Respondents are directed not

to create further subletting either in favour of their sister concerns or

third party."

It is this order passed by the learned Single Judge on Ch/S which is the

subject matter of challenge in this appeal.

The entire reasoning of the impugned judgment is based upon the judgment of

this Court in Anthony C. Leo v. Nandlal Bal Krishnan and Ors., [1996] 11

S.C.C. 376.

In the opinion of the learned single Judge the dispute of the present

nature could not be resolved by summary proceedings (Ch/S) but the Court

Receiver has to adopt the proper procedure under the Bombay Rent Act.

Some of the basic and admitted facts of the case before us are that under

the Leave and Licence agreement dated September 7, 1970, the premises in

question was given to Suhrid Geigy Trading Ltd, for a- period of five

years. This licence was never renewed. During the subsistence of this Leave

and licence Agreement, Bombay Rent Act came to be amended and such of the

licencees who were in possession pursuant to a valid licence on 1st of

February, 1973 shall be deemed to have become the tenant of the landlord in

respect of the premises or any part thereof in its possession (Section 15A

inserted by Maharashtra 17 of 1973). When the Receiver took the symbolic

possession, Suhrid Geigy Trading Limited was in occupation and by virtue of

section 15A of the Bombay Rent Act such a Licensee shall be deemed to be a

tenant. The first respondent came in possession in 1979 pursuant to the

amalgamation scheme approved by the Gujarat High Court on December 24,

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1987. In view of these admitted facts the question is as to whether

induction of the first respondent in the premises without leave of the

court and/or without any intimation to the Court Receiver will be valid or

otherwise. It is well settled principle that when a Court Receiver is

appointed in respect of any property it is said to be in custodia legs and

court holds the property for the benefit of the true owner. The Court

Receiver acts on behalf of the court. Even the court receiver will have no

power to deal with such property without the leave of the court. It is the

duty of the Court Receiver to maintain the status quo and also to protect

the property from being put to waste or allow it to diminish its value. The

Court Receiver cannot encumber the property in any manner without the leave

of the court. It is the obligation of the Court as well as the Court

Receiver to preserve and maintain the property as far as possible and

practicable in the same form when it was taken in possession. If these

principles are borne in mind, in our view, it is quite clear that when the

possession of the property was taken by the Court Receiver in 1978, Suhrid

Geigy Trading Limited was in occupation and the Court Receiver took

symbolic possession thereof. It must be presumed that Suhrid Geigy Trad-ing

Limited was very much aware of the appointment of the Court Receiver. In

Anthony C. Leo's case (Supra) admittedly the tenant was in occupation of

the premises before the Court Receiver took symbolic possession. The tenant

had committed certain breaches and had resorted to unauthorised and illegal

activity prior to the filing of the civil suit. The landlord who had a

cause of action under the Bombay Rent Act did not file any proceedings

under the said Act for necessary reliefs before the appropriate forum. The

landlord filed a suit on the original side of the Bombay High Court and got

the Receiver appointed for the suit property. In that suit the landlord

took out a Ch/S to evict the tenant on the ground that he has committed

breach of lease agreement inasmuch it carried out construction of lofts and

put up two stand-type boxes on the outer wall for storage of gas cylinders

and air-conditioning units. In the Ch/S it was prayed that the Court

Receiver be directed to remove the said lofts and the said box-type stands.

The High Court granted the relief to the landlord in the said Ch/S and it

was against this order the tenant had filed the appeal in Court, Therefore,

the admitted position that flows from Anthony C. Leo's case is that the

landlord had a cause of action before the filing of the civil suit in the

High Court to initiate proceedings for appropriate reliefs under the Bombay

Rent Act in the competent court but he did not do so. When the Receiver

came to be appointed in the suit filed by the landlord on the original side

obviously he could not have better rights to enforce the cause of action

accrued under the Bombay Rent Act. It is in these circumstances this Court

in paragraph 34 has observed as under :

"34. It appears to us that since the court must be presumed to be fully

unbiased in deciding the allegation of unauthorised and illegal activities

of a tenant causing prejudice against the lawful owner in the matter of

preservation and maintenance of the property pendente lite, the necessity

of adjudication of such dispute by another court by bringing a legal action

before it, as a matter of course, is neither necessary nor expedient It,

however, should be made clear that if for the purpose of deciding the

dispute of unauthorised and illegal activity affecting maintenance and

preser-vation of the property in custodia legis it becomes necessary to

determine any right claimed under a statute or flowing from some action

inter partes as may be pleaded and required to be decided, it is only

desirable that the court would refrain from such deter-mination in the

summary proceeding initiated before it on the complaint of the receiver or

a party to the suit and the court will direct the receiver to seek

adjudication of the dispute before a competent court by bringing

appropriate legal action. Save as aforesaid, it will not be correct to

contend that in no case the court exercising control and supervision of the

property in suit by ap-pointing a receiver will be incompetent even to pass

direction against a third party for the purpose of preservation of the

proper-ty, once such third party pleads defence in justification of his

action. The question of summary adjudication by the court ap-pointing the

receiver or relegating the receiver to a regular suit for adjudication of

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the dispute concerning third party will depend on the nature of dispute and

the defence claimed by the third party."

The above observations in our opinion is the ratio of the judgment in

Anthony C. Leo case (Supra) and it would not be correct to read the said

judgment to mean that if the trespasser or any person who obtains the

possession after the Receiver took over symbolic possession or actual

possession of the property and if such person pleads that he is a tenant

the only remedy for the Court Receiver is to approach the Rent court under

the Bombay Rent Act. For instance, a person who is put in possession as an

agent of the Receiver inducts a stranger and if such a third person claims

a tenancy the question is whether Receiver should be directed to adopt the

proceedings under the Bombay Rent Act for appropriate decla-ration and

reliefs. If such a course is required to follow, in our opinion, the very

object of Order XL Rule 1 & 3 of the Code of Civil Procedure would be

defeated. The High Court in our opinion has totally misread and

misinterpreted the ratio of Anthony C. Leo's case (supra). We must,

however, make it clear that we are not laying down a broad proposition that

in every case the Receiver can resort to the summary proceeding of this

nature. The question would have to be decided by the Court with reference

to the pleadings of the parties and the proof thereof. On perusal of the

judgment of the High Court we find that the High Court has not considered

various rival contentions raised by the parties in their pleadings. The

High Court has also not considered the effect of non-renewal of the Leave

and Licence Agreement after the expiry of its period nor it had considered

the effect of Sections 15 and 15A of the Bombay Rent Act. The High Court

has also not considered what would be the effect of changes in the

composition of Subrid Geigy Trading Limited after the Receiver took the

symbolic possession. All these various factual and legal conten-tions will

have to be considered bearing in mind the provisions of the Bombay Rent Act

as well as Companies Act.

Mr. C. Mukund, learned Advocate appearing for the first respon-dent,

however, urged that the judgment in Anthony C. Leo's case (supra) squarely

applies to the facts of the present case and the rights of the first

respondent cannot be adjudicated by taking recourse to the summary

proceedings. The Court Receiver if so advised may adopt the proper

proceedings under the Bombay Rent Act before the competent court. He urged

that the judgment of the High Court does not call for interference. We see

no substance in any of these contentions.

In the result the impugned judgment and order dated 8/9.12.1997 passed by

the learned single Judge of the High Court on Ch/S No. 436 of 1996 is

quashed and set aside and the matter is remitted back to the High Court for

disposal in accordance with law.

In the circumstance there will be no order as to costs.