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Andhra Pradesh High Court - Amravati

The Nellore Progressive Union vs The Town Hall Trust Board on 15 September, 2025

              IN THE HIGH COURT OF ANDHRA PRADESH
                            AT AMARAVATI                          [3506]
                     (Special Original Jurisdiction)

            MONDAY, THE FIFTEENTH DAY OF SEPTEMBER
                  TWO THOUSAND AND TWENTY FIVE
                                   PRESENT
     THE HONOURABLE SRI JUSTICE CHALLA GUNARANJAN
             CIVIL MISCELLANEOUS APPEAL NO: 383/2025
Between:
   1. THE NELLORE PROGRESSIVE UNION, (SRI NELLORE
       VARDHAMANA SAMAJAM), REP. BY ITS SECRETARY,
       MAJJIGA PRABHAKAR REDDY, S/O. SUNDARARAMIREDDY,
       AGED ABOUT 68 YEARS, R/O.TOWN HALL PREMISES.
       TRUNK ROAD, NELLORE.
                                                         ...APPELLANT
                                     AND
   1. THE TOWN HALL TRUST BOARD, REP. BY ITS SECRETARY
       AND TRUSTEE J.S.REDDY, S/O. RANGA REDDY, AGED
       ABOUT 73 YEARS. TOWN HALL PREMISES. TRUNK ROAD,
       NELLORE. (J.S.REDDY DIED)
   2. THE TOWN HALL TRUST BOARD, REP. BY ITS SECRETARY
       AND TRUSTEE J. BAKTHAVATSLA REDDY S/O. J.S.REDDY,
       AGED ABOUT 53 YEARS, R/O.TOWN HALL PREMISES.
       TRUNK ROAD, NELLORE.
                                                   ...RESPONDENT(S):
       Appeal under Order 43 Ruel 1 CPC is filed against the order, dated
02.04.2025, passed in I.A.No.1080 of 2019 in O.S.No.239 of 2016 on
the file of the Principal District Judge, Nellore.
Counsel for the Appellant:
   1. C SUBODH
Counsel for the Respondent(S):
   1. Y L SIVA KALPANA REDDY
   2.
The Court made the following:
                                       2
                                                                     CGR, J.
                                                           CMA No.383 of 2025




     THE HONOURABLE SRI JUSTICE CHALLA GUNARANJAN

              Civil Miscellaneous Appeal No.383 of 2025

JUDGMENT:

Appellant herein - defendant in the Suit preferred present appeal under Order 43 Rule 1 CPC assailing order of appointing receiver, dated 02.04.2025, passed in I.A.No.1080 of 2019 in O.S.No.239 of 2016 on the file of the Principal District Judge, Nellore.

2. For the sake of convenience, parties herein are referred to as they were arrayed in the Suit before the trial Court.

3. Brief facts of the case are as follows:

(a) Plaintiff filed Suit in O.S.No.239 of 2016 on the file of the Principal District Judge, Nellore, for declaration that termination of permissive possession of defendant over plaint-A schedule property to be legal and binding and consequentially, for a direction to defendant to vacate and deliver the same and further to declare that defendant is in illegal occupation of plaint-B schedule property and consequently, to direct the defendant for vacating and delivering the same and further to grant damages for wrongful use and occupation of the said suit schedule property along with interest and costs.

(b) Plaintiff is Trust owning certain properties, including suit schedule-A and B properties. The defendant is a registered Society.

CGR, J.

Plaintiff owned an extent of Ac.1.50 cents as shown in the sketch as 'ABCD' and the area shown as 'EFGH' consisted main Town Hall Building. It is stated that northern portion of 'EFGH' i.e. 'EIGJ' was originally entrusted to defendant Society based on permissive possession for the purpose of running library, reading room. The said permissive possession was reflected from the registered trust deed vide document No.1334/1917. It is stated that the trust deed also provided that in case the purpose for which permissive possession was granted is misused or the Society ceases to continue or exist, right was reserved on plaintiff Trust to determine the permissive possession. It is further stated that while renovating and expanding main town hall building referred as 'EFGH', the portion of property which was given on permissive possession, shown as 'EIGJ' was swiped in exchange for plaint-A schedule property which consisted ground floor of main building on south-west of R.L. Reddy Memorial Hall, particularly, shown as 'KLMN' in the suit plan. Therefore, the swiped portion of property/ building was supposed to be used by defendant Society for the purposes mentioned in the trust deed, however, the same was being utilized for commercial purposes in deviation to the aim and object of Society and the grant. This triggered for initiating steps to determine the permissive possession. Initially, when steps were taken for vacating the property, defendant Society filed O.S.No.467 of 2006 on the file of the 4 CGR, J.

Additional Senior Civil Judge's Court, Nellore, for permanent injunction, which came to be decreed and the same has been confirmed in Appeal in A.S.No.9 of 2010 on the file of the Principal District Judge, Nellore, however, granting liberty to the Trust for taking steps to file appropriate Suit for eviction in case of alleged violations of the grant if any. Accordingly, present Suit came to be instituted in the year 2016. The Suit was proceeded with trial, after completion of pleadings and settling of issues. At that juncture, plaintiff has come up with I.A.No.1080 of 2019, under Order 40 Rule 1 CPC, seeking for appointment of Receiver for management of the subject property and to deposit the rents and profits realised thereof to the credit of the Suit pending disposal of the Suit. The grounds on which said application came to be filed are that the Society has been misusing the property by letting and permitting for commercial activities, contrary to the terms of trust deed, and secondly, that the Society itself was defunct as it failed to submit the periodical returns or up-dates of the affairs of Society before the Registrar of Societies, therefore, it necessitated plaintiff to file the said application in order to safeguard the property and interest of Trust.

(c) The said application was opposed by filing counter inter alia stating that the very petition itself is not maintainable as J.S. Reddy, who sworn the affidavit as Secretary and Trustee of plaintiff, has no authority and that the Trust itself was not in existence, further, that the grounds 5 CGR, J.

on which the application was filed seeking for appointment of receiver are not germane for appointing the receiver and at any rate, the allegations of mismanagement and improper organisation of the affairs of Society were denied and the same have no bearing for the purpose of deciding the application.

(d) The trial Court, by impugned order, dated 02.04.2025, allowed the said application and appointed receiver with further direction to take possession of suit schedule property for managing and to ensure that it is utilized only for free reading, free library and free tennis court, subject to payment of maintenance charges to the Trust and fixed an amount of Rs.15,000/- p.m. as remuneration for the receiver, pending disposal of the Suit. The same is assailed in the present appeal.

4. Heard Sri C.Subodh, learned counsel for the appellant, and Smt.Y.L.Sivakalpana Reddy, learned counsel for the respondents.

5. Learned counsel for the appellant contended that the impugned order suffers from severe infirmity and perversity inasmuch as it has not taken into consideration 'panch sadachar' as enunciated in celebrated judgment rendered in T. Krishnaswamy Chetty v. C. Thangavelu Chetty1, in order to appoint a receiver, it is incumbent on the trial Court 1 AIR 1955 Mad. 430 6 CGR, J.

to test the facts as to whether there is any serious damage and threat to the suit schedule property; the plaintiff had prima facie an excellent chance of succeeding in the Suit; there is some emergency or danger or loss requiring immediate indulgence of the Court to avert such act; in the absence of none of these scenarios, the trial Court ought not to have in a mechanical and casual way allowed the application appointing receiver. He further contended that the application for appointment of receiver was filed merely on two allegations - firstly, that the Society has not filed any documents to show its existence and continuation; and secondly, the subject property was being used for commercial activities, which is in violation to the very bye-laws of the Society, besides the grant under the Trust, which allegations were the basis for initiating the Suit, of course, denied and being contested in the Suit, therefore, on those allegations, which are not germane for entertaining the application under Order 40 Rule 1 CPC, the very filing of application belatedly in the year 2019 after initiation of Suit in the year 2016 would not satisfy the parameters of Order 40 Rule 1 CPC, therefore, the impugned order suffers from severe perversity. Learned counsel for the appellant, even otherwise, contended that in the earlier round of litigation in O.S.No.467 of 2006 instituted by Society for permanent injunction, there is a specific finding and conclusion arrived that Society was entitled to use subject property and that it included the right of leasing out the same to others 7 CGR, J.

subject to trust deed, and further, the said finding has been confirmed by appellate Court as well in A.S. No.9 of 2010 by reiterating that as per recitals of trust deed, Society is entitled to lease out the subject property for conducting any cultural and literary programmes and also exhibitions which promote art and science and also activities, which are undertaken by the Society as per its bye-laws, therefore, the allegation that Society is not permitted to utilize the subject property for exhibitions rather to use only for reading and library purpose has no legs to stand.

6. Opposing the aforesaid contentions, learned counsel for the respondents tried to support the impugned order, contending that the subject property was being used for purposes, particularly, commercial activities, otherwise not provided either under the trust deed or bye-laws of the Society, and even the amounts collected or realised thereof were being misused by members of the Society. The Society has not been cooperating in disposal of the Suit rather dragging the matter by seeking 'n' number of adjournments, in support of the same, she drawn attention of this Court to para.12 of the counter and contended that by dragging the matter, Society is not only trying to take undue benefit and misappropriate the amounts realised by letting out the subject property for commercial activities, but also are causing damage to the property, therefore, the trial Court has rightly appointed the receiver to ensure that 8 CGR, J.

the subject property would be put to use and as envisaged in the trust deed alone and not for any other purposes, therefore, the impugned order is justified and does not call for any interference. To bolster her argument that, in order to protect the property being wasted or dissipated, balancing interest of respective parties, the trial Court has rightly exercised discretion in appointing receiver, she placed reliance on para.11 of the judgment of the Calcutta High Court in Bhaskar Aditya v. Smt.Minati Majumdar2, which reads as follows:

"11. Order 40, Rule 1, C.P.C. empowers the Court to appoint a receiver when it is just and convenient. It has not prescribed any criteria for the purpose of appointment of receiver. The Court can appoint receiver whenever it appears to the Court to be just and convenient. In a suit for partition, it is immaterial whether the application is made by the co-owners or by a stranger. If the question is brought before the Court, it is for the Court to consider whether it is just and convenient to appoint a receiver. The appointment of receiver is conceived for the purpose of management of a property and saving it from being wasted or dissipated, protecting the interest of the respective parties. If it is necessary for the purpose of protecting the interest of the respective parties, if there are materials before the Court to come to the conclusion that it is just and convenient, the Court has every right to appoint a receiver. In Sree Venkataramana Temple Board of Education, Karkala v. C. Manjunatha Kamath, AIR 1974 Kant 59 (Para 4), it was held that even a stranger can apply for appointment of receiver. After having gone through the reasoning given in the said decision we do not find any reason to differ from the same and we adopt the same reasoning in this case."

7. Perused the record and considered the rival submissions of both the learned counsels.

2 2002 SCC OnLine Cal 610 = AIR 2003 Cal 178 9 CGR, J.

8. Five principles which have been culled out and described as 'panch sadachar' for exercising equity jurisdiction in appointment of receivers have been enunciated in T.Krishnaswamy Chetty's case1. These 'panch sadachar' constitute the bedrock of judicial discretion, which the Courts have to keep in mind while considering the applications filed under Order 40 Rule 1 CPC. To put it aptly, the Court has to see whether the plaintiff has shown case of adverse and conflicting claims to the property, besides some emergency or danger or loss and that too such danger to be imminent and requiring immediate relief for Court to step in. Further, such act of appointing receiver should not result in depriving defendant of the possession and plaintiff has to show prima facie an excellent chance of succeeding in the Suit. In testing the application, the Court is vested with discretion, however, the same would not be arbitrary or absolute, and it has to be a sound and such judicial discretion be exercised considering totality of the circumstances of the case. Even the Court is required to judge the conduct of the party, who makes the application and will usually refuse to interfere, unless such party has come with clean hands and should not have approached the Court belatedly, attracting laches, delay and acquiescence.

9. Keeping in mind the panch sadachar, it has to be now tested whether the trial Court has exercised its discretion in sound and judicious manner in totality of circumstances of the case. 10

CGR, J.

10. There is no dispute with respect to title to the property. The trust deed was of the year 1917, by which, the defendant Society was given permissive possession of suit schedule property. The trust deed itself has set out the purposes for which such right was bestowed on Society. When such right was sought to be determined, Society preferred O.S.No.467 of 2006 on the file of the Additional Senior Civil Judge's Court, Nellore, which came to be decreed granting perpetual injunction in its favour with finding that Society was within its rights to lease out subject properties to others subject to recitals in trust deed and the same has been affirmed in appeal in A.S.No.9 of 2010. The appellate Court, while considering recitals in trust deed, has rendered finding that Society is entitled to let out the premises on lease for conducting any cultural and literary programmes and also exhibitions to promote art, science and allied activities as per its bye-laws. The said judgment, however, granted liberty to the Trust to initiate appropriate legal action in case if it is found that Society has been indulging in acts detrimental to the objects and purposes for which property was bestowed on the Society. The present Suit came to be instituted in the year 2016, alleging that firstly, Society was defunct and also that the amounts realised on letting out of premises were being mis-utilized by the so-called office bearers of Society, and secondly, that the premises were being utilised for commercial activities, defeating the object and purpose for which grant 11 CGR, J.

was made. The Suit is being resisted by filing written statement and trial is underway. Only in 2019, present I.A. came to be filed seeking for appointment of receiver. The averments in the affidavit filed in support of the said I.A. merely repeat aforesaid two reasons and try to assert that on account of same, it was required to appoint a receiver for management of subject property in order to safeguard interests of Trust and also to prevent misuse of amounts by the Society. There is no whisper in the affidavit as to nature of urgency, imminent danger requiring grant of immediate relief. In this background, the application has been considered by trial Court.

11. The trial Court after extensively considering the respective pleas of both parties and also the material documents exhibited on either side, in para.12 of the impugned order, observed that the non-existence of Society and so also, whether the deponent of Trust, who instituted the application, was authorised and duly elected, were required to be gone into at the stage of deciding main Suit. Further, it also observed that the ownership to subject property in the hands of plaintiff and so also the possession to the property in the hands of the respondent Society were not in dispute. However, it bestowed more focus on the manner in which the trial was being proceeded to and to some extent, explained that the defendant was not properly cooperating with disposal of the Suit. 12

CGR, J.

Ultimately, it has come to conclusion that the trust deed merely granted permission to the Society to utilize the premises for maintaining tennis court, reading room and library alone and further to use the premises for like purposes as permitted by trust deed, therefore, as Society was using the premises not only for library and also allotting the same to public meetings, conclusion was arrived for appointment of receiver. Meaning thereby, the trial Court has driven by the observations and prima facie finding that the premises was used for purposes other than permitted by trust deed, necessitating for appointment of receiver.

12. Aforesaid observations and findings arrived by trial Court definitely are not in the spirit of panch sadachar. No new facts nor any change in circumstances were either pleaded or demonstrated before the trial Court to show that there was some element of emergency or danger, that too in the nature of great and imminent threat requiring immediate relief. The pleadings in the Suit as well as those in I.A. are in same line, further, nothing has been explained why present application had to be moved nearly after three years of institution of Suit. One of the panch sadachar requires the Court to examine whether the party making application had come to Court with clean hands and in the process of claiming equitable relief, was such application suffered laches, delay and acquiescence. It is trite law that while considering the 13 CGR, J.

application for appointment of receiver, the same should not be allowed for mere asking and the Court is required to exercise the discretion in a sound and judicious manner, and it should not appear to be arbitrary or absolute. The observations made in para.14 of the impugned order definitely appear to be weighed in the mind of the Court in exercising the discretion cast upon it, in considered opinion of this Court, the discretion so exercised clearly is not in true spirit. The trial Court has neither bestowed nor rendered any finding regarding Trust having establishing very excellent chances of success in the Suit. On the contrast, when Trust tried to determine the rights bestowed on Society under trust deed, it suffered an injunction previously and also got confirmed in Appeal. In the process, there was a specific finding regarding the right of Society to let out the subject property and that the trust deed itself provides for right on Society to lease out the premises to conduct cultural, literary programmes besides exhibitions to promote art and science and such other activities in uniformity with its bye-laws. It has to be, therefore, considered and tested whether the so-called alleged activities undertaken by Society in letting out premises really amounted to commercial activities falling outside the purview of the grant. Definitely, such exercise would be embarked in determination of final Suit.

CGR, J.

13. Therefore, the trial Court, ignoring aforesaid findings binding between the parties herein, in a summary manner, could not have come to any other conclusion, and even such conclusion would definitely be not germane for the purpose of determining the present application. Even the judgment that has been cited by the learned counsel for the respondent/plaintiff also proceeds in same direction as that of T.Krishnaswamy Chetty's case1. Therefore, the same really do not come to the aid of the respondents.

14. In view of the aforesaid observations and conclusions, the impugned order clearly suffers from severe infirmities and the findings rendered by the trial Court are clearly perverse, therefore, the same is hereby set aside and accordingly, the Civil Miscellaneous Appeal stands allowed without costs.

As a sequel, miscellaneous petitions pending consideration, if any, in this case shall stand closed.

_____________________________ JUSTICE CHALLA GUNARANJAN Date:15.09.2025.

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