Andhra HC (Pre-Telangana)
Pasumarthi Perraju Ors., Etc. vs Central Bank Of India on 27 August, 1979
Equivalent citations: AIR 1980 ANDHRA PRADESH 283, (1980) 1 ANDH LT 201 (1980) LS 43, (1980) LS 43
JUDGMENT Madhava Reddy, J.
1. These three civil miscellaneous appeals by the judgment debtors in three different suits O. S. Nos. 76/73, 74/73 and 75/73 on the file of the Subordinate Judge, Kakinada raise a common question of law and may be disposed of by a single judgment. The decree against the judgment debtors was obtained on the foot of a simple mortgage executed in favour of the plaintiff bank, respondent herein. The time for payment of the mortgage debt under the preliminary decree having expired and the judgment debtors having failed to pay even a single pie, final decree for sale of the mortgaged property was made. In E. P. Nos. 211, 212 and 213 of 1977 on the file of the Subordinate Judge, Kakinada a request for appointment of receiver of the mortgaged property was made by the decree holder. By the orders now under appeals the learned Subordinate Judge allowed the decree holder's application and appointed a receiver of the mortgaged properties and directed the receiver to take possession of the land after getting the obstruction, if any, removed and sell the leasehold right thereof and deposit the proceeds into Court towards the decree debt till the satisfaction of the decree or until further orders.
2.The amounts were advanced to the judgment debtors in June, 1970 and they have not paid any sum whatsoever either towards the principal or interest. So much so that now execution is levied for the realisation of a sum of Rs. 30,000 and odd in C. M. A. No. 127/79, another sum of Rs. 30,000 and odd in C. M. A. No. 136/79 and Rs. 50,000 and odd in C. M. A. No. 137/79. The judgment debtors inter alia resisted the appointment of the receiver on the ground that the mortgage was a simple mortgage and the direction under the final decree is to bring the mortgaged property to sale. The Court has no jurisdiction in execution of such a decree to appoint a receiver of the mortgaged properties and direct the realisation of the usufruct of the properties mortgaged properties and direct the realisation of the usufuct of the properties mortgaged towards the satisfaction of the decree. Such a direction would convert a simple mortgage to a usufructuary mortgage and that the Court has no jurisdiction to do. It was also pleaded that the judgment debtors had alienated the properties under an agreement of sale in favour of third parties and the mortgaged properties are in the possession of the tenants of the said third party and the court cannot appoint a receiver so as to dispossess the said tenants. The learned Subordinate Judge, on a consideration of all the facts and circumstances of the case found it just and convenient to appoint a receiver. He also came to the conclusion that the so called tenants of the third party are in fact set up by the judgment debtors themselves.
3. In these appeals Mr. Apparao, the learned counsel for the appellants judgment debtors contends that in view of sub rule (2) of O. 40. R. 1 and S. 51, C. P. C. the Court cannot appoint a receiver when it would result in the dispossession of a person who has right to be in possession of the property. According to him, inasmuch as under a simple mortgage executed by the judgment debtors on the foot of which the decree now under execution is obtained by the bank, the mortgagee bank has no right to possession of the properties, in the event of default, the right of the mortgagee bank is merely to obtain a decree for realisation of the mortgage debt and being the mortgaged properties to sale. Neither under the simple mortgage deed nor under the decree, the mortgagee bank has any present right to the possession of the mortgaged property. The decree itself only directs sale of the mortgaged property. As such a receiver cannot be appointed.
4. The power of the Court to appoint a receiver has to be judged in the light of O. 40, R. 1, C. P. C. The power of the Court to appoint a receiver in execution proceedings in particular has to be ascertained having regard to S. 51, C. P. C. O. 40, R. 1 (a) expressly authorises the Court to appoint a receiver where it appears to the Court to be just and convenient and this power may be exercised in respect of any property whether before or after the decree. The Court is empowered to confer upon the receiver such powers as it thinks fit for bringing and defending suits and for the realisation, management, protection, preservation and improvement of the property, the collection of the rents and profits thereon and the application and disposal of such rents and profits. The only restriction on the power of the Court in the matter of appointing a receiver is the one contained in sub-rule (2) of O. 40, R. 1, C. P. C. That sub-rule reads as follows:
"Nothing in this rule shall authorise the Court to remove from the possession or custody of property any person whom any party to the suit has not a present right so to remove."
A reading of O. 40, R. 1, C. P. C. makes it clear that the fact that a decree has been passed on the foot of a promissory note or on the foot of a mortgage deed, be it simple or usufructuary, makes no difference with respect to the appointment of a receiver. The Court has power to appoint a receiver whenever it appears to be just and convenient whether before or after the decree. The jurisdiction to appoint a receiver is not restricted by any words contained in the decree. The nature of the decree and the subject matter of the suit would be relevant for determining whether it is just and convenient; they are not matters affecting the jurisdiction of the Court in this behalf. Further, sub-rule (2) of O. 40, R. 1, C. P. C also does not affect the jurisdiction of the Court to appoint a receiver of properties in possession of persons who cannot be dispossessed. That only imposes a restriction on the power of the receiver appointed by the Court.
While the Court may, in exercise of the powers conferred on it under O. 40. R. 1, (a), (b), (c), (d) confer on the receiver the authority to take possession and manage the properties and realise the rents, etc., that power of the Court does not extend so as to enable it to direct the removal of any person from the possession or custody of the property "whom any party to the suit has not a present right so to remove." A reading of that sub-rule in fact gives an indication that even in respect of a property in the possession of a person whom any party to the suit has no present right to dispossess, a receiver may be appointed, but the receiver so appointed cannot dispossess that other person. Merely because the decree is one for sale of the mortgaged property there is nothing in O. 40, R. 1, C. P. C. which restricts the power of the Court to appoint a receiver. Section 51, C. P. C. which deals with execution proceedings expressly authorises the executing Court to order execution of a decree by appointing a receiver. That power of the Court is "subject to such conditions and limitations as may be prescribed." No such condition or limitation is prescribed which prohibits the Court from appointing a receiver in respect of properties directed to be sold under a preliminary decree passed on the foot of a simple mortgage. In the absence of any rule restricting the right of the Court to appoint a receiver in such contingencies, we do not see any reason to curtail the wide ambit of O. 40, R. 1. C. P. C. which authorises the Court to appoint a receiver even after the decree which necessarily takes in execution proceedings. It is unnecessary for us to discuss these contentions at length having regard to the binding decision of the Madras High Court in Paramasivan v. Ramasami. AIR 1933 Mad 570 (FB) in which the Full Bench laid down that a simple mortgagee is not disentitled to obtain the appointment of receiver if the circumstances are such as to justify it merely because no personal remedy subsists to proceed against the other properties of the mortgagor. The appointment of a receiver is only a mode of execution to be used with caution and sound judicial discretion. Ramesam. J. observed that appointment of a receiver was ordered by the Judicial Committee in simple money decree in Vibhuda Priya v. Lakshmindra, AIR 1927 PC 131: 54 Ind App 228, why should the simple mortgagee be in a worse position then the holder of a money decree? Anantakrishna Ayyar, J. observed. "it must be taken to be settled law in this Court at present that though a simple mortgage does not carry with it right to possession and that a simple mortgagee's remedy is only by way of sale of the mortgaged property, yet the Court has jurisdiction in a suit brought by a receiver in a proper case." That position was made clear in Ethirajulu Chetty v. Rajagopalachari Chettiar, AIR 1929 Mad 138: (ILR 52 Mad 979) after reviewing the earlier authorities on the point. In the judgment the learned Judge noticed the provisions of O. 40, R. 1, C. P. C. and also s. 503 of the Code of 1882. The Full Bench considered at length the case law on the subject and held, "the circumstance that the mortgagee's right to proceed personally and against the other properties of the mortgagor is not available is, in my opinion, no bar to the court appointing a receiver over the mortgaged property (as distinct from the non-mortgaged property)." The Full Bench then proceeded to hold. The court has complete jurisdiction over the subject matter of the suit and if the Court could sell the mortgaged property it should also have jurisdiction to appoint a receiver over the same. This judgment which has reaffirmed power of the Court to appoint. In execution of the decree, a receiver of property subject to simple mortgage, has stood the test of time and has been consistently followed by the Madras High Court. The decision in Subramanyam v. Ethirajulu. AIR 1938 Mad 325 is one such case. No decision either of the Madras High Court or of this Court expressing even a doubt as to the correctness of the Full Bench decision has been brought to our notice. On an examination of the provisions of law in the light of the decision of the Madras High Court we ourselves do not feel any doubt as to its correctness. However. Mr. Apparao, the learned counsel for the appellant, has sought to contend (on the strength of the judgment of the Full Bench decision of the Allahabad High Court in Anandi Lal v. Ram Sarup, AIR 1936 All 495 (FB)) that the view of the Madras High Court expressed in the above Full Bench decision requires consideration. Having gone through the Full Bench judgment of the Madras High Court we are not persuaded to accept Mr. Apparao's contention. The Full Bench of the Allahabad High Court laid down that all the various modes mentioned in S. 51, C. P. C. are not open to an executing Court in every case. It is to be guided by the procedure laid down in the Schedule, and must resort to the method appropriate to each case. It further held, the authority to appoint a receiver is prescribed in O. 40, R. 1, C. P. C. A Civil Court cannot act outside that rule. The general power (of the Court) under sub-rule (1) has been curtailed by sub-rule (2). Accordingly the powers conferred by sub-rule (1) cannot be exercised where they come into conflict with the provisions of sub-rule (2). There is therefore, no authority in the Court to remove form the possession or custody of property any person whom any party to the suit has not a present right as to remove. In this context it further held that the words 'any person' are general, and have been used in a wide sense, and are fully comprehensive to include both persons who are parties and persons who are non-parties only. In view of the above the Court proceeded to hold where a party to a suit, who is sought to be dispossessed, is a simple mortgagor in possession, then the Court has no power to appoint a receiver and to order his dispossession under the provisions of R. 1, O. 40, C. P. C. A simple mortgagor has a right to remain in possession and to appropriate the profits of the mortgaged property till the sale has actually taken place and that right cannot be defeated by the appointment of a receiver. A reading of the said judgment would disclose that while coming to the conclusion the Court was weighted with the fact that the mortgagee is not entitled to immediate possession of the property under a simple mortgage and that 'any person' occurring in sub-rule (2) of O. 40, R. 1, C. P. C includes the party to the suit as well. In our view, the first factor is not one which affects the jurisdiction of the Court to appoint a receiver but only one which is one of the considerations which may weigh with the Court in deciding whether a receiver should be appointed or not. The second factor which weighed with the Court is, in our opinion, not based on a correct interpretation of the expression "any person" occurring in sub-rule (2) of Rule 1, of O. 40, C. P. C. That expression occurring in sub-rule (2) of O. 40, R. 1, cannot be divorced from its context. That expression, if taken literally and by itself would of course include even a party to a suit. But the words 'any person' which take in even parties to the suit are qualified by the words "whom any party to the suit has not a present right so to remove." When sub-rule (2) speaks of a person whom any party to the suit has not a present right so to remove it must necessarily mean a person other than a party to a suit. Mr. Apparao, the learned counsel for the appellants, however, contends that 'whom any party to a suit' means only the other party to the suit and in the case of a simple mortgagor it refers to the mortgagee and according to him, if the mortgagee cannot remove the mortgagor from possession then the receiver also cannot remove him from possession and if the receiver cannot remove the mortgagor who has executed a simple mortgage the Court cannot appoint a receiver of such property. This interpretation, in our opinion, cannot be accepted. If the words 'any person' have to be given the widest connotation there is no reason why the expression 'any party to the suit' has to be restricted to one of the parties only. That also must include all the parties to the suit. If that is so, then it will rob the entire provision of its meaning. To give a proper meaning to the words and bring out the intendment of the legislature the expression 'any person' occurring in sub-rule (2) must be read as qualified by the words "whom any party to a suit has not a present right so to remove" and if so qualified they can only refer to persons other than the parties to the suit. That is the view taken by the Calcutta High Court in Hudson v. Morgan, (1909) ILR 36 Cal 713 and also in Sher Singh v. Devi Dayal, (1913) 20 Ind Cas 761 (Punjab Chief Court). The answer of the Full Bench of the Allahabad High Court in Anandi Lal v. Ram Sarup (AIR 1936 All 495) (supra) in the words of Suleman, C. J. is as follows:- "Although there is no objection to the mere appointment of receiver of any property, the Court cannot remove from the possession or custody of the property any person whether a party to the suit or not whom any party to the suit has not a present right so to remove" which is as we understand and as interpreted by several other High Courts, not in accordance with the provisions of O. 40, R. 1, C. P. C. including sub-rule (2). As stated in the Commentary on the Civil P. C. by Chitaley "the general trend of opinion of the other High Courts (except Allahabad and Patna) is that O. 40, is not inapplicable to mortgage suits and a receiver can be appointed even if the mortgage is a simple mortgage. Even the Patna High Court in Rudreshwari Pd. Sinha v. Ramabati Devi, : Amarnath Ghose v. Abhoy Kumar, AIR 1949 Pat 24; and Haragonal v. Deoniti Prasad Sing, AIR 1945 Pat 404 has followed the preponderant view enunciated by the Madras High Court in the above Full Bench case. There was no occasion for the Allahabad High Court itself to consider the correctness of the view in the Full Bench decision in Anandi Lal v. Ram Sarup (AIR 1936 All 495) (supra) in view of the amendment of sub-rule (2) of O. 40, R. 1, C. P. C. on 10-7-1943. By that amendment after the words 'any person' the words " not being a party to the suit" were inserted. That amendment only made explicit what was implicit in the language of sub-rule (2) even before the amendment which was the view expressed by several other High Courts. That amendment was adopted by the State of Mysore on 10-3-1967. In the result, now it is uniformly accepted by all the High Courts that sub-rule (2) does not prevent a receiver from dispossessing a party to a proceeding. It only restricts his power to dispossess a person other than a party to the suit whom a party to the suit himself could not have dispossessed. Unless that interpretation is accepted then in most suits the receiver could never be appointed, e. g., in a partition suit every member of the coparcenary is entitled to remain in possession of the property and as such the other party to the suit has no present right to dispossess. He could secure exclusive possession only upon the property by being allotted by metes and bounds in pursuance of a decree for partition. Even in a suit against a trespasser it may be contended that in spite of the defendant being a trespasser the plaintiff cannot recover possession unless there is a decree for possession , and even in execution of such a decree, if the appellants' contention is to be accepted, unless there is a decree for mesne profits as well since the decree-holder is only entitled to recover possession, he cannot ask for appointment of receiver for no profits have been decreed. That would go against the very basic purpose behind the conferment of power to appoint receiver pending suits or pending execution proceedings. Appointment of receiver is for safeguarding the interests of the parties to the proceedings; that is also a recognised mode of execution. It cannot be ignored that all execution is intended to satisfy the decree. It must be noticed that under a mortgage decree until a sale is effected, the mortgaged property is subject to the control of the Court and only in recognition of this fact, the Court directs sale of the property. As observed by the Full Bench when the property could be sold in exercise of the jurisdiction of the executing Court, it must necessarily have the power to administer such property for the satisfaction of the decree by appointed the receiver. We, therefore, find no merit in the contention of the learned counsel for the appellant that a receiver cannot be appointed of the properties directed to be sold under a simple mortgage decree. The view of the Full Bench of the Madras High Court in Paramasivan v. Ramasami (AIR 1933 Mad 570) (supra) does not call for reconsideration.
5. It was then faintly contended by the learned counsel for the appellant that the lands are in the possession of the tenants and they being third parties, a receiver should not be appointed. The basic assumption that the lands are in the possession of the tenants is not correct. Even before the lower Court the contention was merely that the lands have been sold to a third party under an agreement for sale and that the said third party has leased out the lands to the tenants. The so-called tenants and the so-called purchaser have not chosen to object to the appointment of receiver or to the receiver taking possession of the properties. That apart, there is a clear finding that the judgment-debtors themselves have set up these third parties. What sub-rule (2) of O. 40, Rule 1, C. P. C. prohibits is the dispossession of a person by the receiver whom a party to the proceeding could not have dispossessed. It does not prohibit dispossession of persons who are falsely set up by the parties to thwart the execution of the decree. The receiver appointed by the Court in this case is, therefore, not precluded from taking actual possession of the mortgaged properties.
6. In the result, these appeals fail and are, accordingly, dismissed with costs.
7. Appeals dismissed.