Calcutta High Court
Lalchand Chhaganmull vs Bengal Warehouse And Construction Pvt. ... on 20 July, 1993
Equivalent citations: (1994)1CALLT337(HC), 98CWN488
JUDGMENT Nripendra Kumar Bhattacharyya, J.
1. The appellant by this appeal challenged order No. 23 dated 2-2-93 passed by the learned Judge, 13th Bench, City Civil Court, Calcutta, in Money Suit No. 551 of 1992 dismissing the appellant's petition dated 15-12-92 under Order 40 Rule 4 read with Section 151 of the Code of Civil Procedure on contest with cost.
2. In a brief profile the fact of the case is that the appellant entered into an oral contract with the respondent herein for supply of 10 tonnes of Maya Arthodox Blended Tea (which term will be referred to hereinafter as the 'Said Tea') at a price of Rs. 52/- per Kg. (all inclusive).
3. It has been further alleged that during the time of entering into the parole agreement it was known to the defendant (the present appellant) that the plaintiff (the present respondent) purchased the said tea for reselling and/or supplying the same to the Tea Trading Corporation of India Limited who in turn required the same for export to Kazakistan.
4. It was further agreed that after the delivery of the tea the same would be approved by Messrs. S.G.S. (India) Limited of 4, Government Place North, Calcutta, inspecting authority of the said Tea Trading Corporation of India Limited, and, thereafter, the payment of the price for the said tea would be made.
5. The defendant/appellant supplied 10 tonnes of the said tea in 336 chests to the said Tea Trading Corporation of India Limited at 8, Khidirpur Dock and the plaintiff/respondent paid Rs. 3,00,000/- to the defendant/appellant as the price of the said tea.
6. It has also been alleged that the implied condition of such sale was that the defendant would supply merchantable quality of the said tea, according to the standard specification of Tea Trading Corporation of India Limited.
7. On or about 4th March, 1992 the said Messrs. S.G.S. (India) Limited rejected the said tea after making required analysis and test of the same as those tea were sub-standard and not up to the specified quality.
8. The plaintiff/respondent demanded refund of the said sum of Rs. 300,000/- from the defendant/appellant by a letter dated 28th July, 1992 and as the demand became abortive, the plaintiff/respondent instituted a Money Suit against the defendant/appellant in the Court of the learned Judge, 13th Bench, City Civil Court, Calcutta, which has been registered there as Money Suit No. 551 of 1992.
9. In that suit the plaintiff prayed for a decree of Rs. 3,30,163.93P., as the price of the tea and interest therein and Rs. 7,188.80P., towards other incidental charges, namely, godown charge, rent charge, transportation charge etc. and prayed amongst others, for appointment of a Receiver.
10. In that suit the plaintiff /respondent also made an application under Order 40 Rule 1 read with Section 151 of the Code of Civil Procedure making identical allegations as aforesaid and further alleged that the tea is a perishable commodity and day-by-day the condition of the tea was deteriorating and with the consequent decrease in the value thereof and on such allegation the plaintiff prayed for appointment of an Advocate-Receiver of the City Civil Court for taking posesssion of the said tea so as to sell out the same either by public auction or by private contract and to make over the same proceeds of the said tea to the plaintiff/respondent on its furnishing a bank guarantee.
11. Upon that ex parte application the learned Judge, 13th Bench, City Civil Court, Calcutta, by his Order No. 3 dated 7-9-92 asked the defendant to show cause within a period of 10 days as to why receiver should not be appointed and by the self-same order he appointed an interim Receiver with the direction upon the Receiver to sell the 10 tonnes of the said tea, which is lying at the godown of the, Calcutta Port Trust, by auction, after giving notices to the parties and also after prior publication of such sale in two daily well circulated newspapers one in English and another in Bengali at the cost of the plaintiff with a direction to pay the said sum (the sale proceeds) to the plaintiff after obtaining proper Bank Guarantee from it.
12. The plaintiff was directed to deposit Rs. 1,000/- as initial miscellaneous cost of the Receiver within 7 days from the date of the order with a default clause that in case of non-payment of the same within the stipulated period the interim order would stand vacated.
13. The plaintiff could not deposite the said sum within the period of 7 days and the plaintiff represented before the Court that the said lapses were due to a bona fide mistake of the plaintiff's Advocate. The plaintiff prayed for acceptance of the deposit of the said sum of Rs. 1,000/- made beyond the stipulated period.
14. The learned Judge accepted the cause shown and condoned the delay of the belated payment of Rs. 1,000/- by bis Order No. 6 dated 18-9-92.
15. By his order No. 7 dated 19.9.92 the learned Trial Judge appointed Sri Pyari Mohan Sinha, an Advocate of City Civil Court, Calcutta, a Receiver for taking possession of the 10 tonnes of the Maya Tea which was lying at the godown of the plaintiff/appellant at Rampur, Budge Budge, P.O. Sarkarpur, District 24-Parganas and directed him to sell the said tea forthwith by public auction after giving notices to the parties and also on making prior publication of the proposed sale in two daily well-circulated newspapers one in English language and the other in Bengali language at the cost of the plaintiff/respondent. The Receiver was further directed to pay to the plaintiff/respondent the sale proceeds of the said tea against a valid Bank Guarantee to be furnished by the plaintiff/respondent. The remuneration of the Receiver was fixed initially at Rs. 500/- and, thereafter, at 5% on the sale proceeds of the said tea.
16. Against the Order No. 3 dated 7-9-92 and Order No. 7 dated 19-9-92 passed by the learned Judge, 13th Bench, City Civil Court, Calcutta in Money Suit No. 551 of 1992, the defendant/appellant moved a Division Bench of this Hon'ble Court under Section 115 of the Code of Civil Procedure on 4th December, 1992. The matter was contested and no order was passed on that application as the same was not maintainable in law.
17. Thereafter the defendant/appellant made an application before the trial court on 15-12-92 under Order 40 Rule 4 read with Section 151 of the Code of Civil Procedure praying, inter alia, for stay of operation of the orders dated 7th September, 1992 and 19th September, 1992, for discharging the Receiver and for setting aside the orders dated 7th September, 1992 and 19th September, 1992, and further an ad interim order was prayed for restraining the respondents from acting any further in terms of the Orders dated 7th September, 1992 and 19th September, 1992.
18. In that application the defendant/appellant has recited that facts as have been narrated by the plaintiff in its application under Order 40 Rule 1 with the difference that it was given out that the price of the tea was fixed at Rs. 57/- per Kg. and not Rs. 52/- per Kg. and that it was averred that the delivery of the said tea would commence after inspection by the said Messrs. S.G.S. (India) Limited.
19. It has further been alleged that the total price of the tea was Rs. 5,80,305.70P., out of which the plaintiff/respondent paid Rs. 3,00,000/to the defendant keeping a balance of Rs. 2,80,305.70P., outstanding. The delivery of the said tea was made after prior inspection by Messrs. S.G.S. (India) Ltd., and on such delivery a sum of Rs. 3,00,000/- was paid by the plaintiff to the defendant towards part payment of the price of the said tea. By a letter dated 28th July, 1992, the defendant/appellant demanded the payment of the said sum of Rs. 2,80,305.70P., and also issued a notice under Section 434 of the Companies Act, 1956 for winding up of the said company (plaintiff) and then only the plaintiff/respondent as a counterblast instituted the Money Suit No. 551 of 1992,
20. In that petition under Order 40 Rule 4 read with Section 151 C.P.C, the defendant/appellant contended, inter alia, that the order appointing Receiver is contradictory in nature and the learned Judge would not have appointed a Receiver over the said tea and would not have directed the Receiver to take steps for sale of the said tea. It has further been contended in the said petition that as a normal practice tea is sold by auction in Tea Market by the C.T.T.A. (Auction Committee) where more that 300 purchasers usually participate in the auction. Even if the tea is sold there, then it would fetch a better price and by Order dated 7th September, 1992 the learned Trial Judge has in fact pre-disposed of the suit.
21. The learned Trial Judge after hearing both the parties dismissed the application of the defendant/appellant on contest with cost by the impugned Order No. 23 dated 2-2-93.
22. At the time of admission of the appeal, an application for stay was filed by the appellant and on that application the impugned sale was stayed and it was further ordered that along with the appeal the application was also to be heard. Accordingly, both the appeal and the application were heard together and the same are disposed of by this judgment.
23. In assailing the impugned order the learned Advocate for the appellant, Smt. Manot contended that no Receiver can be appointed in a Money Suit. In support of her contention she relied on two decisions, one of Calcutta High Court in the case of Balarampur Sugar Co. v. Chalchhitra Bharati and Ors. and the other of Madras High Court in the case of Raja Lakshmi Ammal v. Muthusami Counda .
24. In the case of Balarampur Sugar Co. (supra) a Single Bench of this Court has held that in a case of plain and simple money transaction creditor is not entitled to ask for appointment of a Receiver until and unless some grounds have made out in the petition itself. And in Raja Lakshmi Ammal (supra), the Madras High Court has held that the Court has jurisdiction to appoint a Receiver even in a simple money suit, before decree, only in extraordinary cases.
25. In the aforesaid decisions no blanket embargo has been imposed for appointment of a Receiver in a Money suit. In both the decisions, referred to above, the ratio reduced is that in an appropriate case receiver can be appointed in money suit.
26. The above view has been supported in a decision of the Kerala High Court in the case of Arun Agencies, Mattancherry v. Saint Antony's Oil Mill . The said decision was relied on by the learned Advocate for the respondent.
27. The learned Trial Court after taking into consideration the emergent situation that tea, being a perishable commodity, is lying in the godown losing its value in terms of quality and also in price, appointed a Receiver for preventing it from further deterioration of the said tea in terms of quality and price.
28. So, the contention of Smt. Manot in this regard cannot be accepted by us.
29. In the next place Smt. Manot contended that unless the five principles laid down in the case of T. Krishnaswamy Chetty v. C. Thangavelu Chetty are satisfied no Receiver can be appointed.
30. In that decision the Madras High Court has held that when the properties are in possession of either of the parties then the Receiver should not be appointed unless the principles have been satisfied as laid down in that decision.
31. One of such principles laid down in the said decision is that not only must the plaintiff show a case of adverse and conflicting claims to the property, but, he must show some emergency or danger or loss demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration.
32. In the instant case, there is a danger of loss of quality and price of the tea and the court has taken into consideration that element of danger and hence appointed a Receiver.
33. By referring to a decision of Mysore High Court in case of Srinivasa Rao v. Babu Rao reported in AIR 1970 Mysore 141, Smt. Manot contended that unless the plaintiff can show that he has an excellent chance of succeeding in the suit, no Receiver can be appointed. From the decision, as referred to above, it appears that the said principle is applicable for appointment of receiver when the property is in possession of either of the parties. In the instant case, property is in possession of the plaintiff. In that decision it has been enunciated that the position would be different if the property is shown to be, 'in medio,' that is to say, in the enjoyment of no one.
34. In the instant case, the tea is lying in the godown and day by day there is deterioration of the quality of the tea and thereby there is a gradual, loss in the price of the tea.
35. The Trial Court in consideration of the same appointed the Receiver to take possession of the tea and to make arrangement for selling of the tea.
36. To protect the interests of the parties in the suit the Trial Court directed the Receiver to make arrangement for sale of the tea in auction (publicly or by private treaty) after notice to the parties and after making prior publication in the two daily newspapers one in Bengali and another in English and then to make over the sale proceeds to the plaintiff after taking proper Bank Guarantee from the plaintiff. So, we do not find any illegality or irregularity in the order of the Trial Court.
37. In the instant case, after the order of appointing Receiver was made, the appellant moved a Division Bench of this Court in revision under Section 115 C.P.C. challenging the orders of the Trial Court dated 7th September, 1992 and 19th September, 1992, Having failed there, the appellant moved the Trial Court under Order 40 Rule 4 read with Section 151 C.P.C. On that application the impugned order has been passed.
38. So the orders, appointing Receiver as per Orders dated 7th September, 1992 and 19th September, 1992 have not been challenged by the appellant.
39. Smt. Manot contended that the same can be challenged under Section 151 C.P.C. and the court has the inherent power and jurisdiction to set aside the order of appointment of Receiver. In support of her contention she relied on a Patna decision in the case of Gajanand Sha v. Dayanand Thakur reported in AIR 1943 Patna 127. In that context, Smt. Manot contended that the Court has inherent jurisdiction to recall and cancel its invalid order, specially when such order is induced by misrepresentation by the party in whose favour it is made and the order is to the prejudice of the party against whom it is made and was made in his absence and without notice to him.
40. In the instant case, as it appears from the record that there was no misrepresentation by the plaintiff/respondent before the Trial Court and the Receiver was prayed for on the grounds of protection of the perishable commodity and from sliding down the price of tea and to save further loss of price of the tea and the order passed by the Trial Court on that score cannot be said to be the result of any misrepresentation nor can it be said that the court was induced to pass an illegal order. We find no illegality in the order of appointment of the Receiver. So, this decision is of little help to Smt. Manot. Accordingly, the order appointing Receiver cannot be said to be an invalid order warranting interference so as to set aside the order of appointment of Receiver.
41. In this connection, the Supreme Court decisions, as relied on by the learned Advocate for the respondent, in the case of Ramkarandas Radhavallabh v. Bhagwandas Dwarkadas and Nain Singh v. Koonwarjee may be looked into.
42. In the case of Ramkaran Das (supra), the Supreme Court has held, inter alia, by relying on an earlier decision of the Supreme Court in the case of Manoharlal v. Hiralal , that the inherent powers are to be exercised by the Court in very exceptional circumstances for which the Code lays down no procedure.
43. The Supreme Court in the case of Nain Singh (supra) has held that the court cannot make use of Section 151 C.P.C. where a party had his remedy provided elsewhere in the Code and he neglected to avail himself of the same. Power cannot be exercised as an appellate power.
44. So, the ratio deduced in those cases by the Supreme Court is that where there are provisions in the Code itself, Section 151 cannot be resorted to for substituting those provisions.
45. There is no dispute that in the absence of specific provision in the Code, Section 151 can be resorted to; but where there is specific provision, as in the instant case there is provision for an appeal under Order 43 Rule l(s) C.P.C. or of review under Order 47, Section 151 cannot be resorted to.
46. In the next place Smt. Manot contended that the court has no power to order the receiver to sell the property.
47. In this context the decision of the Supreme Court in the case of Sadhuram Bansal v. Pulin Behari Sarkar may be looked into.
It will appear from that decision that an official Receiver was appointed by the Court over the disputed properties and the Receiver was directed by the court to sell the disputed premises either by a public auction or by private treaty to the highest bidder as some of the parties required immediate funds.
48. The Calcutta High Court in the case of Gora Chand Lurki v. Makhanlal Chakravartty reported in 11 CWN 489 held that a sale of properties, the subject-matter of the suit, by the Receiver under the order of the court, cannot, in the absence of fraud, be attacked collaterally by persons who were parties thereto or their representatives.
49. In the case of Golam Hossein Cassim Ariff v. Fatima Begum reported in 16 CWN 394 it has been held that a sale by receiver under direction of Court is not a sale by Court and in such a sale, the Court does not grant a sale certificate nor does it confirm the sale.
50. So these decisions clearly indicate that the Court has power and authority to give direction or orders to the Receiver for sale of the property in suit.
51. Order 40 Rule 4 C.P.C. deals with enforcement of Receiver's duties. The said provision is not for setting aside the appointment of Receiver appointed under Order 40 Rule 1 of the Code of Civil Procedure. The proper procedure for challenging that order appointing Receiver under Order 40 Rule 1 C.P.C. is either by appeal under Order 43 Rule l(a) C.P.C. or by review under Order 47 of the Code of Civil Procedure.
52. The appellant was negligent in challenging the order under the said provisions. Now it is not open to the appellant to challenge the said order in a circuitous way by invoking the inherent power of the Court under Section 151 of the Code of Civil Procedure.
53. Smt. Manot contended that though the Receiver was directed to give prior notice to the parties for sale of the tea but no such notice was given to her client and on such submission she pressed for removal of the Receiver.
54. In support of her contention that in case of failure on the part of the Receiver to discharge his duties the Receiver should be removed, she relied on a Division Bench decision of this Court in the case of P.R. Sarkar v. S.R. Sarkar reported in 71 CWN 548.
55. In the instant case the Receiver has not yet taken possession of the property and the appellant failed to show that the Receiver has violated the Court's order in any way. So, that decision is of little help to the appellant.
56. In such circumstances the application of the appellant in the trial court under Order 40 Rule 4 C.P.C. is premature and is not maintainable. We are afraid that we cannot accept the contention of Smt. Manot that by invoking the provision under Section 151 C.P.C, the Court can recall the order appointing Receiver, in view of the decisions of the Supreme Court referred to earlier. Smt. Manot expressed her apprehension that in the event the tea is being sold by the Receiver without notice to her client then her client will suffer pecuniary loss and will be left without any remedy.
57. Keeping in view the submissions of Mrs. Manot, we modify the impugned order of the Trial Court to this extent that the Receiver shall sell the tea after taking possession of the same by giving seven days' prior notice to all the parties concerned so that they may be present at the time of sale of the tea and also by giving prior publication of the proposed sale indicating the venue and time of such sale in the two daily newspapers (one Bengali and one English) before such sale of the tea. He must satisfy himself that the parties have received adequate notice about the sale of the tea, the time of sale and the venue of such sale. The Receiver is further directed to make such sale after preserving sample of the tea to be sold in the public auction or by private treaty whichever will fetch higher price.
With this modification of the Trial Court's order, we dispose of the appeal and also the application for stay. The interim order of stay stands vacated.
There will be no order as to costs.
Let a xerox copy of this order be given to the learned Advocates for the parties and also to the Receiver.
M.G. Mukherji, J.
I agree.