A.P. Achari vs Officer Receiver

M.R. Hariharan Nair

The question that is raised before me is whether leave is necessary for suing the Official Receiver appointed in an insolvency proceeding. The petitioner approached the District Court, Thiruvananthapuram, where O.P. (IP) No. 2/89 was pending, seeking permission to sue the Offical Receiver. It was contended that the petitioner has been in possession and occupation of a building available in the property. (T.C. 20/915) which is involved in the said proceeding, from 1987 onwards as a tenant under Act 2 of 1965 and notwithstanding the execution of fresh document in favour of the Official Receiver appointed in the case in 1996, his rights remain unchanged. The petition itself was filed based on an earlier order passed by the Munsiff''s Court whereunder the plaint was returned with a direction that it could be reproduced with leave obtained from the court.

The learned counsel for the petitioner submits that the court below went wrong in relying on the decision in Alikoya v. Narayanan Nair (1969 KLT 10) and in Shyam Sunder Dutta Vs. Baikuntha Nath Banerjee (Dead) By LRs. and Others, . It is argued that in both these cases, the question was regarding rights and powers of the Receivers appointed under Order 40 Rule 1 of the C.P.C. and that the position of such Receiver is entirely different from the Official Receiver, who pursuant to an order of adjudication, has taken over the assets in an insolvency proceeding.

Section 58(1) of the Insolvency Act provides that the court may, at the time of the order of adjudication or at any time afterwards appoint a Receiver for the property of the insolvent and that such property shall thereupon vest in such Receiver. According to me, this makes all the difference. When a Receiver is appointed under Order 40 Rule 1 C.P.C., the property does not vest in the Receiver and what happens is only that the court puts him in possession as it is found just and convenient in the case. The decision referred to in the impugned order and made mention earlier were both cases where the appointment of the Receiver was under Order 40 of the C.P.C. Learned counsel for the petitioner took me through the decision in Amritalal Ghose and another v. Narain Chandra Chakravarti and others (1919) 30 CLJ 515). The nature of possession of the Receiver under the Insolvency Act was considered therein and it was found that the Receiver under the Act is exactly in the same position as the ''trustee in Bankruptcy'' that the whole property of the insolvent is vested in him and that he is the owner of the property until he is discharged. In fact, the question of leave to sue such a Receiver also was considered in that case. It was found that the rule that a suit should not be instituted against a Receiver without previous sanction of the Judge having the carriage of the proceedings in which the Receiver had been appointed, only applies to cases where the Receiver is appointed in an action and does not apply to a Receiver as mentioned in Provincial Insolvency Act, who according to the old English Law is an ''assignee in bankruptcy''.

The other decision relied on by the learned counsel for the petitioner viz., Maharana Kunwar v. E.V. David (77 Indian Case 57) also throws light on the point. After considering the question of similar leave, it was found that a Receiver appointed under the C.P.C. merely holds the estate on behalf of the Court whereas a Receiver under the Provincial Insolvency Act holds it in a different capacity altogether. He is more than a mere Officer of the Court, and u/s 28(2) of the Act, the insolvent''s estate vests in him. He alone, and no one else, represents the estate. He, therefore, is the proper party to be impleaded in the action and no leave is accordingly necessary for suing him.

I respectfully follow the above said decisions. In fact, the learned counsel for the respondent, who also was heard, agreed with this proposition of law. The conclusion, therefore is that the impugned order is defective. Needless to say that all the observations contained in the impugned order with regard to the question of law aforementioned and regarding the rights of the petitioner are to be set aside. I do so. If he files any valid suit against the Receiver asserting tenancy right, it will be treated as maintainable and proceeded with in accordance with law. In view of what is discussed above, the leave of the court is unnecessary for the petitioner to sue the Receiver. There is no merit in the prayer seeking leave and it is dismissed.