Fraser and Ross vs Krishnaswami Iyer and Others

Devadoss, J.—This is an application u/s 115, C.P.C. of the Receivers appointed by the High Court in C.S. No. 6S5 of 1921 to revise the

order of the Subordinate Judge of Mayavaram refusing to make the petitioners parties to execution proceedings pending before him in E.A. No.

130 of 1922. This petition came up for admission on 1-5-1922 with an application for stay of proceedings. As the contesting respondent appeared

in court and offered to take notice I directed the petition to be heard on 3-5-1922.

The facts of the case are that the plaintiff in O.S. No. 111 of 1916 on the file of the Kumbakonam Subordinate Judge''s Court obtained a

decree on a simple mortgage bond against the members of the well known Nadar family of Tanjore on 12-4-1917, and on 13-9-1920 a final

decree was passed in the suit and on 7-11-21 an order for sale was made. The sale was fixed for 30th January 1922 and it was adjourned to 20-

3-22, Disputes having arisen between the members of the family, C.S. No. 655 of 1921 was filed in the High Court for a partition of the family

property. The present petitioners were appointed receivers on 27-1-1922 and the order appointing them was appealed against and it came up

before the Court of appeal on 16-2-1922 and it is now settled that the receivers should continue to be in possession of the properties. On 20-3-

1922 the receivers applied to the Mayavaram Sub Court for being made parties to the execution proceedings and the Subordinate Judge declined

to make them parties. The sale too was proceeded with and was concluded on 27-3-22 and the mortgaged property was sold for Rs. 1,10,000 to

13th respondent hereto.

It is urged on behalf of the petitioners that the lower Court acted without jurisdiction in refusing to make the parties and as the properties of the

Nadar family are all in the hands of the receivers no sales could take place without their being on record. It is further argued that the receivers

could have paid off this debt or at least could have secured a better price for the properties which they value at Rs. 2,00,000, vide paragraph 12

of the affidavit. The property now brought to sale by the Subordinate Judge''s Court of Mayavaram is one of the items of properties which are the

subject matter of the suit now pending before the High Court.

Mr. Doraiswami Aiyar who appears for the petitioners relies on Mrs. Levina Ashton v. Madhabushani Dasi (1911) 14 Cal. W.N. 560 and

contends that it was the duty of the court to make the receivers parties to the execution proceedings. It may be taken as well settled law that there

can be no attachment and sale of the property in the possession of a receiver in execution of a money decree without the leave of the court

appointing the Receiver. To quote the learned Judges of the Calcutta High Court ""The general rule is well settled that property in the hands of a

Receiver is exempt from judicial process, except of course to the extent permitted by the appointing Court. Try v. Try (1851) 13 Beav. 122 De

Winton v. Bredon (1860) 28 Beav. 200, Lane v. Sterne (1864) 3 Gif 629. It has even been affirmed that though an attachment was levied on

property before the appointment of the Receiver, it is within the sound discretion of the appointing Court to refuse to permit a sale of the property

thereunder. On this principle it has been held that property in the hands of a Receiver, though subject to a paramount judgment, cannot be sold

under execution without leave of court. A purchaser of such property at an execution sale buys at his peril, and the sale may be cancelled upon an

appropriate application to the execution court."" It is unnecessary to examine the various authorities relied on by the learned Judges of the Calcutta

High Court. The question here is whether a mortgagee-decreeholder is bound to apply to the court appointing the receiver for redress or whether

he can proceed to sell the mortgaged property in execution of a decree for sale. The only authority that seems to support the contention c\f the

respondent is the judgment of a single Judge of the Calcutta High Court in Jogendranath Gossain v. Debendranath Gossain ILR (1898) Cal. 127.

The facts of that case are, that pending partition proceedings and after the appointment of the Receiver two of the cosharers mortgaged their

interest in the undivided properties; some of the mortgaged properties being within the jurisdiction of the Alipore Court, the mortgagee instituted his

suit in that court and sought to bring to sale the particular properties mentioned in the rule, some of which are situated in Calcutta. The judgment-

debtors, after obtaining several postponements of the sale for the purpose of paying off the judgment creditor applied to restrain the mortgagee

from proceeding to a sale on the ground that to sell the mortgaged properties without the leave or sanction of the High Court would amount to

contempt of court, Mr. Justice Sale in discharging the rule observed as follows: ""This is not a case where the judgment-creditor is proceeding to

execute his decree by attachment. This Court does not permit and will not recognise attachment of the properties in the hands of its Receiver,

under process issued without sanction or leave by inferior courts, the reason being that a proceeding by way of attachment is an interference with

the possession of the Receiver. But as the element of interference with the possession of the Receiver is absent from the present case there is no

reason for restraining the sale. The case of Hem Chunder Chunder v. Prankristo Chunder ILR (1876) Cal. 403 is distinguishable, inasmuch as the

judgment-creditor in that case if he had proceeded to execute his decree in the Mofussil Court, could have done so only by way of attachment and

sale. Under the Transfer of Property Act no attachment is necessary, and the reason for the course adopted in the former case does not now

exist."" The reasoning of the learned Judge is that as no attachment was necessary in a mortgage suit the sale could be proceeded with

notwithstanding the fact that the property was in the possession of the receiver. In that case only two of the co-sharers had mortgaged their

interest, in the present case all the sharers were parties to the mortgage and all their properties are in the hands of the receivers. Moreover the

receivers were appointed for the purpose of safeguarding the interests of all the parties to the suit and if an inferior court is allowed to sell the

property merely because there is a mortgage decree the object of appointing a receiver in a partition suit would become infructuous, and it cannot

be the policy of the law to allow the property to be sold by different courts when that property is in the hands of a receiver. The mere fact that

there is a mortgage on the property would not take the case out of the general rule that no process can be permitted in respect of the properties in

the hands of the receiver without the sanction of the court which appoints him, Moreover after attachment and sale, possession of the property sold

cannot be obtained by an auction purchaser without applying to the court which appointed the Receiver. That being so with very great respect to

the learned Judge it is difficult to follow the distinction which he makes between execution in respect of a simple money decree and execution in

pursuance of a mortgage decree. The possession of the Receiver being the possession of the court no court can interfere with that possession in

any manner without the leave of that court. The property being in custodia legis it would require very strong authority for holding that a mortgagee

could set at naught the ordinary principle which prevents process being issued against the property in the hands of the receiver without the leave of

the court appointing him simply because there is a mortgage in his favour. Mr. Venkatarama Sastri who appears for one of the members of the

family relies upon various passages in Kerr on Receivers and High on Receivers, and it is unnecessary for me to refer to them. One passage from a

well known book is sufficient for the present purpose: ""Property in the possession of a receiver is in the custody of the law and cannot be seized

under a writ of attachment or execution. It is in the discretion of the court to refuse to permit a sale of the property in its possession under a

judgment though the levy was made before the receiver was appointed"". Alderson on Receivers page 229.

It is argued by Mr. Krishnaswami Iyer who appears for the auction purchaser that there is no provision of law for making the receiver a party to

execution proceedings, and that Order 1, Rule 10 has no application to execution proceedings that Section 141 C.P.C. cannot help the petitioners

on the principle of the decision of the Privy Council in Thakur Prasad v. Fakirullah ILR 17 All. 106 and that Section 146 can have no application

to the present case. The fallacy of this argument lies in the assumption that the receiver is a new party.

When a receiver is appointed by a court he takes possession of the property on behalf of the Court and he is not a party in the sense in which

Order I Rule 10 is understood. The Court having taken possession of the properties it appoints an officer to look after the properties on behalf of

all the parties and a receiver is not a legal representative of any party; nor is he a new party to the proceedings. Hut he represents all the parties for

some purpose and his duty is that which is assigned to him by the court. It is further contended by Mr. Krishnaswami Iyer that the receiver has to

respect the orders made before his appointment and relies upon Bryant, v. Bull and Bull v. Bryant 10 Ch. D. 155. Vice Chancellor Bacon in

delivering the judgment says: ""The appointment of a receiver is a matter which does not concern mortgagees or prior incumbrancers, for a receiver

in the exercise of his authority will be obliged to respect former orders of the court; and the prior incumbrancers will be at liberty to take such

proceedings on behalf of their own interests as they may think tit, so that that circumstance occasions no kind of difficulty."" From this passage it

cannot be inferred that a mortgagee can proceed with the execution of a decree in his favour without the leave of the court appointing the receiver.

1892 P. 201 is quoted by Mr. Duraswami Iyer for the purpose of showing that the execution proceedings are a continuation of the suit and any

party can be added at any stage of the proceedings. That case has no application to the present case as in that case assessment of damages was

left over and until the assessment of damages was completed it could not be said that the suit had come to a termination. But in this case the

mortgage suit of the Kumbakonam Court had come to a termination when the final decree was passed and there was no more to be done in the

suits. But as I hold that the receivers are not new, parties to the suit I think Order 1 Rule 10 does not stand in the way of their being made parties.

Considering the fact that the very object of the appointment of the Receivers was to safeguard the interests of all the members of the family and to

liquidate the debts in the best manner possible it was the duty of the Subordinate Judge of Mayavaram to have made them parties to the execution

proceedings for the sale itself is liable to be defeated for want of necessary parties and in any case possession of the properties sold by Court

could not be obtained without the leave of the High Court which appointed the Receivers. Considering the complications that might arise hereafter

I consider that the Subordinate Judge acted with material irregularity in refusing to make the receivers parties to the execution proceedings. I

therefore set aside the order of the Subordinate Judge and direct him to make the receivers parties to the execution proceedings and proceed,

according to law, I allow the petition with costs. The 13th respondent will pay the costs of this petitioner.