According to the catena of decisions referred to in that Madras decision, the element of danger is an important consideration and that the Court will not act on possible danger only but the danger must be great and imminent demanding immediate relief. The appointment of Receiver is recognised as one of the harshest remedies which the law provides for the enforcement of rights and is allowable only in extreme cases and in circumstances where the interests of the creditors is exposed to manifest peril. We are afraid that the case at hand does not satisfy these tests. It would be trite to say that Receiver is not to be appointed unless there is some substantial ground for such interference, such as a well founded apprehension that the property in suit will be dissipated or other irreparable mischief may be done unless the Court appoints a Receiver.
1. In opposing this appeal against the orders of the learned single Judge, appointing ad interim Receiver and also granting ad interim injunction, the learned Advocate General, appearing for the 1st respondent, Central Bank of India, has firstly urged that the appeal is not maintainable. The learned Advocate General contended that the orders being ad interim and subject to further and final hearing, do not have any finality in order to become a "judgment" within the meaning of Cl. 15 of the Letters Patent and are not accordingly appealable under that clause. The learned Advocate General has mainly relied on the well-known decision of the Supreme Court in Shah Babulal Khimji v. Jayaben, and relying mainly on the
observations contained in paragraphs 119, 223 and other paragraphs, the learned Advocate General has urged that an interlocutory order in order to be appealable as a judgment within the meaning of cl. 15 of the Letters Patent must contain the traits, trappings and quality of finality. We need not, and therefore we do not, decide the question as to whether the impugned orders, not being final interlocutory orders, are appealable under cl. 15 of the Letters Patent. The decision of the Supreme Court in Shah Babulal Khimji (supra) is also aclear authority for the proposition that if an appeal is maintainable under the provisions of O. XLIII, R. 1 of the Code of Civil Procedure, the provisions of cl. 15 of the Letters Patent are not required to be invoked for the maintenance of such appeal. The impugned orders in question, whether ad interim or interim or final, are nevertheless orders passed under the provisions of O. XL, R. 1 of the Code of Civil Procedure. And if that is so, then we have the binding authority of the Federal Court in Kutoor Vengayil Rayarappan Nayanar v. Madhavi Amma, AIR 1950 FC 140 at p. 141 that "whenever an order can be brought within the purview of O. XL, R. 1, it at once becomes appealable under the provisions of O. XLIII, R. 1(s) of the Code of Civil Procedure. The contention of the learned Advocate General on this score, therefore, must be rejected and we accordingly proceed to consider the legality and the propriety of the impugned orders.
2. The suit giving rise to this appeal from the impugned orders passed therein, has been branded by the learned single Judge as "a usual bank suit". No citation is obviously necessary for the proposition that appointment of a Receiver is an extraordinary and a harsh remedy provided by law and not just a usual or an ordinary one. We would have, therefore, to consider as to whether there were good grounds to justify the appointment of a Receiver in this case in a "usual" or "ordinary" suit.
3. The plaintiff bank no doubt claims a huge amount of money in this suit. The suit is not one by a simple contract creditor having no specified charge or right to be paid out of a specified fund or property, in which case the Court may not ordinarily appoint a Receiver. That is the view of the Court in Harkisondas Nanjibhai v. Chaturbhuj, AIR 1947 Bom 434 and also of the Calcutta High Court in Hemendra Nath v. Prokash Chandra . The suit is one
where the plaintiff bank seeks to enforce the hypothecation and the securities in its favour. In such a suit, a Receiver may be appointed under the law but is not to be appointed unless it appears that the sale proceeds of the property secured or other securities are insufficient to satisfy the claim.
4. The principles relating to appointment of Receiver are well-settled for more than a century and we respectfully agree with the principles laid down in the Madras decision in T. Krishnaswamy Chetty v. C. Thangavelu Chetty, , where Ramaswami, J. (as his
Lordship then was) has laid down the five principles or requirements which have been described by His Lordships as 'panch sadachar' of our Courts exercising equity jurisdiction in appointing Receiver.
5. According to the catena of decisions referred to in that Madras decision, the element of danger is an important consideration and that the Court will not act on possible danger only but the danger must be great and imminent demanding immediate relief. The appointment of Receiver is recognised as one of the harshest remedies which the law provides for the enforcement of rights and is allowable only in extreme cases and in circumstances where the interests of the creditors is exposed to manifest peril. We are afraid that the case at hand does not satisfy these tests. It would be trite to say that Receiver is not to be appointed unless there is some substantial ground for such interference, such as a well founded apprehension that the property in suit will be dissipated or other irreparable mischief may be done unless the Court appoints a Receiver.
6. On the materials now on record, there is nothing to show that the properties secured/mortgaged/hypothecated to the plaintiff bank by the defendant for the suit loan are likely to be insufficient to satisfy the claim of the plaintiff, nor there is anything on record to show that the properties secured for the loan are likely to he dissipated, wasted or otherwise seriously damaged or injured. That being so, we do not think that, on the materials now before us, there is any justification for the appointment of ad interim Receiver.
7. The learned Advocate General has urged that the order appointing Receiver is rather a soft order which is going to do no appreciable harm to the defendant. But that, by itself, cannot be a ground for sustaining the order of Receiver as a Court will never appoint a Receiver merely on the ground that it will do no harm to the defendant.
8. The grounds in support of the appointment of Receiver have been summarised in paragraph 21 of the plaint. It has been alleged that there are internal disputes going on among the Directors and the shareholders of the 1st defendants. There is nothing on record to show that there is any such serious dispute at present which might warrant an appointment of Receiver. The dispute that was there has already been settled by the orders of the Aurangabad Civil Court and also by the order of the Supreme Court. It has also been alleged that the 1st defendants are banking with other bank though they agreed not to deal with any other bank but to deal with the plaintiff bank exclusively. It is on record, vide letter bearing No. BMO : IFD : 93-94 : 3.152 dated December 20, 1993 of the plantiff bank, that it is the plaintiff bank which notified that the 1st defendants would not be entitled to have any banking facility in the plaintiff bank unless orders are obtained from the Court to that effect. If the plaintiff bank was refusing banking facilities to the 1st defendants, it cannot complain of any breach of agreement on the part of the 1st defendants not to deal with any other bank,
9. The learned Single Judge has, and this we say with respect, spelt out no reasons whatsoever for the appointment of the Receiver. Not that a non-speaking judicial order must fail and cannot be sustained on that score, but that we are inclined to hold that before resorting to such a harsh remedy, the order providing for such a remedy should articulate reasons for such exercise. As already indicated, we have not been able to find, on the materials as at present before us, any good ground for the appointment of ad interim Receiver. We, therefore, quash that order.
10. The claim of the plaintiff bank is for more than Rupees two crores. The plaintiff is a Nationalised Bank and, therefore, in its money the whole Nation is interested. In a conflict between the interest of an individual and the interest of the Nation, the latter must prevail whenever and wherever possible. But the learned counsel appearing for the appellants has not assailed the order of injunction passed by the learned Single Judge. And the said order of injunction will, therefore, continue to operate. The said order along with the securities already furnished by the defendants should take care of the plaintiff's claim for the time being unlit the learned single Judge can finally hear and determine the application for the appointment of Receiver. We make it clear that all that we say is that, on the materials now on record, we have not been able to find any justification for immediate appointment of ad interim Receiver. But this will not prevent the learned Single Judge from appointing a Receiver hereafter at the final hearing before him, and on the materials that may be brought before him hereafter he may, if he so thinks fit, be pleased to hold that such an appointment is necessary.
The appeal is accordingly allowed and that part of the order appointing an ad interim Receiver is quashed. As already indicated, the rest of the order stands confirmed. We, however, make no order as to costs.
Appeal allowed.
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B.D.A. Ltd. vs Central Bank Of India, And Another on 21 July, 1994
Equivalent citations: AIR 1995 Bom 14, 1995 (1) MhLj 91
Bench: A Bhattacharjee, V Tipnis
1. In opposing this appeal against the orders of the learned single Judge, appointing ad interim Receiver and also granting ad interim injunction, the learned Advocate General, appearing for the 1st respondent, Central Bank of India, has firstly urged that the appeal is not maintainable. The learned Advocate General contended that the orders being ad interim and subject to further and final hearing, do not have any finality in order to become a "judgment" within the meaning of Cl. 15 of the Letters Patent and are not accordingly appealable under that clause. The learned Advocate General has mainly relied on the well-known decision of the Supreme Court in Shah Babulal Khimji v. Jayaben, and relying mainly on the
observations contained in paragraphs 119, 223 and other paragraphs, the learned Advocate General has urged that an interlocutory order in order to be appealable as a judgment within the meaning of cl. 15 of the Letters Patent must contain the traits, trappings and quality of finality. We need not, and therefore we do not, decide the question as to whether the impugned orders, not being final interlocutory orders, are appealable under cl. 15 of the Letters Patent. The decision of the Supreme Court in Shah Babulal Khimji (supra) is also aclear authority for the proposition that if an appeal is maintainable under the provisions of O. XLIII, R. 1 of the Code of Civil Procedure, the provisions of cl. 15 of the Letters Patent are not required to be invoked for the maintenance of such appeal. The impugned orders in question, whether ad interim or interim or final, are nevertheless orders passed under the provisions of O. XL, R. 1 of the Code of Civil Procedure. And if that is so, then we have the binding authority of the Federal Court in Kutoor Vengayil Rayarappan Nayanar v. Madhavi Amma, AIR 1950 FC 140 at p. 141 that "whenever an order can be brought within the purview of O. XL, R. 1, it at once becomes appealable under the provisions of O. XLIII, R. 1(s) of the Code of Civil Procedure. The contention of the learned Advocate General on this score, therefore, must be rejected and we accordingly proceed to consider the legality and the propriety of the impugned orders.
2. The suit giving rise to this appeal from the impugned orders passed therein, has been branded by the learned single Judge as "a usual bank suit". No citation is obviously necessary for the proposition that appointment of a Receiver is an extraordinary and a harsh remedy provided by law and not just a usual or an ordinary one. We would have, therefore, to consider as to whether there were good grounds to justify the appointment of a Receiver in this case in a "usual" or "ordinary" suit.
3. The plaintiff bank no doubt claims a huge amount of money in this suit. The suit is not one by a simple contract creditor having no specified charge or right to be paid out of a specified fund or property, in which case the Court may not ordinarily appoint a Receiver. That is the view of the Court in Harkisondas Nanjibhai v. Chaturbhuj, AIR 1947 Bom 434 and also of the Calcutta High Court in Hemendra Nath v. Prokash Chandra . The suit is one
where the plaintiff bank seeks to enforce the hypothecation and the securities in its favour. In such a suit, a Receiver may be appointed under the law but is not to be appointed unless it appears that the sale proceeds of the property secured or other securities are insufficient to satisfy the claim.
4. The principles relating to appointment of Receiver are well-settled for more than a century and we respectfully agree with the principles laid down in the Madras decision in T. Krishnaswamy Chetty v. C. Thangavelu Chetty, , where Ramaswami, J. (as his
Lordship then was) has laid down the five principles or requirements which have been described by His Lordships as 'panch sadachar' of our Courts exercising equity jurisdiction in appointing Receiver.
5. According to the catena of decisions referred to in that Madras decision, the element of danger is an important consideration and that the Court will not act on possible danger only but the danger must be great and imminent demanding immediate relief. The appointment of Receiver is recognised as one of the harshest remedies which the law provides for the enforcement of rights and is allowable only in extreme cases and in circumstances where the interests of the creditors is exposed to manifest peril. We are afraid that the case at hand does not satisfy these tests. It would be trite to say that Receiver is not to be appointed unless there is some substantial ground for such interference, such as a well founded apprehension that the property in suit will be dissipated or other irreparable mischief may be done unless the Court appoints a Receiver.
6. On the materials now on record, there is nothing to show that the properties secured/mortgaged/hypothecated to the plaintiff bank by the defendant for the suit loan are likely to be insufficient to satisfy the claim of the plaintiff, nor there is anything on record to show that the properties secured for the loan are likely to he dissipated, wasted or otherwise seriously damaged or injured. That being so, we do not think that, on the materials now before us, there is any justification for the appointment of ad interim Receiver.
7. The learned Advocate General has urged that the order appointing Receiver is rather a soft order which is going to do no appreciable harm to the defendant. But that, by itself, cannot be a ground for sustaining the order of Receiver as a Court will never appoint a Receiver merely on the ground that it will do no harm to the defendant.
8. The grounds in support of the appointment of Receiver have been summarised in paragraph 21 of the plaint. It has been alleged that there are internal disputes going on among the Directors and the shareholders of the 1st defendants. There is nothing on record to show that there is any such serious dispute at present which might warrant an appointment of Receiver. The dispute that was there has already been settled by the orders of the Aurangabad Civil Court and also by the order of the Supreme Court. It has also been alleged that the 1st defendants are banking with other bank though they agreed not to deal with any other bank but to deal with the plaintiff bank exclusively. It is on record, vide letter bearing No. BMO : IFD : 93-94 : 3.152 dated December 20, 1993 of the plantiff bank, that it is the plaintiff bank which notified that the 1st defendants would not be entitled to have any banking facility in the plaintiff bank unless orders are obtained from the Court to that effect. If the plaintiff bank was refusing banking facilities to the 1st defendants, it cannot complain of any breach of agreement on the part of the 1st defendants not to deal with any other bank,
9. The learned Single Judge has, and this we say with respect, spelt out no reasons whatsoever for the appointment of the Receiver. Not that a non-speaking judicial order must fail and cannot be sustained on that score, but that we are inclined to hold that before resorting to such a harsh remedy, the order providing for such a remedy should articulate reasons for such exercise. As already indicated, we have not been able to find, on the materials as at present before us, any good ground for the appointment of ad interim Receiver. We, therefore, quash that order.
10. The claim of the plaintiff bank is for more than Rupees two crores. The plaintiff is a Nationalised Bank and, therefore, in its money the whole Nation is interested. In a conflict between the interest of an individual and the interest of the Nation, the latter must prevail whenever and wherever possible. But the learned counsel appearing for the appellants has not assailed the order of injunction passed by the learned Single Judge. And the said order of injunction will, therefore, continue to operate. The said order along with the securities already furnished by the defendants should take care of the plaintiff's claim for the time being unlit the learned single Judge can finally hear and determine the application for the appointment of Receiver. We make it clear that all that we say is that, on the materials now on record, we have not been able to find any justification for immediate appointment of ad interim Receiver. But this will not prevent the learned Single Judge from appointing a Receiver hereafter at the final hearing before him, and on the materials that may be brought before him hereafter he may, if he so thinks fit, be pleased to hold that such an appointment is necessary.
The appeal is accordingly allowed and that part of the order appointing an ad interim Receiver is quashed. As already indicated, the rest of the order stands confirmed. We, however, make no order as to costs.
Appeal allowed.
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