Hiralal Patni vs Loonkaram Sethiya and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No.110 of 1961

Decision Date: 11 April 1961

Coram: Subba Rao, Raghubar Dayal, J.R. Mudholkar

In the case of Hiralal Patni versus Loonkaram Sethi­ya and others, decided on 11 April 1961, the Supreme Court of India rendered its judgment. The bench comprised Justice Subbarao K., Justice Raghubar Dayal, Justice J.R. Mudholkar and Justice Raghubar Mudholkar, and the decision was reported at 1962 AIR 21 and 1962 SCR (1) 868, with citator reference R 1984 SC1471 (41). The matter fell within the provisions of the Code of Civil Procedure, 1908, particularly Order 40, concerning the appointment, continuance and discharge of a receiver, as well as issues relating to lease, dispossession and the appropriate mode of recovery. The dispute arose out of the John Mills, a conglomerate consisting of three textile mills and one flour mill, which were jointly owned by several persons. The financier of these mills initiated a suit to recover sums owed to him. During the pendency of that suit, the court appointed a receiver to take possession of the flour mill; however, the receiver was not authorised to operate the mill directly without further directions from the court. Subsequently, a preliminary decree was issued in the suit, expressly directing that the receiver should remain in office until discharged. After this decree, the parties arranged for the continued operation of the mills, and the court ordered that the appellant, who was one of the co‑owners, be granted a lease of the flour mill for a period of three years by the receiver. The lease deed contained a condition requiring the appellant to return possession of the flour mill to the receiver at the expiration of the three‑year term. Shortly thereafter, a final decree was passed in the original suit, but the decree made no mention of the receiver who had been appointed earlier. When the three‑year lease term came to an end, the court directed the receiver to retake possession of the flour mill from the appellant. The appellant challenged this direction on two grounds: first, that the passing of the final decree terminated the receiver’s authority with respect to the co‑owners’ rights, thereby depriving the receiver of the power to dispossess the appellant; and second, that the appellant could be dispossessed only by a suit filed by the receiver and not through any summary procedure. The Court held that the receiver, whose continuance was ordered by the preliminary decree, remained entitled to act until he was formally discharged. The Court further elucidated the legal position concerning the continuance of receivers: (i) where a receiver is appointed in a suit to remain in place until judgment, the receipt of the judgment terminates the appointment; (ii) where a receiver is appointed without an expressly defined tenure, the receiver continues in office until discharge; (iii) even after the final disposal of the suit, although the receiver’s functions ordinarily cease between the parties to the suit, the receiver remains answerable to the court until a discharge is effected; and (iv) the court possesses sufficient authority to maintain the receiver’s appointment beyond the final decree where the circumstances of the case so require.

The Court observed that the final decree issued in the present suit did not finally resolve the litigation and therefore did not terminate the appointment of the receiver. Consequently, the Court held that it was within its authority to order the appellant to surrender possession of the flour mill back to the receiver. This direction was understood to be part of a proper arrangement for the management of the mill while the estate remained under the receiver’s administration. The lease of the mill to the appellant contained an explicit condition that he was required to deliver the property back to the receiver upon the expiry of the lease term. The Court further noted that under Order 0.40 Rule 1(1)(d) of the Code of Civil Procedure it possessed the power to vest in the receiver a right to recover the property from the appellant. Accordingly, the Court concluded that it was unnecessary for the receiver to institute a separate suit for the recovery of the mill.

The appeal arose under special leave and was identified as Civil Appeal No. 110 of 1961. It challenged the judgment and order dated 14 October 1960 of the Allahabad High Court, which had affirmed the order of the Civil Judge, Agra, directing the Official Receiver to take possession of the appellant’s property. Counsel for the appellant were senior advocates, while counsel for respondent No. 1, counsel for respondents Nos. 2, 3 and 4, counsel for respondent No. 5, and counsel for respondent No. 7 appeared on behalf of the respective parties. The judgment was delivered on 11 April 1961 by the learned Justice who presided over the appellate proceedings.

The Court explained that the appeal contested the High Court’s confirmation of the Civil Judge’s order directing the Official Receiver to assume possession of the appellant’s property. This dispute illustrated how the enforcement of an interlocutory order appointing a receiver in the interests of all concerned parties could be hampered by dilatory tactics employed by either side, thereby defeating the purpose of the order. The factual backdrop involved three spinning mills and one flour mill situated in Agra, collectively described as the Johns Mills. Originally, these establishments were owned by the John family or their predecessors. By the time the present proceedings commenced, other persons had acquired interests in the mills. The joint owners at that stage were: Hiralal Patni, the appellant, holding a 19/40 share; Gambhirmal Pandiya Private Ltd., holding an 8/40 share; Messrs. John & Co., holding an 11/40 share; and I.E. John, holding a 2/40 share.

The Court noted that respondent No. 1, Seth Loonkaran Sethiya, had advanced large sums to Messrs. John & Co. secured by the business assets and stocks of the company. On 18 April 1949, Sethiya filed Original Suit No. 76 of 1949 before the Civil Judge of Agra, seeking recovery of the amount owed to him by the defendants. The suit was directed against John & Co. for the repayment of the sums advanced, and the proceedings formed part of the larger controversy concerning the appointment and powers of the receiver.

In the suit for sale of the assets of the company, the partners of Messrs John & Co., identified in the proceedings as “defendants 1st set,” and the partners of Messrs Johns Jain & Co., identified as “defendants 2nd set,” were joined as parties. While the suit was pending, the respondent, Loonkaran Sethiya, filed an application under Order XL, Rule 1 of the Code of Civil Procedure seeking the appointment of a Receiver. By an order dated 21 May 1949, the Civil Judge appointed two joint Receivers and directed them to manage the three spinning mills. Hiralal Patni appealed this order to the Allahabad High Court, which on 22 August 1949 modified the lower court’s order by limiting the appointment of Receivers to the share held by Messrs John & Co. in John Jain Mehre & Co. Subsequently, Loonkaran Sethiya made another application before the same Civil Judge for the appointment of a Receiver over the property of Hiralal Patni; by an order dated 1 December 1951 the Judge directed the Receivers to take possession of the appellant’s share in the mills as well. An appeal against this order was lodged in the High Court and the operation of the order was stayed pending disposal of the appeal. On 5 April 1954 the Civil Judge passed a preliminary decree against the defendants, directing them to deposit the decree amount in court within the prescribed time and providing that, in case of default, the plaintiff could seek a final decree for the sale of the defendants’ business assets. The decree also granted the plaintiff the right to obtain a personal decree if the proceeds of sale were insufficient to satisfy the decree, and it required that the Receivers continue in possession of the property until they were discharged. Hiralal Patni appealed this preliminary decree to the High Court and applied for an interim stay of its operation. The High Court, on 23 August 1955, discharged the Receiver appointed by the Civil Judge and appointed a different Receiver in his place. Earlier, on 25 March 1955, the Civil Judge had prepared a scheme for the operation of the mills; the parties appealed that scheme to the High Court. Those appeals were settled by compromise, under which the parties agreed to take different mills on lease from the Receiver for a period of three years. Accordingly, on 14 January 1956 the Receiver executed a lease of the flour mill in favour of Hiralal Patni for three years, the lease providing that the demised premises were to be delivered back to the Receiver at the expiry of the term. Finally, on 14 March 1956 a final decree was entered in the suit for the sale of the properties, but that final decree made no reference to the Receiver who had earlier been appointed.

On 29 September 1958 Hiralal Patni filed an application before the High Court seeking an extension of his lease for an additional three years. The High Court examined the request and, on 16 January 1959, dismissed it, holding that the existing lease was only a temporary measure and that any further arrangement should be made by the Receiver under the supervision and directions of the Civil Judge of Agra. The following day, 17 January 1959, the Receiver wrote to the Civil Judge asking for instructions as to whether he should proceed straightaway to dispossess the appellant. In response, Patni was served with notice and he raised several objections, asserting that he was the owner of the property and therefore entitled to remain in possession. The Civil Judge rejected Patni’s objections, observing that the Receiver’s authority stemmed from the preliminary decree, and ordered the Receiver to lease the flour mill by public auction for a term of two years. An auction was subsequently conducted in accordance with that order; Patni emerged as the highest bidder, paid the stipulated lease amount and executed a formal lease deed. Dissatisfied with the Civil Judge’s order, Patni appealed to the High Court. The High Court, in a detailed judgment, addressed each of Patni’s submissions concerning the nature of the lease, the powers of the Receiver and the alleged ownership rights, and ultimately found no merit in his claims, thereby upholding the Civil Judge’s direction and dismissing the appeal. The present petition therefore arises from that decision.

Counsel for the petitioner before this Court set out three principal contentions, which Patni had also advanced unsuccessfully before both the High Court and the Civil Judge. The first contention was that, when the relevant orders are properly interpreted, the Receiver possessed no authority to dispossess the appellant in a manner that would prevent him from operating his flour mill. The second contention argued that, after the final decree was passed, the Receiver could continue only for purposes of account settlement and debt discharge, and could not exercise any powers affecting the parties’ rights. The third contention maintained that, because the appellant had obtained a lease right and remained in possession beyond the lease term, he could be removed only through a suit and not by any summary proceeding. The principal issue, therefore, turned on the proper construction of the orders governing the Receiver’s powers. The Civil Judge had originally appointed two joint Receivers by an order dated 21 May 1949; however, that order was not the definitive instrument determining the Receiver’s authority. The definitive order was the one issued by the High Court on appeal on 22 August 1949. After hearing the parties, the High Court concluded that a Receiver should be appointed to take charge of the entire property, both immovable and movable, belonging to the defendants of the first set, for the purpose of its protection and preservation. In that order the High Court identified the John family as the defendants of the first set, and listed defendant five, Hiralal Patni, defendant six, Munnilal Mehra, and Messrs John Jain Mehra & Co. as defendants of the second set. The High Court’s order was limited to the properties belonging to the first‑set defendants.

The High Court observed that, according to the finance agreement that favoured the plaintiff, the plaintiff was not granted any right to take possession of the mills upon non‑payment, nor was the plaintiff entitled to operate the mills. The Court therefore held that, because no such right was conferred, a receiver could be appointed only pursuant to Order 40, rule 1 of the Code of Civil Procedure. Turning to the argument advanced by the defendants that a receiver could not be appointed to run the mills, the Court noted that it would not address that issue in the present order. The Court stated that, should the mills not be operated under an order of the Collector issued under the United Provinces Industrial Disputes Act, or should the partners fail to run them, the parties would be permitted to approach this Court. The Court further clarified that, if it later decided to appoint a receiver to manage the mills, it would then consider whether such an appointment was permissible.

The Court then explained that it had already identified the circumstances that, in its opinion, made it necessary to appoint a receiver to take charge of the property belonging to the first set of defendants. The Court examined whether the finance agreement dated July 1948 created a charge on both movable and immovable property. It directed that the receiver would not interfere with the operation of the mills except under an explicit order of the Court and only to the extent that the value of the security might be jeopardised by any action of the defendants. The Court pointed out that the Collector possessed authority under section 3 of the Industrial Disputes Act to make arrangements for the running of the mills.

Finally, the Court observed that it might become necessary from time to time to issue directions to the receiver. The parties might also seek clarification of portions of the order or request additional directions. The lower court was authorised to give such directions to the receiver or to the parties as it deemed just and proper. If further directions were required or if the receiver or the parties were dissatisfied with the directions given, they could approach this Court for additional guidance. In summary, the High Court affirmed the Civil Judge’s order appointing the receivers and instructed them to take charge of the properties of the first set of defendants. The Court expressly prohibited the receivers from interfering with the operation of the mills unless a specific court order required them to do so, noting that at that stage it did not consider it necessary to direct the receivers to run the mills. It was noted that the receivers were not appointed for the flour mill of the appellant, Hiralal Patni, who belonged to the second set of defendants. Counsel for the appellant argued that this order did not place the mills in the possession of the receivers and that the receivers were given only supervisory control over the first set’s share in the mills.

In this case the Court observed that, notwithstanding the wording of the earlier order which spoke of placing the mills in the possession of the Receivers and granting them only supervisory control over the share of the defendants first set in the mills, the practical effect was that the Receivers were put in charge of the entire property of the defendants first set, including their share in the mills. At the same time it was unmistakably clear that the Receivers could not directly run the mills without further directions. The Civil Judge, by his order dated 1 December 1951, directed the Receivers to take possession of the share of the defendants second set also. The operative portion of that order read: “For all these reasons I have come to the conclusion that it is just and convenient that a receiver should be appointed over the share of the defendant 11 set, and I order that the present receivers who are in possession of the defendant 1st set share should also be appointed receivers over the share of the defendant 11 set. As for the prayer allowing the receivers to run the mills the question of running of the mills is already before the High Court as is shown by the compromise dated 8th September 1950. It is not known what has happened after this compromise. The receivers are directed to seek the direction of the Hon’ble High Court on the question of the running of the mills so that there may be no chance of conflicting of orders passed by this court and the Hon’ble High Court, on this matter. The receivers will not interfere with the running of the mills except under express orders of this court and to the extent when it becomes necessary by reason of the value of the security being jeopardized by any action of the persons running the Mills. The receivers are appointed over the share of the defendants II set only, for the purpose of preservation and protection and realization of the rent.” This order follows the same line indicated by the High Court in its earlier order regarding the share of the defendants first set. It is noteworthy that under this order the Receivers were expressly prohibited from running the mills except under specific orders of the said court or of the High Court. On 5 April 1954 a preliminary decree was issued in the suit. Under that decree the defendants were directed to deposit a sum of Rs 18,00,152 in court within the prescribed date and, in default, the plaintiff was given a right to apply for a final decree for the sale of the assets of the spinning mills. The decree further directed that if the net sale proceeds of the said property were found insufficient to satisfy the plaintiff’s claim, the plaintiff would obtain a personal decree against the defendants first set and defendants second set for the balance of his claim. The Receivers were directed to continue on the

In this case, the Court explained that the preliminary decree gave the plaintiff two distinct rights. First, the plaintiff was entitled to the sale of the spinning‑mill assets, and second, the plaintiff could obtain a personal decree against every defendant for any remaining amount that might still be due after the sale of those assets. The decree also expressly required the receivers to remain in office until they were formally discharged. Because the decree did not list any new powers for the receivers, the Court held that the receivers continued to exercise the same powers that had been granted to them by the earlier court orders dated 22 August 1949 and 1 December 1951. On 25 March 1955, the learned Civil Judge of Agra drafted a scheme for the management of the three spinning mills, and both parties filed two appeals to the High Court challenging that scheme. Subsequently, on 22 July 1955, the parties reached a compromise that settled the two appeals, and the High Court disposed of the appeals in accordance with that compromise by an order dated 23 August 1955. The Court regarded the terms of that order as crucial to the issues before it and therefore reproduced the relevant clauses. Clause 1 stated that, without prejudice to any existing rights or any pending litigation, the parties, after careful consideration and as a special effort to arrange the operation of the Johns Mill, agreed that the three spinning mills and the flour mill located in Agra would be operated by the parties in accordance with the conditions set forth in the order. Clause vi provided that any lease of the mills must be granted by the receiver on terms and conditions that the Court had approved. Clause ix required that if any lessee failed to operate a mill after taking possession, failed to pay the lease rent, or failed to comply with the arrangements agreed upon by the parties for a period of three months, the receiver, with the Court’s permission, would retake possession of that mill and lease it to any other party, except the defaulting party, who might submit the highest bid in accordance with the Civil Judge’s orders. Clause 4 clarified that the arrangement contained in the order was solely for the purpose of operating the mills by the petitioners and that nothing in the order would affect any rights or obligations of the parties that might be the subject of suit No 76 of 1949 or any other litigation between them. Nevertheless, the order expressly allowed the petitioners to pursue any legal remedies available to them and did not prevent either side from seeking a stay order from the Hon’ble High Court or any other court.

The Court observed that the argument presented by counsel for the appellant—that the order in question merely constituted an internal arrangement between the defendants for operating the mills and did not expand the scope of the earlier orders dated 22 August 1949 and 1 December 1951, under which the receivers had been appointed—was not persuasive. The Court held that the scope of those earlier orders was not so narrowly limited. The combined effect of the earlier orders was that the receivers were required to take possession of the entire properties of the two sets of defendants. However, the receivers were not empowered to operate the mills unless the Court gave them specific directions to that effect. By his order of 25 March 1955, the Civil Judge devised a scheme for the operation of the mills, set out the conditions, and directed the receivers to advertise for applications from persons, including the Government, who were willing to run the mills. That order was confined solely to the three spinning mills. The compromise order addressed in the appeals also encompassed the flour mill. Although different mills were to be operated by different defendants through the acquisition of lease deeds, this was only a method devised for running the mills under the supervision of the Court. Under the compromise, the leases were to be executed in favour of the receiver, and the order provided that if any lessee failed to fulfil the terms of the lease, the receiver should retake possession of the specific mill in which the default occurred and, with the Court’s permission, lease the mill to any defendant other than the defaulting party. The clauses preserving the rights of the parties clearly referred to their rights that were the subject‑matter of the suit and could not relate to the terms agreed upon in the compromise order. The compromise order, therefore, represented a consent‑based direction from the courts for the operation of the mills, a matter that had been left for future determination in the earlier orders. Consequently, the earlier orders placed all the defendants’ properties in the possession of the receivers, and the compromise order directed the receiver to operate the mills according to the agreed scheme. Pursuant to the terms of the compromise, on 14 January 1956 the receiver executed a lease in favour of the appellant concerning the flour mill for a period of three years. Under that lease deed the appellant obtained possession from the receiver and undertook to surrender the demised premises, together with all fixtures, improvements and replacements, in good and tenantable repair and condition in accordance with the lease covenants when the term expired or earlier if the lease was terminated as provided. Any ambiguity that might have existed is removed by the lease deed, for the deed shows that the appellant acknowledges the legal possession of the receiver, takes a lease from the receiver, and agrees to return possession to the receiver at the appropriate time.

After the original lease expired, the appellant filed another application on 29 September 1958 requesting that the lease be extended for an additional three‑year period, thereby acknowledging that the property remained under the Receiver’s possession. The court, however, rejected this request on 16 January 1959, observing that the earlier lease was intended only as a temporary measure. The court further held that it was the Receiver’s responsibility, under the supervision and directions of the Civil Judge who had issued the preliminary decree, to devise a fresh arrangement for the future use of the mills.

The records clearly indicate that the Receiver was placed in possession of the entire property belonging to the defendants. The Receiver was not authorized to operate the mills personally; instead, subsequent orders directed the Receiver to lease the mills to the interested parties in the manner prescribed. Moreover, the final order required the Receiver to assume possession of the mills and to make alternative arrangements for their operation. In light of these orders, the argument advanced by counsel for the appellant—that the Receiver never actually possessed the mills and that the mills continued to be held by the defendants—cannot be sustained. The Court therefore interprets the relevant orders to mean that the appellant’s flour mill was also placed under the Receiver’s possession and that the appellant operated the mill pursuant to the compromise scheme.

The appellant’s second claim asserted that the Receiver appointed in the suit lost his authority as soon as the final decree was issued by the court. To address this contention, the Court examined whether a Receiver automatically ceases to hold office upon termination of the suit. Neither Section 51(d) of the Code of Civil Procedure nor Order XL of the Code provides a rule for ending a receivership. Consequently, the Court turned to recognized legal texts for guidance. In the third edition of Halsbury’s Laws of England, volume 32, Lord Simonds explains that a receiver appointed for a limited period—such as in interim orders—holds office only until that period expires, unless a subsequent judgment expressly continues the appointment. If a later court order, even without mentioning the receivership, is inconsistent with the receiver’s continued role, it may effectively discharge him. Conversely, when a receiver is appointed on an interlocutory application without a specific time limit, the final judgment need not expressly provide for his continuation; the silence of the judgment does not constitute a discharge. Additional authorities, including Kerr on Receivers (12th edition) and High on the Law of Receivers (4th edition), echo this principle, stating that an appointment made before judgment is not superseded by the judgment unless the appointment was limited to “until judgment or further order.”

The Court observed that the mere silence of a judgment did not amount to a discharge of the receiver nor to a determination of the receiver’s powers. Accordingly, the Court noted that an appointment of a receiver made generally by a judgment in an administration proceeding did not have to be continued by a subsequent order on further consideration. Referring to Kerr on Receivers, twelfth edition, chapter XII, under the heading “Discharge of a Receiver,” the Court reiterated the principle that an appointment of a receiver made before the judgment in an action would not be superseded by that judgment unless the receiver had been appointed expressly only “until judgment or further order.” The Court then turned to the fourth edition of High on the Law of Receivers, quoting the observations at page 985. Those observations stated that the functions of a receiver usually terminated with the termination of the litigation in which the receiver had been appointed and that, when the bill on which the appointment was based was later dismissed on demurrer, the receiver’s duties ceased as between the parties to the action. Nevertheless, the author explained that even after the receiver’s functions had terminated as between the litigants, the receiver remained amenable to the court as its officer until he complied with the court’s directions regarding the disposal of the funds received during his receivership. The author further warned that the determination of the suit did not automatically produce an order of discharge; the court could, upon sufficient cause being shown, either discharge the receiver or allow the receiver to continue, depending on the exigencies of the case.

The Court further recorded that the same author, at page 986, distinguished two classes of cases. In the first class, the final decree in the cause was generally decisive of the subject‑matter in controversy and thereby determined the right to possession of the fund or property held by the receiver. In such situations, the decree ordinarily superseded the receiver’s functions because there was nothing further for the receiver to do, although a formal application for discharge would still ordinarily be required. In contrast, when the court’s decree did not attempt to decide the main question in controversy and left the receiver’s possession undisturbed, the decree could not be said to operate as a discharge or to supersede the receiver’s functions.

Finally, the Court cited Woodroffe’s “The Law Relating to Receivers in British India,” fourth edition, page 22, to note that Order XL, rule 1(a) expressly provided that a receiver could be appointed either before or after decree. The Court emphasized that, as long as the order appointing a receiver remained unreversed and the suit remained pending, the receiver’s functions continued until the court issued an order discharging the receiver. The Court then succinctly summarized the prevailing law: (1) if a receiver was appointed in a suit expressly “until judgment,” the appointment terminated with the judgment in that action; and (2) if a receiver was appointed without an expressly defined tenure, the receiver continued in office until formally discharged by the court.

The law provides that a receiver remains in office until he is formally discharged by the court. Even after the principal suit has been finally disposed of between the litigating parties, the receiver’s duties ordinarily cease, but he continues to be answerable to the court as its appointed officer until a discharge order is made. The court also possesses sufficient authority to retain a receiver beyond the issuance of a final decree whenever the circumstances of the case demand it. Applying these principles to the present matter, it is observed that the order which appointed the receivers, identified as Receivers III, did not contain any clause stating that their tenure would automatically terminate upon the conclusion of the suit. Under the preliminary decree, the plaintiff acquired the right to seek a final decree authorising the sale of the property that had been charged, and also to obtain a personal decree against both the first and second sets of defendants for any balance of his claim that might remain after the sale proceeds were applied. Importantly, the preliminary decree explicitly instructed that the receivers were to continue in their role until they received a discharge. Subsequently, a final decree effecting the sale of the identified properties was issued pursuant to the preliminary decree; however, this final decree made no alteration to the earlier direction concerning the continued appointment of the receivers. Consequently, the combined effect of the preliminary and final decrees is that the suit was not terminated by the final decree, because the plaintiff retained the entitlement to secure a personal decree in the event that the proceeds from the sale proved insufficient to satisfy his dues. Therefore, it cannot be said that the suit was finally disposed of. Moreover, the explicit language of the preliminary decree mandating that the receivers remain in office until they are discharged reinforces this conclusion. In view of these facts, it is the considered opinion of the Court that the receivers appointed by the preliminary decree are lawfully entitled to continue performing their functions until a formal discharge is granted.

The third issue raised by counsel for the appellant concerns whether, under the specific facts of this case, the receiver may recover possession of the premises from the appellant solely by filing a regular suit for eviction, or whether the court may employ a summary process to dispossess the appellant. The relevant facts are as follows: on 14 January 1956, the appellant executed a lease deed concerning the flour mill in favour of the receiver, and the lease contained an explicit provision that the lessee would surrender possession of all demised premises to the receiver upon the expiry of the lease term. This lease was part of a broader scheme to operate the mills. The lease term subsequently expired, after which the court directed the receiver to take possession of the property and to auction it to the highest bidder. The question therefore arises as to whether the court, given these circumstances, can remove the appellant from possession through a summary procedure, or whether it must require the receiver to initiate a conventional eviction suit. To address this issue, the Court refers to the pertinent provisions of Order XL of the Code of Civil Procedure, specifically Rule 1, which provides that when it appears to the court to be just and convenient, the court may, by order, remove any person from possession or custody of the property and may confer upon the receiver such powers as are necessary for the management, protection, preservation and improvement of the property, including the authority to bring and defend suits.

According to Order XL of the Code of Civil Procedure, when the Court considered it just and convenient it could, by order, (b) remove any person from the possession or custody of the property and (d) give the receiver full authority to bring and defend suits, to realise, manage, protect, preserve and improve the property, and to collect its rents and profits. Sub‑rule (2) clarified that the Court could not, under this rule, remove from possession any person whom a party to the suit did not have a present right to remove. The Order therefore defined the receiver as an officer or representative of the Court who acted under its directions. The Court could, in order to enable the receiver to take possession and administer the property, order the removal of any person from possession or custody. Sub‑rule (2) limited this power only when the person was not a party to the suit and the plaintiff lacked a present right to remove him; however, when the person was a party to the suit, the Court was able to direct the receiver to remove that person even if the plaintiff did not have a present right to do so.

In the present matter the appellant was a party to the suit. The Court, through the receiver, had taken possession of the flour mill and subsequently, under a compromise arrangement for the operation of the mills, the receiver let the flour mill back to the appellant on the explicit condition that the appellant would return possession to the receiver at the expiry of the lease. The lease term had indeed expired, and the Court ordered the receiver to retake possession of the mill. The Court was therefore legally competent to confer on the receiver, under Order XL rule 1(1)(d), the power to recover the property from the appellant. The authorities cited by counsel were not deemed to be of significant relevance. In the case of Krista Chandra Ghose v. Krista Sakha Ghose, a lease granted by a receiver was later challenged on the ground of collusion; the Court held that no summary order could set aside the lease and that the proper remedy was a suit against both the receiver and the lessee. The learned judge, Woodroffe J., observed that the dispute in that case could only be resolved through a properly instituted suit.

The Court noted that a landlord who is a Receiver must institute a regular suit in order to recover rent from a lessee, and that such a suit must be properly instituted. In the decision of the Rajasthan High Court in Nanakchand v. Pannalal, the Court held that a Receiver does not have the power to recover rent through a summary order of the court. Instead, the Receiver must file a suit for recovery of rent in the same manner as any other landlord would do.

The Court then referred to the judgment of the Allahabad High Court in Loonkaran v. I. N. John. While that Court acknowledged that, where a lease has been executed by a Receiver, the lessee can generally be removed only by a regular suit, it also observed an exception. The exception arises when, after the lease term granted by the Receiver has expired, the sub‑lessee who remains in possession gives an undertaking to the court that he will vacate the premises in favour of a prospective lessee, provided that no fresh lease is granted to him. In such a situation, the Court said, it possessed the power to eject the sub‑lessee using its summary jurisdiction. The learned Judge, quoting at page 59, explained that by giving such an undertaking and by participating in the court‑auction, the appellant submitted himself to the jurisdiction of the court and therefore could be removed by a summary process rather than by a full suit.

The Court also cited the decision of the High Court of Travancore‑Cochin in Sivarajan v. Official Beceiver, Quilon District. That Court held that when the period of a lease granted to a Receiver has already expired and the lease deed contains an express stipulation that the lessee must surrender possession of the property without raising any objection, the Court may summarily evict the lessee. The learned Judge, at page 39, observed that although the lease deed is in favour of the Receiver, the unconditional surrender undertaking given by the lessee is in favour of the Court. The summary enforcement of that undertaking is a step towards the discharge of the Court’s duties in managing the estate, and the Court does not lose its jurisdiction merely because the property is in the possession of a lessee.

Further citation was deemed unnecessary. The Court concluded that the authorities mentioned above indicate that a Court cannot use its summary jurisdiction to evict a lessee of a Receiver, whether or not the lessee is a party to the suit, unless the lease deed expressly provides the Receiver with a right of re‑entry. The Court found it unnecessary to draw detailed boundaries around the Court’s summary jurisdiction in estate management. In the present case, the Court was of the opinion that the appellant occupied the mill under an agreed and integrated scheme for operating the mills by the various partners, even though his possession was based on a document described as a lease deed.

During the period when the Receiver was managing the estate, the Receiver assigned each individual mill to a different partner, intending that the mills would be operated competently by persons with appropriate experience. The appellant expressly consented that, upon the conclusion of a period of three years, the mill would be returned to the possession of the Receiver. The present case did not present any issue requiring reference to the decision reported in I.L.R. 1953 T.C. 30 concerning the resolution of competing claims between a lessee and a third party, and the court was not required to adjudicate any alleged vested rights of a lessee that might conflict with the rights of the Receiver. Rather, the matter represented a straightforward situation in which the court, while administering the estate through the authority of a Receiver, was merely arranging an appropriate measure for the continued operation of the mills. Since the three‑year term that had been mutually agreed upon had come to an end, the court was fully empowered, in the opinion of the judges, to order the appellant to surrender possession of the mill back to the Receiver. Finally, the court was made aware that a separate application seeking the removal or discharge of the Receiver was presently pending before the lower court. The remarks and observations recorded in the present judgment were not intended to influence the substantive merits of that pending application in any manner. That pending application will be decided in accordance with the applicable legal principles and procedures. Consequently, the appeal was rejected, the appellant was ordered to bear costs, and the appeal was dismissed.