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Factual and Procedural Background

This appeal arises from a suit filed by Rajalakshmi Ammal, the plaintiff in O.S No. 11 of 1957 before the Sub-Court, Coimbatore, seeking recovery of arrears of lease rent amounting to approximately Rs. 5,000 from her lessee, Muthuswami Gounder. The trial Court appointed a Receiver over the leased properties. This appointment was challenged in C.M.A. No. 116 of 1957, where Ganapatia Pillai, J. set aside the Receiver’s appointment on the ground that the trial Court lacked jurisdiction to appoint a Receiver over property not forming the subject-matter of the suit. The learned Judge did not consider the merits of the case, relying instead on the legal principle regarding jurisdiction. The present appeal challenges that decision.

Legal Issues Presented

  1. Whether a Court trying a simple money suit has jurisdiction to appoint a Receiver over property that is not the subject-matter of the suit during the pendency of the suit and before decree.
  2. Whether the appointment of a Receiver in such circumstances can be justified under the ordinary or extraordinary jurisdiction of the Court.
  3. The scope and applicability of Order 40, Rule 1 of the Civil Procedure Code in relation to appointment of Receivers in simple money suits.

Arguments of the Parties

Appellant's Arguments

  • The trial Court had jurisdiction to appoint a Receiver over the leased properties even though they were not the subject-matter of the suit.
  • Reliance was placed on precedents such as Nedungadi Bank Ltd. v. Official Assignee, Ethirajulu Chetti v. Rajagopalachariar, Paramasivam Pillai v. Ramaswami Chettiar, and A. R. A. R. A. L. Chetti Firm v. U. Sin to support the proposition that Courts have wide powers under Order 40, Rule 1 CPC to appoint Receivers.
  • The appellant argued that the appointment of a Receiver was just and convenient in the present case and that setting aside the appointment without addressing the merits was unjustified.

Respondent's Arguments

  • The respondent did not dispute that in extraordinary cases a Court may appoint a Receiver even in a simple money suit.
  • However, the respondent implicitly contended that no such extraordinary circumstances were present in this case to justify the appointment.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Nedungadi Bank Ltd. v. Official Assignee, Madras Appointment of Receivers in respect of properties covered by simple mortgages to prevent deterioration and loss of mortgage amount. Recognized as authority for Court's jurisdiction to appoint Receivers over properties not subject-matter of suit in mortgage cases, but distinguished as not applicable to simple money suits.
Ethirajulu Chetti v. Rajagopalachariar Similar principle as above regarding appointment of Receivers in mortgage suits. Used to illustrate the different treatment of mortgage suits compared to simple money suits.
Paramasivam Pillai v. Ramaswami Chettiar Approval of principles regarding appointment of Receivers in mortgage suits. Supported the distinction between mortgage suits and simple money suits in Receiver appointments.
A. R. A. R. A. L. Chetti Firm v. U. Sin Wide powers of Court under Order 40, Rule 1 CPC to appoint Receivers. Referenced to support the appellant's argument for broad jurisdiction, but ultimately found not decisive in this simple money suit context.

Court's Reasoning and Analysis

The Court analyzed the scope of Order 40, Rule 1 of the Civil Procedure Code, which confers wide discretionary powers on Courts to appoint Receivers when just and convenient. It acknowledged that in mortgage suits, Courts have jurisdiction to appoint Receivers over properties not forming the subject-matter of the suit to prevent loss or deterioration. However, the Court emphasized that simple money suits are treated differently.

The Court accepted that in extraordinary circumstances, even in a simple money suit pending before decree, a Court may appoint a Receiver to protect valuable property subject to lease if the lessee defaults and absconds, leaving the property at risk of destruction. This extraordinary jurisdiction is exceptional and not to be confused with ordinary jurisdiction.

In the present case, no extraordinary circumstances were alleged or established. The Court held that the trial Court lacked jurisdiction to appoint a Receiver over the leased properties during the pendency of the suit. The Court also noted that alternative remedies, such as attachment before judgment, were available to the plaintiff and should be pursued.

Therefore, while the judgment of Ganapatia Pillai, J. was not entirely correct in stating that a Receiver can only be appointed over property forming the subject-matter of the suit, the facts did not justify invoking the extraordinary jurisdiction. Consequently, the Court confirmed the setting aside of the Receiver's appointment.

Holding and Implications

DISMISSED the appeal and confirmed the order setting aside the Receiver's appointment.

The Court held that the trial Court had no jurisdiction to appoint a Receiver over property not forming the subject-matter of a simple money suit absent extraordinary circumstances. No such circumstances existed here. The decision clarifies that while Courts have wide powers under Order 40, Rule 1 CPC, ordinary jurisdiction to appoint Receivers in pending simple money suits is limited. The ruling imposes a procedural boundary, emphasizing the availability of other remedies like attachment before judgment. The money deposited by the lessee will remain in Court until the suit's disposal, and the Sub-Court was directed to dispose of the suit by April 1958. No new precedent was set beyond the confirmation of these jurisdictional limits.

    Rajalakshmi Ammal. v. Muthusami Gounder And Another.

    (Delivered by Panchapakesa Ayyar, J.)

    This is an appeal by one Rajalakshmi Ammal the plaintiff in O.S No. 11 of 1957, on the file of the Sub-Court. Coimbatore, against the judgment of our learned brother Ganapatia Pillai, J. in C. M. A. No. 116 of 1957, allowing that C. M. A. and setting aside the trial Court's order appointing a Receiver, in respect of leased-out properties, in a simple money suit brought by the appellant for recovery of the arrears of the lease amount, amounting to Rs. 5000 odd, from her lessee, Muthuswami Gounder on the ground that the trial Court had no jurisdiction to pass an order appointing a Receiver of property when that property was not the subject-matter of the suit. The learned Judge did not go into the merits of the case as he held the legal position enunciated by him to be conclusive.

    We have perused the records, and heard learned Counsel on both sides. Mr. R. Gopalaswami Aiyangar, for the appellant, urged that the learned Judge was wrong in holding that a Receiver could be appointed by a Court only regarding property forming the subject-matter of the suit, and that it had no jurisdiction whatever to pass an order appointing a Receiver regarding property which was not the subject matter of the suit. He relied on the rulings in Nedungadi Bank Ltd. v. Official Assignee, Madras.(1), Ethirajulu Chetti v. Rajagopalachariar(2) and Paramasivam Pillai v. Ramaswami Chettiar(3) approving of the latter decision, and on the ruling in A. R. A. R. A. L. Chetti Firm v. U. Sin(4). The first three decisions relied on by him related to appointment of Receivers in respect of properties covered by simple mortgages

    when danger to and deterioration of the properties in question and the loss of the mortgage amount were apprehended. Those rulings will no doubt show that a Court has in suitable cases jurisdiction to appoint Receivers regarding properties not the subject matter of the suit. But, mortgage suits have been treated on a different footing from simple money suits. So those decisions cannot help the appellant in this case, which is a simple money suit. No doubt, the position is somewhat different regarding the Rangoon decision. There, paddy standing on land was directed to be harvested, and an interim Receiver was appointed to take charge of such harvested paddy. The learned Judge who decided the case observed regarding O. 40, R. 1, Civil Procedure Code, and the wide powers conferred on Courts there under:

    “The rule does not say that a Receiver can be appointed only of property whioh is the subject matter of a pending suit. What it says is that if it is found just and convenient, a Court can appoint a Reoeiver of any property provided the plaintiff or the defendant has a right thereto. It would not, of oourse, and in faot, cannot appoint a Reoeiver to take charge of property whioh is in the possession of a third party, when that party claims to be in possession thereof in his own right. This order and the two preceding orders, namely, O. 38 and O. 39 have been designedly framed by the Legislature in order to secure the plaintiff against any attempt on the part of the defendant to defeat the execution of any decree that may be passed against him,”

    Relying on this passage, and the wide scope of O. 40, R. 1 Civil Procedure Code, Mr. Gopalaswami Aiyangar wanted to urge that in every money suit of any kind the Court has jurisdiction to appoint a Receiver, though whether it will appoint a Receiver will depend on its own discretion and its opinion as to whether it is just and convenient to do so. So, he urged that, even in this case, the appointment of a Receiver by the trial Court was justified, as it was convenient) and that the cancellation of that appointment by Ganapatia Pillai, J. without even discussing the merits, was not justified. We agree with Mr. Gopalaswami Aiyangar about the wide powers given to Courts under O. 40

    R. 1 Civil Procedure Code, and also agree that in very extraordinary eases the Court will have jurisdiction to appoint a Receiver even in a simple money suit, before decree, and not merely in execution, under S. 51 (2). Civil Procedure Code. Thus, if a man has leased out his valuable mango tope or extensive paddy fields to another for Rs. 10,000, a year, and the crop is on the ground, but the lessee defaults and when sued for the rent, flees to some foreign country leaving the mango tope or paddy crops unattended and uncared for making a decree in the suit, when got against him for the lease amount worthless, as he has no other property, we are of opinion that the lessor plaintiff would have a right to invoke the extraordinary jurisdiction of the Court for the appointment of a Receiver for the mango tope or paddy crops so that the crops may not be destroyed and he left remediless as the lessee had no other property. Mr. T. K. Subramania Pillai, for the respondent, does not dispute this. The Court will, of course, even then, consider whether it is just and convenient to appoint a Receiver. Mere convenience will not do. It must also be just. But such extraordinary jurisdiction will not show that a Court trying a money suit has ordinary jurisdiction to appoint a Receiver while the suit is pending, and before a decree is got, especially when other remedies, like attachment before judgment, are open to the plaintiff and are in fact the normal remedies he is expected to pursue. It is something like the extraordinary original jurisdiction of this Court.

    In this case, there was no such extraordinary circumstance alleged, and the trial Court had therefore no jurisdiction to entertain or order the petition for the appointment of a Receiver. The law will not allow a party to abuse the powers of a Court and to make what is intended to be a medicine the daily food. The appellant could have asked for attachment before judgment, if justified. Mr. Gopalaswami Aiyangar urged that then he would have to prove several difficult things. That is always so. No man can sue for a debt when he has no debt to recover; nor can he ask for attachment before judgment unless he proves the existence of circumstances which would justify such an application.

    So, we are of opinion that while the judgment of Ganapatia Pillai, J., was not wholly correct, as the Court has in some cases power to appoint a Receiver regarding property not forming the subject matter of the suit even in pending simple money suits and as it did not mention the presence of extraordinary jurisdiction in the Court to appoint a Receiver even in a pending money suit, the facts of this case were such that the extraordinary jurisdiction could not have been invoked. So, we confirm the allowing of the appeal and the discharge of the Receiver in this case by Ganapatia Pillai, J. and dismiss this appeal, but in the circumstances without costs. The money already deposited by the lessee respondent will, however, remain in Court till the suit is disposed of. We also direct the Sub Court, Coimbatore, to dispose of the suit, O. S. No. 11 of 1957, before the end of April, 1958.

    V.C.S

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    Rajalakshmi Ammal. v. Muthusami Gounder And Another.
    (Feb 3, 1958)