Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

Ali Ismail Doodha And Ors. v. Momin Bibi And Ors.

Calcutta High Court
Nov 27, 1950
Important Paras
Please sign up to view Important Paras.
Smart Summary (Beta)

Structured Summary of the Opinion (Harries, C.J.)

Factual and Procedural Background

This appeal arises from an order of Sen, J., dated 17 March 1950, which dismissed objections to an account submitted by a Receiver and passed that account. The Respondent, Mr. Bon Bihari Das, was appointed Receiver by an order dated 8 December 1947 in an administration suit concerning the estate of Ahmed Ariff Bham (estate consisting wholly of movables, chiefly jewellery and shares). Mr. Bon Bihari Das filed an account for the period 1 January 1949 to 30 June 1949. The Appellants objected to various items in that account; the only objection pressed before Sen, J. was that the Receiver had charged remuneration equal to five per cent of the value of the corpus of the property, whereas the Appellants contended that the Receiver was entitled only to five per cent on the income collected year to year.

The order appointing Mr. Bon Bihari Das contained a provision appointing him "on a remuneration of five per cent, on all collections to be made by him the Receiver of the said property" and contained other powers and directions (inventory, custody of jewels, security to be furnished, payment of premium and costs in respect of such security from funds coming into his hands, etc.). A prior Receiver had been removed and a question also arose as to whether the premium for the security could be paid out of the corpus; Sen, J. ordered that it could, and an appeal from that order to the Appellate Bench was dismissed.

Legal Issues Presented

  1. Whether an appeal lies from the order of Sen, J., which dismissed objections to the Receiver's account (i.e., whether that order constitutes a "judgment" or otherwise is appealable).
  2. On the true construction of the order appointing the Receiver, whether the Receiver's remuneration is five per cent on the value of the corpus of the estate or five per cent on the income collected during the accounting period.

Arguments of the Parties

Appellants' Arguments

  • The Receiver was only entitled, by way of remuneration, to charge five per cent on all income which he collected from year to year; it was inconceivable that the Court would order payment of five per cent on the corpus because the Receiver was not required to do anything to reduce the property into possession.
  • They pressed objections to the account submitted by the Receiver, challenging the item claiming five per cent on corpus.

Respondent's (Receiver's) Arguments

  • Preliminary: No appeal lies from Sen, J.'s order because it does not amount to a "judgment."
  • Substantive (as represented in the lower court): The Receiver relied on the order appointing him which, as construed by Sen, J., entitled him to five per cent on the value of the corpus (Sen, J. had held the appointment order authorized remuneration of five per cent of the corpus).
  • It was also argued in the proceedings that prior Bench observations (about remuneration being commission on income) were at most obiter and not binding for the present construction of the appointment order.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
The Justices of the Peace for Calcutta v. The Oriental Gas Company Classic definition of "judgment" as a decision affecting the merits by determining some right or liability (may be final, preliminary, or interlocutory). Quoted to show that Sen, J.'s order, which decided the Receiver's entitlement to remuneration and thereby affected the parties' rights, qualified as a "judgment" and was hence appealable.
Raja Prithwi Chand Lal v. Kumar Pramathanath Roy Authority that an order disallowing items in a Receiver's account is appealable; such orders can be treated as made under Or. 40, r. 1 of the Code of Civil Procedure. Relied upon to hold that the present appeal (an appeal from an order disallowing objections to a Receiver's account) is appealable; the court treated this prior Bench decision as binding and directly in point to overrule the preliminary objection.

Court's Reasoning and Analysis

The court's analysis proceeds in two main parts: (A) whether the order appealed from is appealable; and (B) the proper construction of the appointing order as to remuneration.

(A) Appealability / Whether the order is a "judgment"

  1. The court rejected the Respondent's preliminary contention that no appeal lies because the order was not a "judgment." It observed that the proceedings were effectively between the Receiver (who presented his accounts) and the Appellants (who objected), and that the Court had to construe the appointing order and decide the Receiver's entitlement.
  2. The court quoted the classic definition from The Justices of the Peace for Calcutta v. The Oriental Gas Company to define "judgment" as a decision affecting the merits by determining some right or liability (final, preliminary or interlocutory).
  3. Applying that definition, the court concluded Sen, J.'s decision finally determined the rights and obligations of the parties with respect to the Receiver's remuneration and therefore amounted to a "judgment" from which an appeal lies.
  4. Separately, the court held itself bound by the precedent in Raja Prithwi Chand Lal v. Kumar Pramathanath Roy, where a Bench held that an order disallowing items in a Receiver's account was appealable as an order under Or. 40, r. 1 of the Code of Civil Procedure. The court distinguished an appeal from an order made under Or. 40, r. 2 (which fixes remuneration and is not appealable) by noting that the present proceedings were not an appeal from the original remuneration-fixing order but rather a challenge to the construction of that order as applied to the account.
  5. On these grounds the court overruled the preliminary objection and held that an appeal did lie.

(B) Construction of the appointing order (substantive issue)

  1. The court considered the language of the appointing order, which described the Receiver's appointment "on a remuneration of five per cent, on all collections to be made by him the Receiver of the said property" and included other powers and directions.
  2. Although Sen, J. had construed the order to permit remuneration of five per cent on the corpus value, upon review the court concluded that on a true construction of the appointing order the Receiver was not entitled to remuneration equal to five per cent of the value of the corpus.
  3. The court therefore set aside Sen, J.'s decision on the merits and held that the proper interpretation limited the Receiver's remuneration to five per cent on the income actually collected during the accounting period.
  4. The court directed that the accounts be approved only on the footing that remuneration is five per cent of income collected during the account period.

Holding and Implications

Holding: The appeal is ALLOWED. The order of Sen, J., is set aside. The Receiver is not entitled to remuneration of five per cent on the value of the corpus; instead, the Receiver's remuneration is limited to five per cent on the income collected during the accounting period. The Appellants' objection to the accounts is allowed, and the accounts can only be approved on that basis. The Appellants are entitled to their costs of this appeal and of the proceedings below as against the Receiver (one set of costs). Certification for one counsel was ordered.

Implications: The direct consequences for the parties are: (a) the Receiver's claimed remuneration must be recalculated and approved only as five per cent of income collected in the relevant accounting period; (b) the Appellants succeed and recover costs. The opinion does not discuss broader legal or doctrinal consequences beyond applying existing authority (notably the cited Bench decision) to hold the present order appealable and to construe the appointing order; it does not purport to create a new precedent beyond the decision rendered in this case.

Show all summary ...

The Judgment of the Court was delivered by

Harries, C.J:— This is an appeal from an order of Sen, J., dated March 17, 1950, dismissing the objections made to an account submitted by a Receiver and passing the account so submitted.

2. The Respondent, Mr. Bon Bihari Das, was appointed a Receiver in a suit (Ali Ismail Doodha v. Momin (Bibi) by an order dated December 8, 1947. He filed an account for the period January 1, 1949, to June 30, 1949, and various objections to this account were taken by the Appellants. Only one objection was pressed before the learned Judge before whom the accounts came for approval and that objection was that the Receiver was not entitled to charge five per cent, on the value of the corpus of the property of which he had taken possession by way of remuneration. The contention was that the Receiver was only entitled, by way of remuneration, to charge five per cent, on all income which he collected from year to year. But the learned Judge held that upon a true construction of the order appointing Mr. Bon Bihari Das as a Receiver, he was entitled by way of remuneration to five per cent of the value of the corpus of the property of which he had taken possession. The only issue in this appeal is what, on the true construction of the order appointing the Receiver, is the remuneration payable to him. The suit in question was an administration suit in which the estate of one Ahmed Ariff Bham was sought to be administered. The estate consisted entirely of movable property, the main items being jewellery and shares in certain companies. In the year 1947 one Mahammed Azim Mahmood Salehji was Receiver in the suit and he apparently was acting without remuneration. An application was made to remove the Receiver and to appoint some other person in his stead. The Court eventually acceded to this application and by an order of December 8, 1947, Mahammed Azim Mahmood Salehji was removed from the office of Receiver and the present Respondent Mr. Bon Bihari Das was appointed in his stead. The relevant portion of the order removing the old Receiver and appointing the Respondent in his stead is as follows:—

“It is ordered that the said Mahommed Azim Mahmood Salehji be and he is hereby discharged from further acting as such Receiver as aforesaid of the properties mentioned in the said order dated the thirty-first day of August one thousand nine hundred and forty-four and that he do pass his final accounts before one of the Judges of this Court…. and it is further ordered that subject to his furnishing security to the satisfaction of the Registrar of this Court Mr. Bon Bihari Das, Barrister-at-Law, be and he is hereby appointed on a remuneration of five per cent, on all collections to be made by him the Receiver of the said property with power to him to get in and collect the outstanding debts and claims due in respect of the said property and with all powers provided for in Or. 40, r. 1, cl. (d) of the Code of Civil Procedure and that he be at liberty to pay out of the funds to come to his hands the premium and all costs in respect of such security as aforesaid: And it is further ordered that the heirs of Mahmood Musaji Saleji (who was Receiver herein previous to the said outgoing Receiver) and all persons claiming under them do deliver up quiet possession of the said property together with all account books, papers, memoranda and writings relating thereto to the said incoming Receiver: And it is further ordered that the said incoming Receiver do take possession of the property and do collect the issues and profits thereof: And it is further ordered that the said incoming Receiver do make an inventory of the properties of the estate in the presence of the attorneys for the parties within one month from the date of service upon him of an office copy of this order and that he do put in loose precious stones and other jewelleries, if any, in a sealed box in the presence of the attorneys for the parties and deposit the same in the safe custody of the Imperial Bank of India….”

3. It appears that one of the parties made an application to the Court that the Receiver should be entitled to pay the premium in respect of the security ordered out of the corpus of the estate and Sen, J., who heard the application so ordered. An appeal from that order to the Appellate Bench was dismissed.

4. Before Sen, J., it was contended that on a true construction of the order appointing the Respondent Receiver he was only entitled to five per cent, on the income of the estate which he collected. It was said that it was inconceivable that any Court would order the Receiver to be paid five per cent, on the corpus of the property because he was required to do nothing to reduce the property into possession.

5. It was further contended before Sen, J., that in the appeal to which I have made reference the meaning of the term “relating to remuneration” was considered by the Bench and that the Bench in its judgment expressed the view that the Receiver was only entitled to charge commission on the income. Sen, J., was of opinion that the Bench decision was only a decision on the point as to how the premium for the security had to be paid and that any observations as to the scope of the clause relating to remuneration was at most obiter. He further was of opinion that on a true construction of the order the Receiver was entitled to five per cent, on the total value of the property which was the subject-matter of the estate.

6. The Appellants, being aggrieved, have preferred this appeal and Mr. S.C Mitter on behalf of the Respondent has taken a preliminary point that no appeal lies. His contention is that the order of Sen, J., does not amount to a judgment and, therefore, is not appealable.

7. In my view the order of Sen, J., is a judgment and, therefore, an appear lies. Mr. Mitter's argument is that it cannot be a judgment because the Receiver is not a party in the proceedings. But it appears to me that these are proceedings between the Receiver and the Appellants. The proceedings were, as it were, initiated by the Receiver who presented, as he was bound to do, his accounts for the approval of the Court. The Appellants were entitled to object and they did object, claiming that the remuneration claimed by the Receiver in the account submitted was not in accordance with the order. In order to determine this objection the Court had to construe the provisions for remuneration in the order appointing Mr. Bon Bihari Das as Receiver. The Court construed those provisions and held that Mr. Bon Bihari Das was entitled as remuneration to five per cent, on the value of the corpus of the property. It appears to me that this was a decision between the parties to this appeal finally determining the rights and obligations of the parties with respect to remuneration. It decided that the Receiver was entitled to what he claimed, and that was an obligation to which the Appellants were bound to submit.

8. The question as to what is a “judgment” has been the subject-matter of numerous decisions in this and other Presidency Courts. The classic definition is that given by Sir Richard Couch, C.J, in The Justices of the Peace for Calcutta v. The Oriental Gas Company(1): He observed:

“We think that “judgment” in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.”

9. Mr. Mitter has contended that the order appealed from does not amount to a “judgment” because the Receiver was not a party to that order. The Respondent was appointed Receiver in the suit and these proceedings were originated by him in that suit. He asked for approval of his accounts and one of the items in that account was a sum by way of remuneration. That item was challenged and on the invitation of the Receiver the Court was asked to adjudicate. It did adjudicate between the parties and in my judgment it decided the question and it was a question affecting the merits of the Receiver's claim. The decision of Sen, J., that the Receiver was entitled in the accounts to claim remuneration as contended was a decision finally determining the rights of the parties and, therefore, a “judgment.”

10. In any event it appears to me that we are bound by authority to hold that an appeal does lie in a case such as the present.

11. In the case of Raja Prithwi Chand Lal v. Kumar Pramathanath Roy(2), a Bench held that an order made disallowing certain items in an account submitted by a Receiver was an appealable order. The Bench did not decide that it was appealable by reason of the fact that it was a judgment, but held that it was appealable as an order made under Or. 40, r. 1 of the Code of Civil Procedure.

12. In that particular ease objection was taken to certain items claimed as legitimate expenses by the Receiver. Edgley, J., eventually allowed the Receiver these items and one of the parties appealed. The point was taken that no appeal lay, but the (Bench held that the order was an order made under Or. 40, r. 1 of the Code of Civil Procedure and that an appeal lay.

13. Mr. S.C Mitter has tried to distinguish the present case from the earlier Bench decision to which I have made reference. He has suggested that the present appeal is an appeal from an order made under Or. 40, r. 2, that is, an order fixing the remuneration. Admittedly, no appeal lies from an order made under Or. 40, r. 2, but clearly the present appeal is not an appeal from such an order. It is true that the remuneration of the Receiver is in question in these proceedings, but this is not an appeal from the order fixing that remuneration. The order fixing the remuneration is final and no appeal could be preferred from it. In these proceedings all that the Court was concerned with was the true interpretation and meaning of the order fixing the remuneration. The remuneration had been fixed and had not been challenged. The only issue in these proceedings was—what was the remuneration which the learned Judge fixed? There was no challenge of the amount so fixed. That being so, quite clearly this appeal is not an appeal from an order made under Or. 40, r. 2. It is an appeal from an order disallowing certain objections to an account submitted by a Receiver. The earlier Bench case, it appears to me, is precisely in point and we are bound by that decision and, therefore, must hold that an appeal does lie in the present case. I would, therefore, overrule Mr. Mitter's preliminary objection.

14. [Then his Lordship proceeds to deal with the merits, not relevant to the present report and proceeds as follows:]

15. That being so, I am bound to hold that on a true construction of the order appointing Mr. Bon Bihari Das he was not entitled to remuneration of five per cent, on the value of the corpus. The decision of Sen, J., most, therefore, be set aside.

16. I would, therefore, allow this appeal, set aside the order of Sen, J., and allow the objection of the Appellants to the accounts. The Receiver is only entitled to five per cent, on the income collected during the accounting period as remuneration and the accounts can only be approved on that footing.

17. The Appellants are entitled to their costs of this appeal and of the proceedings in the Court below as against the Receiver. There will be only one set of costs.

18. Certified for one Counsel.

19. Solicitors: N.C Bural & Pyne for the Appellant; S.M Dutt for the Respondent.

Banerjee, J.:— I agree.