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Bal Vyasi v. Mahila Ujjala

Madhya Pradesh High Court
Nov 22, 1971
Smart Summary (Beta)

Structured Summary of the Opinion — Appeal Against Appointment of Receiver

Factual and Procedural Background

The respondent, Smt. Ujjala, filed a suit seeking a declaration that she is the Bhumiswami (owner) of specific lands in village Birdhanpur (Khasra Nos. 4, 5, 64, 172, 330, 403, 404, 415 and 680) and that she is in possession of these lands. She alleged that a sale deed dated 11 December 1967, registered for Rs. 20,000/-, was obtained by the defendant (her husband's sister's son) by someone personating her and that she never executed the deed. She sought cancellation of the consequent mutation in the revenue record and a declaration that the sale-deed is fictitious and ineffective.

The defence asserted that the sale-deed was executed by the plaintiff herself and that she delivered possession to the defendants.

Procedurally, the defendant had earlier applied under Order 39, Rule 1, CPC to restrain the plaintiff from interfering with his possession; the trial Court dismissed that application but appointed a receiver. This Court set aside that order in Misc. Appeal No. 65 of 1969 (decided 3 December 1969). After the matter returned, the plaintiff applied under Order 40, Rule 1, CPC for appointment of a receiver; the Additional District Judge appointed the Collector as receiver and directed annual auction of the suit lands for cultivation purposes. The defendant appealed this receiver appointment to the present Court; implementation of the trial Court's order had been stayed when the appeal was admitted.

Legal Issues Presented

  1. Whether a receiver could be validly appointed by the trial Court pending resolution of rival claims to title and possession in this suit.
  2. Whether a receiver can be appointed in respect of Bhumiswami holdings that are exempt from attachment and sale under section 165(7)(c) of the M.P. Land Revenue Code, 1959.
  3. Whether the trial Court's appointment of a receiver without taking evidence or conducting an enquiry into who was in possession on the date of the suit was proper.
  4. Whether a third person (the Collector) could be appointed as receiver instead of the defendant, and whether appointment of such a receiver was permissible in the circumstances.
  5. Whether the plaintiff's declaration suit (without claiming possession) is maintainable where possession is disputed on the date of the suit (relevance of proviso to section 34 of the Specific Relief Act).

Arguments of the Parties

Appellant-Defendant's Arguments (as stated in the opinion)

  • The defendant is in possession and his possession cannot be disturbed by appointment of a receiver.
  • The plaintiff's suit is for a declaration only and does not claim possession; therefore appointment of a receiver was inappropriate.
  • The trial Court passed the receiver order without taking any evidence.
  • No third person should have been appointed as receiver; if a receiver was to be appointed, it should have been the defendant.
  • Appointment of a receiver is barred in contravention of section 165(7) of the M.P. Land Revenue Code, 1959 (specifically clause (c) regarding Bhumiswami holdings exempt from attachment and sale).

Respondent-Plaintiff's Arguments (as stated in the opinion)

  • The plaintiff's counsel said that she applied for appointment of a receiver because she found herself unable to protect her possession.
  • The plaintiff's counsel further urged that the provisions of the M.P. Land Revenue Code limiting attachment/vesting (section 165(7)(c)) should be confined to execution proceedings and have no application when a receiver is sought under Order 40, Rule 1, CPC in the course of a title dispute.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Syed Waziruddin v. Syed Basliiruddin, A I R 1936 Nag. 288 = I L R 1937 Nag. 534 Held (Nagpur High Court) that appointment of a receiver does not amount to attachment. The opinion records this decision as part of a set of authorities showing divergent views on whether a receiver can be appointed in respect of properties exempt from attachment.
Amir Uddin v. Nanak Shahi, A I R 1937 All. 389 Decision answering the question in the negative (i.e., against appointing a receiver in respect of properties not liable to attachment). Recorded by the Court as one of the authorities taking an opposite view to Syed Waziruddin on whether receivership can be used where attachment is barred.
Vasant v. Jagannath, A I R 1955 Bom. 450 Decision holding that a receiver could not be appointed in such circumstances (negative answer). Noted as another authority against appointment of receivers over properties exempt from attachment and sale.
Union of India v. Hira Devi, 1952 S C R 765 = A I R 1952 S C 227 Supreme Court held that where statute absolutely prohibits attachment/assignment of a compulsory deposit, appointment of a receiver to reach such a fund would frustrate the legislation and is impermissible. The Court relied on this Supreme Court pronouncement to illustrate the principle that statutory exemptions from attachment cannot be circumvented indirectly by appointing a receiver.
Union of India v. Hira Debi, A I R 1951 Cal. 25 Calcutta High Court decision that was reversed by the Supreme Court in the Hira Devi case. Mentioned to show that the Supreme Court reversed an earlier High Court decision which had taken a contrary view.
Lucas v. Harries (1887) 18 Q B D 127 Early authority stating that indirect methods (such as appointment of a receiver) should not be used to circumvent statutory protection against attachment. Quoted in the opinion (via the Supreme Court's reasoning) to support the rule that receivership cannot be employed to defeat absolute statutory exemptions.
Owen v. Homan, (1853) 4 H L Cases 997 Lord Cranworth L.C. warned that Court's interim taking of possession at plaintiff's instance may cause irreparable wrong to the defendant if plaintiff later fails on merits. The Court cited this authority to emphasize the potential for interim receivership to cause irreparable injury and the need for caution before appointing a receiver where possession is disputed.
Mt. Tuhha Devi v. Shah Chronju Lal and others, A I R 1943 All. 1 (F. B.) Authority cited alongside Owen v. Homan on the general caution about appointing receivers. Used as supporting authority illustrating established caution in appointing receivers where rights are disputed and interim possession may cause irreparable harm.
Rasi Dei v. Bikal Maharana and others, A I R 1965 Orissa 20 Authority cited along with others about principles governing appointment of receivers. Referred to as an additional authority confirming the need for judicial restraint and proper enquiry before appointing a receiver.

Court's Reasoning and Analysis

The Court first summarized the procedural posture and the parties' contentions and then addressed the statutory and judicial context for appointing a receiver.

On the statute issue, the Court noted that there had been conflicting judicial opinions on whether receivership may be appointed in respect of property protected from attachment and sale. The Court recited the Supreme Court's reasoning in Union of India v. Hira Devi that where the interdiction against attachment is absolute, permitting a receiver would indirectly circumvent the statute and frustrate legislative object. The Court observed that the Legislature, in enacting clause (c) of section 165(7) of the M.P. Land Revenue Code, 1959, has expressly provided that no receiver shall be appointed to manage the land of a Bhumiswami under section 51 of the Code of Civil Procedure, nor shall such land vest in the Court or in a receiver contrary to specified provisions. The Court, however, expressly stated that it considered it unnecessary for the purposes of this appeal to decide whether those provisions apply only to execution proceedings or also to appointment of receivers under Order 40, Rule 1 when title is disputed.

The Court then recapitulated established principles governing the appointment of a receiver (summarized in eight points in the opinion). Key aspects emphasized were:

  • The object of a receivership is preservation of the subject-matter pending judicial determination.
  • Order 40, Rule 1, CPC vests a discretionary power in the Court to appoint a receiver when it appears just and convenient to do so; this discretion must be exercised judicially and cautiously and not arbitrarily.
  • Receivership is a harsh and exceptional remedy and should be used only in extreme cases where there is a well-founded fear of dissipation or irreparable mischief.
  • The Court must not decide the merits while deciding the receivership application; the aim is to preserve status quo ante.
  • If a person is in bona fide possession, that possession should not be disturbed by appointing a receiver unless substantial grounds exist.

Applying these legal principles to the facts, the Court found that the trial Court had acted in a "mechanical and summary manner" when it appointed a receiver and had not applied the guiding principles. Specifically, the trial Court had not sufficiently inquired into who was in possession on the date of the suit — a fact of critical importance. The Court noted that issue No. 3 had been framed to determine whether the suit as framed was competent without a consequential relief for possession, and that this preliminary issue ought to have been decided first.

The Court spelled out the legal consequences of the preliminary factual determination:

  • If on the date of the suit the defendant was in possession:
    • The suit as framed would be barred by the proviso to section 34 of the Specific Relief Act;
    • The defendant's possession could not be disturbed by appointing a receiver;
    • The plaintiff, if she eventually succeeded, would be entitled to mesne profits.
  • If on the date of the suit the plaintiff was in possession:
    • The suit as framed would be maintainable;
    • The Court could issue a temporary injunction restraining the defendant from interfering with her possession or, if so prayed and justified, appoint a receiver — but only after enquiry on the question of possession.

The Court concluded that because the trial Court did not conduct the necessary enquiry or take evidence to resolve who was in possession, its appointment of a receiver could not stand. The trial Court's stated reason — that a receiver would prevent future disputes and attempts to take possession from each other — was deemed insufficient without a prior enquiry into possession and the application of legal principles set out in the opinion.

The Court also made procedural observations to prevent unnecessary delay of the main trial when appeals are filed against interlocutory orders appointing or refusing receivers: only the record relating to the receivership proceedings (application, reply, evidence, copies of plaint, written statement and issues) should be sent to the appellate court on requisition to decide the interlocutory appeal; sending the entire trial record causes unwarranted delay.

Holding and Implications

Core Ruling: The appeal is allowed and the trial Court's order appointing a receiver is set aside.

Immediate Consequences for the Parties

  • The order appointing the Collector as receiver is vacated.
  • The parties shall bear their own costs in this appeal.
  • The record of the trial Court is to be returned forthwith so that the trial may proceed on the merits and the plaintiff's application for appointment of a receiver can be dealt with in the light of this order.
  • Parties were directed to appear before the trial Court on 14 December 1971 for further proceedings.

Broader Implications and Limits of the Decision

The opinion emphasized controlling principles on the appointment of receivers and cautioned trial Courts to conduct necessary preliminary enquiries (particularly as to possession on the date of suit) before appointing a receiver. The Court did not, however, decide the question whether section 165(7)(c) of the M.P. Land Revenue Code applies only in execution proceedings or also to appointments of receivers under Order 40, Rule 1 CPC; the Court stated it was unnecessary to decide that point for the purposes of this appeal. The decision thus vacated the particular appointment of a receiver in this case and directed the trial to proceed, but it did not lay down a new rule on the statutory question left open.

Note: This summary is strictly confined to the matters and language set out in the provided opinion and does not add any information beyond that text.

Show all summary ...

This appeal is from an order passed by the Additional District Judge, Bhind, appointing the Collector as Receiver in a suit between the respondent-plaintiff and the appellant-defendant.

2. The respondent Smt. Ujjala's suit is for a declaration that she is the Bhumiswami of the lands (Khasra Nos. 4,5,64,172,330,403,404,415 and 680) of village Birdhanpur, Pargana Bhind, and that she is in possession of these lands. She alleges that she is an illiterate Pardanashin woman without any issue; that the defendant, who is her husband's sister's son, got a sale deed, dated December 11, 1967, executed and registered in respect of the suit lands for Rs. 20,000/- by somebody personating her. It is her contention that she never executed that sale-deed, she seeks this declaration. She also claims cancellation of the mutation in revenue record which the defendant got effected on faith of the impugned sale-deed. She claims a declaration that it is fictitious, ineffective and without consideration.

3. The defence is that the said sale-deed was executed by no person other than the plaintiff herself, and that she delivered possession to the defendants.

4. The defendant made an application under Order 39, rule 1 Civil Procedure Code to restrain the plaintiff from interferring with his possession. The trial Court dismissed that application but appointed a receiver. That order was set aside by this Court on the defendant's appeal (Misc. Appeal No. 65 of 1969 decided on December 3, 1969).

5. When the case went back, the plaintiff made an application under Order 40, rule 1, Civil Procedure Code for appointment of a receiver. The learned Additional District Judge appointed the Collector as receiver, directing him to auction the suit lands annually for the purposes of cultivation.

6. The defendant has preferred this appeal. It is contended by Shri Naoker, learned counsel for the appellant, that he is in possession, and his possession cannot be disturbed by appointing a receiver. Secondly, since the plaintiff's suit is not for possession but for a mere declaration, there was no question of appointing a receiver. Thirdly, the trial Court passed the order without taking any evidence. Fourthly, no third person could be appointed a receiver; if at all, the defendant should have been appointed receiver. Fifthly, no receiver could be appointed in contravention of section 165 (7) of the M. P. Land Revenue Code, 1959.

7. At the first sight it looks strange that the plaintiff claiming herself to be in possession of the suit lands applied for appointment of a receiver. Shri Gupta, her learned counsel, argues that sure she found herself unable to protect her possession, she applied for such appointment. But it appears that, if that was so, the proper remedy was to apply for an injunction to restrain the defendant from interferring with her possession.

8. On the objection of the defendant, issue No. 3 was framed by the trial Court whether the suit, as framed, is competent without the consequential relief of possession being claimed. This is a preliminary issue and the Court has to go into that question. If on the date of the suit, the plaintiff was in possession, it is alright; otherwise she will have to amend her plaint and seek the relief of possession without which she cannot get a decree for mere declaration.

9. The implementation of the order appealed from was stayed by this Court when this appeal was admitted by a learned Single Judge, Now it is stated by Shri Gupta that the lands are lying idle for the last two years while according to Shri Naoker the lands have been cultivated by the defendant.

10. Adverting first to the question whether a receiver can be appointed when according to section 165 (7) (c) of the M. P. Land Revenue Code, the holding of a Bhumiswami is not liable to attachment or sale upto 5 acres of irrigated land and 10 acres of unirrigated land. There was a conflict of judicial opinion on the question whether a receiver can be appointed in respect of properties which cannot be attached and sold. In some decisions, the High Courts of Calcutta, Lahore, Nagpur and Orissa answered this question in the affirmative. The Nagpur High Court took the view that the appointment of a receiver does not amount to attachment [see Syed Waziruddin v. Syed Basliiruddin, A I R 1936 Nag. 288 = I L R 1937 Nag. 534. In Amir Uddin v. Nanak Shahi, A I R 1937 ALL. 389, and Vasant v. Jagannath, A I R 1955 Bom. 450, it was answered in the negative.

11. In Union of India v. Hira Devi, 1952 S C R 765= A I R 1952 S C 227, their Lordships reversed the decision of the Calcutta High Court in Union of India v. Hira Debi, A I R 1951 Cal. 25. The question which their Lordships had to consider was whether the provident fund standing to the credit of the judgment-debtor, a retired Government servant, which was a compulsory deposit, was not liable to attachment and sale. Mr. Justice Chandrashekhara Aiyar, delivering the judgment of the Supreme Court said:-

"It is obvious that the prohibition against the assignment or the attachment of such compulsory deposits is based on grounds of public policy. Where the interdiction is absolute, to allow a judgment creditor to get at the fund indirectly by means of the appointment of a receiver would be to circumvent the statute. That such a frustration of the very object of the legislation should not be permitted was laid down by the Court of Appeals as early as 1886 in the case of Lucas v. Harries (1887) 18 Q B D 127. Section 51 of the Civil Procedure Code no doubt recognises five modes of execution of a decree and one of them is the appointment of a Receiver. Instead of executing the decree by attachment and sale, the Court may appoint a Receiver but this can only be done in a case where a Receiver can be appointed. The Provident Fund money is exempt from attachment and is inalienable. Normally, no execution can lie against such a sum."

12. It appears that this position of the law was taken note of by the Legislature while enacting the M P. Land Revenue Code, 1959. Clause (c) of section 165 (7) now clearly enacts that no receiver shall be appointed to manage the land of a Bhumiswami under section 51 of the Code of Civil Procedure, 1908, nor shall any such land vest in the Court or in receiver contrary to the provisions of clause (a) i clause (b) clause (a) declares only that part of the holding of a Bhumiswami to be liable to attachment or sale as is in excess of 5 acres of irrigated land, or 10 acres of unirrigated land. It is, therefore, contended by Shri Naoker that no receiver could be appointed in respect of the land so exempted from attachment and sale.

13. Shri Gupta, learned counsel for the plaintiff, on the other hand, urges that these provisions must be confined to the case of an execution proceeding. They have no application to the question of appointment of a receiver under Order 40, rule 1, Civil Procedure Code when the title is in dispute and there are rival claims about possession. I consider it unnecessary to go into that question for the purposes of this appeal.

14. Principles relating to appointment of receiver may now be recapitulated as under:-

(1) Generally stated, the object of appointment of receiver is preservation of the subject-matter of the litigation pending a judicial determination of the rights of the parties to it.

(2) The rule embodied in Order 40, rule I, Civil Procedure Code empowers the Court to appoint a receiver whenever it appears to it to be just and convenient to do so. The language employed in the Rule leaves the matter to the discretion of the Court.

(3) The Court has fullest jurisdiction in the matter of appointment of receiver, but the discretion cannot be exercised arbitrarily or in an unregulated manner ; it must be exercised judicially, cautiously and according to legal principles on a consideration of the whole of the circumstances of the case.

(4) Appointment of receiver is recognized as one of the harshest remedies which the law provides for the enforcement of rights so that the jurisdiction must be exercised only in extreme cases.

(5) The Court does not, while considering the question whether a receiver should be appointed, arrive at any final decision on the merits of the case. Its aim is merely to preserve the status quo ante during litigation.

(6) Receiver cannot be appointed just because it is expedient or convenient to one of the parties to do so; nor merely because it will do no harm to do so.

(7) When a person is in bona fide possession of the property in dispute, his possession should not be disturbed by appointment of receiver unless there is some substantial ground for such interference, such as a well founded fear that the property in suit will be dissipated or other irreparable mischief may be done unless the Court appoints a receiver. The plaintiff must not only show a case of adverse and conflicting claims to property, he must further show some emergency or danger or loss demanding immediate action and, further the plaintiff's own right must be reasonably clear and free from doubt.

(8) Although the jurisdiction of the trial Court in the matter of appointment of a receiver is discretionary, that discretion is liable to interference, if it is not in accordance with the principles on which judicial discretion must be exercised.

15. In Owen v. Homan, (1853) 4 H L Cases 997, Lord Cranworth L. C. laid down:-

"Where the object of the plaintiff is to assert right to property to which the defendant is in the enjoyment, the case is necessarily involved in further question. The Court, by taking possession at the instance of the plaintiff may be doing a wrong to the defendant; in some cases an irreparable wrong. If the plaintiff should eventually fail in establishing his right against the defendant, the Court may, by its interim interference have caused mischief to the defendant for which the subsequent restoration of the property may afford no adequate compensation."
See also Mt. Tuhha Devi v. Shah Chronju Lal and others, A I R 1943 ALL. 1 (F. B) and Rasi Dei v. Bikal Maharana and others, A I R 1965 Orissa 20.

16. In the present case the above principles were not present to the mind of the trial Court when it appointed receiver in a mechanical and summary manner. All that it says is that this will prevent future disputes between the parties and attempt to take possession from each other, thereby causing loss.

17. It was of the utmost importance that the trial Court should have proceeded to enquire the question whether on the date of the suit the plaintiff or the defendant was in possession. If the defendant was in possession then the following consequences would ensue:-

(1) The suit as framed would not be maintainable as it would be barred by the proviso to section 34 of the Specific Relief Act.

(2) The possession of the defendant could not be disturbed by appointing a receiver, and

(3) The plaintiff will get mesne profits, if she succeeds in the suit.

If on the other hand, the plaintiff was in possession on the date of the suit, a finding to that effect will entail these consequences:-

(1) The suit as framed will be maintainable, and

(2) The Court could issue a temporary injunction, restraining the defendant from interfering with her possession, or, if the plaintiff so prayed for her protection, appoint a receiver. But this could not be done before an enquiry on the question as to who was in possession on the date of the suit is made.

18. It is nobody's case before me that the plaintiff was in possession on the date of the suit, but was dispossessed during its pendency.

19. I must make a few observations before I leave this case:

(1) The trial Court should have engaged itself in first determining the preliminary issue whether the suit was barred by the proviso to section 34 of the Specific Relief Act. That issue should have been decided without loss of time. It is the duty of the trial Court to determine preliminary issues as expeditiously as possible.

(2) The crux of the suit on merits is whether the sale-deed was executed by the plaintiff. The nature of the allegations made by the plaintiff demand that in the interests of justice the disposal of this suit must be expedited. I am told that each of the parties has summoned a handwriting expert. It appears that if the plaintiff's claim is false strong action will have to be taken against her; and against the defendants if the sale-deed is false and forged. In the interests of justice such suits must be disposed of with utmost speed.

(3) The trial of the suit must not be postponed merely because proceedings for appointment of receiver have been initiated. If I may say so, it is a deriliction of duty to put off the trial just because such an application is made. The trial of the suit must take its own course and must not be detained because of such proceedings.

(4) When an appeal is preferred from an order appointing or refusing to appoint a receiver, the trial Court should send on requisition from the appellate Court, only the record pertaining to proceedings for appointment of receiver, that is to say, the application, reply and evidence produced by the parties. Copies of the plaint, written statement and the issues should also be sent. That is all which the appellate or revisional Court needs for the disposal of the appeal or revision By sending the entire record to the appellate or revisional Court the trial is held up, which is wholly unnecessary and unwarranted. The record relating to the trial on merits should, and must, be sent only when the appeal or revisional Court specifically requisitions it, but not otherwise.

20. The appeal is allowed. The order of the trial Court appointing a receiver is set aside. In the circumstances of the case the parties shall bear their own costs in this appeal. The record of the trial Court shall be returned forthwith for proceeding with the trial of the suit and for dealing with the plaintiff's application or appointment of receiver in the light of this order. Parties shall appear before the trial Court on December 14, 1971.

Appeal allowed.