1. The facts giving rise to this appeal may be shortly stated as follows: One Kabil Molla, whose heirs the present respondents are, instituted a suit in the Court of the Subordinate Judge at Alipore for recovery of money due on a mortgage bond against two persons viz., Saparaddi Gazi the appellant before us, and his brother Dhonai Gazi. The suit was registered as Title Suit No. 5 of 1933. On 12th April 1933, Kabil Molla was appointed a receiver in respect of the mortgaged property pending the hearing of the suit and the writ of possession was delivered to him on 28th April following. The suit itself was dispersed of on 19th February 1934, and there was a decree made in favour of the plaintiff. The plaintiff, however, continued to remain in possession of the property as a receiver and it appears that he assigned the decree to his wife who started execution proceedings in connexion with the same. On 22nd July 1935, the receiver for the first time submitted accounts in Court. The Court made an order on that date to the effect that the Sheristadar should check the accounts and report after giving notice to the pleaders for the parties. Nothing however seems to have been done till 13th May 1936 when the accounts for another year were submitted by the receiver, and the Court directed on that date that the Sheristadar should check both the accounts after giving notice to the pleaders of the parties. On 22nd May 1937 that is to say, more than a year after the above order was made we find the following order recorded. “Read the report of the Sheristadar. The accounts for years 1310, 1341 and 1342 are passed.”
2. On 1st June 1938, the receiver filed accounts for the years 1343 and 1344 B.S and they were passed on 80th June 1938. The accounts for the years 1345 and 1346 B.S were filed by the receiver on 9th December 1939 and on 10th February 1940, the defendant appellant filed a petition of objection in which he set out various allegations of misappropriation, negligence and wilful neglect on the part of the receiver. According to the applicant the estate suffered loss to a considerable extent by reason of these acts of wilful default and he prayed that an enquiry might be made into these allegations and that the loss might be made good out of property belonging to the receiver. On 29th June 1940 this matter was heard by the Subordinate Judge in the presence of both sides and the contention raised on behalf of the receiver was that these questions could not be gone into in a summary proceeding and that the remedy of the defendant lay in a separate suit to be filed against the receiver. The Court came to the conclusion that so far as the accounts for the years 1345 and 1346 B.S were concerned which were not yet passed by the Court, these allegations of wilful default and gross negligence should be gone into, but the accounts of the previous years which were already passed could not be reopened. It is against this order that the present appeal has been filed by the defendant and the point raised on his behalf is that the Court below was wrong in refusing to allow the question of wilful default and negligence to be enquired into with regard to matters covered by the accounts of the previous years. Mr. Das appearing on behalf of the respondents has taken a preliminary objection. His contention is that the appeal is incompetent inasmuch as the order complained of does not come under O. 40, R. 4 of the CPC. The contention prima facie seems sound. Order 40, R. 4 of the Code contemplates an order of attachment of the property of the receiver when the receiver fails to submit his accounts or to pay the amount due from him as the Court directs or occasions loss to the property by his wilful default or gross negligence. Here what was done was that the receiver's accounts for some years were passed and the defendant was not allowed to reopen these matters or to make out any case of wilful default or gross negligence in respect of them. The contention of the appellant seems to be that in passing the accounts of the receiver, the Court in substance refused to make any order under O. 40, R. 4 of the CPC, and its refusal to make an order under the rule is to be deemed to be an order made thereunder, and an appeal would be competent under O. 43, R. 1, cl. (s) of the CPC. In our opinion this contention is not sound although it is supported by the observations of the Bombay High Court in 45 Bom. 99.1 So far as this Court is concerned the decision in 14 C.L.J 4452 is to the point and agreeing with that decision we are of the opinion that the appeal is not competent and that the only remedy of the as grieved party is by way of revision under Section 115 of the CPC.
3. Although the appeal is incompetent we deemed it necessary to inquire into the merits of the case for if we were satisfied that the order is one which should be revised by this Court in exercise of its powers under Section 115 of the CPC, we could certainly treat the memorandum of appeal as a petition of revision under that section and direct the appellant to put in the additional court, fee that might be required. Now two questions require determination in the present case. The first is whether when a receiver is accused of having committed wilful default or gross negligence with regard to the administration of the property placed in his charge, the matter can be investigated by the Court who appointed the receiver in a summary proceeding or the remedy must be by way of a separate suit. If this question is answered in the affirmative the next question is whether this inquiry could be held only when the accounts are being examined and not after they are passed. So far as the first question is concerned the relevant provisions are to be found in O. 40, R. 3 and 4 of the CPC. Order 40, R. 3 enumerates the duties of the receiver and provides inter alia that the receiver shall be responsible for any loss occasioned to the property by wilful default or gross negligence. Rule 4 provides that in cases where the receiver fails to submit his accounts or fails to pay the amount due from him as the Court directs, or occasions loss to the property by his wilful default or gross negligence, the Court may direct his property to be attached and may sell such property and may apply the sale proceeds to make good any amount found to be due from him or any loss occasioned by him and shall pay the balance, if any, to the receiver. This clearly contemplates a proceeding of a summary character and not a suit. The Court here, as in all other rules under this order, means the Court which made the appointment and the order that the proceeding can culminate in, is an order for attachment and sale of the property and the proceeding has to be conducted by the Court itself and not by the party in whose favour the order is made. If O. 40, R. 4 had simply enunciated a right and not the procedure as Mr. Das contends the provisions would be quite anomalous for a suit would undoubtedly end in a decree which has got to be executed by the successful party in the usual way and nothing would be left in the hands of the Court. We are of the opinion therefore that the answer to this question must be in the affirmative and it is open to the Court to investigate questions of wilful default or gross negligence in a summary proceeding under O. 40, R. 4 of the CPC.
4. It is necessary in this connexion to refer to some of the decisions which have a bearing on this point. In 5 C.W.N 2233 it was held by Sale J. that a receiver's liability is not restricted to matters shown on the accounts and if there is any liability attaching to the receiver other than what appears on the face of the accounts, the remedy of the parties is to sue the receiver for establishing that liability. The learned Judge indicated the procedure to be followed in such cases. The Court can either postpone the passing of accounts till the question of the receiver's liability has been established by a suit or it may pass the accounts reserving the right of the parties to establish any claim against the receiver. It must be noted that at the time when this decision was pronounced there was no provision in the Code of Civil Procedure corresponding to that contained in O. 40, R. 4 of the present Code. In face of the clear provision now made in the Code, it cannot be disputed that the Court which appointed the receiver has jurisdiction to make an inquiry into allegations of wilful default and gross negligence, and the filing of a separate suit is not essential.
5. This was expressly held by a Division Bench of this Court in 40 C.W.N 479.4 There is indeed another decision by the Appellate Bench of this Court which is to be found reported in 63 Cal. 881.5 In that case Rankin J. as he then was, held on the authority of the decision in 6 C.W.N 223 referred to above, that a separate suit was the proper remedy for proceeding against a receiver on the basis of wilful default. As was pointed out by the learned Judges in 40 C.W.N 479 the decision of Rankin J. did not lay down anything more than this, that it was only a general rule of practice that cases of any complication should not be decided without a properly framed plaint and without a suit being brought in a regular manner. It was pointed out further that the learned Judges in that case were hearing an appeal from an order made by a Judge on the Original Side of this Court and the only question before the Appellate Bench was whether the order of the Original Side Judge should be interfered with or not. In oui opinion, it cannot be said that a separate suit is the only remedy where a receiver is sought to be made liable on the basis of wilful default and gross negligence and it is quite open to the Court to investigate the matter in a proceeding under O. 40, R. 4 of the CPC. It is true that the proceeding is of a summary character. But as was observed by Heaton J. in 45 Bom. 99 at pages 104 and 105, though the proceeding is of a summary character yet if it is conducted with fair ness and efficiency it might avoid a good deal of formality and delay. We are, however, not concerned with the policy of the Legislature. It is enough for es that there is a clear provision contained in the Code of Civil Procedure as it now stands, which allows an enquiry of this character.
6. As regards the second point raised in this case, Mr. Das has conceded that if the Court is competent to investigate the matter in a summary way under O. 40, R. 4, the investigation cannot possibly be confined to the accounts of those years only which have not yet been passed by the Court. The question of wilful default and gross negligence is not a matter directly of accounts. It is, to quote the language of Sale J., ‘a liability which attaches to the receiver outside the accounts’ and consequently the question as to whether or not the accounts of particular years were formally passed by the Court, is immaterial for the purpose of determining whether the charges of default or negligence could be brought home against the receiver. We are not satisfied from the order sheet in this case that the defendants had any knowledge of the filing of accounts in previous years or the fact of their being checked by the Sheristadar. The result therefore is that we find that the order of the Subordinate Judge is wrong and must be set aside.
7. Another point has been raised by Mr. Das appearing on behalf of the respondents viz., that as the receiver in the present case died during the pendency of the appeal to this Court the proceeding could not be continued against his heirs. It is quite true that the heirs and legal representatives of a receiver could not be made liable personally for any loss that has been occasioned to the estate which was in possession of the receiver by reason of any misconduct or negligence on his part. But there is nothing in law which prevents a proceeding against the property of the receiver in the hands of his heirs. We think the correct principle was laid down in 39 Mad. 5846 where it was held by Oldfield J. that under O. 40, R. 4 of the CPC, an application can be made for execution being levied against the properties of the receiver in the hands of his legal representatives. If the order for attachment is at all made in these proceedings it can certainly be directed against the property of the receiver in possession of his legal representatives.
8. The result therefore is that in exercise of our powers of revision under Section 115 of the CPC, we set aside the judgment of the Court below and send the case back in order that the matter might be heard in the light of the observations made above.
9. The appeal is dismissed. There will be no order as to costs in this case. Further costs will abide the result. The memorandum of appeal is converted into a petition of revision and the appellant is directed to put in the additional court-fee of Rs. 5 payable on the petition of revision within a month from this date.
G.N
10. Case remanded.