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citation codes
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  • Order XL, Rule 1, read with Order XXI, Rule 83.5.
  • section 115 of the Code.
  • section 11 of the Code
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
Acts
  • Order XL, Rule 1, read with Order XXI, Rule 83.5.
  • section 115 of the Code.
  • section 11 of the Code
Smart Summary

Factual and Procedural Background

This opinion concerns an application by the decree-holder (respondent) for the discharge of a Receiver who had been appointed by a consent order on 9 April 1910, and for leave to proceed with the sale of mortgaged properties to execute mortgage decrees. The Receiver had originally been appointed on the application of the judgment-debtors (on 2 February 1910) in order to manage the attached properties and to ensure gradual payment of decretal amounts from rents and profits, so as to avoid sales of portions of the mortgaged properties. The petition by the judgment-debtors, with the consent of the decree-holder, expressly sought appointment of a Receiver to pay debts gradually from income.

On 15 September 1910 the decree-holder applied to discharge the Receiver, asserting that without sale of the bulk of the properties the decrees could not be satisfied. The Subordinate Judge rejected that petition. The decree-holder appealed to the Calcutta High Court and also presented a petition for revision under section 115 of the Code, seeking an order for discharge of the Receiver and sale of the attached properties. The Calcutta High Court, by consent of the parties, on 7 June 1911 varied the order below as to priorities of payment (government revenue and cesses and Receiver's budget to be paid first; then decrees without interest; then decrees with interest), allowed allowances to the judgment-debtors, and ordered that the Receiver continue as before. The decree-holder challenged the result on the ground that the consent order had not granted his primary relief (discharge and sale).

Legal Issues Presented

  1. Whether the decree-holder was entitled to have the Receiver discharged and to proceed with the sale of the mortgaged properties in execution of his decrees despite his earlier consent to the appointment of the Receiver.
  2. Whether a consent order (in this case the Calcutta High Court's consent order) operates to estop the decree-holder from subsequently seeking the discharge of the Receiver and sale of the properties.
  3. Whether the appointment of a Receiver is equivalent to execution (and whether that equivalence prevents the decree-holder from pursuing other remedies to enforce the decree).

Arguments of the Parties

Decree-holder's (Respondent's) Arguments

  • The presence of the Receiver was a legal impediment to execution of his decrees; without sale of the bulk of the properties, the decrees could not be satisfied.
  • He sought the discharge of the Receiver and that the properties attached in the several execution cases be sold to satisfy his decrees; alternatively, that decrees carrying no interest be satisfied by sale, and that the Receiver be directed to pay current demands for revenue and cesses.
  • He pursued appeal and revision (under section 115) to have the Subordinate Judge's order set aside and execution proceed in the usual way.

Judgment-debtors' (Appellants') Arguments

  • The Receiver had been appointed with the consent of the decree-holder for the explicit purpose of managing the properties and paying the decretal amounts gradually from rents and profits to prevent sale of properties; that was the object stated in their petition.
  • By consenting in the High Court to the scheme which conceded certain points, the decree-holder gave up his primary demand for discharge and sale; it is not open to him now to go back on representations made in the High Court on which the judgment-debtors relied and changed their position to their detriment.
  • The consent order passed by the Calcutta High Court, which included a specific scheme, must operate to estop the decree-holder from seeking discharge of the Receiver and sale of the properties so long as the Receiver adheres to that scheme.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Re. Bond (In re Capital and Counties Bank; Ex parte Bond) That an order appointing a Receiver does not operate as a stay of execution so as to disentitle the judgment-creditor from obtaining an order to issue a bankruptcy notice in respect of the same debt. The Court relied on this to support the proposition that mere consent to the appointment of a Receiver does not, by itself, estop a decree-holder from pursuing other remedies of execution; the decree-holder could, in principle, seek other remedies if the Receiver procedure proved unproductive.
Mungal Pershad v. Girja Kanth That the principle of law underlying section 11 of the Code applies to interlocutory orders. The Court invoked this principle to treat consent/interlocutory orders as capable of operating as an estoppel akin to final decrees for the purposes at issue.
Nicholas v. Asphar That a consent order raises an estoppel as much as a decree passed in invitum. Used to support the conclusion that the Calcutta High Court's consent order binds the parties and estops the decree-holder from reopening the surrendered point (discharge of the Receiver).
Lakshmi Sankar v. Vishnuram That a consent order raises an estoppel equivalent to a decree in invitum. Applied to reinforce that parties to a consent order cannot abandon it and later assert contrary rights which they gave up in the consent proceedings.
Bhai Sankar v. Moraji That a consent order raises an estoppel as much as a decree passed in invitum. Relied on as authority for the binding effect of a consent order and the estoppel it creates.
Raja Kumar Venkata v. Ramaswami Chetty That a consent order raises an estoppel as much as a decree passed in invitum. Cited to confirm that a consent order prevents parties from subsequently repudiating the concessions made in that order.
Co-wasji v. Kishandas That so long as a consent order stands, it is not open to either party thereto to give it the go-by, even if it contains clauses bad in law. The Court used this to hold that the decree-holder cannot ignore or repudiate the consent order of the High Court simply because it did not secure all the relief he sought; he is bound by the consent scheme so long as it stands.

Court's Reasoning and Analysis

The Court's analysis proceeded in these steps (stated as in the opinion):

  1. Establishment of original purpose of Receiver: The Court reviewed the petition of the judgment-debtors (and the decree-holder's own petition under section 115) and concluded the clear object of the appointment was to ensure gradual payment of debts from the income so as to prevent sales of the mortgaged properties.
  2. Effect of the decree-holder's consent: The Court observed that the decree-holder understood and consented to that object; however, mere consent to the appointment did not forever preclude the decree-holder from seeking execution by other remedies if the Receiver procedure were unproductive (citing Re. Bond).
  3. Subsequent events and attempts to discharge the Receiver: The decree-holder later applied to discharge the Receiver on the ground that without sale the decrees could not be satisfied. The Subordinate Judge rejected that application.
  4. Proceedings in the High Court and the consent order: On appeal/revision the Calcutta High Court varied the scheme for payments by consent (prioritising government revenue and Receiver budget, then non-interest decrees, then interest-bearing decrees) and ordered the Receiver to continue. The Court noted the decree-holder had raised three points in the High Court (discharge and sale; sale to satisfy non-interest decrees; payment of current revenue and cesses), and that the consent order addressed two of those points but not the primary relief of discharge and sale.
  5. Estoppel by consent order: The Court analysed whether the consent order left the decree-holder free to assert the previously relinquished claim. Relying on the principle that the law underlying section 11 applies to interlocutory orders (Mungal Pershad) and on authorities that a consent order raises an estoppel equivalent to a decree in invitum (Nicholas v. Asphar and others), and that a consent order cannot simply be disregarded even if it contains clauses bad in law (Co-wasji v. Kishandas), the Court held that the consent order operates to estop the decree-holder from now contending he was entitled to have the Receiver discharged and properties sold.
  6. Conclusion from the scheme: The Court concluded the decree-holder is bound by the scheme framed and referred to in the consent order; as long as the Receiver adheres to and gives effect to that scheme, the decree-holder cannot raise fresh grievances as grounds for discharge and sale.

Holding and Implications

HOLDING: The appeal is dismissed. The consent order of the Calcutta High Court dated 7 June 1911 operates to estop the decree-holder from obtaining discharge of the Receiver and from putting forward the contention that he is entitled to have the Receiver discharged and the properties sold in execution of his decrees.

Implications:

  • The decree-holder is bound by the consent order and the scheme specifically referred to therein; the Receiver is to continue and must adhere to the scheme framed by the Court.
  • The decree-holder cannot now reopen the surrendered point (discharge and sale) by asserting fresh grievances so long as the Receiver complies with the scheme contained in the consent order.
  • The Court recognized that appointment of a Receiver does not necessarily prevent a decree-holder from pursuing other remedies in principle (as to which Re. Bond was cited), but on the facts and by reason of the consent order in this case the decree-holder is estopped from seeking the discharge and sale he previously relinquished in the High Court.
  • The opinion does not state that it establishes a new precedent beyond applying existing principles concerning estoppel by consent orders and the application of section 11 principles to interlocutory orders; the direct effect is to bind the parties to the consent scheme and to dismiss the appeal.

    Maharajadhiraj Sir Rameshwar Singh Bahadur Petitioner v. Hitendra Singh .

    Das, J.:— This was an application by she respondent decree-holder for discharge of a Receiver appointed by a consent order on the 9th April, 1910, and for leave to proceed with the sale of the mortgaged properties in execution of his mortgage decrees. The learned Subordinate Judge has made an order favourable to the respondent. We are in this appeal concerned with the correctness of the order passed by the learned Subordinate Judge.

    2. It will appear that the Receiver was appointed on the application of the judgment-debtors in a proceeding for execution of a decree obtained by certain creditors against the judgment-debtors. On the 2nd February, 1910, the date of the application of the judgment-debtors, the position was this; numerous decrees obtained by the respondent and certain other persons against the appellants were under execution, in consequence whereof the appellants experienced great difficulties in making collect ions and therefore in paying off the decretal amounts and it was in order to ensure successful collection of the rents due to the judgment-debtors and the gradual payment of the debts through the Receiver that the judgment-debtors with the consent of the respondent applied on the 2nd February, 1910, for the appointment of a Receiver. The object which the judgment-debtors had in view in making the application for the appointment for a Receiver was clearly stated in the petition. The second paragraph of the petition stated, that, owing to the execution cases, they experienced great difficulties in making the collections and in paying off the decretal amounts, but that, if some arrangement could be made, the amount due under the decrees could be paid off gradually. The fourth paragraph of the petition stated that there was no way to save the properties of the petitioners except by appointing a Receiver. The fifth paragraph ran as follow;

    “For the reasons submitted above, it is prayed that a Receiver may be appointed by the Court, lot the entire estate of your petitioners, and the legal debts may be paid gradually through the Receiver.”

    3. In my view, there can be no doubt that the whole object of the petition was to ensure the payment of the debts gradually from the income, so that it might be possible to prevent the sale of any portion of the mortgaged properties.

    4. That the decree-holder himself understood that to be the object of the petition will clearly appear from the third paragraph of a petition presented by him to the Calcutta High Court in a proceeding under section 115 of the Code. That paragraph ran as follows:—

    “That on the 2nd February, 1919, the debtors applied to the Subordinate Judge that a Receiver might be appointed over their attached properties and that such Receiver instead of selling the properties might manage them and from the rents and profits, after deduction of management expenses and after payment of some small allowances to the debtors for their maintenance might pay up the decree debts according to the decrees. The application presumably was made under Order XL, Rule 1, read with Order XXI, Rule 83.”

    5. It is idle in my opinion be suggest, as has been suggested in the judgment of the Court below, that the parties did not understand that the whole object of the appointment of a Receiver was to ensure the gradual payment of the debt from the income of the properties. If the matter stood where it did on the 9th April, 1910, I apprehend that the decree-holder would be entitled be present an application for execution of the decree. Whether the appointment of a Receiver is equivalent to execution and therefore to a delivery in execution is a matter of some doubt; but I apprehend that there is nothing to prevent the judgment creditor from saying “the procedure which I have adopted is unproductive. I claim the right to pursue the other remedies which I have under the Code.” It has been held that an order appointing a Receiver does not operate as a, stay of execution so as be disentitle the judgment-creditor from obtaining an order be issue a bankruptcy notice in respect of the same debt [Bond, In re Capital and Countries Bank Ex parte(1)] [Re. Bond], I therefore agree with the learned Subordinate Judge that the mere fact that the decree-holder consented to the appointment of a Receiver does not estop him from now seeking to enforce his decree by execution.

    6. I have now be consider whether any subsequent events have taken away from the decree-holder the right to proceed with the execution of his decrees.

    7. On the 15th September, 1910, the decree-holder applied for discharge of the Receiver. The decree-holder took She view that the presence of the Receiver was a legal impediment to execution, and the ground he assigned for the discharge of the Receiver was “that without the sale of the bulk of the properties, the decrees of your petitioner cannot be satisfied.” That was the specific ground put forward by the decree holder for she discharge of the Receiver, and the issue which the Court had to try in dealing with this application was whether the consent order for the appointment of a Receiver operated so as to lake away from the decree-holder the right to proceed with the sale of the mortgaged properties. The Court tried this issue and held that it was known to the decree-holder when the petition for appointment of a Receiver was presented that it would sake a considerable time to satisfy his dues. In the result, the Court rejected the petition for discharge of the Receiver.

    8. From this order an appeal was carried to the Calcutta High Court, and, as there was some doubt whether an appeal lay from the order passed by the Subordinate Judge, the decree-holder presented a petition for revision of the order under section 115 of the Code. In his grounds of appeal, the decree-holder specifically asked that the order of the Sub-Judge should be set aside and that the execution cases proceeded within the usual way. In his petition for revision, he asked for a Rule on the judgment-debtors to show cause why the Receiver should not be discharged and the properties attached in the several execution cases sold to satisfy the decrees. I have thought it necessary to refer to the relief sought in the grounds of appeal and in the petition for revision, as it has been suggested that the question whether the decree-holder was entitled be proceed with the sale of the properties in execution of his decree was not an issue in these proceedings. In my opinion, there can be no doubt whatever that was the only point in issue in these proceedings, the decree-holder seeking to have the Receiver discharged as, in his opinion, he could not proceed with the sale of the properties so long as the Receiver was in possession of the properties.

    9. On the 7th June, 1911, the Calcutta High Court dealt with the appeal, but not it seems with the revision petition and passed the following order by consent of she parties:—

    “By consent of parties the order of the Court below is varied in the manner following, namely, the Government Revenue and cesses and other outgoings as per scheme framed by Court, and the budget of the Receiver, are to be paid first, and then the decrees which do not carry any interest and then the decrees which carry interest. This order is made subject to the payment of allowances to the judgment-debtors. There will be no order as to the costs of this Court. The Receiver will continue as before”.

    10. It will appear on a reference be the petition for revision that the decree-holder raised three distinct points, first, that the Receiver should be discharged and the properties attached in execution of his decrees sold to satisfy his decrees, secondly, that, in any event, aha decrees carrying no interest should be satisfied by sale of the properties, and, thirdly, that the Receiver should be directed be pay to him the current demand for revenue and cesses. In order be understand the last point, I ought be stake that the properties of the judgment-debtors are babuana properties granted to them by the bead of the family and that, under an arrangement between them, the Government revenue and cesses payable in respect of these properties is recoverable from them by the Maharaja of Darbhanga; and one of the grievances of the respondent was that the Receiver did not pay to him the current demands for revenue and cesses. The consent order passed by the Calcutta High Court met two of the points raised by the decree-holder, but said nothing at all as to the most important point raised by the decree-holder. Had the order of the High Court been passed in invitum, it could not be argued for one moment that the relief specifically claimed by the decree-holder, and not granted by the High Court should not be deemed be have been refused. Does it make any difference that the order passed by the High Court was a consent order? In my view, the position taken up by the decree-holder is opposed both to principle and authority. On principled cannot understand how it is open to the decree-holder to raise a question which he gave up in the High Court, when, as a result of that giving up no secured certain advantages which were denied to him by the Court of first, instance. The judgment-debtors say as follows, and I can see no answer to the argument “it is because the decree-holder gave up the first point raised by him in the High Court, that we conceded the other points as to which he had a grievance. It is not open to him now to go back upon the representation which he must be held no have made to us, on the faith of which we acted and changed our position to our detriment”. As regards authorities, it has been bald that the principle of law underlying section 11 of the Code applies to interlocutory orders [Mungal Pershad v. Girja Kanth(2)] and that a consent order raises an estoppel as much as a decree passed in invitum [Nicholas v. Asphar(3), Lakshmi Sankar v. Vishnuram(4), Bhai Sankar v. Moraji(5), and Raja Kumar Venkata v. Ramaswami Chetty(6),] and that so long as a consent order stands, it is not open to either party thereto to give the go-bye to it, even it contains clauses bad in law [Co-wasji v. Kishandas(7). I hold final the consent order passed by the Calcutta High Court on the 7th June, 1911, must operate so as to estop the decree-holder from putting forward the contention that he is entitled to have the Receiver discharged and the properties sold in execution of his decrees. He is, in my opinion, bound by the Scheme as framed by the Court, which is specifically referred to in the consent order, and, so long as the Receiver adheres to the scheme and gives effect to that scheme, the decree-holder is not entitled to put forward fresh grievances as grounds for the discharge of the Receiver and for proceeding with his execution cases.

    11. The rest of the judgment is not material for this report.

    12. Appeal dismissed.

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    Maharajadhiraj Sir Rameshwar Singh Bahadur Petitioner v. Hitendra Singh .
    (Mar 31, 1921)