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Sripati Dutta v. Bibhuti Bhusan Dutta
Opinion Summary — Appeal against Removal of Receiver (Suit No. 142 of 1923)
Factual and Procedural Background
The appeal challenges an order of the Subordinate Judge of Burdwan removing a Receiver who had been appointed in Suit No. 142 of 1923 for declaration of title and partition of certain movable and immovable properties. The appellant filed the appeal (the record was sent up) on 16 June 1925. The order removing the Receiver also contemplated appointment of a new Receiver, but that appointment was postponed until the following month; no new Receiver had been named at the time the appeal was filed. A preliminary objection was raised by the respondents that no appeal lay against the order of removal.
Legal Issues Presented
- Whether an appeal lies, under the Code of Civil Procedure read with the General Clauses Act, against an order removing a Receiver appointed under Order 40 of the CPC.
- Whether the order of removal was interlocutory (and therefore the appeal premature) because no successor Receiver had been named when the appeal was filed.
- On the merits, whether the appellate court should interfere with the Subordinate Judge's exercise of discretion in removing the Receiver.
Arguments of the Parties
Respondents' Arguments
- No appeal lies against an order removing a Receiver because Order 40, Rule 1(1)(a) of the CPC refers only to appointment of a Receiver and is silent as to removal; therefore the Code does not expressly provide a right of appeal against removal.
- Order 40 Rule 1(1)(b) (which refers to removing "any person from the possession or custody of the property") does not, according to respondents, apply to a Receiver and instead relates to persons in possession before a Receiver is appointed.
- Even if an appeal were competent, the order was interlocutory and the appeal premature because no Receiver had yet been appointed by name to replace the removed Receiver (relying on Upendra Nath v. Bhupendra Nath).
Appellants' Arguments
- The appeal is competent because Order 43 Rule 1(s) gives a right of appeal against orders under Rule 1 or Rule 4 of Order 40; and Rule 1(1)(b)'s reference to "any person" can include a Receiver.
- More importantly, by virtue of Section 16 of the General Clauses Act (X of 1897), the power to appoint a Receiver necessarily includes the power to remove or dismiss one; therefore a right of appeal against appointment (expressly provided) should logically extend to removal.
- As to prematurity, where an order consists of interlocutory and final parts, an appeal may be brought against the final portion (here, the part directing removal), and the appellant was entitled and bound to exercise his right promptly.
- On the merits, the appellants contended that the removal was wholly unjustifiable given the facts and circumstances of the case.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Upendra Nath v. Bhupendra Nath | Used to support the proposition that an order contemplating the future appointment of a Receiver (where no Receiver had yet been named) may be interlocutory and not a final order, making an appeal premature. | The court distinguished the present case from Upendra Nath: in that case the order related only to appointment (not removal) and was held interlocutory; here the order effected removal and was treated as final, so Upendra Nath did not render the present appeal incompetent. |
| Palaniappa Chetty v. Palaniappa Chetty | Support for the proposition that an order removing a Receiver can be a final order (Full Bench decision cited for that view). | The court relied on this Full Bench decision to hold that the order of removal in the present case was final and therefore susceptible to appeal. |
| Kali Kumari v. Bachhan Singh | Principles governing judicial discretion in the selection and appointment of a Receiver and the limited circumstances in which an appellate court should interfere (need for overwhelming or fatal objection to justify interference). | The court applied these principles (originally stated for appointment) by analogy to removal: appellate interference is exceptional and requires proof of arbitrary exercise of discretion or grave impropriety—standards not met on the facts here. |
Court's Reasoning and Analysis
The court proceeded in two stages: first addressing the preliminary objection on competence of appeal, and second addressing the merits.
Competence of appeal:
- The court noted the absence of direct precedent on whether an appeal lies against removal of a Receiver under the CPC and examined the relevant provisions: Order 43 Rule 1(s) (which permits appeal against orders under Order 40 Rule 1 or Rule 4) and the sub-rules of Order 40 Rule 1. The respondents contended that Rule 1(1)(a) refers only to appointment while Rule 1(1)(b) (removing "any person") did not clearly include a Receiver.
- The court expressed doubt about construing Rule 1(1)(b) as wide enough to include a Receiver, viewing it as more likely directed to persons in possession prior to a Receiver's appointment.
- However, the court held that the right of appeal against appointment (express in Rule 1(1)(a)) should, by necessary implication and by operation of Section 16 of the General Clauses Act (which allows that the power to appoint includes the power to remove), extend to removal — thus making an appeal competent. The court observed that the General Clauses Act helps avoid superfluity by supplying such necessary consequences.
- Respondents' alternative objection that the order was interlocutory because no successor Receiver had been named was considered in light of authority. The court accepted the appellant's submission that where an order contains a final direction (here, removal) it is appealable even if other steps (like naming a successor) remain to be completed.
- The court concluded that the order effecting removal was final in character (citing Palaniappa Chetty), distinguished Upendra Nath on its facts, and held the appeal competent.
Merits — whether appellate interference was justified:
- The court acknowledged that appellate tribunals have power to interfere with the exercise of judicial discretion but ordinarily will not do so except for established grounds (relying on the Kali Kumari principle that selection/appointment of a Receiver is a matter of judicial discretion and interference requires overwhelming or fatal objection).
- Applying the analogous standard to removal, the court examined the grounds relied on by the Subordinate Judge for removal and the conduct of the Receiver. It identified key factual findings relied upon below:
- The Receiver had realized Rs. 4,000 from Messrs N.C. Sarkar & Sons on account of royalties due to the estate but failed to show this sum in his accounts.
- The Receiver did not personally give evidence to explain this omission or other charges; he submitted explanations through his pleader, effectively allowing the case against him to proceed by default.
- There was evidence of embittered relations among parties and repeated petitions and objections that had wasted court time and threatened efficient management of the estate.
- There was some justification for the view that the Receiver had shown bias in his management; absolute impartiality is an indispensable qualification of a Receiver.
- The original appointment had been made with the consent of the parties; that consent was withdrawn on grounds of alleged misconduct, undermining the foundation for retaining him.
- On these combined grounds — the unexplained Rs. 4,000 in accounts, failure to testify, apparent bias, and withdrawl of consent leading to impeded estate management — the court found no basis to characterize the Subordinate Judge's removal of the Receiver as an arbitrary exercise of discretion requiring appellate interference.
Holding and Implications
Holding: The court held that (1) the order removing the Receiver was a final order and an appeal against it was competent; but (2) on the merits no case was made out to justify interference with the discretionary order of removal. Accordingly, the appeal was dismissed.
Implications / Consequences:
- The Subordinate Judge's order removing the Receiver is upheld; the removal stands.
- The appeal was dismissed with costs. The hearing-fee was assessed as follows: five gold mohurs to the plaintiffs, three gold mohurs to Defendant No. 6, and two gold mohurs to Defendant No. 7.
- The court applied existing principles limiting appellate interference in matters of judicial discretion concerning Receivers; the opinion does not purport to announce a broader new principle beyond applying those established standards to removal as well as appointment.
Additional procedural notation in the opinion: Newbould, J. concurred. The appeal was dismissed (final order).
Graham, J.:— This appeal is directed against on order of the Subordinate Judge of Burdwan removing a Receiver, who had been appointed in a suit (No. 142 of 1923) for declaration of title and partition of certain moveable and immovable properties.
2. A preliminary objection has been taken on behalf of the respondents that no appeal lies, and it becomes necessary to deal with this first. So far as this Court is concerned the question appears to be one of first impression. At all events no case has been brought to our notice in which this particular point has been decided. It is contended that R. 1(s) of O. 43 of the CPC, under which alone an appeal can lie, has no application, inasmuch as R. 1(1)(a) of O. 40 refers only to appointment of a Receiver and is silent as to his removal. It is argued that, as the Code of Civil Procedure nowhere expressly provides a right of appeal against an order removing or dismissing a Receiver, an intention to provide for such appeal ought not to be read into the Act. Now, O. 43, R. 1(s) gives a right of appeal against an order under R. 1 or R. 4 of O. 40. The learned advocate for the appellants in meeting the objection has not relied on R. 4 of the order, and it is obvious that it has no application in the present case. He has relied, however, on R. 1(1)(b) of O. 40. This sub-section and the portion which precedes it read as follows: “When it appears to the Court to be just convenient, the Court may by order………….remove any person from the possession or custody of the property.” It is argued that the words “any person” include a Receiver and that, that being so, the appeal is competent. It is, I think, open to doubt whether this sub-section has the wide meaning sought to be attached to it, so as to make it include a Receiver, and it appears to me that it refers to persons interested in the property and in possession or custody of it prior to the passing of an order appointing a Receiver. This view seems also to be supported by sub-S. (c) which follows. In my opinion, however, an appeal will lie under sub-S. (a) of R. 1(1) of O. 40. The words used therein are, it is true, “appoint a Receiver of any property,” but under Section 16 of the General Clauses Act, (X of 1897), the power to appoint includes the power to remove or dismiss, the power to terminate being a necessary sequence from and adjunct to the power to create and it may, therefore, be argued that, if a right of appeal is given against appointment, it is given equally against the removal of a Receiver, since appointment includes the right to remove. It is true the Code nowhere makes express provision for an appeal against the removal of a Receiver, as it does in the case of his appointment, but the reason may well be that it was not considered necessary by virtue of the section in the Genera, Clauses Act referred to above. Indeed one of the objects of a General Clauses Act is to avoid superfluity. Moreover, if an appeal lies against the appointment of a Receiver, it would seem to be only logical and consistent that an appeal should equally lie against his removal.
3. But, it has been urged on behalf of the respondents, even if the appeal is held to be competent, it is premature, inasmuch as no Receiver has yet been appointed by name to supersede the Receiver who has been removed, and that, that being so, it is merely an interlocutory order, and not a final order, and so no appeal will lie. In support of this view reference has been made to the case of Upendra Nath v. Bhupendra Nath(1). In that case the material part of the order appealed against was in these terms: “I think the whole of the property in suit will be better managed and the interest of all the parties will be better served if the property in suit be placed in the hands of a competent Receiver.” Subsequently on a date after the appeal to the High Court had been filed one Nakuleswar Bose was appointed as Receiver. It was held on these facts that the order in question was an interlocutory, order and not a final order, and that the appeal was, therefore, premature and incompetent. Similarly in the present case no Receiver has yet been appointed by name, the reason apparently being that the order did not contemplate the appointment of the new. Receiver until the following month, and in the meanwhile this appeal, involving the sending up of the record to this Court, was filed on the 16th June 1925. It may be argued, therefore, that the order was merely interlocutory, that the appeal was premature, and that the appellants should have waited until the new Receiver was appointed when there could be no possible doubt as to the competency of the appeal.
4. In reply to this, however, the learned advocate for the appellants contends that if an order consists of two parts, half of it being interlocutory, and half final, he is entitled to appeal against that portion of it which is final, and he argues that, inasmuch as part of the order directed that the Receiver was to be removed, the Defendant No. 1 was entitled to appeal and that he was bound to exercise his right, or run the risk of losing it.
5. There is certainly some force in this, contention. The crucial question seems to be whether it was a final order or not. The effect of the order was that the Receiver was declared to be removed, and it seems to me that the mere fact that the appointment of the new Receiver was postponed (presumably as a matter of convenience) to the beginning of the next month cannot in any way affect the position. So far as the Subordinate Judge was concerned it was presumably a final order, which it would not have been open to him to revise. It was something more than a preliminary order, or expression of opinion. This view of the matter finds support in the case of Palaniappa Chetty v. Palaniappa Chetty(2) decided by a Full Bench of the Madras High Court.
6. The present case is distinguishable from the case in 13 Calcutta Law Journal [Upendra Nath v. Bhupendra Nath referred to above, inasmuch as there was in that case no question of removal, it being merely a question of appointment, and it was held that the order was interlocutory and not final with the result that the appeal was premature.
7. In my opinion, therefore, the order must be held to be a final order, and as such, consistently with the view which I have taken as to the interpretation to be put on R. 1(1)(a) of O. 40, liable to be challenged by way of appeal.
8. On the merits the substantial contention on behalf of the appellant is that the removal of the Receiver was, having regard to all the facts and circumstances of the case, wholly unjustifiable. I was at one stage of the hearing rather inclined to hold that this contention had been substantiated, but upon further reflection I have formed a decided opinion that we should not be justified in the particular circumstances of this case in interfering with the discretion which has been exercised by the Court below. There can be no doubt that an appellate Court has the power to interfere, and ought to do so in a fit case for such interference, and where it has been shown that there has been arbitrary exercise of the power of removal. At the same time Courts of appeal have always been reluctant to interfere in a matter which is regarded as one purely within the discretion of the Court concerned. The principles applicable to such cases have been frequently laid down, and it will suffice to refer to one of these three cases Kali Kumari… v. Bachhan Singh…Opposite Party.(3) where the subject is dealt with. It was there held that the selection and appointment of a particular person as a Receiver is a matter of judicial discretion to be determined by the Court according to the circumstances of the case, and that the exercise of this, like other matters of judicial discretion, will rarely be interfered with by an appellate tribunal. It was further held that in order to induce the appellate Court to interfere it is necessary to show some overwhelming objection in point of propriety, or some fatal objection in principle to the person named. It was also pointed out that it is a settled rule that one of the parties to a cause should not be appointed Receiver without the consent of the other party unless a very special case is made out.
9. That was a case of appointment of a Receiver, but the principles laid down appear to be equally applicable in a case of removal, and the question which then arises is whether in this instance there has been such an arbitrary exercise of discretion by the Court below as would justify our interference. In my opinion no such case has been made out. The main point is that the Receiver has failed to submit any explanation, which can be considered satisfactory, of his omission to show in his accounts the sum of Rs. 4,000 realized by him after his appointment as Receiver from Messrs N.C Sarkar & Sons on account of royalties due to the estate. This was a sufficiently serious matter, but the Receiver does not appear to have considered it necessary to go into the witness box to meet this and other charges which were preferred against him. All that he condescended to do was to submit an explanation through his pleader so that in a manner he seems to have allowed the case against him to go by default. On his own showing some portion of this money would go to the plaintiffs and the Defendants Nos. 6 and 7 according to the determination of their shares in the pending suit, and it was, therefore, incumbent upon him to show the amount, or at all events portion of it in his accounts.
10. On this ground alone the propriety of the order made in the Court below cannot, I think, be challenged with success. But here is another aspect of the matter. It is clear from the learned Subordinate Judge's order that owing to the embittered relations between the parties a great deal of the Court's time had been unnecessarily wasted in heating all sorts of objections and petitions (there is ample evidence of this on the record), and there seemed every probability that the management of the estate might be seriously hampered. The Subordinate. Judge considered that such an undesirable state of affairs should be put an end to, and with that opinion it is not possible to find fault. Indeed matters might almost have reached an impasse. Again, apart from the item of Rs. 4,000; there appears to be some justification for the contention that the Receiver has betrayed bias in his management. Absolute impartiality as between the parties to the litigation is however, an indispensable qualification of a Receiver, and Upon an application for his removal the Court may properly consider his past relations to the parties as well as his present sympathies. If by reason of interest shown by him the efficiency of the Receiver as an officer of the Court is impaired the Court will be justified in removing him.
11. Finally it is to be observed that in cases where one of the parties to the litigation is appointed as Receiver the order is usually based on consent of the parties, though there may be exceptional cases where this is not so. In the present instance the appointment was at first made with the consent of the parties. That consent has now been withdrawn, the allegation being that the other parties have lost their faith in the Receiver as a result of his misconduct. In these circumstances the foundation upon which the appointment rested no longer exists and with the withdrawal of the consent it may be argued that the justification for retaining him as Receiver disappears. For these reasons stated, while I am of opinion that the appeal is competent, I hold that no case has been made out on the merits which would justify us in interfering. The appeal, therefore, fails and must be dismissed with costs. The hearing-fee is assessed at five gold mohurs to the plaintiffs, three gold mohurs to the Defendant No. 6 and two gold mohurs to the Defendant No. 7.
Newbould, J.:— I agree.
12. Appeal dismissed.
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