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Case Number

Appeal No. 85 of 1934

Judges

Mukerjee
Patterson, JJ.

Acts

Code (Act 5 of 1908)

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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

The appeal challenges an order of Cunliffe, J. which discharged an interim receiver that had been appointed ex parte on the plaintiff's application. The plaintiff's application sought appointment of a receiver pending her suit founded on an indenture of hypothecation (the indenture contained a stipulation entitling the plaintiff's assignor to a receiver on breach of covenants). The order appealed from effectively rejected the application to appoint a receiver. The appellant appealed from that order.

Legal Issues Presented

Whether an order discharging or refusing to appoint a receiver constitutes a "judgment" within the meaning of Clause 15 of the Letters Patent, and hence whether there is a right of appeal to this Court from such an order.
Whether an appeal from the order is competent under the procedural provisions of the Code (referenced as the Code, Act 5 of 1908) and the Rules (specifically Cl. (s), R. 1, O. 43, as cited in the opinion).
On the merits, whether there was sufficient ground to refuse appointment of a receiver where (a) prima facie breaches of at least two covenants in the indenture were found to exist and (b) the indenture itself provided for appointment of a receiver on breach.

Arguments of the Parties

Appellant's Arguments

The interim receiver had been properly sought under the indenture of hypothecation which provided that a receiver would be entitled to be appointed on breach of covenants; there was prima facie evidence of breach of at least two covenants.
Given the prima facie breach and the contractual bargain, it was just and appropriate that a receiver be appointed pending the suit.

Respondent's Arguments

The respondent (or respondent's counsel) relied upon a judgment in another suit (to which the present appellant was not a party) as containing reasons that would justify the discharge of the receiver in the present case.
The respondent contended, as a defence, that the covenants in the indenture were not enforceable, or at least not enforceable in their entirety (a contention which the Court said must be considered at the hearing of the suit itself).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
17 W.R. 364	Definition of "judgment" as a decision affecting the merits by determining some right or liability (may be final, preliminary or interlocutory).	Described as the leading case for this Court on the meaning of "judgment"; the Court analysed and applied this definition to determine whether the impugned order was a "judgment" under Clause 15.
21 W.R. 303	Held that an appeal lies under the clause from an order refusing to grant leave to the plaintiff to sue under Cl. 12 (reasoning that such an order determines a right to sue in that Court).	Cited to show that orders affecting jurisdiction or rights to sue have been treated as appealable; used as an example of a broader application of the "judgment" concept.
4 Cal. 531	Garth, C.J: "judgment" means a decision which decides the case in its entirety and not an interlocutory order deciding some isolated point.	Presented as a contrasting, narrower definition of "judgment" and cited to show differing judicial views in earlier authorities.
35 Mad. 1 (Full Bench)	White, C.J's three tests for determining whether an order is a "judgment": (1) effect is to put an end to the suit before that Court; (2) non-compliance would have that effect; (3) passed in an independent ancillary proceeding (e.g., appointment of receiver).	The Court relied on the third test and expressly held that an order refusing to appoint a receiver falls within that test; the opinion endorsed applying these tests when appropriate.
6 Cal. 594	Order refusing to transmit for execution an order of His Majesty in Council was held appealable under the clause.	Cited as an example where the Judicial Committee affirmed appealability because the matter involved judicial discretion and could entirely conclude rights of the decree-holder for execution.
9 Cal. 482	Judicial Committee's affirmation of the above (6 Cal. 594) on the ground that transmission was not merely ministerial and involved judicial discretion.	Used to explain how that decision was brought within the meaning of "judgment" under the clause.
5 C.W.N. 781	Decisions where orders discharging or refusing to discharge a receiver were held to be "judgments" and appealable.	Cited as precedent supporting the proposition that orders about receivers may be appealable; the opinion references these decisions as relevant analogues.
1930 Cal. 803	Another decision treating orders about receivers as "judgments."	Referenced as an example of decisions of this Court holding similar orders to be appealable.
1929 Cal. 214	Decision that cast doubt on certain broad readings of the "judgment" definition (e.g., as to whether some interlocutory orders fall within it).	Cited to show that the Court's prior decisions on the meaning of "judgment" have not been uniform and that some earlier holdings have been questioned.
1922 Cal. 335	Held that an order setting aside an abatement is a "judgment" within the meaning of the clause.	The correctness of this decision was doubted in later authority (1929 Cal. 214) and was referenced in discussing the uncertain state of the authorities.
1916 Cal. 361; 1918 Cal. 850; 1918 Cal. 858; 1919 Cal. 667; 1922 Cal. 172	Various decisions cited in the opinion as authorities illustrating the Court's divergent views on the scope of "judgment."	The opinion aggregated these decisions to demonstrate that judicial opinion in this Court has not been uniform or easily reconcilable on the point.

Court's Reasoning and Analysis

The Court proceeded in two stages: (A) competency of the appeal; and (B) merits of the application for a receiver.

A. Competency of the Appeal

The Court addressed a preliminary objection that the appeal was incompetent under Clause 15 of the Letters Patent (which grants an unqualified right of appeal from the judgment of a single Judge on the Original Side).
The Court reviewed competing judicial definitions of "judgment," centring on the classical definition in 17 W.R. 364 (Couch, C.J.) that a "judgment" is a decision affecting the merits by determining some right or liability (which may be final, preliminary or interlocutory).
The opinion acknowledged a body of conflicting authorities in this Court, and noted alternative, narrower and broader formulations (for example, Garth, C.J's narrower test in 4 Cal. 531 and White, C.J's three tests in 35 Mad. 1).
Applying White, C.J.'s third test (an order passed in an independent proceeding ancillary to the suit, such as an application for appointment of a receiver), the Court concluded that an order refusing to appoint a receiver falls within that test.
The Court also held that the impugned order satisfied Couch, C.J.'s definition because it determined a right that was one of the matters in the controversy itself (the right to have a receiver appointed pursuant to the indenture). Therefore the order was a "judgment" within Clause 15.
Independently, the Court found a simpler ground for competency: the Code (Act 5 of 1908) and Rules (Cl. (s), R. 1, O. 43) provide a right of appeal in respect of the order. The Court rejected any contention that the Code and Rules did not apply to appeals from a learned Judge of the High Court (referring to prior treatment of the issue in 1916 Cal. 361).

B. Merits

On the merits, the Court said it could find no sufficient ground to support the order of the Court below discharging the receiver.
The respondent had relied upon a judgment in another suit as justificatory, but the Court found that judgment irrelevant to the controversy in the present suit and not affecting the question of appointment of a receiver under the indenture.
The Court found that a breach of at least two covenants in the indenture had been prima facie established. While there might have been some deterioration of the security (for which the defendants could be responsible), the Court declined to express a definite opinion on that point at the interlocutory stage.
The respondent's substantive defence (that the covenants were not enforceable or not enforceable in entirety) was a matter to be considered at the main hearing; it was not clearly well-founded at the interlocutory stage.
Given the prima facie breach and the fact that the parties had contracted for the appointment of a receiver in the indenture, the Court concluded that it was just and appropriate to appoint a receiver. The Court was not satisfied that any circumstance showed the appointment would be inconvenient.
The Court therefore allowed the appeal, set aside the order of Cunliffe, J., and ordered that the Official Receiver take possession as prayed on behalf of the appellant. The Court also ordered costs in favour of the appellant and provided a procedural direction that the receiver take possession before the order was drawn and upon counsel's endorsement only.

Holding and Implications

APPEAL ALLOWED.

Holding (direct effect): The Court allowed the appeal, set aside the order of Cunliffe, J. which had discharged the interim receiver, and ordered that the Official Receiver forthwith take possession as prayed for on behalf of the appellant. The appellant was awarded her costs of the appeal and of the application in the Court below. The receiver is to take possession before the formal order is drawn and on counsel's endorsement only. Patterson, J. agreed with this disposition.

Implications: The direct consequence is restoration of the interim possession to the Official Receiver and an interlocutory appointment of a receiver in accordance with the indenture pending the suit. The opinion does not purport to lay down a new, sweeping precedent; rather it applies existing tests (including the White, C.J. tests and the definition in 17 W.R. 364) to hold that an order refusing appointment of a receiver in these circumstances is a "judgment" appealable under Clause 15 and under the procedural Code and Rules cited. The Court noted the lack of uniformity in earlier authorities but did not announce any comprehensive reformulation of the law; the decision's immediate effect is confined to the parties and the interlocutory relief granted.

Note: This summary is strictly limited to statements and materials appearing in the provided opinion. No factual or legal matter has been added that is not present in the original text.

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Lea Badin v. Upendra Mohan Roy Choudhury

1. The order from which this appeal has been preferred was made by Cunliffe., J. discharging an interim receiver appointed exparte on the plaintiff's application pending her suit laid on the basis of an indenture of hypothecation. The order amounts to one rejecting an application to appoint a receiver. A preliminary objection has been taken to the competency of the appeal. Under Cl. 15, Letters Patent, there in unqualified right of appeal from the judgment of a single Judge on the Original Side. As regards the meaning of the word judgment as used in the clause, Courts in this country have taken different views. So far as this Court is concerned the leading case on the point is that of 17 W.R 3641, in which Couch, C.J said,

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

2. In more decisions than one of the Court this definition of ‘judgment’ given by Couch, C.J has been described as classical; and yet in a long course of decisions this Court has repeatedly expressed the view that the definition is not absolutely exhaustive 5 C.W.N 7812, 1922 Cal. 1723, 1916 Cal. 3614, 1918 Cal. 8505 and 1918 Cal 8586. Treating this definition as not of an infiexing character and yet not expressly purporting to extend it, the Court has in numerous cases emphasized the necessity of scrutinizing the nature of the decision in each particular case in order to find out whether the decision amounts to a ‘judgment’ within the meaning of the clause. It may be observed that Couch, C.J himself in the case of 21 W.R 3037, held that an appeal lies under the clause from an order refusing to grant leave to the plaintiff to sue under Cl. 12, Letters Patent, giving as his reason:

“It is not a mere formal order or an order merely regulating the procedure in the suit, but one that has the effect of giving a jurisdiction to the Court which it otherwise would not have and it may fairly be said to determine some right between them, viz. to sue in a particular Court and to compel the defendants who are not within its jurisdiction to come in and defend the suit, or if they do not, to make them liable to have a decree passed against them in their absence.”

3. This reason, it must be admitted, would hardly bring the case within the definition given in 17 W.R 364, because it is perfectly clear that the “right or liability” contemplated by the definition in that case must mean some right or liability which was the subject-matter of the controversy in the suit or proceeding and we must respectfully dissent from those decisions which have held or have proceeded on the supposition that the expression “right or liability” in that case was not meant to be restricted to the controversy in the suit or the proceeding itself (e.g 1919 Cal. 6678). In 6 Cal 5949 an order refusing to transmit for execution an order of His Majesty in Council was held to be open to appeal under the clause. This decision was affirmed by the Judicial Committee on the ground that it came within the meaning of the word “judgment” in that clause because the transmission of the record was not a merely ministerial proceeding, and the Judge who had made the order had in fact exercised a judicial discretion and had come to a decision of great importance which, if it remained, would entirely conclude any rights of the decree-holder for an execution in the suit: 9 Cal 48210. It is not impossible to bring this reasoning within the definition in 17 W.R 364, but in some cases an attempt has been made to treat it as the foundation for a doctrine that where a question of jurisdiction is involved there is a right of appeal, e.g 1918 Cal 858. This view however is one with which we do not agree. Garth, C.J in the case of 4 Cal. 53111 laid down a definition in these words:

“I think the word ‘judgment’ means a judgment or decree which decides the case one way or the other in its entirety, and that it does not mean a decision or order of an interlocutory character which merely decides some isolated point not affecting the merits or the result of the entire suit.”

4. It would seem that orders excluded by this definition from the category of judgments would also be excluded by the definition of 17 W.R 364, but that this definition would bring within its scope orders which would put in peril the finality of a decision in favour of a party as affecting the merits or the result of the entire suit, a view which has been doubted in the decision of this Court in the case of 1929 Cal. 21412. In the last mentioned case the correctness of the decision in the case of 1922 Cal. 33513 in which it was held that an order setting aside an abatement is a judgment within the meaning of the clause, was also doubted. An examination of the decisions bearing upon the question reveals a position, which has been admitted in many of the more recent decisions, that judicial opinion in this Court has not been either uniform or consistent as regards the meaning of the word ‘judgment’ as used in the clause, and that the decisions are not easy to be reconciled.

5. The result could not have been otherwise when the Court purporting to take its stand upon the definition given in 17 W.R 364 has, in each particular case, sought to bring the relevant order within its scope, not unoften by using logic which, it has to be said within the utmost respect, is not sound. This conflict of authority has been pointed out in several cases amongst which reference may be made to the cases of 1916 Cal. 361, 1918 Cal. 850 and 1929 Cal. 214. In Madras, White, C.J, in the Full Bench decision in 35 Mad. 114 said:

“The test seems to me to be not what is the form of the adjudication, but what is its effect in the suit or proceeding in which it is made.”

6. He laid down three tests for determining whether an order is a judgment within the meaning of the corresponding clause of the Madras Letters Patent. They are the following: (1) If its effect is to put an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned; or (2) if the non-compliance therewith will have the effect of putting an end to such suit or proceeding; or (3) if it is passed in an independent proceeding which is ancillary to the suit (not instituted as a step towards judgment, but with a view to rendering the judgment effective when obtained), e.g, an order on an application for temporary injunction or for the appointment of a receiver.

7. Mookerjee, J., in several decisions of his, when characterizing the definition of Couch, C.J, in 17 W.R 364 as too narrow has referred to 35 Mad. 1, and in at least one decision of his has, applying the tests laid down in the latter case, held a particular order to be a ‘judgment’ as it satisfied the third of the said tests: 21 W.R 303. To remove the incongruity which appears in the decision of this Court and to lay down some definite rule by which orders might be tested when it has to be determined whether or not they are ‘judgments’ within the meaning of the clause, this Court will some day have to abandon its fund adherence to the antiquated definition of Couch, C.J, and boldly acknowledge its allegiance to the tests laid down by White, C.J: For the purposes of the present case however it is not necessary to go so far. As an order refusing to appoint a receiver, it comes within the words of the third test of White, C.J, and is indeed one of the illustrations to the test which he himself has given.

8. As an order refusing an application for the appointment of a receiver based on a provision in the indenture of hypothecation, that on a breach of any one of the covenants contained therein the plaintiff's assignor would be entitled to have a receiver appointed, the order has determined a right which is one of the matters in the controversy itself, and so it satisfies the definition of Couch, C.J, as well. The order appealed from in this case is, in our opinion, a judgment within the meaning of Cl. 15, Letters Patent. We may add that there are decisions of this Court in which orders discharging or refusing to discharge a receiver appointed in a suit, after the suit had come to an end or had become infructuous, have been held to be ‘judgments,’ and so appealable: e.g, 5 C.W.N 781 and 1930 Cal. 80315. But there is another and a far simpler ground on which it must be held that an appeal is competent. The order in the present case is one for which a right of appeal is provided in Cl. (s), R. 1, O. 43 of the Code. Under the present Code (Act 5 of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court; such a contention was elaborately dealt with and repelled in the case of 1916 Cal. 361.

9. Turning now to the merits of the appeal, we must say that we are unable to find any sufficient ground on which the order of the Court below may be supported. We have been referred by learned counsel for the respondent to a judgment of the said Court in another suit, to which the present appellant was no party, as containing reasons which would justify the present order. We have read that judgment, but we cannot see how what has been said therein touches the controversy in the present suit and may in any way affect the question of appointment of a receiver which has been asked for on the strength of a stipulation contained in the indenture. That there has been a breach of at least two of the covenants in the indenture is a, fact which must be held to have been prima facie established. It is possible that there has also been some deterioration of the security for which the defendants are responsible; but on this point we do not consider it necessary to express any definite opinion. The defence is that the covenants are not enforceable or, at any rate, are not enforceable/in their entirety. That defence will have to be considered at the hearing of the suit itself; and it is far from clear that it can be regarded as well-founded at the present stage. The breach having been prima facie established it is clearly just that a receiver should be appointed, for that is what the parties had bargained for in the indenture itself. We are not satisfied that any circumstance exists which may be taken as indicating that the appointment of a receiver would be anything but convenient; indeed, the parties themselves appear to have considered in their contract that it would be convenient. The appeal, in our judgment, should be allowed, and we order accordingly. The order of Cunliffei J., is set aside and it is ordered that the Official Receiver do forthwith take possession as prayed for on behalf of the appellant. The appellant will have her costs of this appeal and of the costs of the application in the Court below. The receiver will take possession before the order is drawn up and on counsel's endorsement only.

Patterson, J.:— I agree.

K.S

10. Appeal allowed.

Lea Badin v. Upendra Mohan Roy Choudhury

Structured Summary of the Provided Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

A. Competency of the Appeal

B. Merits

Holding and Implications

Lea Badin v. Upendra Mohan Roy Choudhury

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