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Case Summary: Official Receiver — Revision Application against President of the Calcutta Improvement Tribunal

Factual and Procedural Background

The Official Receiver of the Calcutta High Court filed an application in revision against an order of the President of the Calcutta Improvement Tribunal. The Tribunal President had refused to hand over certain Government promissory notes (securities) representing compensation awarded under the Land Acquisition Act for a portion of premises that formed part of a debutter estate of certain idols.

Procedurally: land was acquired under the Land Acquisition Act and compensation was deposited with the Calcutta Improvement Tribunal under Section 31. Some shebaits (persons claiming management of the idol estate) commenced a suit in the original side of the High Court seeking declarations and, if necessary, administration of the debutter estate. The High Court appointed the Official Receiver as receiver with the powers under Order 40, Rule 1 of the Code of Civil Procedure; the order expressly permitted the receiver to withdraw the securities representing compensation in respect of the premises and the interest thereon. The President of the Improvement Tribunal, however, declined the receiver's request to withdraw the securities, prompting this revision application. There was no opposite party before the Court and the matter was heard ex parte.

Legal Issues Presented

  1. Whether a receiver appointed by the High Court is merely a trustee/representative of the parties (and therefore cannot take possession of or withdraw compensation moneys deposited under the Land Acquisition Act) or whether he is an officer/representative of the Court entitled to take possession under the Court's order.
  2. Whether the suit in the High Court concerned the idols' debutter estate such that the idols (through their management by shebaits) had an interest in the funds deposited with the Tribunal, and consequently whether the receiver could be entitled to possession of those funds.
  3. Whether the Improvement Tribunal (or the acquisition Court under the Land Acquisition Act) has a statutory right to retain the compensation money in its custody despite an order of the competent civil court directing delivery to a receiver appointed by that court (i.e., whether the Tribunal/Acquisition Court is absolutely vested with the compensation money and can refuse to comply with the High Court's order).

Arguments of the Parties

President of the Calcutta Improvement Tribunal — Reasons for Refusal

  • The receiver is only a trustee for the parties to the suit; no party to the suit is competent to alienate land within the meaning of Section 31 of the Land Acquisition Act or is entitled to act under Section 3, proviso (iv), of the Act; therefore the Tribunal should not make over the securities to the receiver.
  • The High Court suit is between parties claiming to be shebaits and the idols themselves are not parties in name or substance; consequently, property belonging to the idols should not be handed over to a receiver appointed in such a suit.
  • The High Court's order appointing the receiver cannot deprive the Improvement Tribunal of its statutory right under the Land Acquisition Act (and under Order 40, Rule 1(2) of the CPC) to retain the money in its possession or custody, because no party to the suit has a present right to remove the money from the Tribunal's custody.

Official Receiver / Petitioner — Position as Presented in the Opinion

  • The Official Receiver sought release of the Government securities deposited with the Tribunal under Section 31 of the Land Acquisition Act, relying on the High Court order of appointment which expressly authorized the receiver to withdraw the said securities and the interest accrued thereon.
  • The receiver was acting under the High Court's order appointing him under Order 40, Rule 1 of the CPC with the powers to administer the debutter estate and take possession of its properties.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Harihar Mukherjee v. Harendra Nath Mukherjee The receiver appointed by the Court is not ordinarily the representative or agent of either party; he holds property for the benefit of those ultimately found to be the rightful owners and is merely entrusted by the Court with certain powers for temporary purposes. Relied upon to reject the Tribunal President's view that the receiver was a representative of the parties and thus lacked power to take possession of the compensation securities.
Jagat Tarini Dassi v. Naba Gopal Ghaka The receiver is the representative of the Court and may be deemed to be the "right arm" of the Court for administering the property in litigation. Used to support the proposition that a receiver acts as an officer/representative of the Court and administers property on the Court's behalf rather than as agent of a party.
Radha Binode Mandal v. Gopal Jiu Thakur The decision in that case rests on a factual situation where the suit was for declaration of plaintiffs' title as shebaits in which the idol was not interested. Distinguished on the facts: the present suit, unlike that case, contained prayers indicating administration of the debutter estate and thus the idols were properly seen as interested.
Jagadindra Nath Roy v. Hemanta Kumari Devi Although an idol may be regarded as a juridical person, possession and management of dedicated properties belong to the shebaits; the idol is owner in an ideal sense but management vests in shebaits. Applied to conclude that the suit aimed at benefit of the idols and that shebaits' claims relate to management, supporting the view that the receiver's taking of the securities would be part of administering the debutter estate.
Mrinalini Dasi v. Abinash Chander Dutt Compensation money representing the estate of an incompetent person partakes of the nature of real property and does not lose that character merely because it has been transformed in shape. Relied on to hold that the compensation securities deposited with the Tribunal were part of the debutter property and subject to the receiver's possession under the Court's direction.
Kamini Debi v. Promotho Nath Mukerjee (Cited in support) — corroborative authority on the nature of compensation and its relation to estate/property. Referred to as further authority that compensation forming part of an estate is to be treated as estate property for administration by the Court/receiver.

Court's Reasoning and Analysis

The Court (Suhrawardy, J., with Graham, J. concurring) undertook the following analytical steps:

  1. The Court noted the exact wording of the High Court order appointing the Official Receiver and emphasized that the order expressly allowed the receiver to withdraw the securities representing compensation for the premises and accruing interest. This factual foundation gave the receiver a clear mandate from the appointing Court.
  2. The Court reviewed the reasons given by the President of the Improvement Tribunal for refusing to make over the securities and grouped them into three principal grounds: (a) the character of the receiver as only a trustee/representative of the parties lacking power to alienate acquired land funds; (b) the suit did not sufficiently involve the idols as parties, so their property should not be handed to the receiver; and (c) statutory custody/rights of the acquisition/Tribunal under the Land Acquisition Act and Order 40, Rule 1(2) prevent transfer.
  3. Turning to the first ground, the Court applied precedent (Harihar Mukherjee and Jagat Tarini Dassi) to conclude that the learned President's characterization of the receiver as merely the representative of the parties was untenable in the present circumstances. The Court highlighted authorities establishing that a receiver is generally an officer or representative of the Court who holds property for the benefit of the parties ultimately found to be entitled and acts as the "hand of the Court."
  4. On the second ground, the Court examined the plaint and found that, although the suit sought a declaration of shebaitship, it also contained express prayers that (a) the debutter estate be administered under the direction of the Court if necessary, and (b) a scheme be framed for proper worship. The Court considered these prayers and other relief sought (including setting aside unauthorized alienations) and concluded that the idols were indeed interested in the suit; the litigation sought administration for the benefit of the idols, not merely matters personal to the plaintiffs. The Court relied on Jagadindra Nath Roy to explain the legal relationship between idols and shebaits (the idol as owner in an ideal sense; management/possession vested in shebaits), supporting the view that the receiver taking possession of the securities would be consistent with administering the debutter estate.
  5. Addressing the third ground concerned with the statutory custody of compensation (citing Section 32 and other provisions of the Land Acquisition Act and Order 40, Rule 1(2) of the CPC), the Court reasoned that the acquisition Court or Tribunal is not absolutely vested with the compensation money so as to refuse compliance with the direction of a competent civil court. The Court held that possession by the receiver is possession of the Court (custodia legis), and if the money is made over to the receiver it will remain in custodia legis. The law does not grant the acquisition Court the power to retain the money in defiance of a competent civil Court's direction.
  6. Graham, J. added a reinforcing explanation: a receiver is an officer and representative of the appointing Court, a temporary custodian who cannot deal with properties without the Court's approval, so allowing the receiver to hold the securities temporarily poses no danger to the parties' interests. This reinforced the conclusion that the Tribunal President's order could not be sustained.

In sum: the Court applied controlling principles about the nature and role of receivers, analyzed the pleas in the plaint to determine that the idols were properly interested, and found no statutory bar preventing the High Court's order from being effectuated.

Holding and Implications

Holding: The rule was made absolute — the order of the learned President of the Calcutta Improvement Tribunal refusing to make over the securities to the Official Receiver was set aside, and the President was directed to comply with the High Court's order by making over the money to the petitioner (the Official Receiver).

Implications

  • Direct effect: The Tribunal President must deliver the Government promissory notes (compensation securities) and the interest thereon to the Official Receiver, who will hold them in custodia legis as the court-appointed temporary custodian for the benefit of those ultimately entitled.
  • Legal consequence emphasized by the Court: A receiver appointed by a competent civil Court is an officer/representative of that Court and may take possession of property (including compensation money treated as estate property) under the authority of the appointing order; acquisition authorities are not absolutely vested with compensation so as to override a civil Court's direction in such circumstances.
  • Broader precedent: The decision relies on and applies existing authorities concerning the nature of receivership and the character of compensation awarded under land acquisition; the opinion does not purport to announce a novel legal principle beyond applying established doctrine to the facts. (No statement in the opinion purports to create a new general rule beyond the application in this case.)

This summary is confined to the information and reasoning expressly contained in the provided opinion. No additional facts or inferences beyond the opinion text have been introduced.

    K.C. Bannerjee, In Re

    Suhrawardy, J.:— This application in revision is by the Official Receiver of this Court against an order of the President of the Calcutta Improvement Tribunal by which the learned President refused to make over certain Government promissory notes held in his Court to the petitioner. In the circumstances of the case there is no opposite party and we had to hear this matter exparte. We have given our earnest consideration to the facts of these case and to the observation made by the learned President in his judgment. The facts are that a portion of the premises No. 28, Giri Babu's Lane, in Calcutta belonging to the debutter estate of certain idols was acquired under the Land Acquisition Act and the compensation thereof was deposited with the Calcutta Improvement Tribunal under S. 31 of the Act. Thereafter some of the shebaits of the said idols instituted a suit in the original side of this Court against certain persons for a certain declaration which will be more particularly mentioned later. In that suit an application was made by the plaintiffs for the appointment of a receiver and the Court appointed the Official Receiver as Receiver in the suit with all the powers with which a receiver can be wested under O. 40, R. 1 of the CPC. The receiver thereafter applied to the President of the Tribunal that the Government securities representing the compensation money awarded in respect of a portion of the debutter property acquired might be made over to him. The learned President on certain considerations has refused to make over the securities to the petitioner. Before proceeding further it is necessary to observe that the order appointing the petitioner as receiver can in the following words:

    And it is further ordered that the said receiver be also at liberty to withdraw the securities representing the compensation money in respect of premises No. 23, Giri Babu's Lane, and deposited with the Tribunal of the Improvement Trust, Calcutta, and the interest accrued due and to accrue due thereon.

    2. Since the learned President has declined to part with the securities in spite of the order of this Court, the matter has assumed an importance which demands very careful consideration by us.

    3. The main grounds on which the learned President has refused to make over the securities to the petitioner may be summed up thus: (1) The receiver is only a trustee for the parties to the suit, and no party to the suit is a person competent to alienate the land within the meaning of Section 31 of the Land Acquisition Act 1 of 1894 or a person entitled to act under Section 3; prov. (iv) of the Act; (2) That the suit in the High Court is a suit between parties claiming to be shebaits to which the idols are not parties either in name or in substance; and, therefore, the properties which belong to idols should not be made over to the receiver appointed in such a suit; (3) The order of the High Court appointing the petitioner to be the receiver cannot deprive the Improvement Tribunal of the statutory right which it has under the Act of retaining the money, under O. 40, R. 1(2) and the order of appointment of the receiver cannot operate so as to remove from its possession or custody the property as no party to the suit has a present right so to remove.

    4. As regards the first ground it is clear on the authorities that the view expressed by the learned President is not tenable in the circumstances of the present case. As has been held in the case of Harihar Mukherjee v. Harendra Nath Mukherjee (1), a receiver appointed by the Court is not ordinarily the representative or agent of either party in the administration of the trust. But his appointment is for the benefit of all parties and he holds the properties for the benefit of those ultimately found to be the rightful owners; and reliance has been placed on the decision in Jagat Tarini Dassi v. Naba Gopal Ghaka (2), where it is laid down that the receiver is the representative of the Court and may be deemed to be right arm of the Court in exercising jurisdiction invoked in such cases for administering the property because the Court can only administer through a receiver. The learned Judges further observed that no doubt, in some cases the expression is used that the receiver may be considered as a representative of the parties to the suit but this only in the sense that as against an adverse claimant his title does not stand higher than that of the parties to the litigation; and upon this notion of the character of the receiver is founded the provision in O. 40, R. 1(2) of the CPC. In Harihar Mukherjee's case the question was whether the receiver appointed by the Court could take possession of the property without a succession certificate. It was held that a receiver, when he seeks to take possession of the subject-matter of the litigation under an order the Court is not a person who claims to be entitled to the effects of a deceased person, under the Succession Certificate Act, 1889, and he is in no sense a representative of the deceased person but, is merely entrusted by the Court with certain power over the estate for temporary purposes. The decision in Radha Binode Mandal v. Gopal Jiu Thakur (3) rests on the fact that there the suit was for declaration of plaintiffs' title as shebaits in which the idol was not interested.

    5. This brings us to a consideration of the nature of the suit in the High Court which is connected with the second ground an which the learned President's judgment is founded. The suit in the High Court as appears from a perusal of the plaint is no doubt for a declaration that the plaintiffs and some of the defendants are shebaits of the idol. But there are also two prayers in the plaint which are relevant for our present purposes. The prayer (o) is to this effect:

    If necessary the said debutter estate be administered by and under the direction of this honourable Court,

    and, (p)

    if necessary a scheme be framed for the proper performance of the worship of the Thakur.

    6. It is conceivable that in view of these prayers this Court appointed the receiver and authorized him to take possession of all the debutter properties including the promissory notes in the hands of the improvement tribunal. In the suit the plaintiffs further prayed that certain unauthorized alienations of the idols' properties might be set aside. Considering the entire scope of the suit it is difficult to hold that the idols were not interested in the suit. As has been observed by their Lordships of the Judicial Committee in Jagadindra Nath Roy v. Hemanta Kumari Devi (4), that although an idol may be regarded as a juridical person, capable of holding properties, it is only true in an ideal sense; but the fact remains that the possession and management of the dedicated properties belong, to shebaits; in other words though the idol is the owner of a property but being, incompetent to manage it, the right of management and possession is vested in the shebaits. The suit is for the benefit of the idols though a portion of it relates to matters personal to the plaintiffs. We are told that all the other properties belonging to the idols have been taken possession of by the receiver. There appears to be no reason why the promissory notes which are in the possession of the Tribunal should not be taken possession of by the receiver as a part of the debutter estate. As has been held in Mrinalini Dasi v. Abinash Chander Dutt (5) the compensation money representing the estate of an incompetent person partakes of the nature of real property and does not lose its character as such because it has been transformed in shape. The money in the hands of the Tribunal therefore, is a portion of the debutter property which would have come into the possession of the receiver under the direction of the Court if it were not acquired under the Land Acquisition Act: see also Kamini Debi v. Promotho Nath Mukerjee (6).

    7. As to the third ground under Section 32 of the Land Acquisition Act, the acquisition Court is not absolutely vested with the compensation money. It is apparent that possession of the receiver is the possession of the Court and the money if made over to the receiver will remain in custodia legis. The law does not vest the acquisition Court with such power as to retain the money in its possession in spite of the direction of a competent civil Court. Taking all these facts into consideration I am of opinion that the order of the learned President of the Improvement Trust should be set aside and that he be requested to comply with the order of this Court by making over the money to the petitioner. This rule is made absolute.

    Graham, J.:— I agree and desire to add only a few words. The rule was issued it the instance of the Official Receiver to show cause why an order of the President of the Calcutta Improvement Trust Tribunal rejecting the application of the Official Receiver to withdraw certain securities deposited with the Tribunal under S. 31 of the Act should not be set aside and an order made directing the delivery of the said securities to the petitioner.

    8. The learned President of the Improvement Trust Tribunal, in refusing the application, proceeded mainly upon the ground that he was precluded by the terms of the statute (Land Acquisition Act 1 of 1894) from acceding to the application, and he has referred in support of the view taken by him to certain provisions of the Act. He has held that the receiver stands in the shoes of the parties and represents them, and that being so he cannot have any greater power than is possessed by the party whom he represents. The learned President has perhaps not considered sufficiently the fact that a receiver by his appointment does; not become the representative of the party, but is an officer and representative of the Court which appoints him. In deed he is frequently spoken of as “the hand of Court” and is merely in possession of the property on behalf of the party who may be ultimately declared to be entitled thereto. One or other of the parties must eventually be declared to be entitled to the securities in question, or at all events to retain possession of them. A receiver appointed by the Court is merely a temporary custodian of the property on behalf of the Court and holds them for the benefit of the party successful in the litigation. He cannot deal with the properties in any way without the consent and approval of the Court, so that no apprehension need arise that the interest of either of the contesting parties is likely to suffer in any way by reason of his temporarily retaining possession of the properties. For these reasons and also in view of the order made on the original side of this Court by Mr. Justice Pearson I agree with my learned brother that the order which has been made by the President of the Improvement Trust Tribunal cannot be sustained and that this rule should be made absolute.

    9. Rule made absolute.

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    Comments

    K.C. Bannerjee, In Re
    (Dec 20, 1927)