Sapru, J.:— This is an appeal which arises out of an application for the appointment of a permanent receiver in a pending suit. The plaintiff in the suit in which this application was made is the Budaun Electric Supply Company through its Managing Agents, P.L Jaitly & Co. represented by Mr. P.L Jaitly. The plaintiff company is an electric supply company for the supply of electricity within the municipal limits of Budaun.
The plaintiffs' suit is for rendition of accounts and for recovery of the sum that might be found due to them after accounting. The plaintiffs' allegations are that the defendant, Mr. Kaghunath Prasad Tandon, was appointed agent by them on the 17th of November, 1932, for a period of 10 years for working the undertaking, that he has been carrying on the business of the undertaking as an agent, that in spite of repeated demands and registered notices he has not rendered any account to the plaintiffs, that he has indeed, set up a title in himself and was claiming to carry on the business on behalf of the firm Kishore Chand Shiva Char an Lal and not as agent of the plaintiffs.
The defendant has denied the plaintiffs' allegation of agency which according to him terminated in the month of May, 1934. According to the case put up by him the plaintiff company became, after the Government Order no. 20E1/25—El/1928 of 5th March, 1934 directing the plaintiffs to complete a sale of the Budaun Electric Supply Company undertaking in favour of the firm Kishore Chand Shiva Charan Lal, a defunct company. The defendant has raised other defences with which we are not directly concerned. It appears that during the pendency of the suit, an application was first made before the learned Civil Judge of Allahabad, who was trying the case, for the appointment of an interim receiver. The ground taken was that the defendant was wasting property and falsifying accounts so as to deprive the plaintiffs of the profits to which they might be entitled.
There is a long history of disputes and litigation between the parties into which we consider it unnecessary to enter for purposes of deciding this appeal, which arises, out of an application for the appointment of a permanent receiver. We may, however, state that one of the questions which will arise in the suit now pending before the civil court is the nature of the interest which the defendant has now come to possess in the undertaking. For his case is that the property is in the possession of the firm Kishore Chand Shiva Charan Lal, that they cannot be dispossessed and that no receiver can be appointed, inter alia, for this reason. The Civil Judge, when hearing the application for the appointment of an interim receiver, overruled the objections of the defendant and held, that it was competent for him to appoint a receiver. In fact, two persons named Mr. Shri Mohan Srivastava and Mr. Gauri Shankar were appointed as interim receivers. Mr. Shri Mohan Srivastava did not function as he was removed by a later order, and Mr. Gauri Shankar was working as interim receiver when the application for the appointment of a permanent receiver came up for final hearing before the learned Small Cause Court Judge sitting as a Civil Judge to whom the case had been transferred by the learned District Judge of Allahabad and from whose order the defendant appellant has now appealed. It further appears that there was an appeal against both the orders appointing an interim receiver and the removal of Mr. Shri Mohan Srivastava to this Court. Actually, however, it was during the pendency of that appeal that the suit which had been instituted before the Civil Judge, was transferred to the court of Small Causes at Allahabad exercising the powers of a Civil Judge.
In those appeals the High Court upheld the order appointing an interim receiver in these terms:
“The result is that we cannot undo anything which has already been done in execution of the orders of the learned Judge of the court below. We, therefore, direct that the status quo shall be preserved, that the receivers will continue to exercise the functions which they have already resumed but that no further authority or function shall be assigned to them till the appeals are decided.”
The question whether a permanent receiver should be appointed was left open for the court which was to try the suit.
We may now make a brief reference to the pleadings of the parties with reference to this application. It appears that on the 13th March, 1946 the plaintiffs applied for the appointment of a permanent receiver in the court below on the allegations that the defendant was creating all sorts of obstacles in the smooth working of the interim receiver and that the staff also being under his control and influence was acting obstructively and the interim receiver was unable to control the defendant and his staff, that large sums of money had been removed without right, in collusion with the staff illegally by the defendant Mr. Tandon after the dismissal of the appeals on 8th February, 1946 and that it was “just and convenient” that a permanent receiver should be immediately appointed. In earlier affidavits it had further been stated by the plaintiffs that the defendant had been interfering with the property of the company by removal of machinery, embezzlement of money, tampering with and falsification of accounts. Their allegation, in short, was that the defendant had been contesting their rights, denying their agency and dissipating the property. The defendant has not categorically and directly denied these allegations. The position is that the lower court to which the suit had been transferred has now exercised its discretion in favour of appointing a permanent receiver whose appointment had been prayed for by the plaintiffs. The question which we have to consider is whether this Court would be justified in interfering with the order of the lower court appointing a receiver.
Before we state our conclusions on this issue, we propose to dispose of certain preliminary objections which the defendant has raised to the hearing of this application. His first contention is that a receiver cannot be appointed as the court-fee paid by the plaintiffs is insufficient. It appears that the plaintiffs, when presenting their plaint, tentatively valued their suit at the figure of rupees one lakh, but that the Inspector of Stamps who went through the plaint came to the conclusion that the suit should have been valued at rupees 10 lakhs and that the plaintiffs had a deficiency of Rs. 8,437-9 to make up assuming that the stand of the Inspector of Stamps in this respect is correct. The position under section 6(2) of the Court Fees Act is that a person can give a security and the security that the plaintiffs offered was a cheque on the Northern Bank of India Ltd. which first guaranteed the payment of the cheque up to the 31st of May, 1946 and subsequently extended it to the 31st of August, 1946. The court below appears to have been satisfied with this guarantee. It may be that the period for which this guarantee was given has now expired. But the question of the sufficiency or otherwise of the court-fee paid for the suit is really one for the lower court at this stage to decide and this Court will not be justified in interfering with an interlocutory order, the effect of which can be considered only when the case has been tried and decided by the lower court and comes before us in appeal, if the parties should choose to exercise their right of appeal.
The second ground taken by the defendant appellant is that the suit in which this application of a permanent receiver was made cannot be entertained as the plaint was signed, on behalf of the managing agent by Mr. P.L Jaitly, who was declared to be an insolvent by the Calcutta High Court on the 18th of July, 1935 and who has not, yet secured his discharge. Attention was invited on this point to section 87(b) of Act XXII of 1935 which seeks to amend the Indian Companies Act of 1908. It is urged that section prohibits the employment as managing agent of a person who has been declared to be an insolvent.
It is urged by the plaintiffs that Mr. P.L Jaitly is not the same person as Messrs P.L Jaitly Co. and that the order of insolvency does not affect the latter. It is further argued that section 87(6) of Act XXII of 1935 has no retrospective effect and cannot affect rights which were acquitted before it came into force. We are of the view that the question whether the plaint was properly presented and verified, is properly one which can only be decided when the suit comes up for trial in the ordinary course before the learned Civil Judge and we cannot go into it at this stage.
It is also urged before us that this Court should not entertain this application for the appointment of a permanent receiver on the ground that the suit in which it was made, was One for rendition of accounts and not for possession. The appointment of a receiver pending a suit is a form of specific relief and it is generally given upon the principle of quia timet, that is to say, the court assists a party who seeks its aid because he fears some future possible injury to his rights or interests. Rule 1(1) of Order XL of the Code of Civil Procedure lays down that:
“Where it appears to the court to be just and convenient, the court may by order— (a) appoint a receiver of any property, whether before or after decree; (b) remove any person from the possession or custody of the property; (c) commit the same to the possession, custody or management of the receiver; and (d) confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has or such of those powers as the court thinks fit.”
We have not been shown any authority for the proposition that a receiver cannot be appointed in a suit for rendition of accounts. Section 44 of the Specific Relief Act declares that the appointment of a receiver pending a suit rests in the discretion of the court and makes a reference to the Code of Civil Procedure for the mode and effect of their appoint merit and for their rights, powers, duties and liabilities. The words “pending a suit” in Section 44 of the Specific Relief Act are not followed or qualified by any such limitation as would suggest that the suit in which a receiver is appointed must be one for possession of the property. What is stated in Order XL is that it is only in cases where the court considers “just and convenient” that it may appoint a receiver.
The plaintiffs' case, as stated in the plaint is that the defendant is holding the property under an agreement dated the 17th of November, 1932 as their agent and that he has been declining to render accounts to which the plaintiffs are entitled, and that sums will be found due to them if accounts are taken. The defendant's answer to that suit is that he is no longer holding this property as their agent, that he is holding it on behalf of the firm Kishore Chand Shiva Charan Lal and that he cannot be disturbed from possession as the firm Kishore Chand Shiva Charan Lal on whose behalf he claims to be holding possession is not a party to the proceedings. It is urged that the court has no right to remove from the possession or custody of the property and person whom any party to the suit has not got a present right to remove. Whether the firm Kishore Chand Shiva Charan Lal and the defendant is or is not the same person is a matter of controversy between the parties in the suit and we do not wish to prejudge this issue. The point of importance is that the property of the Budaun Electric Supply Company Ltd. should not be dissipated and should be preserved for the party who ultimately establishes his right to possession on it. To hold that the firm Kishore Chand Shiva Charan Lal is a different person from the defendant Raghunath Prasad Tandon would be to prejudge one of the vital issues between the parties in the case now pending before the trial court. The plaintiffs' case is that the defendant's possession started as that of an agent on their behalf and it is not denied by the defendant that an agreement of agency was entered into for a period of ten years certain. What is urged by him is that the licence of the plaintiff company was revoked by the Government in June, 1932 and that later by the grant of working licence under section 5(g) of the Indian Electricity Act it was offered to the firm Kishore Chand Shiva Charan Lal.
It is further urged that by G.O 20E1/25—El/1928 of the 5th March, 1934 the Government directed the plaintiff company to sell the undertaking to the firm Kishore Chand Shiva Charan Lal and that in pursuance of the said Government Order the District Magistrate of Budaun had put the firm Kishore Chand Shiva Charan Lal in possession. It appears that after this order at the request of the firm Kishore Chand Shiva Charan Lal Government appointed an arbitrator to determine the sale price of the undertaking. By his award dated the 14th of November, 1936, the arbitrator assessed the sale price at Rs. 1,71,084-3-6. It may be noted that during the pendency of the arbitration proceedings and award, creditors applied for and obtained injunctions restraining the company from selling and Kishore Chand Shiva Charan Lal from purchasing the undertaking. Finally the firm Kishore Chand Shiva Charan Lal brought a suit against the plaintiffs and their managing agent Mr. P.L Jaitly to execute a sale-deed of the entire electrical and engineering undertaking at Budaun within a period to be prescribed by the Court.
This suit was disposed of in appeal by this Court on September 7, 1942 and is reported in 1944 A.L.J.R 43. We understand that it is in appeal now before their Lordships of the Privy Council. In the appeal in this Court Mr. Justice Bajpai made the following observations:
“The licence granted, to the company stands revoked. The order of sale of the undertaking passed by the Government against the company in favour of the plaintiffs and all cosequential orders following it are wholly inoperative. The plaintiffs acquire no title to the undertaking by purchase…. The plaintiff, Kishore Chanel Shiva Charan Lal have since May 15, 1934, been exclusively working the undertaking of the company. The company has claims against them as agents and mortgagees; the plaintiffs have claims against the company for their debentures and for their loans. It is also possible that claims of some strangers also are outstanding. These rights and liabilities can only be a matter of one or more separate and independent enquiry.”
What the effect of the judgment and decree was which, we understand, are before their Lordships of the Privy Council, is a matter of controversy between the parties and we cannot, therefore, assume that the defendant's allegations that the title of the property has passed to the firm Kishore Chand Shiva Charan Lal and that the defendant is no longer in possession of the undertaking on behalf of the plaintiffs as agent is necessarily correct. There are claims and counter claims of the plaintiffs and defendant as agents and mortgagees of the company for their debentures and for their loans. The question of their respective rights and liabilities has not yet been judicially determined. In these circumstances, we are unable to hold that it is an admitted fact that a third party whose possession the court cannot disturb under Order XL, rule 2 is in possession of the property Clause 2 of Order XL, rule 1 does not apply because in our opinion the effect of the appointment of the receiver would not be to dispossess any party who is in possession.
The simple question thus which we have to consider is whether, in view of the circumstances of this case, it is “just and convenient” to uphold the order of the lower court appointing a receiver in suit now pending before it. In Benoi Kishen Mukerji v. Satish Chandra Giri, their Lordships of the Judicial Committee of the Privy Council made the observation set out below:
“On an interim application for receivership such as this, the court has to consider whether special interference with the possession of a defendant is required, there being a well-founded fear that the property in question will be dissipated, or that other irreparable mischief may be done unless the court gives its protection. Such an order is discretionary, and the discretion is, in the first instance, that of the court in which the suit itself is pending.”
On the facts before them, then Lordships came to the conclusion that there were various wastes and there was a danger of loss or injury to the properties in question if they remained in unrestricted control of the defendant Mahant. In the present suit there are allegations supported by an affidavit which have not been rebutted by any counter affidavit on behalf of the defendant, of waste, falsification of accounts, of destruction of accounts, of removal of machinery and embezzlement of money on the part of the plaintiffs. In view of these allegations, the strained relations between the parties and the various litigations—Civil and Criminal—to which reference has been made by us before, we are trot able to say that the learned Civil Judge did not exercise a proper and judicial discretion in appointing a permanent receiver in this case. The interim receiver operated for a period of 9 months and the permanent receiver has been working for another nine months. The appellant's counsel has not been able to show that the management of the under-talking has in any way suffered by the financial control which the lower court has vested in the receiver. We are not oblivious of the fact that the company in question is a public utility concern, but that by itself is, in our opinion, no sufficient ground for refusing to provide a check in the shape of a receiver over the financial management of the concern, the title of which is seriously in dispute between the plaintiffs and the defendant. The learned Civil Judge came to the conclusion that it was just and convenient in the interest of the safety of the property and its preservation from destruction and dissipation that a receiver should be appointed. We are not disposed to say on the material before us, that the trial court was in error in taking this view.
It remains for us to consider what the powers of the receiver should be. We have taken full note of the fact that the company is a public utility concern and that it is essential that there should be no unnecessary interference with its technical management. With this point of view in mind, we have carefully examined the extent of the powers that should be vested in the receiver. In our opinion, it is essential that he should possess a supervisory control over the financial management of the concern, while its technical side should remain in the hands of the Resident Engineer. In order to protect the interest of the plaintiffs and to make it possible for them to realise their decrees, should a decree be passed in their favour, we think that the receiver may be given the following powers:
(1) He will have power to check the accounts and the account books at any time that suits him and to sign them if he thinks necessary.
(2) He will have power to ask any servant of the undertaking to supply him with any statement of the accounts of the company and the property possessed by the company.
(3) In case the receiver is of opinion that any expenditure is being unnecessarily incurred or any step is being taken that would affect the financial positions, he will have the power to ask the person, in charge to rectify matters and in case of difference to refer the matter to the court.
(4) The receiver shall also be entitled to keep all the account books and registers that are not in use in his custody.
(5) The receiver shall be entitled to take any steps that may be necessary to preserve the account books and property of the undertaking and prevent any person from tampering with them or from falsifying the accounts.
(6) Any amount of money that is not immediately required for the purposes of the undertaking shall be handed over to the receiver who shall deposit it in some recognised bank.
(7) The receiver alone shall operate the cash and the Bank account of the company.
Subject to the modifications we have stated above, the management of the undertaking shall continue as before the appointment of the receiver.
With the modifications in the order of appointment of the receiver stated above, the appeal shall stand dismissed. The parties are to bear their own costs.
On the application of the U.P Government, the following order of the court was delivered by Sapeu, J.
This is an application on behalf of the U.P Government praying that in First Appeal From Order No. 201 of 1946, this Court may either be pleased to remove the receiver and give possession to the working licensee or appoint some officer of the Hydro-Electric Department nominated by the Chief Engineer, Irrigation Branch, as the receiver.
The suit out of which the First Appeal From Order arises is not one to which the U.P Government is a party. It is a suit between a limited liability company through its Managing Agent Messrs P.L Jaitly and Company represented by Mr. P.L Jaitly and Raghunath Prasad Tandon, defendant appellant before us.
It is in this suit that the plaintiffs applied for the appointment of a permanent receiver and this application was granted by the trial court. It is urged on behalf of the Government that it has responsibilities under the Indian Electricity. Act and that the Government can only allow a person to run the undertaking who holds a licence or who otherwise possesses their confidence. It is further stated that the only alternative left to the Government if a receiver who does not enjoy their confidence is appointed, will be to discontinue the supply of electricity which will be prejudicial to both the parties and will cause hardship to the public generally.
We cannot help taking exception to the application which has been sought to be moved on behalf of the Government. In a case between two individual parties in which the Government is not a party, we cannot allow the Government to be heard. The Government has no locus standi in this, matter. It has no right to be heard in an appeal arising, out of an application in a suit to which it was no party. We know of no law or rule of procedure which gives the Government this right. Indeed, to allow it to be heard in a case between two individual parties would be to give a right of interference to the Executive Government with the mode in which justice should be administered by this Court. Such a procedure would undermine the confidence which the litigant public rightly reposes in the highest court of appeal in this province. We, therefore, regret that the Government should have intervened in this appeal. Whatever may have been the considerations of the public weal which may have actuated the Government in seeking to place its point of view before us in this appeal, the application has wider implications which we cannot ignore and which may, indeed, set a bad precedent, if we were to entertain it, of interference with judicial processes in future.
For the reasons stated above, we indicated to Mr. Gupta that we were neither prepared to hear him, nor to allow this application to be entertained by us in this appeal. The reasons which may have actuated the Government may have been the interests of the public of Budaun as it concerns them. But these are extraneous considerations with which this Court in adjudicating rights between parties has no concern whatever. To allow such considerations to prevail would be to permit the judgment of this Court to be influenced by extra judicial considerations which militate against those principles of justice which must guide the manner in which this Court must operate.
We, therefore, reject this application with costs.