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AMICUS AI
Citation Codes
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citation codes
Case Number
Attorney(S)
  • S. Doraiswami Ayyar for the petitioners.
  • T.R Venkatarama Sastri, A. Krishnaswami Ayyar and Sivaramakrishna Ayyar for the respondents.
Judges
  • Devadoss, J.
Acts
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • S. Doraiswami Ayyar for the petitioners.
  • T.R Venkatarama Sastri, A. Krishnaswami Ayyar and Sivaramakrishna Ayyar for the respondents.
Judges
  • Devadoss, J.
Acts
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is an application under section 115, Civil Procedure Code, by Receivers appointed by the High Court in Civil Suit No. 655 of 1921 to revise an order of the Subordinate Judge of Mayavaram refusing to make the petitioners (the Receivers) parties to execution proceedings (Execution Application No. 130 of 1922).

The petition was placed for admission on 1 May 1922 with an application for a stay of proceedings; the contesting respondent appeared and offered to take notice, and the petition was directed to be heard on 3 May 1922.

Background facts (as stated in the opinion):

  • Original Suit No. 111 of 1916 (Kumbakonam Subordinate Judge's Court) resulted in a decree on a simple mortgage bond on 12 April 1917; a final decree was passed on 13 September 1920 and an order for sale was made on 7 November 1921.
  • A sale originally fixed for 30 January 1922 was adjourned to 20 March 1922.
  • Disputes among members of the Nadar family of Tanjore led to Civil Suit No. 655 of 1921 in the High Court for partition; Receivers were appointed by the High Court on 27 January 1922.
  • The order appointing Receivers was appealed and considered by the Court of Appeal on 16 February 1922; it was settled that the Receivers should continue in possession of the properties.
  • On 20 March 1922 the Receivers applied to the Mayavaram Sub-Court to be made parties to the execution proceedings; the Subordinate Judge declined to make them parties.
  • The execution sale proceeded and concluded on 27 March 1922; the mortgaged property was sold for Rs. 1,10,000 to the thirteenth respondent.

Legal Issues Presented

  1. Whether the Subordinate Judge of Mayavaram acted without jurisdiction or committed a material irregularity in refusing to make the High Court-appointed Receivers parties to execution proceedings.
  2. Whether a mortgagee-decree-holder can proceed to sell mortgaged property in execution without obtaining the leave or sanction of the Court which appointed a Receiver who is in possession of the property.
  3. Whether the ordinary principle that property in the hands of a Receiver is exempt from judicial process applies to execution sales under a mortgage decree (i.e., whether execution in a mortgage suit is distinguishable from execution by attachment).
  4. Whether procedural provisions such as Order I, rule 10 and sections 141 and 146 of the Civil Procedure Code prevent the Receivers from being made parties to execution proceedings or otherwise affect the Receiver's status in this context.

Arguments of the Parties

Petitioners' (Receivers') Arguments — as summarized in the opinion

  • The Subordinate Judge acted without jurisdiction in refusing to make the Receivers parties to the execution proceedings.
  • Because the Nadar family properties were in the possession of the Receivers, no sale could properly take place without the Receivers being on record.
  • The Receivers could have paid off the debt or secured a better sale price (they valued the properties at Rs. 2,00,000 in an affidavit).
  • Relied on the decision in Mrs. Levina Ashton v. Madhabmoni Dasi and on established authorities stating the general rule that property in the hands of a Receiver is exempt from judicial process except as permitted by the appointing court.
  • Authorities and textbooks (Kerr on Receivers, High on Receivers, Alderson on Receivers) were cited to support that property in possession of a Receiver is in custodia legis and cannot be seized under ordinary execution without leave of the appointing court.

Auction-Purchaser and Respondent Arguments — as summarized in the opinion

  • There is no provision of law for making the Receiver a party to execution proceedings; Order I, rule 10 does not apply to execution proceedings.
  • Section 141 CPC cannot assist the petitioners, relying on the principle in Thakur Prasad v. Fakirullah (Privy Council decision); section 146 CPC is also inapplicable.
  • The Receiver is not a "new party"; on appointment the Receiver takes possession on behalf of the Court and must respect prior orders, so mortgagees/prior incumbrancers may proceed to protect their interests.
  • Reliance was placed on the authority of Bryant v. Bull and Bull v. Bryant (Vice-Chancellor Bacon) to argue that appointment of a Receiver does not affect the rights of mortgagees or prior incumbrancers to take proceedings for their own interests.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mrs. Levina Ashton v. Madhabmoni Dasi Used by petitioners to support the duty of the Court to make Receivers parties to execution proceedings when property is in their possession. The Court accepted this line of authority as supporting the petitioners' contention that property in the hands of a Receiver is generally immune from execution without the appointing Court's leave and that the Receivers ought to have been made parties.
Try v. Try Example cited for the general rule that property in the hands of a Receiver is exempt from judicial process except as permitted by the appointing Court. Quoted as part of the general principle relied on by the petitioners; the Court treated the principle as well-settled and relevant to the present dispute.
De Winton v. The Mayor of Brecon Cited among authorities establishing that property in the hands of a Receiver is exempt from judicial process. Referred to by the Court as part of the established rule that custody by a Receiver is custody of the Court and limits execution or attachment without leave.
Lane v. Sterne Cited similarly to the other authorities establishing the protective rule for property in receivership. Included by the Court in the set of authorities illustrating the general rule that property in the hands of a Receiver should not be subject to execution without the appointing Court's permission.
Jogendra Nath Gossain v. Debendra Nath Gossain Single-judge Calcutta High Court decision suggesting that where execution does not involve an interference with the Receiver's possession (no attachment required), a mortgagee may proceed to sale without leave of the appointing Court. The Court examined this decision as the principal authority supporting the auction-purchaser's position, but distinguished it on its facts (only two co-sharers mortgaged their interests there; here all sharers and all properties were in receivership) and found it difficult to follow the distinction drawn in that judgment.
Hem Chunder Chunder v. Prankristo Chunder Referred to in the Jogendra Nath judgment; in that case the judgment-creditor could only execute by way of attachment and sale. The Court noted that Hem Chunder is distinguishable from Jogendra Nath because the latter did not involve execution by attachment; the present Court relied on the broader principle of custodial protection for receivership property to reject the auction-purchaser's reliance on Jogendra Nath.
Bryant v. Bull and Bull v. Bryant Authority cited to support the proposition that the appointment of a Receiver does not necessarily concern mortgagees or prior incumbrancers and that a Receiver must respect former orders of the appointing Court. The Court considered this passage but held that it does not support the proposition that a mortgagee can proceed to execute his decree without leave of the Court appointing the Receiver; the Court rejected the auction-purchaser's use of this authority to justify proceeding without making Receivers parties.
Thakur Prasad v. Fakirullah (Privy Council) Invoked by the auction-purchaser's counsel as authority for the proposition that section 141 CPC could not assist the petitioners in the circumstances. The Court recorded the respondent's reliance on this principle but proceeded to analyze the status and effect of a Receiver's possession and the need for leave of the appointing Court, rather than accepting the respondent's contention based on that decision.

Court's Reasoning and Analysis

The court proceeded through a sequence of legal analysis, grounded in the factual matrix that all the family properties were in the possession of the High Court-appointed Receivers:

  1. The court acknowledged the general rule (as reflected in earlier authorities) that property in the hands of a Receiver is in the custody of the law (custodia legis) and is exempt from ordinary judicial process except to the extent permitted by the appointing Court.
  2. The court considered the principal authority relied on by the respondent (the single-judge Calcutta High Court decision in Jogendra Nath Gossain v. Debendra Nath Gossain), which held that where execution does not require attachment (as in a mortgage sale under the Transfer of Property Act) there is no interference with the Receiver's possession and thus no reason to restrain the sale.
  3. The court distinguished Jogendra Nath on its facts: in Jogendra Nath only two co-sharers had mortgaged their interest and certain properties were situated within the jurisdiction of another Court; in the present case all sharers were parties to the mortgage and all the properties were in the hands of the Receivers, who were appointed to safeguard the interests of all parties in the partition suit.
  4. The court found that allowing an inferior Court to sell property which is in custody of the High Court-appointed Receivers would defeat the purpose of appointing Receivers in a partition suit and would enable different Courts to dispose of parts of the same property, contrary to the principle that the Receiver's possession is the possession of the appointing Court.
  5. The court examined procedural contentions (Order I, rule 10; sections 141 and 146 CPC) and concluded that the Receiver is not a "new party" in the sense envisaged by Order I, rule 10; because the Receiver represents the Court's custodial possession, nothing in Order I, rule 10 stood in the way of making the Receivers parties to the execution proceedings.
  6. The court emphasized that an auction-purchaser at an execution sale of property in the possession of a Receiver would face difficulty in obtaining possession without applying to the Court which appointed the Receiver; consequently, process issued by an inferior Court in respect of property custodied by a Receiver requires the appointing Court's sanction.
  7. On this basis the court held that the Subordinate Judge of Mayavaram committed a material irregularity in refusing to make the Receivers parties to the execution proceedings.

Holding and Implications

Holding: The petition is allowed. The court set aside the order of the Subordinate Judge and directed that the Receivers be made parties to the execution proceedings; the Subordinate Judge is to proceed according to law. The petition was allowed with costs, and the thirteenth respondent (the auction-purchaser) was ordered to pay the costs of the petition.

Implications and consequences (as stated or necessarily arising from the opinion):

  • The court affirmed the principle that property in the possession of a Receiver is in the custody of the appointing Court and generally cannot be subjected to execution or sale by another Court without the leave or sanction of the appointing Court.
  • The Subordinate Judge's refusal to make the Receivers parties was held to be a material irregularity; the Receivers must be added as parties so that the appointing Court's interests and control over possession are respected.
  • The opinion notes a practical consequence: a sale concluded by an inferior Court in respect of property in the custody of a Receiver is liable to be defeated for want of necessary parties, and an auction-purchaser would not be able to obtain possession without applying to the appointing Court.
  • The court's decision directly affects the parties in these proceedings (order set aside; Receivers to be added; costs awarded). The opinion does not announce or state that it is laying down a new, general precedent beyond applying established principles to the present facts.

End of summary — all information in this document is drawn exclusively from the provided opinion and no facts or inferences beyond that text have been added.

Show full summary ...

    Fraser v. Krishnaswami Aiyer

    This is an application under section 115, Civil Procedure Code, of the Receivers appointed by the High Court in Civil Suit No. 655 of 1921 to revise the order of the Subordinate Judge of Mayavaram refusing to make the petitioners parties to execution proceedings pending before him (Execution Application No. 130 of 1922). This petition came up for admission on 1st May 1922 with an application for stay of proceedings. As the contesting respondent appeared in Court and offered to take notice, I directed the petition to be heard on 3rd May 1922.

    The facts of the case are that the plaintiff in Original Suit No. 111 of 1916 on the file of the Kumbakonam Subordinate Judge's Court obtained a decree on a simple mortgage bond against the members of the well-known Nadar family of Tanjore on 12th April 1917, and on 13th September 1920 a final decree was passed in the suit and on 7th November 1921 an order for sale was made. The sale was fixed for 30th January 1922 and it was adjourned to 20th March 1922. Disputes having arisen between the members of the family, Civil Suit No. 655 of 1921 was filed in the High Court for a partition of the family property. The present petitioners were appointed Receivers on 27th January 1922 and the order appointing them was appealed against and it came up before the Court of Appeal on 16th February 1922, and it is now settled that the Receivers should continue to be in possession of the properties. On 20th March 1922 the Receivers applied to the Mayavaram Sub-Court for being made parties to the execution proceedings and the Subordinate Judge declined to make them parties. The sale was proceeded with and was concluded on 27th March 1922 and the mortgaged property was sold for Rs. 1,10,000, to the thirteenth respondent hereto.

    It is urged on behalf of the petitioners that the lower Court acted without jurisdiction in refusing to make them parties and as the properties of the Nadar family are all in the hands of the Receivers no sale could take place without their being on record. It is further argued that the Receivers could have paid off this debt or at least could have secured a better price for the properties which they value at Rs. 2,00,000— vide paragraph 12 of the affidavit. The property now brought to sale by the Subordinate Judge's Court of Mayavaram is one of the items of properties which are the subject-matter of the suit now pending before the High Court.

    Mr. Doraiswami Ayyar who appears for the petitioners relies on Mrs. Levina Ashton v. Madhabmoni Dasi(1) and contends that it was the duty of the Court to make the Receivers parties to the execution proceedings. It may be taken as well settled law that there can be no attachment and sale of the property in the possession of a Receiver, in execution of a money decree without the leave of the Court appointing the Receiver. To quote the learned Judges of the Calcutta High Court:

    “The general rule is well settled that property in the hands of a Receiver is exempt from judicial process, except of course to the extent permitted by the appointing Court. Try v. Try(2), De Winton v. The Mayor of Brecon(3) and Lane v. Sterne It has even been affirmed that though an attachment was levied on property before the appointment of the Receiver, it is within the sound discretion of the appointing Court to refuse to permit a sale of the property thereunder. On this principle it has been held that property in the hands of a Receiver, though subject to a paramount judgment, cannot be sold under execution without leave of Court. A purchaser of such property at an execution sale buys at his peril, and the sale may be cancelled upon an appropriate application to the execution Court.”

    It is unnecessary to examine the various authorities relied on by the learned Judges of the Calcutta High Court. The question here is whether a mortgagee-decree-holder is bound to apply to the Court appointing the Receiver for redress or whether he can proceed to sell the mortgaged property in execution of a decree for sale. The only authority that seems to support the contention of the respondent is the judgment of a single Judge of the Calcutta High Court reported in Jogendra Nath Gossain v. Debendra Nath Gossain. The facts of that case are that pending partition proceedings and after the appointment of the Receiver two of the co-sharers mortgaged their interest in the undivided properties. Some of the mortgaged properties being within the jurisdiction of the Alipore Court, the mortgagee instituted his suit in that Court and sought to bring to sale the particular properties mentioned in the rule, some of which were situated in Calcutta. The judgment-debtors, after obtaining several postponements of the sale for the purpose of paying off the judgment-creditor, applied to restrain the mortgagee from proceeding to a sale on the ground that to sell the mortgaged properties without the leave or sanction of the High Court would amount to contempt of Court. Mr. Justice Sale in discharging the rule observed as follows.

    “This is not a case where the judgment-creditor is proceeding to execute his decree by attachment. This Court does not permit and will not recognize attachment of the properties in the hands of its Receiver, under process issued without sanction or leave by inferior Courts, the reason being that a proceeding by way of attachment is an interference with the possession of the Receiver. But as the element of interference with the possession of the Receiver is absent from the present case, there is no reason for restraining the sale. The case of Hem Chunder Chunder v. Prankristo Chunder, is distinguishable inasmuch as the judgment-creditor in that case if he had proceeded to execute his decree in the mufassal Court, could have done so only by way of attachment and sale. Under the Transfer of Property Act no attachment is necessary and the reason for the course adopted in the former case does not now exist.”

    The reasoning of the learned Judge is that as no attachment was necessary in a mortgage suit the sale could be proceeded with notwithstanding the fact that the property was in the possession of the Receivers. In that case only two of the co-sharers had mortgaged their interest. In the present case all the sharers were parties to the mortgage and all their properties are in the hands of the Receivers. Moreover the Receivers were appointed for the purpose of safeguarding the interests of all the parties to the suit and if an inferior Court is allowed to sell the property merely because there is a mortgage decree the object of appointing a Receiver in a partition suit would become infructuous, and it cannot be the policy of the law to allow the property to be sold by different Courts when that property is in the hands of a Receiver. The mere fact that there is a mortgage on the property would not take the case out of the general rule that no process can be permitted in respect of the properties in the hands of the Receiver without the sanction of the Court which appoints him. Moreover after attachment and sale the possession of the property sold cannot be obtained by an auction-purchaser without applying to the Court which appointed the Receiver. That being so, with very great respect to the learned Judge, it is difficult to follow the distinction which he makes between execution in respect of a simple money decree and execution in pursuance of a mortgage decree. The possession of the Receiver being the possession of the Court, no Court can interfere with that possession in any manner without the leave of that Court. The property being in custodia legis it would require very strong authority for holding that a mortgagee could set at naught the ordinary principle which prevents process being issued against the property in the hands of the Receiver, without the leave of the Court appointing him, simply because there is a mortgage in his favour. Mr. Venkatarama Sastri who appears for one of the members of the family relies upon various passages in Kerr on Receivers and High on Receivers, and it is unnecessary for me to refer to them. One passage from a well-known book is sufficient for the present purpose:

    “Property in the possession of a Receiver is in the custody of the law and cannot be seized under writ of attachment of execution. It is in the discretion of the Court to refuse to permit a sale of the property in its possession under a judgment though the levy was made before the Receiver was appointed.”

    Alderson on Receivers, page 229.

    It is argued by Mr. Krishnaswami Ayyar who appears for the auction-purchaser that there is no provision of law for making the receiver a party to execution proceedings, and that Order I, rule 10, has no application to execution proceedings, that section 141 Civil Procedure Code, cannot help the petitioners on the principle of the decision of the Privy Council in Thakur Prasad v. Fakirullah and that section 146 can have no application to the present case. The fallacy of this argument lies in the assumption that the Receiver is a new party. When a Receiver is appointed by a Court he takes possession of the property on behalf of the Court and he is not a party in the sense in which Order I, rule 10, is understood. The Court having taken possession of the properties it appoints an officer to look after the properties on behalf of all the parties and a Receiver is not a legal representative of any party; nor is he a new party to the proceedings. But he represents all the parties for some purpose and his duty is that which is assigned to him by the Court. It is further contended by Mr. Krishnaswami Ayyar that the Receiver has to respect the orders made before his appointment and relies upon Bryant v. Bull and Bull v. Bryant. Vice-Chancellor Bacon in delivering judgment says:

    “The appointment of a receiver is a matter which does not concern mortgagees or prior incumbrancers, for a Receiver in the exercise of his authority will be obliged to respect former orders of the Court; and the prior incumbrancers will be at liberty to take such proceedings on behalf of their own interests as they may think fit so that circumstance occasions no kind of difficulty.”

    From this passage it cannot be inferred that a mortgagee can proceed with the execution of a decree in his favour without the leave of the Court appointing the Receiver. The Duke of Bucclench is quoted by Mr. Doraiswami Ayyar for the purpose of showing that the execution proceedings are a continuation of the suit and any party can be added at any stage of the proceedings. That case has no application to the present case as in that case assessment of damages was left over and until the assessment of damages was completed it could not be said that the suit had come to a termination. But in this case the mortgage suit of the Kumbakonam Court had come to a termination when the final decree was passed and there was no more to be done in the suit. But, as I hold that the Receivers are not new parties to the suit, I think Order I, rule 10, does not stand in the way of their being made parties. Considering the fact that the very object of the appointment of the Receivers was to safeguard the interests of all the members of the family and to liquidate the debts in the best manner possible it was the duty of the Subordinate Judge of Mayavaram to have made them parties to the execution proceedings, for the sale itself is liable to be defeated, for want of necessary parties and in any case possession of the properties sold by Court could not be obtained without the leave of the High Court which appointed the Receivers. Considering the complications that might arise hereafter, I consider that the Subordinate Judge acted with material irregularity in refusing to make the Receivers parties to the execution proceedings. I therefore set aside the order of the Subordinate Judge and direct him to make the Receivers parties to the execution proceedings and proceed according to law. I allow the petition with costs. The thirteenth respondent will pay the costs of this petition.

    K.R

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    Comments

    Fraser v. Krishnaswami Aiyer
    (May 5, 1922)