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  • Section 111, T.P. Act. Clause 2, Section 146,
  • Civil P.C. By Order 40, Rule 1, Civil P.C.,
  • Clause 2, Section 146, Criminal P.C.,
  • Section 145, Criminal P.C.,
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  • Section 111, T.P. Act. Clause 2, Section 146,
  • Civil P.C. By Order 40, Rule 1, Civil P.C.,
  • Clause 2, Section 146, Criminal P.C.,
  • Section 145, Criminal P.C.,
Smart Summary

Summary of Legal Opinion

Factual and Procedural Background

The petitioner was a party to proceedings under Section 145, Criminal P.C., concerning possession of a house. The Sub-divisional Magistrate found that neither party had established possession and on 27 February 1930 made an order attaching the house until a civil Court determined the right to possession. That attachment order was confirmed by the High Court in revision on 12 December 1930 (the applicant for revision then was the present petitioner).

A receiver had been appointed under Clause 2, Section 146, Criminal P.C. On 30 June 1932 the receiver requested permission to lease the house and, on 1 July 1932, granted a lease to the petitioner. When the Joint Magistrate learned that the lease had been given to one of the disputing parties, he removed the receiver and set aside the lease. The petitioner challenged the cancellation of the lease by filing the present revision petition. The opinion is an order dismissing that petition.

Legal Issues Presented

  1. Whether a lease once granted by a receiver appointed under Clause 2, Section 146, Criminal P.C. can be summarily set aside by the Magistrate, or whether the only remedy is a suit (after notice under Section 111, T.P. Act).
  2. What powers a receiver appointed under Clause 2, Section 146 has with respect to granting leases (including limitations on duration and any need for court directions), and whether those powers were exceeded by the receiver in this case.
  3. Whether misrepresentation, concealment or fraud by a receiver (or with the connivance of the lessee) justifies summary setting aside of a lease by the Magistrate.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner contended that once the receiver had granted the lease it could not be cancelled summarily by the Joint Magistrate; the proper course, the petitioner argued, was to bring a suit against him after giving notice under Section 111, T.P. Act.
  • It was also urged on behalf of the petitioner that the receiver had sought and obtained permission to grant a lease and had reported the grant to the Court on the day of the lease, which was said to indicate the receiver's good faith.
  • Reliance was placed on precedent (Krista Chandra Ghose v. Krista Sakha Ghose) to the effect that when a lease had been granted by a receiver the matter passed beyond the Court's control and the lessee was not subject to the Court's jurisdiction as lessee; from this it was argued that a suit (not summary cancellation) was the proper remedy.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mt. Lachmi Kuer, v. Gajadhar Prasad AIR 1927 Pat 393 Principle that when an attachment is made under Section 146 pending civil decision, possession should not be given to either disputing party while the attachment continues. The Court observed that this decision does not bear on the specific question of the grant or cancellation of a lease by a receiver; it relates only to the principle of withholding possession during attachment.
Krista Chandra Ghose v. Krista Sakha Ghose (1909) 36 Cal 52 Held that where a lease has already been granted by a receiver the matter may pass beyond the Court's control and the lessee may not be subject to the Court's jurisdiction as lessee; suggested that collusion would normally be remedied by suit. The Court acknowledged the authority but distinguished it as not addressing cases of fraud on the Court; the petitioner relied on it to argue that only a suit could annul a lease, but the Court noted the decision does not rule out setting aside leases procured by fraud.
Sirish Chandra v. Debendra Nath AIR 1929 Cal 828 Holds that misrepresentation or concealment by a receiver of material facts can justify the Court in summarily setting aside a lease obtained as a result of such misrepresentation or concealment. The Court treated this case as authority that where a fraud upon the Court is proved (misrepresentation or concealment by the receiver), a Magistrate is entitled to set aside a lease summarily; it applied this principle to uphold the Magistrate's action in the present case.

Court's Reasoning and Analysis

The Court began by considering the statutory and procedural framework: a receiver appointed under Clause 2, Section 146, Criminal P.C. has, subject to the control of the Court, the powers of a receiver appointed under the Civil P.C.; by Order 40, Rule 1, Civil P.C., the Court may confer on a receiver powers of management, including power to let property, generally up to three years unless special permission is granted. The Court accepted that a receiver may grant leases within those limitations and that such power was not in dispute.

The Court found fault with the particular lease granted here because it was an indeterminate lease "until such time as the civil Courts have decided the matter," which could extend beyond the typical three-year limit and was therefore improper for a receiver to grant without limitation.

The Court then examined the authorities relied upon by the Joint Magistrate and by counsel for the petitioner. It held that Mt. Lachmi Kuer v. Gajadhar Prasad concerned only the principle that possession should not be given to either disputing party while an attachment under Section 146 continues, and so did not address the question of a receiver's grant of a lease. Krista Chandra Ghose was recognized as authority that a granted lease may put the matter beyond the Court's control and that the usual remedy for collusion is a suit, but that decision did not speak to the effect of fraud upon the Court.

The Court relied on Sirish Chandra v. Debendra Nath for the proposition that misrepresentation or concealment by a receiver of material facts can justify summary setting aside of a lease. Applying these principles to the facts, the Court found (on the material before it) that the receiver had applied for permission to grant a lease without stating to whom it would be granted and then immediately granted the lease to the petitioner. Although the receiver later reported the lease, that report concealed material facts: specifically, while the report named the lessee (Meyappa Chetty) and referenced that the lessee had 71 keys, it did not disclose that the lessee was one of the parties to the Section 145 proceedings. The Court found that this omission was deliberate concealment intended to mislead.

Concluding that the petitioner, with the connivance of the receiver, had committed a deliberate fraud upon the Court to obtain a lease that afforded possession while the dispute remained undecided, the Court held that the Joint Magistrate had every justification and authority to remove the receiver and set aside the lease summarily.

Holding and Implications

Holding: The petition is dismissed. The Court upheld the Joint Magistrate's cancellation of the lease and removal of the receiver.

Implications: The direct consequence is that the lease granted to the petitioner has been set aside and the petition to challenge that action dismissed. The Court's decision rests on the finding of deliberate concealment/fraud upon the Court by the receiver and the petitioner; accordingly, a Magistrate is entitled to set aside a lease summarily where such fraud or material misrepresentation/concealment is shown. The opinion does not state any broader rule beyond application of the authorities cited to these facts, and it does not purport to establish a new general precedent beyond reaffirming that fraud or concealment by a receiver may justify summary cancellation of a lease.


Presiding Judge: Bardswell, J. (Order)

    P.S.S Meyyappa Chettiar Petitioner (2Nd Counter-Petitioner). v. Nagamai Achi (Petitioner).

    ORDER

    Bardswell, J.

    1. The petitioner was a party to the proceedings under Section 145, Criminal P.C., the dispute being one as to the possession of a house. The Sub-divisional Magistrate found that possession was not established by either party and on 27th February 1930, passed an order attaching the house until the right to possession of it by one party or the other was determined by a civil Court. This order was confirmed by the High Court in revision on 12th December 1930. The applicant for revision was the present petitioner. On 30th June 1932 the receiver who had been appointed in accordance with Clause 2, Section 146, Criminal P.C., asked for permission to lease the house and on the following day he leased it to the petitioner. On its becoming known to the Joint Magistrate that the lease had been given to one of the disputing parties he removed the receiver from his appointment and set aside the lease. Against the order cancelling the lease the petitioner has come up on revision.

    2. The point taken for the petitioner is that when the lease had once been granted, it could not be cancelled summarily as it has been, by the Joint Magistrate, but that the only procedure was to bring a suit against the petitioner after giving him notice under Section 111, T.P. Act. Clause 2, Section 146, provides that a receiver who is appointed under it is to have, subject to the control of the Court, all powers of the receiver appointed under the Civil P.C. By Order 40, Rule 1, Civil P.C., the Court may confer on a receiver all powers of management, etc., or such powers as the owner himself has as the Court thinks fit. In the present instance there seems to have been no limitation imposed upon the powers of the receiver and so it is to be taken that he had all the general powers of management, and these powers of management include the granting of leases. It is stated in Woodroffe and Ameer Ali's commentary on the Civil P.C., that, under the general permission of the Court, a receiver may in his discretion let out the property for any period not exceeding three years, but that he may not do so for a longer period without obtaining special permission. I should note that in this case a lease has been granted to the petitioner until such time as the civil Courts have decided the matter. It is possible that the lease may endure for less than three years, but it is equally possible that it may last for a considerably further period. Such an indeterminate lease was certainly not a proper one for the receiver to grant. That however a lease can be granted by the receiver within the limitations above stated seems beyond question and is not indeed disputed. The Magistrate has stated in his order that it has been clearly held by various High Courts that a receiver must take specific instructions from Courts and act strictly in accordance with the same, but he has not stated what his authorities are, neither have they been mentioned in this Court in the course of the arguments on this petition. The receiver has in fact, in this case, asked permission before hand of the Magistrate to grant the lease, but once he has got that permission, it does not seem that he needed to ask the permission of the Court as to whom the lease should be granted, so long, at least, as he did not practise a fraud upon the Court.

    3. The Joint Magistrate has based his decision on the ruling in Mt. Lachmi Kuer, v. Gajadhar Prasad AIR 1927 Pat 393. But this decision does not bear on the point raised by Mr. K.S. Jayarama Ayyar for the petitioner. It has nothing whatever to do with the granting of any lease. What it does is to declare the principle that, when an attachment has been made under Section 146 pending the decision of the civil Courts, possession should not be made over to either party to the dispute so long as the attachment continues. For such a principle authority is hardly required. Though the order under Section 146 does not prohibit the entrance of any party upon the property in dispute pending the decision of the civil Court, it is clearly implied by the fact of attachment that neither party is meant to enter upon the property in any circumstance till the civil Courts have decided the matter. The decision on which Mr. Jayarama Ayyar lays stress is in Krista Chandra Ghose v. Krista Sakha Ghose (1909) 36 Cal 52, a decision of Woodroffe, J., who is an eminent authority on the law of receivers. In that case it was held that, when a lease had been already granted by a receiver, the matter had passed beyond the Court's control and that, even though the lease had been granted to one of the parties, that party was not subject to the jurisdiction of the Court as lessee. It was also made to appear in that case that, even in the case of collusion between the receiver and his lessee, the proper course was to proceed by a suit. Nothing however is said in this decision as to what will be the position if a fraud has been practised upon the Court. As to that there is another decision of the same High Court, which is found in Sirish Chandra v. Debendra Nath AIR 1929 Cal 828. In that case it was held by a Divisional Bench that misrepresentation or concealment by a receiver of material facts are sufficient to justify the Court in setting aside a lease summarily when that lease has been granted in consequence of such misrepresentation or concealment of facts. It has been pointed out by Mr. Jayarama Ayyar that in that particular instance it would appear that the receiver had no authority to grant leases, but this does not matter from the point of view of Mr. Jayarama Ayyar's contention, which is that in no circumstances can a lease once granted by a receiver be set aside except by means of a suit. In the circumstances of that case the learned Judges of the Calcutta High Court did not set aside the lease as they found that there had been no fraud, but they made it clear that if there had been a fraud they would have set it aside. I take this as an authority that, if it is found that there has been a fraud upon the Court in granting and obtaining a lease, a Magistrate is entitled to set the lease aside in a summary manner as the Magistrate has done in the case under review. The receiver in this case applied on 30th June 1932, for permission to grant a lease without stating to whom it was intended that the lease should be granted. On the very next day, after the permission was given, the lease was granted to the present petitioner. Mr. Jayarama Ayyar urges that it was an indication of the good faith of the receiver, that he reported the matter to the Court on the very day of the lease, i.e., on 1st July 1932, but I find that this does not help the petitioner at all, as in that report there was concealment of facts which has to be regarded as deliberately intended to mislead the Court. The name of the person to whom the lease was given was indeed mentioned, the name being Meyappa Chetty, but this name is not a very unusual one and the Court cannot be expected to bear in its mind the names of all parties to proceedings before it. There is no reference in the report to the lessee being one of the parties to the proceedings under Section 145. There is indeed a reference to the lessee having in his possession 71 keys, but it is not mentioned in what capacity he had those keys, and it was not to be expected from this casual reference, which came at the end of the report, as to the 71 keys, that the Magistrate should gather that the lessee was one of the parties to the inquiry under Section 145. Had the Magistrate known that the party to whom the lease was being given was one of the parties to the inquiry, he would not have allowed the lease to be given to that party.

    4. I am satisfied that the petitioner, with the connivance of the receiver, has been guilty of a very impudent fraud upon the Court and has by these means obtained a lease which he would not have otherwise got, by the terms of which he was to have possession of the property in dispute so long as the dispute remained undecided. The Magistrate, therefore had every justification in setting aside the lease and I am further satisfied that he had authority to order its cancellation. The petition is dismissed.

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    Comments

    P.S.S Meyyappa Chettiar Petitioner (2Nd Counter-Petitioner). v. Nagamai Achi (Petitioner).
    (Sep 9, 1932)