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Case Number

Suit No. 568 of 1871

Judges

Sale, J.

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Smart Summary

Analytical Summary of the Opinion (Sale, J.) — Application to Pass Receivers' Accounts

Factual and Procedural Background

The dispute concerns whether the accounts filed by two Receivers of a very large estate (principally consisting of four large zemindaris in the mofussil) should be passed, in the face of exceptions filed to those accounts. There were also some properties in Calcutta, but no question arose as to them in this opinion.

Historically, various members of the family had acted as Receivers; in 1878 Mr. Fergusson (an advocate of the Court) was appointed, and thereafter successive advocates acted as Receivers. From 1878 accounts were filed every six months and were generally passed without exception until the present occasion.

Mr. Caspersz was appointed Receiver in 1893 (in succession to Mr. Dunne) and served until 1899. When he planned to leave the country in 1899 he obtained the parties' consent to have Mr. Graham appointed to act for him; Mr. Graham was appointed in March 1899. Mr. Caspersz returned in September 1899 and sought to resume the appointment; that was opposed. Mr. Graham sought to be relieved but was at first retained by the Court; he ultimately applied for and obtained discharge in March 1900.

Exceptions were filed to the accounts of both Mr. Caspersz and Mr. Graham. The first account objected to was Mr. Caspersz's account covering approximately the six months from August or September 1898 to the end of March 1899. The applicants asserted that inspection of certain mofussil accounts during Mr. Graham's tenure revealed errors and omissions prompting the exceptions.

The matter proceeded to hearing before Sale, J., who considered whether the exceptions were well founded and whether the Receivers' accounts should be passed. The court ultimately disallowed all exceptions, directed that the accounts be passed, ordered the applicants who filed exceptions to bear and pay costs (including the Receiver's costs), allowed certain administrative directions regarding payment of costs from shares of parties who filed exceptions, and made incidental orders (including vacating sureties).

Legal Issues Presented

Whether the exceptions filed to the Receivers' accounts disclose valid grounds for refusing to pass those accounts — i.e., whether the exceptions challenge items properly within the scope of an application to pass accounts.
Whether a Receiver's accountability extends to mofussil collections made by estate employees (naibs and other servants) that did not come into the Receiver's hands, such that those collections must be included in accounts filed by the Receiver.
Whether the alleged misconduct, improper compromises, naibs' practices (including instalment bonds and alleged receipt of nuzzurs) or management methods can be the subject of exceptions to be resolved on an application to pass accounts, or whether those matters require a separate suit or enquiry.
Whether any prima facie case exists that would justify referring the exceptions for further enquiry or postponing the passing of the accounts pending suit.

Arguments of the Parties

Applicants (those filing exceptions)

Upon inspection of certain mofussil accounts while Mr. Graham acted as Receiver, the applicants claimed to have discovered errors and omissions which warranted exceptions to the accounts of both Mr. Caspersz and Mr. Graham.
They argued generally that the Receivers' accounts do not cover the full extent of the Receivers' liability because the mofussil collections made by estate servants were not included, and that the Receiver should be accountable for those collections.
Certain exceptions specified alleged misconduct by the Receivers, including improper compromises of claims or suits, sanctioning unjustifiable methods by naibs and other employees, acceptance of instalment bonds for consideration to give debtors more time, and alleged nuzzurs received by employes not credited to the estate; in substance the applicants contended that the Receivers' management caused loss to the estate.

Receivers / Respondents (and their supporting counsel)

The Receivers took the position (from the outset) that they disclaimed responsibility for mofussil collections that did not pass into their hands; their accounts were confined to sums actually remitted to them from the mofussil.
It was contended that many of the matters complained of are matters of long-standing practice and were known to the parties for years, and that they are objections to the system of management rather than to particular receipt or payment entries in the Receivers' accounts.
Respondent-counsel (as reflected in the Court's summary) argued that issues of alleged wilful neglect, negligence, or broader liability cannot properly be resolved on an application to pass accounts and that the appropriate remedy, if pressed, would be to sue the Receiver to establish such liability.

Other positions noted by the Court

It was accepted by some counsel (notably Mr. Garth, as the Court recounts) that the historical system of management was unsound and likely to cause loss, and that the parties could, if they agreed, propose a scheme to give Receivers control over mofussil collections or take management into their own hands.
There were contentions and submissions about costs among counsel (Mr. Knight, Mr. A. Chaudhuri, Mr. C.R. Dass, Mr. N.C. Bose, etc.) regarding who should bear costs, whether costs should be on a particular scale, and whether costs could be paid out of funds in Court or charged to the parties' shares.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Balaji Narain Patvardhan v. Ram Chandra Govind Kanade (as explained by Farran, J.)	Defines the Receiver's liability: a Receiver is responsible for all property which came into his custody or management and is responsible not only for actual sums received but also for sums which might have been received but for his wilful neglect or default.	The Court used this authority to clarify the legal standard for Receiver liability and to explain that broader claims of accountability (beyond items shown on accounts) require establishing wilful neglect or default — typically by separate suit — and cannot ordinarily be resolved solely by exceptions on an application to pass accounts.

Court's Reasoning and Analysis

The Court framed the narrow scope of an application to pass a Receiver's accounts: the proper inquiry is limited to (a) whether all collections made on behalf of the property and that came into the Receiver's hands are duly entered in the accounts, and (b) whether disbursements shown were actually made and made for estate purposes. Matters of wider liability or responsibility which do not appear on the face of the accounts must be pursued by suit rather than by exceptions to accounts.

The Court relied on the statutory definition of liability (sec. 503, Civil Procedure Code) and the judicial exposition in Balaji Narain Patvardhan v. Ram Chandra Govind Kanade to articulate the legal test for Receiver responsibility including responsibility for sums that might have been received but for wilful neglect.

Applying those principles, the Court examined the exceptions and found that none of them alleged (and none established) that a Receiver had received sums which were not credited, nor that any payment shown in the accounts had not been made or was not for estate purposes. Instead, the exceptions predominantly challenged the mode of management and the conduct of estate employees (naibs), alleged improper compromises, the taking of instalment bonds, and receipt of nuzzurs — matters which the Court characterized as objections to management methods rather than to discrete account items.

The Court further analysed the historical practice: since 1878 the Receivers' accounts had consistently been confined to sums actually received by the Receivers, and that practice had been sanctioned by the parties and the Court. The Court noted repeated objections by parties to giving Receivers control over mofussil collections; therefore, the Receivers had consistently disclaimed responsibility for sums other than those remitted to them. Given this background, the Court found it inconsistent for the applicants to insist on Receiver accountability for mofussil collections while having opposed placing those collections under Receiver control.

The Court considered procedural alternatives (postponing passing accounts until liability established by suit, or passing accounts while reserving parties' rights) but found neither necessary. No suit had been instituted despite months of opportunity, and on the evidence before the Court there was no prima facie ground to hold the Receivers accountable beyond items in their accounts. The Court therefore concluded that none of the exceptions justified refusing to pass accounts or ordering a reference for enquiry.

On costs and incidental relief the Court exercised discretion: it disallowed the exceptions, passed the accounts, ordered that applicants who filed exceptions bear and pay their costs and the Receiver's costs, allowed Receivers to have their costs as between attorney and client, vacated sureties (on request), and gave the present Receiver liberty to pay costs sanctioned and debit them to the shares of the parties who filed exceptions; the Court declined certain other costs-related requests (for example, allowing another party's costs or directing costs on a particular scale).

Holding and Implications

Core Ruling: All exceptions filed to the Receivers' accounts were disallowed and the Receivers' accounts were ordered to be passed.

Consequential orders and immediate implications:

The applicants who filed exceptions were ordered to bear and pay their costs and to pay the Receiver's costs.
The Receivers were awarded costs as between attorney and client.
The Court granted liberty to the present Receiver to pay the sanctioned costs and to debit those costs to the shares of the parties who filed exceptions.
The Court vacated the sureties (as requested).
The Court explicitly refused to permit the exceptions to serve as a substitute for a suit to establish broader liability; the Judge expressed no concluded opinion whether this finding would affect any future suit the parties might institute to pursue larger accountability against the Receivers.

Broader legal implication: The decision applies settled procedural principles limiting an application to pass accounts to examination of items appearing in the accounts; allegations of wider mismanagement or liability that do not appear on the accounts must be pursued by suit. The Court did not purport to establish a new legal precedent; it applied existing statutory and judicial authorities to deny the exceptions on the facts and record before it.

Attorneys and parties appearing (as recorded in the opinion): Babu Bhuban Mohan Das; Mr. N.C. Bose; Messrs Carruthers & Co.; Messrs Dignam & Co.; Messrs Sanderson & Co.; Mr. A.H. Gillanders; Babus M.M. Chatterjee and Bhupendra Sri Ghosa. (These appearances are recorded in the opinion and relate to the proceedings summarized above.)

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Coomar Sattya Sankar Ghosal And Others v. Ranee Golapmonee Debee And Others.

Sale, J.:— The question which arises upon this application is as to whether certain accounts filed by two Receivers appointed in this suit should be passed. Certain exceptions have been filed to the accounts submitted by the Receivers and the question is whether these exceptions are well founded. The facts shortly are these. The estate in question is a very large one and consists mainly of four large zemindaris situated in the mofussil. I believe there are properties in Calcutta belonging to the estate but no question arises as to these. Very many years ago certain members of the family interested in the estate were appointed Receivers. Subsequently they retired from that position and Mr. Fergusson, an advocate of this Court, was appointed Receiver in their place. That was in 1878. From that time to this there have been from time to time Receivers appointed all of whom have been advocates of this Court, and they have filed their accounts every six months and all such accounts have been passed, I think, without any exception being taken thereto. I think this is the only occasion when exceptions have been filed to the Receiver's accounts. It appears that Mr. Caspersz was appointed Receiver in the place of Mr. Dunne in 1893. He continued as Receiver till 1899 and passed his accounts at Intervals in the ordinary way. He was leaving the country in that year and proposed that Mr. Graham should be appointed to act for him during his absence from the country. He obtained the consent of all parties to this proposal and Mr. Graham was appointed Receiver in March 1899. Mr. Caspersz returned to this country in September of that year and proposed to take up the appointment vacated by him. That was objected to by the parties. Mr. Graham was not anxious to continue and asked to be relieved of his duties. That also was objected to. The result was Mr. Graham at the suggestion of the Court, continued to act as Receiver, but shortly afterwards finding that the parties persisted in maintaining a hostile attitude he was compelled to make an application to the Court for his discharge from the office of Receiver and he was accordingly discharged in the month of March of 1900.

In the meantime steps had been taken to oppose the applications of these gentlemen to pasa their accounts. The first account objected to is that of Mr. Caspersz which covers the period of six months from August or September 1898 to the end of March 1899. It appears that this account was filed in the ordinary course and remained for months without any objection being taken to it. It is said that during the period Mr. Graham acted as Receiver, the parties obtained inspection of certain mofussil accounts and that from the information obtained thereby, they became aware for the first time of certain errors and omissions which necessitated objections being filed to the accounts both of Mr. Caspersz and Mr. Graham. I do not believe that these so-called discoveries have anything to do with the filing of these exceptions.

The matter supposed to be discovered are matters of which the parties must have had general knowledge for years past. They may not have known of certain particulars disclosed in the accounts inspected but the principle and methods adopted by the Receivers in rendering their accounts which are now so strongly objected to must have been known to the parties for a long course of years.

The question now is whether these exceptions disclose any real or just ground for refusing to pass the accounts which the Receivers have filed. I propose to deal with the exceptions to the accounts filed by both Receivers at one and the same time, as what I have to say will apply to both sets of exceptions equally.

There is first a general ground of exception taken to these accounts and that as that they do not cover the whole extent of the liability or accountability of the Receivers, inasmuch as they do not include the mofussil accounts of the estate. It seems to me this is not strictly speaking a matter of exception to the accounts filed. The only question which properly arises on an application by a Receiver to pass his accounts is as to the items of the particular account and involves the inquiry whether all his collections, made on behalf of the property of which he is the Receiver, are duly entered in the accounts, and next whether all his disbursements are payments properly made in respect of the estate of which he is the Receiver. These are the only matters which can be conveniently dealt with on an application to pass accounts. But it by no means follows that a Receiver's liability is to be restricted to matters shown upon his accounts. If there is any liability attaching to the Receiver other than that which appears on the face of the accounts the proper course is to sue the Receiver for the purpose of establishing that liability. It is impossible on an application to pass a Receiver's accounts to go into serious questions with regard to his liability and responsibility, which are really not respondent upon the accounts filed by him, but arise independently of his accounts. Questions of this Bort can only be satisfactorily dealt with by suit. There is, moreover, but little doubt as regards the question what the liability of a Receiver really is. That liability is defined in sec. 503, Civil Procedure Code, and is also explained by Farran, J., in Balaji Narain Patvardhan v. Ram Chandra Govind Kanade. The Receiver is responsible for all properties which came into his custody or management and he is responsible not only for actual sums received by him but for those which might have been received by him but for his wilful neglect and default. It is unusual and improper to raise questions with regard to the soundness or prudence of the system of management adopted by a Receiver or to seek to charge him for wilful default or negligence on an application by him to pass his accounts. These are not matters which can be disposed of in the shape of exceptions to accounts. Applying these tests to the several exceptions which have been filed to the accounts submitted by the Receivers, it appears that not a single one of these exceptions can be supported as a proper exception to these accounts. In not one of them is the objection taken that the Receiver has received any sum which he has not properly credited, nor is there a single exception which charges that any payment or disbursement appearing in the accounts either has not been made by him as a fact, or, if made, was not made for the purposes of the estate. If any such questions had been raised by the exceptions, and it appeared there was substance in the dispute, it might have been necessary to refer such dispute or disputes for enquiry. But after a long hearing and careful examination of the matters raised by these exceptions all I need say is that there does not appear to be one which has either been established or which would justify a reference for further enquiry.

In substance the exceptions consist of objections more or less specific to the mode of management adopted by the Receivers.

Certain of them allege misconduct of the Receivers in respect of the estate property as regards alleged improper compromises of claims or suits.

Another class of exceptions complain that Receivers have sanctioned methods on the part of the naibs or other employes of the estate which are not justifiable.

It is said also that instalment bonds have been improperly taken by the naibs for a consideration with the object of giving time to the debtors to pay their debts and also that nuzzurs have been received by various employes of the estate and have not been credited. It is suggested in respect of all these matters that the management by the Receivers has been at fault and has caused loss to the estate. I do not understand it to be suggested that the Receiver is personally responsible in respect of bribes which the employes of the estate have received.

But I am asked that an enquiry should be directed on these allegations for the purpose of establishing the fact that the management by the Receivers has not been beneficial to the estate. All I need Bay is that there is nothing in the evidence to show that the Receivers are in any sense personally responsible for the mal practices of the servants of the estate which are complained of, and even if a primâ facie case of responsibility on the part of the Receivers had been made out, it seems to me that an enquirer of this sort would be foreign to the purposes and scope of the present application.

I think therefore all these exception must be disallowed, but I should like to make some observations upon a matter which rises only incidentally upon exceptions, but has been made the subject of considerable argument, and that is the objection to the effect, that the accounts filed by the Receivers are improperly confined to sums that have come Into their own hands and their dealings therewith.

It is urged that in these accounts of the Receivers there is no account included of the mofussll collections made by the employes of the estate and it is contended that a Receiver's accountability extends to all these collections whether they came to the Receiver's hands or not. My difficulty in respect of this argument is that I do not see how a question of that sort can be determined upon an application to pass accounts. It might have been necessary to adopt one or other of the following courses: to postpone the passing of these accounts until the question of the Receiver's liability has been established by suit, or to pass the accounts reserving the right of the parties to establish any claim they may make against the Receivers in a suit properly framed for the purpose.

I do not think it necessary to take either of these courses. No suit has been instituted in respect of this matter although the parties have had months to consider what they are pleased to call their discoveries, and in the next place before I can take either of these courses, I must see if any real primâ facie ground of accountability was made out against the Receivers in respect of this matter. It seems to me that the evidence now deduced entirely contradicts the alleged Accountability. It is quite clear that the Receivers from the first disclaimed all responsibility in respect of sums other than those directly remitted to them from the mofussil. That position was taken by the Receivers from the very first, and there can be no stronger evidence of this fact than this, that from 1878, twenty two years ago, accounts of the Receivers filed in this Court have been confined to sums actually received by them and this has been done with the approval and sanction of the parties and of the Court.

The Receivers have not included in their accounts the mofussil collections by the servants of the estate, and for this very good reason, that the parties objected to the Receivers having any control over the mofussil collections. From time to time one Receiver after another has pointed out the difficulty which arises in respect of the management of the estate by reason of all mofussil collections not being permitted to come to their hands and on one occasion an application was made on the part of the then Receiver that he ought to be allowed out of some large funds then available to form a reserve fund for paying Government revenue and it was pointed out that if that was done it would enable the Receiver to undertake the responsibility of paying Government revenue and of making all mofussil collections. But as usual, In the history of this suit, when any course has been suggested by the Receiver for the benefit of the parties, it is strongly objected to by them. They preferred the old system that the Receivers should have no control over the naibs, that the naibs should make all local collections and disbursements including the payment of Government revenue and how, on the face of this, the present Applicant and his supporters can urge that the Receiver is responsible for the acts of the naibs I fail to understand. The Receiver can only be responsible for mofussil collections if he is in a position to exercise control over them. But here the parties insist upon the accountability of the Receivers and at the same time object to pub them in a position to exercise effective control.

There is a great deal in Mr. Garth's argument with which I entirely agree. I agree that the system adopted with regard to the management of this estate was unsound and could only result in loss to the estate and that so long as it continued, anything like good management was impossible. I also agree that because this system has been adopted till now, there is no reason why the parties should nob be ab liberty to put an end to that system. There is nothing so far as I know, to prevent the parties taking the management of the estate in their own hands, or if they prefer the Receiver to remain in possession of the estate, to propose a scheme which would enable him to be responsible for the payment of Government revenue and the receipt of all mofussil collections. But knowing as I do the history of this estate, I think lb is safe to predict that, if any such application is made by one party, it would be opposed by all the rest. If the parties would only agree to take the management of the estate upon then selves, It would relieve the Court of a considerable burden and enable the parties to gratify their own wishes and ideas as to the proper management of the estate. I should be happy to assist the parties in following out any such course of action.

It is quite a different thing to raise all these objections, which in my opinion are utterly unreal and unsubstantial and devoid of good faith, to the management of the Receivers and upon an application of this sort.

Under these circumstances it seems to me that the applicant has failed to show that primâ facie ground exists for supposing that the Receivers are liable for anything except that which appears in their accounts. I express no opinion whether this finding will affect in any way any issue which the patties may seek to raise by suit as to any larger accountability on the part of the Receiver.

I must disallow all the exceptions, and I pass the accounts filed and direct that the applicants who filed exceptions do bear and pay their costs and pay the Receiver's costs. The Receivers will be entitled to their costs as between attorney and client.

Mr. Knight asks that the sureties be vacated.

The Court.—Yes.

Mr. A Chaudhuri submits that the applicants should pay his costs.

The Court.—I do not see my way to allow that.

Mr. Knight asks for costs as of a hearing. The suit was placed on the peremptory list and treated as a hearing.

Mr. C.R Dass.—That was at their request and to suit their convenience.

Mr. N.C Bose.—I do not see why it should be treated differently.

The Court.—I do not see my way to direct costs on scale 2.

Mr. Knight.—The share of Mr. N.C Bose's client is under attachment; Messrs Carruthers' client's shares are also under attachment and Mr. Girth's clients are insolvents. Costs should be paid out of the fund in Court. Receiver has to pay monthly sums for maintenance, our costs should be paid out of that.

Mr. C.R Dass.—If there are any funds in the hands of the Receiver they can execute the order by attachment. The Receiver is not the Receiver now. He is not in possession.

The Court.—I will give the present Receiver liberty to pay the costs sanctioned and debit the same to the shares of the parties who have filed exceptions. Certified for counsel.

Mr. M.M Chatterjee.—Does your Lordship make any order as to my costs.

The Court.— No.

Mr. N.C Bose.—As regards the costs of the other parties there will be a general taxation of our costs.

The Court.—Yes.

Babu Bhuban Mohan Das, Attorney for some of the Plaintiffs.

Mr. N.C Bose, Attorney for the Plaintiff Sattyabadi Ghosal.

Messrs Carruthers & Co., Attorneys for some of the Defendants.

Messrs Dignam & Co., Attorneys for Mr. Graham.

Messrs Sanderson & Co., Attorneys for Mr. Caspersz.

Mr. A.H Gillanders, Babus M.M Chatterjee and Bhupendra Sri Ghosa for some of the other parties.

S.R.D

Exceptions disallowed.

Coomar Sattya Sankar Ghosal And Others v. Ranee Golapmonee Debee And Others.

Analytical Summary of the Opinion (Sale, J.) — Application to Pass Receivers' Accounts

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Applicants (those filing exceptions)

Receivers / Respondents (and their supporting counsel)

Other positions noted by the Court

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Coomar Sattya Sankar Ghosal And Others v. Ranee Golapmonee Debee And Others.

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