TMI Blog1961 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... to run the mill of the company. Leave was also granted to the liquidator to buy and enter into contracts for purchase of ( i ) cotton, ( ii ) stores, ( iii ) coal, ( iv ) dye-stuff and other chemicals and ( v ) all other articles and accessories that would be required for running the mill and to pay the price thereof from the funds of the company. Thereafter, on November 28, 1955, an order was made in Extraordinary Suit No. 7 of 1955 ( United Bank of India Ltd. v . Mahaluxmi Cotton Mills Ltd. (In liquidation) and Others ) appointing Mr. P.K. Pal, the liquidator, as receiver in the suit. The receiver was directed to work the mills on the same terms and conditions as were mentioned in the order relating to the running of the mill and made in the liquidation proceedings. While the receiver under order of this court was running the mill he placed diverse orders with the petitioner from time to time for supply of various quantities of cotton at agreed rates. The petitioner made supplies to the receiver in terms of his orders. The petitioner submitted bills to the receiver who also made various part payments from time to time. After appropriating these payments on the 5th July, 1950 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point urged before me. At page 572 Spencer C.J. has said that if in pursuance of the court's order the receiver bad mortgaged the press for raising a fund to defray the costs of his management that mortgage would have taken precedence over the mortgagee's security. At page 573 Srinivasa Ayyangar J. observes as follows: "when property is placed in custodia legis, by the appointment of a receiver, all the orders passed by the court for the management of such property will be binding on all persons who, if not actual parties to the suit, have so conducted themselves, either with regard to the litigation, or with regard to the management of the property, under the directions of the court, as to make themselves virtually or constructively parties to the suit, or have otherwise submitted them selves to such management by the court." With respect I agree with these observations. In the instant case at first the liquidator was asked by the court to carry on the business of the company and to run the company's mill. Then in the suit of the United Bank itself the same person is appointed the receiver and is empowered to run the mill on the same terms and conditions as he was directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petition and does not admit the same. Then, with reference to paragraph 12 of the petition, the deponent denies that the petitioner's alleged dues are payable in priority to all other dues or to the dues of the bank. The receiver, however, has stated in paragraph 10 of the affidavit affirmed on the 27th February, 1961, as follows: "The allegations contained in paragraph 11 of the said petition are substantially correct. I say that on taking of accounts the amount due to the petitioner is Rs. 38,813.40. The petitioner did not receive payment of his dues as the correct bills were not submitted and the petitioner's claimed amounts were much in excess of the petitioner's real dues. I crave leave to refer to the statement of account of the petitioner as kept in my office at the time of the hearing of the application. " Since the learned counsel for the petitioner is now willing to accept this sum of Rs. 38,813.40 in full satisfaction of the petitioner's claim and there are no allegations against the receiver, I see no justification for a further enquiry into the amount due purely on suspicions sought to be raised at the hearing. The next contention of the bank is that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hawkins Co., In re [1915] 31 TLR 247 and Brocklebank v. East London Railway Co. [1879] 12 Ch. D. 839. Mr. Mitter contends that none of these two cases lends any support to the proposition of the learned editors of this text book. I shall first deal with Brocklebank's case ( supra ). This was a debenture-holder's action in which a receiver of the defendant's undertaking was appointed. The receiver was ordered to pay all expenses for maintenance, management and working of the undertaking and any party was to be at liberty to apply as to any payments to be made by the receiver. The Great Eastern Railway Company, which was not a party to the suit, obtained a judgment for 800 for two years' rent, 415-4-0 for expenses and 10,000 for two years' toll under an agreement. The Great Eastern Railway Company took out a summons in the debenture-holder's suit for a direction on the receiver to pay out the decretal amounts to it. Fry J., at pages 842 and 843, observed as follows: "But it is said on the part of the plaintiffs, and I think rightly, that such an order gives no right to every person to whom the receiver may owe money for expenses, still less to every person to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposition that a judgment-creditor may be granted either an order on the receiver for payment of what is due to him or leave to levy execution. Reference is made to Brocklebank's case ( supra ) in the foot-note and it is observed that the order will not, however, be made brevi manu where the receiver of a railway undertaking has been directed to pay working expenses with liberty to the parties to apply as to payments. This decision, therefore, is not, in my opinion, contrary to the general principles enumerated in Kerr on Receivers which I have quoted above. The other case referred to in that book is In re Ernest Hawkins Company Limited [1915] 31 TLR 247. This was also a debenture-holder's action against a company and a receiver and manager was appointed who was empowered by an order made in the action to borrow not more than 300 to carry on the business. The receiver and manager gave an order for goods on the understanding that he was not to be personally liable. In giving this order he was contracting in excess of the sum of 300. During the proceedings in the action a summons was taken out by the creditor for an order that the receiver and manager should pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrict in which certain properties belonging to the company were situated. The properties were let at "inclusive rentals", i.e. , the rates as between landlords and tenants were to be discharged by the landlords. The company was a subsidiary of another company and the properties were subject to a charge for securing the stock issued by the other company. On March 5, 1940, in an action brought by the debenture stockholders the court appointed a receiver and manager of the properties subject to the charge. The applicants took out a summons in the action asking that they might obtain payment of their unpaid rates on the properties for the half year ending September 30, 1940. It was contended for the applicants that (1) since the receiver had received as rent an aggregate sum exceeding by the amount of the rates the sum payable as rent, if the rates had been payable by the tenants, it would be unconscionable for an officer of the court to retain this additional benefit; (2) by the applicants not exercising their proper remedies of distraint the interests of the stockholders had been benefited. It was held that the claims of the rating authority could not be put higher than the claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as to questions of fact or of damages." It may now be relevant in this connection to quote the observations of Mukherji J. in Eastern Mortgage Agency Co. Ltd. v. Fazlul Karim [1930] 51 CLJ 571,586, which are as follows : "It cannot be doubted that a person who is prejudiced by the con duct of a receiver appointed in an action ought not, without leave of the court, to commence an action against him for adequate reliefs; more ordinarily would his remedy lie in an application to the court in the course of the action itself. But, if an application had been made in the partition suit by the present plaintiff to hold the receiver account able for the monies paid by him as alleged, the court would in all probability have found itself unable to decide the question on his accountability in such proceeding, inasmuch as it involved a determination of the rights and liabilities between the companies on the one hand and the plaintiff on the other, a matter entirely outside the scope of the suit in which the receiver had been appointed. Where the accountability of a receiver depends upon debatable questions not easy to be dealt with at the passing of the receiver's accounts the court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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