Appeal (L) No.104 of 2013,Chamber Summons No.1209 of 2011,Suit No.4913 of 2000

19th July, 2013

Petitioner Counsel: Mr. K.G. Munshi,Thakore Jariwala
Respondent Counsel: Mr. Neel Helekar,Mr. Rahul R. Singh,Mr. Devanshu Desai,Desai Desai Currimji,Mulla
Other Counsel: Mr. S.S. Deshpande,Mr. N.A. Bandodkar

Cases Cited:
Everest Coal Company (P) Ltd. Vs. State of Bihar, (1978) 1 SCC 12 [Para 4]
Mohamed Hanif Abdul Hamid Vs. Chunilal Ukabhai Padia, AIR 1981 Bombay 156 [Para 5]
Hi Fi Sound Corporation Vs. Vinsons, 2001(1) ALL MR 807=2001 (Supp.) Bom.C.R. 313 [Para 5]

JUDGMENT

DR. D. Y. CHANDRACHUD, J. :- On 20 July 1999, a lease deed was executed by the erstwhile partnership of Ahmed Oomerbhoy with the First Respondent, the landlord, in respect of the suit premises bearing No.43, Shopping Centre-I, Manasarovar Garden, New Delhi. In a suit for dissolution and accounts of the partnership firm, which was filed in this Court, an ad-interim order was passed on 6 December 2000, appointing the Court Receiver as Receiver of the firm and of its assets. In January 2002, the First Respondent instituted a suit before the Civil Judge at Delhi (Suit 20 of 2005) for the recovery of possession of the suit premises on account of arrears of rent. The Court Receiver was impleaded in the proceedings before the Trial Court on 16 October 2002. However, leave of this Court was not taken for proceeding with the suit against the Court Receiver. The suit proceeded ex-parte and a decree for possession was passed on 23 July 2005. A Chamber Summons was taken out by the First Respondent in June 2011 for the following relief:

"(a) That leave may be granted to allow the Applicant to implead the Court Receiver as the party Respondent in the execution proceedings to be initiated on the basis of the Decree dated 23.07.2005 passed in Suit No.20 of 2005 by the Civil Judge, Delhi.

(b) That leave may be granted to execute the Decree dated 23.07.2005 to release the property No.43, Shopping Centre-I, Block-F, Manasarowar Garden, New Delhi-110 015, from the hands of the court receiver."

The Chamber Summons is opposed by the Appellant. By an order dated 2 July 2012, the Learned Single Judge has granted leave as sought in terms of prayer clauses (a) and (b).

2. The challenge to the order of the Learned Single Judge is on the ground that no leave was sought from this Court for proceeding with the suit against the Court Receiver until the decree was passed. It has been urged that as a result, the suit proceeded ex-parte and it would be too late in the day to seek leave after the decree was passed.

3. The genesis of the requirement of obtaining the leave of the Court to proceed against the Court Receiver is that once a Receiver has been appointed, the property is custodia legis. Hence, the institution of a legal action without obtaining the leave of the Court, may amount to interference with the process of the Court.

4. In Everest Coal Company (P) Ltd. vs. State of Bihar, (1978) 1 SCC 12 the following issue was framed by the Supreme Court for determination:

"Can the Court appointing a receiver to take charge of properties, grant leave to continue a suit against him when a third party wants to prosecute such action initiated without such permission? If so, what are the guidelines for grant of such leave?

The Supreme Court held as follows:

"When a Court puts a receiver in possession of property, the property comes under Court custody, the receiver being merely an officer or agent of the Court. Any obstruction or interference with the Court's possession sounds in contempt of that Court. Any legal action in respect of that property is in a sense such an interference and invites the contempt penalty of likely invalidation of the suit or other proceedings. But, if either before starting the action or during its continuance, the party takes the leave of the Court, the sin is absolved and the proceeding may continue to a conclusion on the merits. In the ordinary course, no Court is so prestige-conscious that it will stand in the way of a legitimate legal proceeding for redressal or relief against its receiver unless the action is totally meritless, frivolous or vexatious or otherwise vitiated by any sinister factor. Grant of leave is the rule, refusal the exception. After all, the Court is not, in the usual run of cases, affected by a litigation which settles the rights of parties and the receiver represents neither party, being an officer of the Court. For this reason, ordinarily the Court accords permission to sue, or to continue. The jurisdiction to grant leave is undoubted and inherent, but not based on black-letter law in the sense of enacted law. Any litigative disturbance of the Court's possession without its permission amounts to contempt of its authority; and the wages of contempt of Court in this jurisdiction may well be voidability of the whole proceeding. Equally clearly, prior permission of the Court appointing the receiver is not a condition precedent to the enforcement of the cause of action. Nor is it so grave a vice that later leave sought and got before the decree has been passed will not purge it. If, before the suit terminates, the relevant Court is moved and permission to sue or to prosecute further is granted, the requirement of law is fulfilled. Of course, failure to secure such leave till the end of the lis may prove fatal.

It needs to be emphasised that the Supreme Court held that the leave of the Court is granted liberally and grant of leave would be the rule.

5. The judgment of the Supreme Court was followed by a Learned Single Judge of this Court in Mohamed Hanif Abdul Hamid vs. Chunilal Ukabhai Padia. AIR 1981 Bombay 156. The Learned Single Judge held thus:

"The ratio of the authorities cited above appears to be that although there is no statutory provision which requires a party to take leave of the Court to sue a Receiver, the rule regarding obtaining leave is part of the rules of equity and is based on public policy which requires that when the Court had assumed possession of the property in the interest of the litigants, the authority of the Court was not to be disturbed without first taking its leave. However, a party can apply for leave retrospectively, if it has omitted to obtain such leave prior to the filing of the suit or prior to initiating proceedings in execution. It is, therefore, within the competence of the Court to grant such leave in retrospect; the only question being whether the granting of such 'subsequent leave' would prejudice any party."

Finally, it is necessary to take note of the judgment of another Learned Single Judge in Hi Fi Sound Corporation vs. Vinsons. 2001 (Supp.) Bom.C.R. 313 : [2001(1) ALL MR 807]. In that case, the Learned Single Judge noted the observations of the Supreme Court extracted above to the effect that the "failure to secure such leave till the end of the lis may prove fatal". The Learned Single Judge held as follows :

"The decision nowhere lays down the law that the moment the suit against Receiver comes to an end without any leave being obtained, the entire proceedings are rendered void. On the contrary, the expression used by the Apex Court is not "the suit" but "lis". This is apparent from the last sentence in para 4 wherein it is observed that "Of course failure to secure such leave till the end of the lis may prove fatal". (emphasis supplied). The expression "lis" would certainly include the proceedings for execution of a decree and is not restricted to the proceedings in a suit. It will include the proceeding in the appeal as well. No doubt a observation prior to the last sentence in para 4 of the said decision of the Apex Court does state that "if before the suit terminates, the relevant Court is moved and permission to sue or prosecute is granted, the requirement of law is fulfilled." That was in the facts of the case. From the said sentence in the decision it cannot be concluded that in case of failure on the part of the plaintiff to obtain the leave before the suit is decreed, the entire proceedings would be rendered void. It should not be forgotten that a decision is an authority for what it actually decides."

We are in respectful agreement with the view which has been expressed by the Learned Single Judges in the decisions in Mohamed Hanif and in Hi Fi Corporation.

6. The requirement of obtaining the leave of the Court is to ensure that when the property is custodia legis, as it is when a Receiver has been appointed, the property continues to remain under the supervision and control of the Court. Where leave has not been taken before the action was instituted that is not something which would inexorably result in the invalidity of the action in every case. The jurisdiction to grant leave, which the Court exercises, is in pursuance of its inherent jurisdiction. In a broad sense, the jurisdiction is equitable for, as the Supreme Court noted, it is not based on black letter law or enacted law. In the absence of permission, a litigant taking recourse to legal action may well invite the exercise of the contempt jurisdiction. But, equally it is a matter of trite law that an action in contempt is a matter which rests between the Court and the contemnor and it is, hence, for the Court to decide in the facts of each individual case whether the infraction is so serious as to attract a penal consequence. Hence where permission of the Court which has appointed the Receiver has not been taken before institution of a legal action the Court may be moved to give its post facto sanction. It is then for the Court to consider whether the facts of the case are such as to suggest that the conduct of the litigant was lacking in bona fides or whether the Court was not moved at an earlier point of time to secure an unfair advantage. Hence, the element of prejudice also assumes significance. In the present case, the action was between the landlord and a tenant. The incidents of that relationship would be governed by rent control legislation. In the present case, there was evidently no motive to secure an unfair gain nor was any prejudice caused to the Appellant. Significantly, the Receiver had been impleaded to the proceedings before the Court in Delhi though an application for permission to implead the Receiver was made before this Court subsequently after the decree was passed. For the reasons indicated earlier, we find that there was nothing wrong in principle with the Learned Single Judge entertaining such an application. Nor for that matter is there any reason for the Court to decline to follow the ordinary rule to grant leave when leave is sought to proceed against the Receiver. The first prayer that was granted by the Learned Single Judge was to implead the Receiver in the execution proceedings which would be initiated on the basis of the decree passed by the Civil Judge, while the second prayer, we clarify, meant only that leave has been granted to execute the decree against the Court Receiver.

7. For the aforesaid reasons, we do not find any merit in the appeal. The appeal is accordingly dismissed. There shall be no order as to costs.

Appeal dismissed.