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I.C.I.C.I. Limited v/s Patheja Brothers Forgings & Stampings Limited & others

    Suit No. 2784 of 1999

    Decided On, 03 March 2000

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE S.H. KAPADIA

    For the Petitioner: Virendra Tulzapurkar, Arif Bookwalla i/b Malvi Ranchhoddas & Co., for the debtor Chockani International, Ms. Rajani Iyer i/b Mehta and Girdharlal, for Sree Ram Security & Consultancy Services., dvocate. For the Respondent: , Advocate.



Judgment Text

S.H. KAPADIA, J.


On 16th July, 1999, the Central Government by notification established the Debt Recovery Tribunal under section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Consequent upon the said notification, all suits/proceedings pending before this Court involving claims of Rs. 10 lakhs and above stood transferred to the Debts Recovery Tribunal (hereinafter, for the sake of brevity, referred to as ""D.R.T."").


2. After 16th July, 1999 in several proceedings before the Court receiver parties have challenged the right of the Court Receiver to manage the properties on the ground that in view of D.R.T. Act, 1993, the Court Receiver had no authority to act in the matter. Hence, the Court Receiver has moved this Court. Pursuant to notice, the above matters have come up for hearing.


3. In the circumstances, the Court Receiver has moved this Court for adjudication of various points, which arise for determination consequent upon the above notification.


4. The following points arise for determination:


(i) Whether this Court has jurisdiction to issue directions to Court Receiver in suits in which the Court Receiver stands appointed prior to 16th July 1999 ?

(ii) If not, whether this Court is empowered to give directions to its Court Receiver regarding the properties which are in the custody of the said Receiver till such time as the D.R.T./Central Government sets-up alternate office machinery with a proper infrastructure ?


5. Before coming to the above two questions, a short preclude needs to be mentioned.


Prelude : Before 1929, receivership was granted to private persons, Gradually, the business in the hands of the private Receiver increased and it was thought it had grown too big to be entrusted to a single private individual. It was, therefore, decided that the work should be assigned to a salaried officer on the establishment of the High Court. As a result, in 1929 the Government created the post of the Court Receiver, who took over all the pending receiverships from the private Receiver. The system sanctioned by the Government for running of the office, after it was taken over, was that the office should budget for its normal expenditure which the Government will pay in the first instance but which had to be recouped to them from the takings of the office other than the Receiver's commission. In 1932, the office was made a permanent department of the High Court. The Court Receiver was directed to continue to charge to the estates under his management all expenses incurred in connection with his office including the payment of rent and to credit all recoveries to the Government. Accordingly, Rule 592 of the Original Side Rules, inter alia, provides that the Court Receiver shall charge to the estates under his management a sum towards the expenses of his office including his salary. Under Rule 591, the Court Receiver is directed to charge fees according to a prescribed scale. Under Rule 595, a Receiver is required to file accounts in the office of the Commissioner. In appropriate cases, this Court is also empowered to appoint a Receiver other than the Court Receiver. Such receiver is also required to file accounts in the office of the Commissioner (See Rule 594(a)). When the Court Receiver is discharged, he is required to file his accounts upto the date of his discharge. Similarly, under Rule 924, the accounts of the Court Receiver are required to be audited by Accountant General and if any question between the auditor and the Court Receiver relating to accounts arises for determination, the question is required to be referred to the Chief Justice. This is under Rule 926. As stated in my order dated 4th February 2000, properties, both moveable and immoveable, worth Rs. 2000 crores are in possession of the Court Receiver, High Court, Bombay. These consist of shares, fixed deposits, jewellery, plant and machinery, buildings, dry-docks, tea estates, ships, amounts in the personal ledger accounts of the Court Receiver with R.B.I. as also amounts lying in the hands of the Court Receiver in cash and cheques. The office of the Court Receiver, High Court, Bombay has various departments like accounts department/section, cash department, record department, general administration department, etc. It employs approximately 100 employees. The Court Receiver, High Court, Bombay and the entire staff constitute a permanent department of the High Court. The Court Receiver is a high-ranking official. The present Court receiver holds the pay scale of Additional Prothonotary & Senior Master. The Court Receiver has to enter into agency agreements after the properties become custodia legis. As a Court Receiver, she has to sign bills/vouchers. At this stage it is important to note that after deducting costs, charges and expenses as also the commission by the Court Receiver, Banks and Financial Institutions are required to be paid the net royalty amount even during the pendency of the suit pursuant to the orders of the Court. These payments are made by the Court Receiver by cheques. Hence, the Court Receiver is required to sign cheques and payment vouchers by which net royalty amount is remitted to the parties to the suit. The Court Receiver is also required to sign daily vouchers to meet office expenses. The Court Receiver is also required to pay expenses to the officers, who visit the site by way of daily allowances. These officers are also required to go out of Bombay. The Court Receiver is also required to sign salary bills. The Court Receiver is also required to pay security guards who are appointed to protect plants, machinery and immoveable properties all over India. The Court Receiver is also required to pay fees to Valuers, Architects and Chartered Accountants. In some cases, Court Receiver is also required to sign returns under the Income-tax Act. All these facts are mentioned only to indicate that in Bombay the Court Receiver, High Court, Bombay discharges a very important function. The properties are spread over in India between Assam and Kanyakumari. One more fact needs to be mentioned that the State Government provides annual grant to the High Court. The budget allocation also includes office of the Court Receiver, High Court, Bombay. After deducting all costs, charges and expenses, the Court Receiver remit the balance amounts to the State Government. In the last Financial Year ending on 31st March 1999, the office of the Court Receiver, High Court, Bombay earned net revenue for the State Government of about Rs. 2 crores. These facts are required to be mentioned also for a different reason. With the coming up of the D.R.T. all suits, in which the claim is below Rs. 10 lakhs, remained within the jurisdiction of this Court. Apart from the Bank suits, we have private suits. In thousands of these suits Court Receiver's office still continues to have jurisdiction. As stated hereinabove, the office of the Court Receiver, High Court, Bombay is a department of the High Court. In last 60 years, this office has worked only for the High Court and not for any other Court like Small Causes Court. It is made clear once again that the Court Receiver has not worked for Small Causes Court or any other judicial forum. The point, which needs to be mentioned specifically is that an independent establishment will have to be set up by the Central Government to assist the receiver of the D.R.T. On the administrative side, the D.R.T. has informed this Court that it has no such infrastructure to take over the above properties and that the Central Government has been moved in that regard. In the meantime, enormous problems have arisen after 16th July 1999. The Court Receiver has informed this Court that in some matters parties have stopped depositing royalty on the ground that the Court Receiver, High Court, Bombay has no authority to collect the royalties after 16th July 1999. With the non-payment of royalties, the Court Receiver cannot meet her day-to day expenses. Without payment of royalty, the Court Receiver cannot pay salary to the security guards, rent collectors, etc. Without payment of royalty, she cannot pay fees to Valuers, Architects and Chartered Accountants. In some cases, emergent steps are required to be taken to protect dilapidated properties, vessels, etc. These problems have been brought to the notice of the Central Government. The well settled position in law is that if the properties, which are custodia legis, stand dissipated on account of neglect on the part of the Court Receiver, it can be sued for damages. It is for this reason that the Court Receiver, High Court, Bombay is required to seek directions at every stage from the High Court. All complaints are heard by the High Court. Either against the Court Receiver or complaints made by the Court Receiver. Even royalty fixed by the Court Receiver is highly debated before this Court and matters are fought on that ground. Moreover, it is important to bear in mind that this office of the Court Receiver, High Court, Bombay earns revenue in crores for the Government even pending a suit. In the circumstances, this Court is now required mainly to consider issuing appropriate directions regarding the fall out of the notification dated 16th July 1999, which incidentally, it may be mentioned, the Central Government should have realised before issuing the notification. This has not been done by the Central Government.

Point No. (i) :


Whether this Court has jurisdiction to issue directions to Court Receiver in suits in which the Court Receiver stands appointed prior to 16th July 1999 ?

The Recovery of Debts Due to Banks and Financial Institutions Act of 1993, was enacted to provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to Banks and Financial Institutions. Under section 2(c) the words ""appointed day"" have been defined to mean the day on which the tribunal is established under section 3(1) i.e. 16th July 1999 in the present case. Section 2(g) defines the word 'debt' to mean any liability which is alleged as due from any person by a Bank or a Financial Institution, whether secured or unsecured or whether payable under a decree or order of any Civil Court and subsisting on the date of the application before D.R.T. This definition of the word 'debt' is important. It refers to any liability which is alleged as due from any person by a Bank or a Financial Institution. Section 2(k) defines the expression 'Recovery Officer' to mean Recovery Officer appointed by the Central Government for D.R.T. under section 7(1). Under section 25(c) the Recovery Officer shall on receipt of certificate under section 19(7) can proceed to recover the debts mentioned in the said certificate, inter alia, by appointing a Receiver for the management of the properties of the defendant. Section 17 lays down the jurisdiction of D.R.T. in respect of recovery of debts due to Banks and Financial Institutions. Section 19 deals with procedure to be followed by the Tribunal. Under section 19(6), D.R.T. is empowered to make interim order by way of injunction restraining the defendant from transferring any property during the pendency of the application. Under section 19(7), the Presiding Officer is empowered to issue a certificate on the basis of the order of D.R.T. to the Recovery Officer for recovery of debts specified in the certificate. In other words, D.R.T. has no power to appoint an interim Receiver under section 19(6) as it originally stood. However, under section 22, D.R.T. was empowered to issue orders in accordance with principles of natural justice. The D.R.T. under section 22, was not bound by the procedure laid down by the C.P.C. Under section 22, D.R.T. was empowered to regulate its own procedure. In view of section 22, in some cases, D.R.T. took the view that it had the power to appoint interim Receiver in accordance with rules of natural justice in appropriate cases. However, on 17th January 2000, the President of India promulgated Ordinance No. 1 of 2000 whereby section 19 of the original Act has been substituted by a new section 19. Under the amended section 19(6), the defendant has a right to claim set-off against the applicant's demand. Under section 19(8) as amended, a defendant may, in addition to his right of pleading a set-off, also set-up a counter-claim, which will have the same effect as a cross suit. Under the amended section 19(18), the D.R.T. in appropriate cases, may appoint a Receiver at the interim stage, even before grant of certificate for recovery of debts. Under the said section, the D.R.T. is empowered to confer on the Receiver all powers for realisation, management, protection, preservation and improvement of the property including collection of rents and profits thereof. In the light of this amendment, the earlier lacuna in the Act is filled in. Under section 26 of the Act, the defendant cannot dispute before the Recovery Officer the correctness of the amount specified in the certificate. Section 31 of the Act deals with transfer of pending cases. Section 31(1) provides that every suit or other proceedings pending before any Court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is such that it would have been, within the jurisdiction of such Tribunal, if it had arisen after such establishment then, such suit or proceeding shall stand transferred on the date of the notifications to D.R.T. However, by way of proviso, it is mentioned that section 31(1) will not apply to appeals pending before any Court. Section 31(2) lays down that where any suit or other proceeding stands transferred to a Tribunal under section 31(1), then D.R.T. may proceed to deal with such suit or other proceeding, in the same manner as if the case stood covered by section 19 and from the stage which was reached before such transfer or from any earlier stage or de-nevo as the Tribunal may deem fit. However, by the above Ordinance, the words 'de-novo' are omitted. In the circumstances, the point which arises for consideration is the true scope of section 31 of the Act as amended. Section 31(1) not only transfers suit to D.R.T. but also all other proceedings. Section 31(1) further provides that the proceedings should be based on a cause of action which was cognizable by the D.R.T. after establishment of the Tribunal. The section is not happily worded. Briefly what it wants to say is that every suit or proceeding pending before any Court, before the date of establishment of the D.R.T. based on a cause of action cognizable by the D.R.T. (after establishment of the D.R.T.), should stand transferred to D.R.T. automatically. Section 31(2)(b) empowered the D.R.T. to proceed with such suit or other proceeding from the stage which was reached before such transfer or from any earlier stage as the Tribunal may deem fit. However, with the deletion of the word 'de-novo' by the Ordinance, it is clear that the legislature does not want the proceedings to start de-novo before the D.R.T. and the D.R.T. shall continue the proceedings from the stage which was reached before the Civil Court and before such transfer to D.R.T. or from any earlier stage as the D.R.T. may deem fit. In the circumstances, it is clear that all suits, execution proceedings and interim applications shall stand transferred to the D.R.T.


6. Before me, numerous Advocates appeared in support of their respective contentions. Broadly, it was contended on one hand that there was nothing in the D.R.T. Act, which renders orders passed by this Court (including interim orders) as non-est. It was urged that in cases where interim proceedings have already become final the orders passed therein are not rendered non-est and they will continue notwithstanding the provisions of the D.R.T. Act. In this connection, it was also urged that in any event till D.R.T. substitutes the Court Receiver, High Court, Bombay by its own Receiver, the present Court Receiver, High Court, Bombay shall continue. At this stage it may be mentioned that before the Ordinance, there was a conflict as to whether D.R.T. had the authority to appoint a Receiver. The judgments of the various tribunals indicate that Receivers were appointed by D.R.T. under section 22 of the Act on the principles of natural justice. However, with the Ordinance coming into picture that controversy is now being resolved. It was also contended that under Order XL, Rule 3 various duties to be performed by the Receivers are laid down. Similarly, under Order XL, Rule 4 where a Receiver causes loss to the property, or fails to carry out his duty, the Court may direct the property to be attached and sold. It was contended that these provisions are not made applicable to the Receiver of the D.R.T. It was contended that in the circumstances the Court Receiver, High Court, Bombay should not be disturbed. It was further contended that in all the above suits this Court, has appointed the Court Receiver and therefore, it is only this Court which can issue directions to its Receiver. It was contended that by law, Court Receiver, High Court, Bombay cannot be discharged. It was contended that there was no provision under the Act/Rules providing for such discharge. It was also contended that deletion of the worked 'de novo' by the Ordinance under section 31, shows that the legislature intends to give continuity to the orders passed before 16th July 1999. On the other hand it was urged that with the coming into force of the D.R.T. Act, the Court Receiver, High Court, Bombay stood automatically discharged. It was contended that section 31 of the D.R.T. Act provides for transfer of all pending cases which indicates that by law the Court Receiver, High Court, Bombay cannot function after 16th July 1999. It was urged that there was no provision under the Act empowering D.R.T. to appoint Court Receiver, High Court, Bombay as its own Receiver. It was urged that even under the Ordinance, D.R.T. can appoint a Receiver. However, under the Ordinance there is no provision either for continuity of the Court Receiver, High Court, Bombay nor is there any provision empowering D.R.T. to appoint or continue the existing Court Receiver. It was contended that after 16th July 1999 fresh applications ought to have been made for appointment of the Receiver with D.R.T. It was urged that under the Act, provisions of Order XL, Rule 1 are expressly made applicable to D.R.T. and therefore, High Court should immediately order discharge of the Court Receiver and the parties should be directed to apply 'de-novo' for appointment of Receiver before D.R.T. It was contended that with the transfer of jurisdiction, this Court had no authority to issue directions on the Receiver's reports. It was urged that important rights of the parties are involved in matters of fixation of royalty and determination of such rights and liabilities can only be decided by the D.R.T. after 16th July 1999. In other words, it was contended that orders appointing receivers prior to 16th July 1999 are part of an on-going process. They are not final before the cut-off date. Hence, in matters arising before the Court Receiver after the cut-off date directions can only be given by D.R.T. and that too, only to its own Receiver and not the Court Receiver. A third view was also canvassed by advocates viz. that looking to the definition of the word 'debt' under the D.R.T. Act, there was no automatic transfer under section 51. It was urged that under section 2(g), the word 'debt' means any liability which is alleged as due from any person by a bank which is legally recoverable or payable under a decree or order of any Civil Court on the day of the application. It was contended that therefore, in each matter of transfer the Court should examine the question whether the claim of the bank was legally recoverable, that whether the debt was time barred and only if the conditions mentioned under section 2(g) are satisfied then the Court should transfer the matters to D.R.T. At the threshold it may be mentioned that this argument stands rejected by the judgment of the Apex Court in the case of (State Bank of Bikaner & Jaipur v. Ms. Ballabh Das & Co.)1, reported in 2000 Bank.J. (S.C.)104 : J.T. 1999(7) S.C. 102. Before concluding it may be mentioned that before the Ordinance, there was a conflict of view regarding transfer of execution proceeding pending in this Court. In the case of (Bank of India v. Tin Pack Corporation & others)2, decided on 3rd September 1999 in Chamber Summons 963 of 1998, Rebello, J., took the view that there was no provision under the D.R.T. Act to convert a decree passed by this Court into a certificate and, therefore, section 31 did not contemplate transfer of the decree to the Recovery Officer appointed under the D.R.T. Act. This view was dissented by Chandra Shekhara Das, J., in the case of (Bank of Maharashtra v. Konkan Chemicals Pvt. Ltd.)3, in Suit No. 782 of 1992 reported in 2000(1) Bom.C.R. (O.O.C.J.)72 : 2000 Bank.J. (Bom.)292. Normally I would have referred this question to the Division Bench. However, in view of the Ordinance introducing section 31-A the controversy referred to above stands resolved. By the said section, it is now clearly laid down that where any decree or order has been passed by any Court before the Ordinance and which has not been executed then the decree holder may apply to the Tribunal to pass any order for recovery of the amounts under the decree and that on receipt of an application D.R.T. may issue a certificate of recovery to a Recovery Officer.


7. The Act has been enacted to enable Banks and Financial Institutions to expeditiously recover their dues and enforce securities charged with them. These securities as stated above, run into crores of rupees. With the coming into force of the Act, all suits and other proceedings pending before this Court stand automatically transferred to the D.R.T. This is very clear from the provisions of section 19 as amended by the Ordinance as also by section 31 of the Act. When the Court Receiver is appointed, it cannot be said that the proceedings stand exhausted inasmuch as the properties which are custodia legis are required to be managed by the Court Receiver under the directions of this Court. These directions are sought, from time to time, by the Court Receiver. These directions are sought with regard to various aspects detailed hereinabove. The Court Receiver also needs to be guided and protected by this Court. The office of the Court Receiver is an establishment of this Court. The day-to-day monitoring is done by the Court Receiver. The Court Receiver seeks directions on every aspects from the High Court. The duties of the Court Receiver flow from the order appointing the Court Receiver which is passed by this Court. In the circumstances it cannot be said that once the Court appoints the Court Receiver, the proceedings which are interim in nature come to an end. It would be an anomalous position to say that although the main suit has been transferred to the D.R.T., the interim proceedings in which the Court Receiver is appointed before the cut-off date continue to remain within the jurisdiction of this Court. The scope of the various provisions, discussed hereinabove, clearly show that all suits and other proceedings pending in this Court before the cut-off date shall stand transferred to the D.R.T. This will include even execution applications in which the Court Receiver is appointed prior to the cut-off date. It may be mentioned that as regards execution proceedings the decree holder will have to move the D.R.T. The D.R.T. shall issue the recovery certificate after examining the quantified decretal amount and on such certificate the recovery officer, under the Act, can proceed to recover the decretal dues. The Act is a complete Code by itself. Looking to the scheme of the said Act, as discussed above, it is clear that all suits and pending proceedings including interim proceedings pending before 16th July 1999 stand transferred to D.R.T. It needs to be reiterated that proceedings in which Court Receiver is appointed before 16th July, 1999 cannot be said to have worked out. They continue to remain pending on the cut-off date and therefore, the said proceedings also stand transferred to D.R.T. It is important to bear in mind that after the properties become custodia legis under the orders passed before the cut-off date the management of such properties is an ongoing continuous process and such monitoring/management requires appropriate directions to be given by D.R.T. Therefore, all such pending cases stand covered by section 31 of the Act. In the circumstances point No. 1 is answered in the affirmative.


8. One point needs to be clarified that in cases where Court Receiver has been appointed before 16th July 1999, the properties in possession of the Court Receiver shall continue to remain custodia-legis. I do not find any merit in the contention advanced that on and from 16th July 1999 the Court Receiver stood discharged automatically. The Court Receiver can only be discharged by this Court inasmuch as she has been appointed by this Court. Even in cases where proceedings stand transferred to D.R.T., the properties shall continue to remain custodia-legis either under the High Court or under the D.R.T. By way of clarification it is once again reiterated that the property shall remain custodia-legis with the Court Receiver till such time as the D.R.T. appoints a Receiver under the Act, in which event, a request will be made by the Receiver of D.R.T. to the Court Receiver to hand over the properties to the Receiver of D.R.T. Therefore, there is no merit in the contention advanced that after 16th July 1999 a fresh application will become necessary, seeking appointment of a Receiver, to the D.R.T. As stated above, the legislature has deleted the words de novo from section 31. This itself indicates that no fresh application for appointment of Receiver is required to be made to D.R.T. If this Court has already appointed a Receiver before 16th July 1999, the property shall continue to remain custodia-legis till the suit is disposed of by the D.R.T. Hence, no fresh application for appointment of Receiver is required to be made to D.R.T. It may be open to D.R.T., on an application of a party, to discharge its Receiver. However, ipso facto by reason of transfer of suits and proceedings the Court Receiver does not stand discharged. There will be no question of making a fresh application for appointment of Receiver. As stated above, proceeding before the Court Receiver is an on going process till the rights of the parties to the properties in the hands of the Receiver are decided. Only a formal handing over of the properties by the Court Receiver to the Receiver of D.R.T. will follow and, therefore, there is no question of de novo proceedings being adopted for appointment of Court Receiver.


9. In the case of (United Bank of India v. D.R.T.)4, reported in 1999 Bank.J. 788, it has been held by the Supreme Court that the word 'debt' has to be given widest amplitude to include any liability due from any person to the bank, whether secured or unsecured, whether payable by decree or otherwise. That the entire averments in the plaint have to be looked into to ascertain whether D.R.T. has the jurisdiction. In that matter, the High Court took a view that the suit was for damages and compensation which required quantification by a decree and therefore, it did not come within the purview of the Act. However, looking to the definition of the word 'debt' under the Act the Supreme Court found that the word debt included all claims arising out of debts owe (sic) due to the Banks and Financial Institutions. In another judgment of the Supreme Court in the case of State Bank of Bikaner and Jaipur v. Ms. Ballabh Das & Co., reported in 2000 Bank.J. (S.C.) 104 : Judgments Today 1999(7) S.C. pg. 102, it has been held by the Supreme Court that all suits/proceedings shall automatically stand transferred to D.R.T. on the date of the issuance of the notification. In that matter, it was argued by one of the parties that before the banks request for transfer of the case to the Tribunal is accepted, the Court should first decide the question as to whether the debt became due and payable. It was contended that the disputed amount had not become due and payable. It was contended that under section 2(g) of the Act the disputed amount should have become payable and legally recoverable on the date of the application. It was contended that looking to the definition of the word 'debt' under the Act if the disputed amount had become time barred or if the disputed amount had not become payable then, D.R.T. had no jurisdiction to entertain the suit. Accordingly it was contended that before the suit is transferred to D.R.T., the Civil Court should have considered the above questions. The Supreme Court, however, came to the conclusion that the word 'debt' under the Act has been defined to mean any liability which is alleged as due from any person by a bank and in the circumstances, the High Court erred in holding that unless the amounts claimed by the bank are decided by a competent forum they cannot be said to be due. The Supreme Court formulated the text and laid down that what was necessary to be considered was whether the bank had alleged in the suit that the amounts are due to the bank. That the liability had arisen to the bank and that the liability was subsisted and legally recoverable. Once these allegations are found in the plaint, section 31 of the Act become applicable. Hence, the suit stood transferred automatically by operation of law. Therefore, the bank was not really required to file application for transfer to Civil Court and such applications should have been treated by the Civil Court as applications for forwarding the suit to the Tribunal. In view of the said judgment of the Supreme Court, it is clear that all suits and proceedings shall stand transferred to D.R.T. This judgment is also relied upon in order to reject the contention advanced on behalf of one of the parties that the High Court should first ascertain as to whether the debt was legally recoverable in each suit and therefore, there cannot be an automatic transfer to D.R.T. In the above judgment, the Apex Court has clearly laid down that if the bank has made its claim on the basis of an allegation that the liability of the defendant had arisen during the course of its business activity and if it is alleged that the liability is subsisting and legally recoverable then the suit shall stand transferred to D.R.T.

Point No. (ii):

If not, whether this Court is empowered to give directions to its Court Receiver regarding the properties which are in the custody of the said Receiver till such time as the D.R.T./Central Government sets up alternate office/machinery with a proper infrastructure?


10. Although I have come to the conclusion that all suits and proceedings stood transferred on 16th July 1999 an important point which arises on the facts of these cases is that the D.R.T. has no infrastructure to take possession of the properties worth Rs. 2000 crores. Although, D.R.T. is now given the power to appoint Receivers, there is no adequate infrastructure provided to D.R.T. to take possession and charge of the properties which are in the custody of the Court Receiver, High Court, Bombay. The working of the Receiver's office as detailed hereinabove, the question that arises is what steps this Court should take to protect and manage the said properties during the transitional period? On one hand, the Court's jurisdiction has been transferred to D.R.T. and on the other hand D.R.T. is not in a position to take possession and manage the said properties. These assets constitute securities created in favour of the Banks and Financial Institutions. They cannot be permitted to be dissipated. It has been urged on behalf of the Banks and Financial Institutions that till adequate/alternate machinery is set up by the Central Government, this Court should manage the properties which are already custodia legis. On the other hand it has been urged that once the suits/proceedings stand automatically transferred to D.R.T. this Court cannot issue directions regarding preservation and management of the properties after 16th July 1999 and such directions can be given only by D.R.T. However, D.R.T. can only appoint its Receiver. The question is whether the said Receiver would be in a position to take charge of the above properties from the Court Receiver, High Court, Bombay. The matter involves large number of administrative problems. At the outset, it may be mentioned that the Central Government carries a wrong impression that the Court Receiver, High Court, Bombay in the past has lent its services to other Courts. That is not so. As stated above, the Court Receiver, High Court, Bombay is an establishment of the High Court. As stated above, it is required not only to protect the properties, but it is also required to maintain accounts of the royalty received and the expenses debited. The remission of the revenue goes to the State Government. It is not clear as to whether the Central Government and the State Government had entered into any agreement to share the revenue. Moreover, the Court Receiver, High Court, Bombay is required to attend a large number of non-banking suits, which are pending in this Court and if the services of the Court Receiver, High Court, Bombay are required to be lent to other Courts, additional staff would be required. The fact therefore, remain that the Central Government should take immediate steps to set up an independent machinery to assist the D.R.T. and during the concessional period this Court is of the view that notwithstanding transfer of suits and proceedings to D.R.T. this Court can continue to give appropriate directions to the Court Receiver, High Court, Bombay regarding management of the assets and properties in the hands of the Court Receiver till the Receiver appointed by the D.R.T. takes charge of the said assets and properties. In this connection, the position in law can also be seen. When a Court Receiver is appointed by the Court, the properties come under the management of the Court. The Receiver enters into an agency agreement after taking formal possession. During the subsistence of the agency agreement, the receiver monitors implementation of the terms and conditions mentioned in the agency agreement. To give an illustration, a Court Receiver has been appointed in the case of a Tea Estate in one of the above suits. The Tea Estates are located outside Bombay. The highest bidder is appointed as agent. That bidder enters into an agency agreement with the Court Receiver. As long as that agency agreement subsists, the Court Receiver is required to protect and manage the Tea Estates. It is for this reason that till the Court passes an order discharging the Court Receiver with or without passing of accounts the agency agreement subsists. The jurisdiction of the Civil Courts to grant reliefs by way of appointment of Receiver, is therefore, determined by C.P.C. and Specific Reliefs Act. Even under the D.R.T. Act, the words 'de novo' have been deleted by the Ordinance which indicates that the legislature intends that the Receiver appointed prior to the transfer shall continue till alternate arrangements are made by the D.R.T. to take charge of the properties which are custodia legis. The office of the Court Receiver, High Court, Bombay has a historical background. It is unique to Mumbai. It has done a wonderful job over the years particularly in the matter of earning revenue for the State. It has been protecting the properties all over India over the years. The authority of the Court Receiver over the properties continues till the Court discharges the Receiver by passing an express order to that effect. It is for this reason that even in execution proceedings after a decree is passed a Receiver can be appointed by the Court to take steps to protect the property till the Banks or Financial Institutions take adequate steps to recover the sale proceeds. Even where a suit is decreed, it has been held that there was nothing in the Code, which limited the power of the Court to appoint a Receiver when it became so necessary. Ultimate

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ly, a Court Receiver is appointed under equity jurisdiction. In the case of (Hiralal Patni v. Loonkaran Sethiya)5, reported in A.I.R. 1962 S.C. pg. 21, one of the contentions raised on behalf of the appellant was that the Receiver appointed in the suit ceased to be a Receiver qua the rights of the parties to the suit when the final decree was made. This argument has been discussed at length in the said judgment. It was held that where a Receiver is appointed in a suit without his tenure being expressly defined he will continue to be the Receiver till he is discharged. It may be mentioned that in the said judgment also it has been laid down that although as between the parties to the suit the functions of the Receiver have terminated with the determination of the suit, the Court Receiver is still amenable to the Court as its officer until he has complied with the Court's direction as to the disposal of the funds which he has received during the course of his receivership. It is also laid down that in appropriate cases, upon sufficient cause being shown, the Court can continue the receiver even after disposal of the suit depending upon the exigencies of the case. The reason is very clear that during the pendency of the suit, the rights of the parties to the possession of the funds/properties held by the Receiver is not determined. It is only in the final decree that such rights are determined. In the present matter, the suits are pending. The rights to possession of the funds/properties held by the Receiver have not been decided. In the circumstances, it cannot be said that the Court Receiver appointed by this Court stands automatically discharged after 16th July 1999. Till such rights are determined by D.R.T., the property remains custodia-legis. Even after coming into force of the D.R.T. Act and the D.R.T. the said rights to the possession of the funds/properties held by the Receiver remain undecided and, therefore, till D.R.T. appoints its Receiver under the D.R.T. Act, 1993 this Court can certainly issue directions on the reports of the Court Receiver regarding management and protection of the assets which are custodia-legis. The Court Receiver, High Court, Bombay is hereby directed to act in all matters pending before her regarding fixation and recovery of royalties, regarding fixation of sale price, regarding implementation of agency agreements already executed, etc. In other words in all cases where the Court Receiver is seized of the properties and assets she is empowered to take all necessary steps to preserve and manage such properties. I am informed that there are some cases in which the Court Receiver was appointed prior to 16th July 1999. However, before the Court Receiver could take possession, the notification came to be issued. Such marginal cases are kept for hearing on 10th March 2000. 11. In this matter, the learned Acting Chief Justice, High Court, Bombay has received a letter from the Hon'ble Finance Minister of India requesting the High Court to lend the services of the Court Receiver to D.R.T. till alternate arrangements are made. The learned Acting Chief Justice, High Court, Bombay, thereafter invited submissions from the Prothonotary & Senior Master, High Court, Bombay. After due deliberation, it has been decided that administratively it would not be possible to lend the services of the Court Receiver to D.R.T. Detailed reasons in that regard have been given. Some of the reasons have been mentioned hereinabove. It may be once again stated that in the past Court Receiver's services have not been lent to the Small Causes Court. In any event, in the light of this judgment, the question of lending services of the Court Receiver to D.R.T. does not arise. 12. Before concluding it may be mentioned that the life of the law has not been logic. It has been experience. These words of Justice Holmes applies to this case squarely. 13. The Court Receiver is now directed to submit her reports to this Court from time to time in accordance with this judgment.
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