E SATHEESH KUMAR Vs. VIJAYA BANK

JUDGEMENT

(1.) THE Civil Revision Petition is filed under Article 227 of the Constitution of India against the order passed in I.A.No. 226/2002 in T.A.No. 189/2002, appointing an Advocate Receiver.

(2.) THE case of the petitioner is briefly stated hereunder: According to him, on 2-6-2000 he entered into an Agreement with the second respondent herein for the purchase of a textile unit comprised in Survey No. 278/2, 273/2B, 279/2A, measuring an extent of 1.74 acres situated at Madampatti village, Coimbatore. THE sale consideration of the entire property is Rs.1,50,00,000/-. On the date of agreement, the petitioner herein had advanced a sum of Rs.1,00,000/- to the 2nd respondent herein. As per the sale agreement, the petitioner herein undertook to discharge the debts payable to the 1st respondent bank and other creditors of the 2nd respondent. THE petitioner herein and the 2nd respondent herein entered into a Memorandum of Understanding, and in pursuance to that, the petitioner herein advanced a sum of Rs.1,00,000/- even prior to the agreement of sale. THE petitioner was aware that the 2nd respondent herein had borrowed a sum of Rs.50,00,000/- from the 1st respondent- Vijaya Bank, Coimbatore. On the date of execution of sale agreement, the 2nd respondent is liable to pay a sum of Rs.71 lakhs to the 1st respondent Bank and therefore in the agreement it was incorporated that the petitioner herein had to repay the said amount on the condition that the 2nd respondent should obtain Letter of Consent from the 1st respondent Bank. Pursuant to the sale agreement, the petitioner herein advanced a sum of Rs.19,67,000/- to M/s. Bannariamman Finance and M/s. Suchithra Finance. Since the 2nd respondent failed to obtain the consent letter from the first respondent, the petitioner was not able to repay the same to the first respondent Bank at the appropriate point of time. In the meanwhile, based on the sale agreement, the petitioner herein was put in possession of the textile unit and the name of the said textile unit was also changed as Rukma Tex India Private Limited. THE sales-tax authorities have also assessed the unit as well as the other departments of the Government, and effected changes in their records. Since the 2nd respondent herein started creating problems interfering with the day to day management of the unit, the petitioner filed a civil suit in O.S.No.277/2001 on the file of the Principal District Munsif, Coimbatore, seeking for relief of permanent injunction. THE said suit is pending. THE 2nd respondent herein also filed a civil suit in O.S.No.323/2001 on the file of the Subordinate Judge,Coimbatore, seeking for permanent injunction restraining the Electricity Board not to give service connection to the textile unit, pending disposal of the suit. THEreafter, the petitioner approached this Court on many occasions for getting electricity service connection. THE petitioner is in possession and has been engaged in the process of manufacturing cotton yarn by running the Mill. But this being the position, the first respondent Bank seems to have already instituted O.A.No. 568/97 against the 2nd respondent for the recovery of money payable to them. Pending the application, it seems that there was a compromise proposal initiated by both the 1st and 2nd respondents. THErefore, the said original application was repeatedly adjourned before the Debt Recovery Tribunal at Chennai. Subsequent to the Notification of the Ministry of Finance, dated 23-2-2002, the matter was transferred to the file of the Debts Recovery Tribunal at Coimbatore. THErefore, the said Original Application was assigned as T.A.No. 189 of 2002. In the said T.A., the petitioner herein entered appearance by filing a vakalath on 7-6-2002 and requested for filing counter statement. On that date, the 2nd respondent seems to have filed an application for appointment of Receiver/Administrator for the machineries. THE said T.A. was adjourned periodically from time to time from 7-6-2002 to 2-7-2002 and to 3-9-2002. Since it has been represented that there is a compromise proposal, the counsel representing respondents 2 to 4 sought time before the Presiding Officer, Debts Recovery Tribunal at Coimbatore. THErefore, the case was adjourned to 1-10-2002. Again the same was adjourned to 12-11-2002. On 12-11-2002 respondents 2 to 4 herein filed I.A.Nos. 226 and 227/2002 seeking for appointment of a Receiver to take possession of the mortgaged property for removing the petitioner herein from possession or custody of the property and confer upon the receiver with all necessary powers. THErefore, the petitioner sought time to file counter. THE case was adjourned to 16-12-2002. Again it was adjourned to 22-1-2003 for filing counter. On 22-1-2003, when the matter was taken up for hearing, the counsel appearing for the first respondent Bank filed a short memo stating that they have no objection in appointing a Receiver. At that time, the counsel appearing for the petitioner herein has represented before the Presiding Officer, Debts Recovery Tribunal, Coimbatore that sufficient time may be granted to file its counter. But the same was not accepted by the Presiding Officer, Debts Recovery Tribunal and had proceeded with the appointment of Receiver by appointing one Mrs. Revathi Rajesh, Advocate, as the Receiver/Administrator. THE petitioner herein is in possession of the unit and has been carrying on the business by obtaining electricity connection from the Electricity Board. THE said unit is also assessed to sales tax and other departments. Now all of a sudden, the Presiding Officer, Debts Recovery Tribunal, Coimbatore, without providing sufficient opportunity and also exceeding its jurisdiction appointed the 5th respondent herein as an Advocate Receiver, hence the same is liable to be set aside.

(3.) MR. R. Muthukumaraswamy, learned senior counsel for the petitioner, by drawing my attention to the similar provision in the Code of Civil Procedure, namely, Order 40, Rule 1 (1)(d) regarding appointment of Receiver in civil proceedings, would contend that the said power has to be exercised for just and convenient reason. He also very much relied on a decision of the Apex Court in I.C.I.C.I. v. KARNATAKA BALL BEARINGS CORPN. LTD., reported in AIR 1999 Supreme Court 3438. While considering order 40, Rule 1 (d) C.P.C., in the said decision, the Supreme Court has held that the language of Order 40 being of widest possible import, any restriction as regards the power of the Court to direct a Receiver to effect a sale of immovable property prior to the decree does not and cannot arise. They further held that Order 40, Rule 1 and various sub-rules thereunder unmistakably depict that the Court has unfettered powers in the event the Court feels, that the sale of property would be just and convenient having due regard to the situation of the matter. Their Lordships further held that the Court must consider whether special interference with the possession of the defendant is required or not and in the event the Court comes to such a conclusion that there is likelihood of the immovable property, in question be, dissipated or some such occurrences, or party initiating the action suffering irreparable loss, unless the Court gives appropriate protection, there should not be any hesitation in directing the sale of immovable property. It is clear that Section 19 (18) of the Act is in pari materia to Order 40, Rule 1 (d) C.P.C. The said power has to be exercised for just and convenient reasons. I have already extracted the order passed by the Presiding Officer (Judge). It does not disclose any reason at all for appointing a Receiver. Merely because the Bank has filed a 'short Memo" stating that they have no objection in appointing Receiver, the Presiding Officer is not expected to allow the application without considering the objection of the contesting respondent, namely, petitioner herein. It is unfortunate that after passing an order of appointment of an Advocate Receiver, the Presiding Officer (Judge) has permitted the other respondents, including the petitioner herein to file counter to the said applications. In the absence of any other reason or ground for urgency, and in the light of the language used in sub-Section (18) of Section 19 of the Act, I am of the view that the said order cannot be sustained.