KAKKAR REROLLERS LTD Vs. CENTRAL BANK OF INDIA

JUDGEMENT

(1.) The facts giving rise to this report are that M/s Kakkar Rerollers Pvt. Ltd. was ordered to be wound up by this court by order dated 22nd August, 1985. The possession of the property of this company was taken over by the official liquidator on 25.4.1986. It appears that the Central Bank of India filed special civil suit No.551 of 1986 in the Court of Civil Judge, Sr.Division, Nagpur for recovery of the amount of about Rs.1,26,00,000/-. It was their claim in the suit that the properties of the company under liquidation were mortgaged with the Bank. The company court was moved by the Bank under section 446 of the Companies Act for leave to proceed with the suit. The court granted the leave. It appears that in that suit an application was moved by the Bank for appointment of a receiver. The learned Civil Judge, Sr. Dn., Nagpur by order dated 21st September 1992 ordered appointment of a receiver for the properties of the company under liquidation, which were hypothicated to the bank; However, it is pertinent to note here that by the order dated 21.9.1992 nobody was appointed as a receiver. In fact the appointment of a receiver came to be made by the learned Civil Judge, Sr. Division, Nagpur by order dated 27th July 1995 and the official liquidator was appointed as a receiver by the court. It appears that the official liquidator came forward for being appointed as receiver and therefore, the civil court by order dated 27th July 1995 appointed him as the receiver. In the report dated 8th November 1996 a grievance is made about the order dated 27 7.1995. It is urged that the order dated 27.7.1995 is contrary to the provisions of section 453 r/w Rule 233 of the Companies (Court) Rules, 1959 , as the civil court appointed the receiver of the assets which were in the hands of liquidator without obtaining the leave of the court.

(2.) The learned counsel appearing for the Bank on the other hand submitted that the order dated 27.7.1995 cannot be considered to be contrary to the provisions of section 453 of the Act. Because in the submission of the learned counsel the suit was proceeded after obtaining leave of the Court under section 446 of the Act and for obtaining leave of the court under section 446 of the Act, a copy of the plaint which included a prayer for appointment of a receiver during the pendency of the suit was presented before the court. In the submission of the learned counsel grant of leave of the court under section 446, therefore, should be deemed to be a leave granted under section 453 also. The learned counsel further submitted, relying on a judgment of the Supreme Court in a case of Indian Bank v/s. The Official Liquidator, Chemmeens Exports (P) Ltd. & Ors, 1998 3 Scale 531) that once the court grants leave under section 446 then the civil court which entertains the suit, pursuant to the leave granted by this court, gets power to pass an interim order that may be necessary to be passed in the suit and therefore, the order dated 27 7.1995 cannot be said to be an order passed without jurisdiction by the civil court. A perusal of section 446 makes it clear that a leave under that section is required to be obtained from the court in order to initiate or proceed with the suit which is instituted against the company under liquidation. Section 446 contemplates leave being granted by the court for proceeding with the suit. Perusal of section 453 shows that even in case of a suit which is permitted to be proceeded with by grant of a leave under section 446, a receiver cannot be appointed of the assets in the hands of the liquidator except with the leave of the court. Therefore, in my opinion, securing leave of the court before appointing a receiver was necessary before the civil court made the order appointing a receiver of the assets which were certainly in the hands of the liquidator on the day on which the order of appointing the receiver was made. It is further to be seen here that section 453 bars the power of the court to make appointment of a receiver unless a leave of the court is obtained under this section. However, leave of the court is not necessary for consideration of the application for appointment of a receiver. It is only when the court comes to the conclusion that a receiver has to be appointed then the leave for making appointment of the receiver would be necessary. Therefore, in my opinion, it cannot be said that because the court has granted leave under section 446 for proceeding with the suit and as the plaint had a prayer for appointment of a receiver, the court is deemed to have granted leave for appointment of a receiver in relation to the properties in the hands of the liquidator. In so far as the reliance placed by the learned counsel for the Central Bank on the judgment of the Supreme Court is concerned, the fact of that case, as narrated in the judgment, was that the suit in that case was proceeded after obtaining the leave of the court and in that suit to which official liquidator was a party, a preliminary decree was passed and in those facts the Supreme Court has said that the preliminary decree binds the official liquidator though the preliminary decree may be contrary to some of the provisions of the Companies Act. According to the Supreme Court the remedy of the official liquidator to challenge such a preliminary decree by way of filing an appeal. As I see the reason that has been given by the Supreme Court for this is that the suit was proceeding with the leave of the court and passing a preliminary decree in that suit was a natural consequence of the court granting leave under section 446 when an official liquidator was also a party to that suit. In the present case however, even after the court grants leave under section 446 so that the suit can be proceeded with for appointment of a receiver, a further leave under section 453 is contemplated by the Companies Act and therefore, in my opinion, the judgment of the Supreme Court in Indian Bank's case would not be relevant for deciding the controversy raised in the present matter. Perusal of section 453 leaves no manner of doubt that an appointment of a receiver in relation of the assets in the hands of the liquidator, cannot be made except by the leave of the court even in the suits which are proceeding with the leave of the court granted under section 446. Therefore, the court will not get jurisdiction to make appointment of the receiver unless leave of the court as contemplated by section 453 is obtained. Therefore, in my opinion, the order of the Civil Court dated 27.7.1995 would be an order made without jurisdiction and therefore, that order would be nonest. As I have observed above section 453 bars appointment of receiver in relation to the properties in the hands of the official liquidator but does not bar the court from considering an application for appointment of the receiver. In case, in such a situation, if the court comes to the conclusion that it is not necessary to appoint any receiver then there is no question of securing any leave of the court under section 453. However, in case the court comes to the conclusion that the receiver is required to be appointed then the court cannot make an order of appointment of receiver without first the company court, granting a leave that is contemplated by section 453. Therefore, the order of the civil court dated 21st September, 1992 cannot and would not, in my opinion, be termed as an order made without jurisdiction. However, in so for as the subsequent order made by the court dated 27th July 1995 would definitely be an order made without jurisdiction and therefore, a nonest order. In this view of the matter, therefore, it is directed that the order dated 27th July 1995 passed by the Civil Judge, Sr. Division, Nagpur in Special Civil Suit No.551/1986 is nonest and inoperative. The learned counsel appearing for the Central Bank also submitted that the official liquidator if feels aggrieved by the order of the civil court dated 27th July 1995, will have to file an appeal against that order and that order cannot be got over by seeking orders from this court. In my opinion, this submission has no substance. Had the order been within the jurisdiction of the court, the learned counsel was justified in saying that the only remedy against that order is of approaching the same court for review of its order or by filing an appeal against that order. However, as I have found that the order is beyond the jurisdiction of the court and therefore, nonest, in my opinion, this court under whose supervision the company is being liquidated, is competent to make an order declaring that the order dated 27th July 1995 is nonest and without jurisdiction. The official liquidator may take up appropriate proceedings, if he feels aggrieved by the earlier order of the court dated 21st September 1992 for setting aside the same. For that purpose the Official liquidator is permitted to engage a suitable counsel.