SREEDHAR CHAUDHURY Vs. NILMONI CHAUDHURY

JUDGEMENT

(1.) This is an application on behalf of Messrs. Mugneeram Banger & Co. and Harsokdas Balkissendas for an order (1) that an enquiry may be made as to whether the applicants have any and what interest in the collieries taken possession of by Mr. R.N. Mitter, the receiver appointed in this suit, (2) for a direction on the receiver to pay rents and receipts from the said collieries to the applicants or for such other direction as to this Court may seem fit and proper, (3) that the said receiver do give up possession of the said collieries, (4) for a direction on the receiver to stop the monthly payment of Rs. 500 to himself and Rs. 500 for establishment charges and Rs. 3,000 to Sreedhar Chaudhury and Nilmoni Chaudhury out of any income of the collieries mortgaged to the applicants and making any payments out of the income of the mortgaged collieries to the creditors of Chaudhury & Co., and Sreedhur Chaudhury, and (5) for such other orders as to this Court may seem fit.

(2.) The facts which have given rise to the present application, shortly stated, are as follows:- Messrs. Harsookdas Balkissendas who obtained on the 21 August, 1923, a decree in suit No. 2239 of 1923 against the firm of Messrs. Chaudhury & Co., in which the parties herein are partners, for a sum of Rs. 10,000 made an application to this Court for an order that the firm of Messrs. Chaudhury & Co., might be adjudicated as insolvents. That application came on before me and was disposed of by me on the 9 May, 1924. There was an appeal against my judgment, but the same was dismissed. My judgment is reported in wherein I have set out fully the facts to which my attention was drawn in the said application in insolvency. It is alleged that with the object of using the property of the firm of Chaudhury & Co., in such a manner as it suited the firm and with the object of delaying and defrauding the creditors of the firm, the parties herein formed a scheme of instituting a collusive suit and of having a nominee of their own appointed as receiver and although unable to pay their just debts, of using the income of the collieries belonging to the firm for their own purposes. The suit referred to is the present suit which was filed in July, 1923, for dissolution of partnership and for partnership accounts. By an order by consent which was passed on the 17 July, 1923, Mr. R.N. Mitter, Barris-tar-at-Law, and an Advocate of this Court, was appointed receiver of the partnership assets, which included certain colliery properties. In passing, it may be noticed that the said colliery properties are at present the subject-matter of a suit instituted in the Court of the Subordinate Judge of Dhanbad in Bihar by one Mugneeram Banger and others, the same being a suit to enforce a mortgage of the said colliery properties, executed by Nilmoni Chaudhury on the 22nd January, 1920. The said suit in the Dhanbad Court was instituted on the 14 August, 1923, and an order was made by the Subordinate Judge of Dhanbad, on the 15 September, 1923, by which the said Mr. R.N. Mitter was appointed receiver of the mortgaged premises. The mortgagors being dissatisfied with the last mentioned order, appealed to the Patna High Court and by their judgment delivered on the 7 January, 1924, Das and Ross, JJ. allowed the appeal and set aside the order of the Subordinate Judge, appointing Mr. R.N. Mitter as receiver in the Dhanbad suit of the mortgaged premises. The judgment of their Lordships of the High Court is reported in 3 Pat. 357 : A.I.R. 1924 Pat. 491 where the facts of the Dhanbad suit are set out. It is alleged that the receiver has, instead of paying the interest due on the mortgage of the colliery properties, paid a sum of Rs. 1,41,054-5-0 in satisfaction of certain alleged debts and liabilities of Messrs. Chaudhury and Co., and attention is drawn to the fact that it was stated in the Court of appeal on the 27 June, 1924, that large sums of money amounting in all to between three and four lacs have been paid by the said receiver to various unsecured creditors. The present applicants contended that as mortgagees of the said colliery properties they have a title paramount to that of the persons who procured the appointment of the receiver and that they are entitled to be examined pro interesse suo and to establish their claim as mortgagees and to have the rents, issues and profits of the mortgaged properties already received and to be received by Mr. Mitter as receiver, applied in satisfaction of the incumbrances held by them. The applicants further urge that in any event the receiver should be restrained from paying the profits of the said mortgaged properties to unsecured creditors or to creditors who have no priority over the applicants as mortgagees. Attention is also drawn by the applicant to the conduct of the receiver in giving personal undertaking to tradesmen and money-lenders and it is suggested that to further the scheme, to effectuate which the present suit has been brought, the receiver has set up a contention that the present applicants are merely unsecured creditors and has brought a suit in this Court against the applicants praying for a declaration that the mortgage of the said colliery properties is no longer subsisting and that the mortgagees had been overpaid, I am informed that the last mentioned suit was instituted more than a year ago, but that no summons has yet been served, nor have any steps been taken in the said suit, notwithstanding demands for service of summons. In opposition to the present application there have been used before me the affidavits of Nilmoni Chaudhury and Mr. R.N. Mitter. I desire-to say at once that there was no justification whatsoever on the part of the receiver to write the letter of the 15 January, 1924, which is referred to in the affidavit of Kissengopal Bagree and that the receiver has by his conduct merited the severe displeasure of the Court. It is intolerable that a receiver of this Court should so far forget himself as to write letters to creditors of the firm of Chaudhury & Co., in the manner in which he has done. The receiver has through his Counsel expressed his regret and after some hesitation. I have decided to accept his apology.

(3.) On the merits of the present application and also on the question whether such an application can lie, I have heard an elaborate argument from Mr. Langford James. He has argued that although there is power in the Court to make an order for examination pro interesse suo Court has a discretion in the matter and will never exercise that discretion in favour of the applicant where the applicant himself has instituted a suit or action to try the question of title. He points out that there is a suit to enforce the mortgage pending in the Court of the Subordinate Judge at Dhanbad; no doubt a contention has been raised that the mortgage has been paid off, but in any event the question of title will have to be gone into in the Dhanbad Court and it is therefore argued that this Court on the present application will refuse to make an order such as has been prayed for. Mr, Sircar, who appeared in support of the application has argued that having regard to the events which had happened, the mortgagees have had no other alternative but to make the present application in the present suit in which a receiver has been appointed, and that the Court will not make an order refusing to examine the applicants pro interesse suo unless it is perfectly clear that there is no foundation for the claim. No doubt, when a receiver is in possession of property under the process or authority of the Court, his possession is not to be disturbed even by Jan ejectment under an adverse title without the leave of the Court, for the receiver's possession is deemed the possession of the Court and the Court will not permit itself to be made a suitor in a Court of law. The proper and usual mode adopted under such circumstances is for the party claiming an adverse interest to apply to the Court to be permitted to come in and be examined pro interesse suo [See in this connection Searle V/s. Choat [1884) 25 Ch. D. 723]. The practice in England is to allow the applicant to go before the Master and to state his title upon which he may in the first instance have the judgment of the Master and ultimately, if necessary, that of the Court, but where the question to be tried is a pure matter of title, the Court from a sense of convenience and justice will generally authorise a suit to be brought taking care, however, to protect the possession by giving proper directions [See Angel V/s. Smith [1804] 9 Ves. 335, Brooks V/s. Greathed (1820) 1 Jac. and Walk. 176, Bryan V/s. Cormick (1788) 1 Cox. 422, Hayes V/s. Hayes (1674) 1 Ch. Cas. 223, Empringham V/s. Short (1844) 3 Hare 461, Evelyn V. Lewis (1844) 3 Hare 472]. But what are the facts in the present case? Soon after the institution of the present suit the mortgagees went to the Dhanbad Court to enforce their mortgage, as they were entitled to do. They made an application in the Dhanbad Court for the appointment of a receiver of the mortgaged premises and they obtained an order for the appointment of a receiver. That Order, however, was subsequently-set aside on appeal by Patna High Court. Then there were the insolvency proceedings in this Court, to which I have referred. Then followed the present application. I should have been glad to assist the mortgagees who claim a title paramount by making an order for their examination pro interesse suo, but for the reasons about to be given I must refuse the present application. My reasons are two in number. In the first place, there is the suit in the Dhanbad Court, where the mortgagees rights will have to be established, and there is also suit in this Court instituted by the receiver in which no summons has yet been served; and in the second place, an examination pro interesse suo is never made unless the applicant shows diligence, and in this case the applicants have not shown diligence. The applicants cannot be allowed now to come into this suit by petition for examination pro interesse suo laying by the suit which they had begun in the Dhanbad Court to obtain the same relief. As the Master of the Rolls (Plumer, M.R) said in Brooks V/s. Greathed (1820) 1 Jac. and Walk. 176, "it would not be consistent to give to the applicants that on petition, which they had themselves sought by another remedy". The conclusion, therefore, to which I have regretfully come, on the facts of this case, is that I must refuse the present application. As I have said, there is undoubted power in the Court to make such an order, as has been asked for; such orders have been made from very early times, although it is perfectly true that the Court has exercised the power very sparingly and only in very special cases and under special conditions [See Motivahu V/s. Premvahu (1892) 16 Bom. 511; Mahomed V/s. Zoharra (1889) 17 Cal. 285]. But although I refuse the present application, I am prepared to assist the applicants as far as it lies in my power and I propose to do that in this way, viz., that I direct the receiver to take immediate steps to bring the suit which he has instituted in this Court against the applicants to a hearing and, secondly, the receiver must not pay out any moneys out of the estate in his possession without my order having been previously obtained. The receiver can obtain such orders by means of communications addressed to the Registrar of the Court; he is not to incur costs by making applications in Court. Having regard to the peculiar circumstances of this case, I shall make no order as to costs.