ALLAHABAD BANK LTD Vs. MAHARAJ KISHORE KHANNA

JUDGEMENT

(1.) This is a somewhat unusual case. The essential facts can, however, be stated briefly. It appears that the respondent before us, Mr. Maharaj Kishore Khanna, was possessed of considerable immovable property over which he created a number of simple mortgages in favour of the Allahabad Bank, the Benares Bank, and some other person or persons. The Benares Bank brought Suit No. 117 of 1929 in the Court of the Civil Judge at Benares for sale on foot of their mortgage and impleaded the mortgagor as well as the other mortgagees as defendants. During the pendency of this suit an application was filed by the Benares Bank - in which the other mortgagees joined or which, at any rate, was supported the other mortgagees - praying that a Receiver be appointed of the landed property belonging to Mr. Khanna. This application was granted by the Civil Judge on 6th January 1932. A preliminary decree for sale was passed on 25 May 1933. There was an appeal to this Court against this decree by the Allahabad Bank on the question of priority. That appeal was decided on 25 April 1938, and the judgment of this Court is reported in Allahabad Bank Ltd., Calcutta V/s. Benares Bank Ltd., Benares . In the meantime, on 6 March 1936, Mr. Khanna had applied under Section 4, U.P. Encumbered Estates Act of 1934. It is stated that Mr. Khanna had been adjudicated an insolvent by the Calcutta High Court on 25th September 1929, and that the application under Section 4, U.P. Encumbered Estates Act, was filed by Mr. Khanna with the consent of the Official Assignee at Calcutta. The proceedings prescribed by the U.P. Encumbered Estates Act were taken in due course and ultimately, on 21 March 1940, the Special Judge passed the decrees prescribed by Section 14 of the Act and sent those decrees to the Collector under Section 19 of the Act. It has been stated before us that the order sending the decrees to the Collector under Section 19 was passed on 21 March 1940. Some time before that date Mr. Khanna had filed an application in the Court of the Civil Judge in Suit No. 117 of 1929, praying that the Receiver appointed by the order of that Court dated 6 January 1932, be removed and that Mr. Khanna be put in possession of the properties which were in the possession of the Receiver. The learned Civil Judge granted this application by an order dated 28th March 1940, and directed the Receiver to submit his accounts by 15 May 1940, and to hand over the charge of the estate to the judgment-debtor by that date "subject to any orders which the Collector may pass in execution proceedings." The present appeal by the Allahabad Bank is against this order.

(2.) The appellant, after filing the present appeal in this Court, applied that the operation of the order passed by the learned Civil Judge on 28 March 1940, be stayed, that the Receiver be directed to continue in possession of the properties and that the respondent be restrained from taking possession thereof. Upon this application, an ad interim stay order was passed by this Court on 6 May 1940, and the Receiver was directed to continue in possession until the application was finally disposed of. The matter came up for final hearing on 28 November 1940, before Mulla J. It is stated before us that some time before 20 November 1940, an application had been made by the Allahabad Bank to the Collector preying that he might appoint a Receiver under the provisions of the U.P. Encumbered Estates Act and that the Collector had expressed the opinion that, in view of the stay order passed by this Court on 6 March 1940, it was not open to him to entertain the application. The order passed by Mulla J. on 20 November 1940, was as follows: Learned counsel for the parties are agreed in this case that the temporary order of stay passed by this Court upon an application made on behalf of the opposite parties should be modified to this extent that the Collector should be given freedom to consider and decide the application for appointing a Receiver made on behalf of the applicants. I therefore modify the stay order accordingly and direct that the Collector shall proceed to consider the application made on behalf of the present applicants before him for the appointment of a Receiver. Thereafter the Allahabad Bank renewed their application before the Collector. A certified copy of an order of the Collector dated 17 March 1941, has been shown to us. It appears from this certified copy of the Collector's order that he dealt with the application of the Allahabad Bank in the following manner: It is clear that there is already a Receiver appointed by the civil Court. He will remain unless he is removed by the order in appeal of the Hon ble High Court. Until that contingency arises there is no necessity for the appointment of another Receiver. The application is premature and is dismissed. It appears to us that a copy of the order passed by Mulla J. on 20 November, 1940, was not shown to the Collector and that he did not consequently appreciate the true nature and scope of that order. If the matter had been properly presented to him, he would not have dismissed the application on the ground that it was premature but would have considered the application for the appointment of a Receiver on its merits.

(3.) Our attention has next been drawn to an order of this Court passed by Mulla J. on 24 February 1942. It appears that this order was passed upon an application filed by Mr. Khanna praying that the order of 20 November 1940, be vacated and that the stay application filed by the Allahabad Bank, appellant, on 6 May 1940, be dismissed. Mulla J. dismissed this application of Mr. Khanna and, after referring to his order of 20 November 1940, stated his reason thus: The Collector has now considered that application and has directed the Receiver previously appointed by the Court to continue in possession. It is now prayed that I should vacate the order passed by me on 20 November, 1940, and should reject the application for stay made by the Allahabad Bank. I am unable to accede to that contention because the parties agreed to abide by the decision of the Collector on the application for the appointment of a Receiver made before him. I do not see how the order passed by the Collector can now be interfered with by vacating the order passed by me on 20 November 1940. If the reference in the passage Quoted above was to the Collector's order dated 17 March 1941, to which we have referred above, the facts were evidently not correctly presented to Mulla J. It seems clear to us that a copy of the order of the Collector dated 17 March 1941, was not shown to the learned Judge. That may have been due to the fact, as has been suggested before us, that the Allahabad Bank did not appear at the hearing of that application of Mr. Khanna. If, on the other hand, there is some other order of the Collector passed after 17 March 1941, which was brought to the notice of Mulla J. on 24 February 1942, there are no materials before us from which we can find out the contents of such an order. Learned Counsel for the parties state that they do not know whether any order has been passed by the Collector after 17 March, 1941. In these circumstances, it appears to us desirable to adjourn the further hearing of this appeal in order that learned Counsel for the parties might be able to make enquiries as to whether any further orders have been passed by the Collector after 17 March 1941, and to intimate to us the (result of these enquiries. If there are any such orders, certified copies should be produced when the appeal comes up for hearing next. It is hardly necessary to point out that the appellant is at liberty to file a fresh application before the Collector praying for the appointment of a receiver under the provisions of the U.P. Encumbered Estates Act-if no such application was made by him after 17 March 1941, and no orders have been passed by the Collector after that date- and to invite the attention of the Collector to the order of this Court dated 20 November 1940. We may point out that that order makes it perfectly clear that the Collector is at liberty to entertain an application for the appointment of a receiver and to pass orders there on the merits. We direct that this appeal do stand out for four weeks. A copy of this order should be given to the appellant-as soon as possible on payment of the necessary fees.