Decided on October 04,1961

STATE Respondents


- (1.) THIS is an application on behalf of Mill Stores and Cotton Company (Private) Limited, inter alia, for an order that Mr. Probhat Kumar Pal, the Receiver appointed in extra-ordinary suit No. 7 of 1955 (United Bank of India Limited v. Mahaluxmi Cotton Mills Limited (In Liquidation), do out of the assets in his hands pay to the petitioner the sum of Rs. 58,605. 35 or such other sum as he may be directed to pay by this Court in preference to all other creditors of the Mill.
(2.) IT appears that on January 10, 1955 the Mahaluxmi Cotton Mills Limited, hereinafter called "the company" was ordered to be wound up by this Court. On the 25th January, 1955, Mr. P. K. Pal, Barrister-at-Law, was appointed the company's official liquidator. By an order dated the 3rd February, 1955 the Official liquidator was given leave, inter alia, to carry on the business of and to run the mill of the company. Leave was also granted to the liquidator to buy and enter into contracts for purchase of (i) cotton, (ii) stores, (iii) coal, (iv) dye-stuff and other chemicals and (v) all other articles and accessories that would be required for running the mill and to pay the price thereof from the funds of the company. Thereafter on November 28, 1955, an order was made in extra-ordinary suit No. 7 of 1955 [united Bank of India Limited v. Mahaluxmi Cotton Mills Limited (In Liquidation) and Ors. ] appointing Mr. P. K. Pal, the liquidator, as Receiver in the suit. The Receiver was directed to work the mills on the same terms and conditions as were mentioned in the order relating to the running of the mill and made in the liquidation proceedings. While the Receiver under Order of this Court was running the mill he placed diverse orders with the petitioner from time to time for supply of various quantities of cotton at agreed rates. The petitioner made supplies to the Receiver in terms of his orders. The petitioner submitted bills to the Receiver who also made various part payment from time to time. After appropriating these payments on the 5th July, 1960, according to the petitioner, a sum of Rs. 58,608. 35 became due and payable by the Receiver. By letter dated the 29th December, 1960 the Receiver acknowledged his liability for the sum of Rs. 38,813. 40 only. I learned Counsel for the petitioner has submitted to me that his client is willing to accept this sum of Rs. 38,813. 40 in full settlement of his client's claim. On July 6, 1959, the Official Liquidator was directed to sell the mill On the 18th March, 1960 the sale of the mill to one Gajraj Pannalal for Rs. 13. 00 000/- was confirmed by this Court. The sale proceeds are now in the hands of the Receiver.
(3.) THE first contention on behalf of the United Bank of India Limited is that it was the mortgagee of the mill in question and its claim has priority over the claim of the petitioner. A similar question arose in the case of K. Rajagopalachari v. Jamal Ayisha Bibi (1) A. I. R. 1925 Madras 571. In this case a landlord had a decree for arrears of rent against a tenant who carried on a printing press in the premises. A Receiver was appointed in the course of the execution of the decree and was directed by the Court in the presence of all the parties to sell the press for the best price obtainable and meanwhile to keep it running as a going concern and to pay the rents due to the landlord. Another person held a mortgage on the stock-in-trade of the press. Though not a party to the landlord's suit he became aware of the appointment of a Receiver and applied to the Court that the Receiver appointed in the suit for rent should be appointed Receiver in his own mortgage suit. He opposed the removal of the press from the landlord's premises and asked that the defendant should be restrained by an injunction from removing it. It was held that the mortgagee acquiesced in the housing of the property in the landlord's premises and in the employment of a Receiver to preserve the property and he took the benefit of its being preserved. he could not afterwards claim to have the properties without paying any rent and his claim to the proceeds of the mortgaged property could not be given precedence over the landlord's claim for rent for the period during which the property was in the Court's management and over the claims of the Receiver for his remuneration and expenses of management.;

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