Decided on October 27,1952

SAMDU KHAN Respondents

Referred Judgements :-


Cited Judgements :-



Wanchoo, C. J. - (1.)THIS is a revision by Bhagirath in a receivership matter and has arisen in the following circumstances.
(2.)BHAGIRATH filed a suit for rendition of accounts and dissolution of partnership on the 6th July 1951, in the court of Munsif Nawa. He made an application for appointment of a receiver the same day. On the 9th July, 1951, the Munsif appointed an ad interim receiver ex parte, and also issued notice to the defendants to file any objection to the ex parte appointment. On the same day, Samdu Khan, now opposite party No. 1. appeared, and objected to the appointment of a receiver. On the 21st July, 1951, cause was shown why the receiver should not be allowed to continue any further, and an affidavit was filed by the defendants in support of their objection. On the same day, the plaintiff applied for cross examination of Samdu Khan defendant who had filed the affidavit. 1st of August, 1951, was fixed for that. Samdu Khan did not appear on that date on the ground that he was ill, and a prayer was made for postponement of his cross-examination. The case was then fixed for 11th August, 1951. In the meantime, however, Samdu Khan filed an appeal against the order, and proceedings in the Munsif's court were stopped. The appeal was decided on the 10th September, 1951, and was allowed. Thereupon, the present revision was filed in this 'court. It came up for decision before a learned single Judge who has referred the case to a Division Bench. Two preliminary objections were raised before him, which have been argued at length before us. These objections are - (1) In view of the order of the admission Judge, dated the 18th September, 1951, it was not open to the applicant to contest the correctness of the order of the appellate court; and (2) That the revision is not maintainable.
The first point may be disposed of shortly. The order of the 18th September, 1951, admitting the revision is in these terms - "the learned District Judge has considered the question of appointment of a receiver at considerable length, and after hearing the learned counsel I am of the view that a case for appointment of a receiver for conducting the transport business of the firm is not made out. All the same, there are dissensions between the parties, and there is an allegation that for a long time defendant No. 1 has not rendered any account to the plaintiffs. In the circumstances, it appears to be necessary, if a receiver is not appointed, to safeguard their interests and protect them in every possible manner by taking security or otherwise. Notice to the respondents as to this. "

It has been urged on behalf of the opposite parties that in view of the expression of opinion by the learned Judge admitting the revision that no case for appointment of a receiver has been made out, it was not open to the applicant now to urge before us that the order of the lower Appellate Court was wrong. With all due respect to the learned Judge admitting this revision, we must say that if he was of the view that the order of the lower Appellate Court was correct, the revision should have been dismissed. The only question before the two lower courts was whether an ad interim receiver should or should not be appointed. The Munsif thought that an ad interim receiver should be appointed, and made the appointment. The District Judge thought otherwise and set aside the order of the Munsif. The question of safeguarding the interest of any party did not arise in these proceedings, and this Court was not called upon to decide whether security should be taken or not. In any case, whatever the view of the learned Judge who admitted the revision, the fact remains that the revision was finally admitted, though the notice was confined to a particular point. We are of opinion that once a civil appeal or civil revision is admitted for whatever reason, it is open to the party to urge all matters which can be properly urged. Reference in this connection may be made to (a) Janaki Nath Hore vs. Prabhasini Dasi (1) (A I. R. 1916 Calcutta, 741.) (b) Rekha Thakur vs. Ramchandan Rai (2) (A. I. R. 1936 Patna, 7. ). In the Calcutta case it was held that if an appeal is once admitted under O. 41, R. 12, the whole appeal is before the court, and the party cannot be restricted to one or more grounds specified in the memorandum of appeal. In the Patna case, the learned Judge admitting the appeal said that he was dismissing it on one question, but ordered that the parties would be heard on another question. It was held that the court cannot partly admit and partly dismiss an appeal and that once it is admitted it is to be heard as a whole, unless at the time of admission the court is informed that the appeal will be confined to certain specified grounds only, and the other grounds are abandoned by the party. These cases are based on O. 41, R. 12 C. P. C. ; but in our view the same principles apply to civil revisions, and once a civil revision is admitted, and the party is given a chance of hearing, it is entitled to urge all points which can be properly urged, and cannot be confined to certain points only by the Judge admitting the appeal or revision, though, of course, if the party abandons certain points at the time of admission, it will not be allowed to argue those points when the appeal or revision comes up for hearing. In this case, the party did not give up any point at the time of admission, and therefore the applicant, now that he has been given a hearing by us, is entitled to be heard on all points which can be properly urged. We overrule this preliminary objection.

We then turn to the next preliminary objection viz. whether this revision is competent under sec. 115 (c) the Code of Civil Procedure. We may give some facts on the basis of which the receivership application was made. In this connection, the case of the applicant was that there had been an agreement between him and the four defendants including Samdukhan, and a partnership was established for purposes of running motor lorries between Kuchaman and Narainpura, and Narainpura and Parbatsar. This partnership began on the 1st January, 1948. and was to come to an end on the 31st December, 1952. The terms of the partnership gave the right to each partner to inspect the accounts, and the partner keeping the accounts was made liable to explain the accounts to the other partners. In the beginning the account was kept by Madanlal, one of the partners. From the 23rd October 1949, Samdu Khan began to keep the accounts, and was still keeping them. The applicant asked these persons to explain the accounts to him; but they never did so, though they had, by fraud, taken a writing from him to the effect that the accounts had been explained up to the 31st October, 1948. In any case, no accounts were explained after that date. The defendants were also committing breach of other provisions of the agreement, and therefore the applicant filed the suit and prayed for the appointment of a receiver, as he had been excluded from the partnership. The Munsif passed an ex parte order on the 9th July, 1951, appointing a receiver on the ground that the applicant had been wrongfully excluded by the other partners from taking his rightful part in the conduct of the firm's business in accordance with the deed of partnership, dated 8th November, 1948, and was not allowed to look into the accounts and profit and loss statements. The Munsif considered it necessary to appoint a receiver in order to check the alleged fabrication and falsification of accounts and dissipation of partnership property.

It was this ex parte order appointing an ad interim receiver, which was taken in appeal to the District Judge. One of the points taken in the grounds of revision is that no appeal lay to the District Judge. Learned counsel for the applicant however conceded that in view of the terms of O. 40, R. 1, and O. 43, R. l (s) C. P. C. , an appeal lies against an ex parte order of this nature. In view of this statement of learned counsel we need not consider the question at length. It is enough to say that the words of O. 40, R. 1, and O. 43, R. l (s) clearly provide for an appeal from even an ex parte order. We must however say that such appeals should be rare as the court, which appoints an ad interim receiver ex parte, has still to consider the matter a second time after the other party has put in an objection, and may set aside the ex parte order itself. Under these circumstances, the appellate court should be slow to intervene, and it is only in the clearest cases where the appointment of an ad interim receiver is completely unjustified that it should interfere with an ad interim order of this nature. However, in this case, the District Judge has chosen to interfere, and we have first to decide the preliminary question whether the revision is competent.

Learned counsel for the applicant concedes that this case is not covered by clauses (a) and (b) of sec. 115, and can only be covered by clause (c), namely that the subordinate court has acted in the exercise of its jurisdiction illegally or with material irregularity.- His contention is that the judgment of the learned District Judge itself shows that he acted with material irregularity in the exercise of his jurisdiction. It is pointed out that in appeal before the District Judge the order of the 9th July, 1951, which had been passed ex parte, was only called in question, and the District Judge should have confined himself, when dealing with the appeal, to the material which was available on the record when that order was passed. But in actual fact the District Judge has referred to the material which came on the record afterwards when the defendants appeared and objected to the appointment of a receiver. He has also urged that the District Judge, though he wrote out a long order, did not apply his mind at all to the main point which had appealed to the Munsif and led him to make the ad interim appointment, namely that the applicant had been excluded by the other partners from taking his rightful part in the conduct of the firm's business in accordance with the deed of partnership. He relied on Blakeney vs. Dufaur (1) (51 E. R. , 451.) where it was held that exclusion was a sufficient ground for appointing a receiver in partnership cases. Reliance was also placed on Halsbury's Laws of England, Volume 24, paragraph 923, where the following passage occurs at pages 484 and 485 - "danger to the property is always a ground for the appointment. Thus the Court will appoint a receiver, although the partnership is not dissolved, where a partner is guilty of such breaches of his duty as a partner as would entitle his partner to a dissolution, or of embezzling the assets, or of excluding his partner, or where a surviving partner insists on continuing the business with the assets of the deceased partner, or fails to get in the outstanding debts, or otherwise acts to the prejudice of the assets or where an acting partner denies the other partner's right to relief on the ground that the partnership is illegal and claims the whole property for himself, or where a new firm, being interested in giving long credit to the debtors of the old firm, forbears to press them. "

Learned counsel for the respondents however urges that a mere wrong decision by a court, which has jurisdiction, as the District Judge had in this case, would not be sufficient to make a revision competent under sec. 115 (c ). Before we discuss the question of law, we might briefly analyse the judgment of the learned District Judge.

The learned Judge begins by giving the facts of the case, and then negatives the argument, and rightly so, raised before him that notice to the defendant was necessary before the appointment of an ad interim receiver. He also points out, and again rightly so, that it is only in cases of extreme urgency that receivers should be appointed without notice to the defendants. Then he deals with the affidavit in support of the receivership application, and points out that it is not in accordance with O. 19 of the Code of Civil Procedure, and is vague. This criticism is also, in our opinion, justified, though the learned District Judge has been somewhat harsh and unsparing in this matter. He has found defects in certain parts of the affidavit, and has given prominence to them, which was not deserved, if he had only looked carefully into other documents which were also available along with the affidavit on the 9th July, 1951. He then refers to the counter-affidavit filed on behalf of the defendants, and here he was clearly acting irregularly in the exercise of his jurisdiction, for he had to confine himself to the material which was on the record on the 9th of July, 1950, and this counter-affidavit came on the record after that date. He then goes on to say that there is an allegation in the plaint of falsification of accounts and removal of partnership properties, and that no such allegation was made in the statement made by Bhagirath in the court on the 6th July, 1951. The learned Judge is not right when he says that there is nothing in the plaint about falsification of accounts and removal of partnership properties. There is mention of the apprehensions felt by Bhagirath in paragraphs 9 and 10 of the plaint. It is correct that Bhagirath had said nothing about these matters in his statement in court on the 6th July; but that statement was confined to getting certain particulars from him, and was obviously not a full statement in support of his plaint. Then the District Judge dealt with the matter whether the applicant could be a partner in the business when the permit for running the lorries was in the name of Madanlal and Samdukhan only, but left it to be decided at the hearing of the suit. He finally came to the conclusion that the appointment of the ad interim receiver was wrong, and set it aside. But he did not make it clear that he was only setting aside the order of the 9th July, 1951, and the Munsif was at liberty to decide the question whether a receiver should or should not be appointed after hearing both parties. It was the duty of the District Judge to have made this clear so that the Munsif might go on with the proceedings about the appointment of the receiver, which had been interrupted by this appeal. This analysis of the judgment of the District Judge shows that in certain matters he had clearly acted irregularly in exercise of his jurisdiction, where, for example, he referred to documents which were not available when the order was passed on the 9th July 1951. Learned counsel further urges that the District Judge has not applied his mind at all to the question that Bhagirath, who was one of the partners according to the partnership deed filed along with the plaint, had alleged wrongful exclusion from taking his rightful part in the business of the partnership. This was the main basis for the appointment of the ad interim receiver by the Munsif, and in as much as the District Judge did not apply his mind at all to the cardinal question he must be deemed to have acted irregularly in the exercise of his jurisdiction.

Learned counsel for both parties have cited a large number of authorities before us on the question whether such a revision is competent or not. It is not necessary in our opinion, to consider all those authorities, and we shall confine ourselves to five Privy Council cases and a few others on this point. The first is the well known case of Rajah Amir Hassan Khan vs. Sheo Baksh Singh (1) (11 Indian Appeals, 237. ). Their Lordships of the Privy Council were then dealing with sec. 622 of Act X of 1877, which corresponded to the present sec. 115, and with the interpretation of the words "or to have acted in the exercise of its jurisdiction illegally or with material irregularity" appearing therein, and observed as follows - "the question then is, did the judges of the lower courts in this case, in the exercise of their jurisdiction act illegally or with material irregularity. It appears that they had perfect jurisdiction to decide the question which was before them, and they did decide it. Whether they decided it rightly or wrongly, they had jurisdiction to decide the case; and even if they decided wrongly, they did not exercise their jurisdiction illegally or with material irregularity. " The next case is T. A. Balakrishna Udayar vs. Vasudeva Ayyar (2) (A. I. R. 1917 Privy Council, 71. ). Referring to sec. 115. Their Lordships observed at page 74 as follows: - "it will be observed that the section applies to jurisdiction alone, the irregular exercise, or non-exercise of it, or the illegal assumption of it. The section is not directed against conclusions of law or fact in which the question of jurisdiction is not involevd. " The view taken in Rajah Amir Hassan Khans case may be said to have been further Explained in Dewan Bahadur Seth Umed Mal vs. Chand Mal (3) (A. I. R. 1926 Privy Council, 142. ). That was a case where the plaintiffs claimed certain land in dispute under a mortgage, and the main question was whether the mortgagor had included the particular land in his mortgage. The suit was disposed of without impleading the mortgagor and was decreed in favour of the plaintiffs. The then Commissioner of Ajmer, in the exercise of his powers under sec. 115 C. P. C dismissed the suit reversing the decree of the courts below. Their Lordships held that there was jurisdiction in the then Commissioner to entertain the proceedings for revision, as they held that the decision of the question whether the land had been included by the mortgagor in the mortgage without making the mortgagor a party to the suit was a material irregularity, and under the circumstances revision lay to the then Commissioner under sec. 115 (c) C. P. C. |

The next case where there was further amplification of the point discussed above is Atma Ram vs. Beni Prasad (4) (A. I. R. 1935 Privy Council, 185. ). In that case, a suit had been filed by the Collector under the local Court of Wards Act representing two widows for possession of certain property. The Collector later applied for permission to withdraw the suit. Thereupon, the widows, who were the wards of the Collector, made an application objecting to the withdrawal. Their next reversioner also made another application along with the widows for permission to carry on the suit in place of the Collector. The widows' objection was dismissed. So was 'the other application by the reversioner. There was then a revision before the High Court by the widows, and the reversioner, who originally appeared as opposite party in the revision, was transposed as an applicant. The application was dismissed by the High Court so far as the widows were concerned. But so far as the reversioner was concerned, it was allowed on the ground that the court had acted with material irregularity in dismissing the application of the reversioner, inasmuch as the application of the reversioner had not received a proper hearing or consideration in the court below, and the Subordinate Judge had totally misapprehended the nature of the application, and dealt with it summarily. Their Lordships held that the High Court was right inasmuch as the Subordinate Judge, in disposing, as he did, the reversioner's application, acted with material irregularity. This case supports the view urged on behalf of the applicant that it is a question of fact in each case whether the disposal by the subordinate court was such as to amount to acting with material irre-gularity. The next case is N. S. Venkatagiri Ayyangar vs. The Hindu Religious Endowments Board, Madras (1) (A. I. R. 1949 Privy Council. 156. ). In this case, Their Lordships reiterated the view taken in Rajah Amir Hassan Khans case and Bala-krishana Udayars case, and observed as follows: - "the section empowers the High Court to satisfy itself upon three matters - (a) That the order of the subordinate Court is within its jurisdiction; (b) That the case is one in which the Court ought to exercise jurisdiction; and (c) That in exercising jurisdiction the Court has not acted illegally that is, in breach of some provision of law, or with material irregularity, that is, by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision. " "if the High Court is satisfied upon those three matters, it has no power to interfere because it differs, however profoundly, from the conclusions of the subordinate Court upon questions of fact or law. " The last case is Joy Chand Lal Babu vs. Kamataksha Chaudhury (2) (A. I. R. 1949 Privy Council, 239. ). In this case, their Lordships amplified what has been hinted in Balakrishna Udayars case (3) (A. I R. 1917 Privy Council, 71.), and made it clear that where in order to give itself jurisdiction a subordinate court has to decide a question of fact, the decision of the subordinate court on that question of fact can be taken up in revision under sec. 115, for a subordinate court cannot clutch jurisdiction or refuse to exercise jurisdiction by making a wrong decision on the question of fact Rajah Amir Hassan Khans case (4) (11 Indian Appeals, 237.) was approved so far as the interpretation of sec. 115 (c) was concerned; but Their Lordships observed as follows with respect to clauses (a) and (b) of sec. 115 at page 242 - "some of such decisions prompt the observation that High Courts have not always appreciated that although error in a decision of a Subordinate Court does not by itself involve that the subordinate Court has acted illegally or with material irregularity so as to justify interference in revision under sub-sec. (c), nevertheless, if the erroneous decision results in the subordinate Court exercising a jurisdiction not vested in it by law, or failing to exercise a jurisdiction so vested, case for revision arises under sub-sec. (a) or sub-sec. (b), and sub-sec. (c) can be ignored. "

We may also refer to two Allahabad cases. In Abdul Majid vs. L. Daleep Singh (5) (A. I R. 1949 All, 744.), the scope of sec. 115 (c) was considered, and some instances where that section would apply were given. The following observations at page 745 may be quoted - "it seems to us, therefore, that the material word in sec. 115, sub-sec. (c) is "acted". This clause will apply when the Court "acts" illegally or with material irregularity in the exercise of its jurisdiction. It cannot apply to cases where the Court merely comes to a wrong decision on a question of fact or of law. The use of the word "acted" indicates the true position and limits this clause to that class of cases where the Court having jurisdiction violates any rule of law or of procedure prescribing the mode in which such jurisdiction is to be exercised. The arriving at a conclusion or decision is only a mental operation, and the Court cannot be said to be "acting" in so coming to a conclusion or decision on a question of law or of fact. " The next case is Mohd. Yakub Khan vs. Sirajul Haq (6) (A. I. R. 1949 All. , 771. ). The learned Judges in that case brought out the difference between clauses (a) and (b) and clause (c) in these words - 'the illegal assumption and non-exercise of jurisdiction have reference usually to the initial stage of a case. Where a Court could not have tried a case, but has in fact tried it, there is an illegal assumption of jurisdiction. Where it could have tried a case but has refused to try it, there is a refusal to exercise jurisdiction Both these things usually happen at the commencement of a trial. A Court has to find out the limits of its jurisdiction. This enquiry will be a preliminary enquiry collateral to the main issues in the case. Where a Court has correctly assumed jurisdiction and commenced the trial it may exercise that jurisdiction contrary to the fundamental principles of judicial procedure or to the procedure laid down by law or may decide a case without applying its mind to important facts proved on the record or to the provisions of a statute or under some misapprehension of facts. In all these cases it acts illegally in the exercise of its jurisdiction. This acting illegally clearly happens after the Court has validly assumed jurisdiction. "

If we may say so with respect, these two cases clearly define the limits of sec. 115 (c) in general words. It is difficult to give an exhaustive list of cases where the court can be said to have acted illegally or with material irregularity in exercise of its jurisdiction. But for practical purposes, in cases where the procedure provided by law has not been followed, or relevant provisions of an enactment are completely overlooked, or the authority of the High Court as to what is the law is ignored, or the court invents a fanciful rule and acts on its basis, or acts in defiance of the admitted facts of the case, or decides it against fundamental principles of judicial procedure, or without applying its mind to the real point involved in the case, or misapprehends the nature of the enquiry before it altogether, it can be said to be acting illegally or with material irregularity in the exercise of its jurisdiction, if such acting has a material effect on the result of the proceeding.

(3.)WE have, therefore, to see whether in this case the District Judge can be said to have acted illegally or with material irregularity in deciding the appeal before it. Two matters stand out clearly in this case as to the manner in which the District Judge acted in deciding the appeal. The first is that he referred to the material to which he should not have referred, and which was not before the Munsif when he passed the order on the 9th July, 1951. In so doing he acted contrary to the fundamental principles of judicial procedure, and took into account evidence which should not have been considered by him. The second is that he did not apply his mind at all. to the main point that required consideration, and largely misapprehended what he had to decide. He should have directed his mind to the question whether the applicant was entitled to take part in the partnership business, and was wrongfully excluded by the other partners from taking his rightful part in it. In these circumstances, it can be said in; this case that the District Judge acted with material irregularity in exercising his jurisdiction while deciding the appeal, and we have, therefore, power to interfere under sec. 115 (c), and the revision is competent.
The next question is whether we should interfere in the circumstances of this case. It is enough to point out that it is now more than a year since the matter was decided by the District Judge in September 1951. There is, under the circumstances, no urgency now for the appointment of an ad interim receiver. As the proceedings so far are only with respect to the appointment of an ad interim receiver, and there is no urgency for such an appointment now, we must dismiss this revision. While doing so however we may point out that the question whether a receiver should or should not be appointed in this case pending the disposal of the suit is still open for decision by the Munsif's court after hearing both parties. He should proceed to do so, if so required by the applicant when the case goes back to him. The dismissal of this revision only means that at this stage no ad interim (or provisional) receiver need be re-appointed, and the question of appointment of a receiver should be considered on the merits after hearing both parties.

We, hereby, dismiss this revision; but considering the circumstances of the case, we order parties to bear their own costs of this Court and of the District Judge's Court. .

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