- (1.) Leave granted. Heard both sides. On 9.1.1990, M/s Jyoti Chemicals leased out its industrial undertaking situate in the State of Andhra Pradesh to the appellant for a term of 11 years on an annual rent of Rs. 20 lakhs. A sum of Rs. 11 lakhs was paid by the appellant as security and every year a sum of Rs. 1 lakh therefrom was to be adjusted towards the Rs. 20 lakhs payable for that year. It appears that M/s Jyoti Chemicals had borrowed amounts from the Bank of Maharashtra on the security of the properties and had agreed to formally mortgage the properties. On 14.12.1993, the Bank of Maharashtra filed Suit No. 307 of 1994 on the Original Side of the High Court of Bombay for recovery of the amount due to it on the basis of the loan transaction and for specific performance of the alleged agreement to mortgage the properties included in Schedule 'B' to that plaint. It was pleaded that a hypothecation had been created in respect of the machineries in favour of that Bank as far back as on 25.11.1982. In that suit, the appellant was not originally made a party. But the Bank moved an application for appointment of a receiver for the properties of M/s Jyoti Chemicals situate in Thane as well as the industrial undertaking situate in the State of Andhra Pradesh. The application under Order XL Rule 1 of the Code of Civil Procedure in regard to the industrial undertaking of which the appellant was the lessee, was rejected by the learned single judge of that court. The learned judge noticed that the loan was advanced by the Bank in the year 1982; that the Bank had consented to the appellant being put in possession as a lessee subject to the appellant paying to the Bank a sum of Rs. 20 lakhs as rent. The court further noticed that the amount had not been paid by the appellant into the Bank from the year 1982 and the suit was filed by the Bank only in the year 1993. Also, in the mean time, M/s Jyoti Chemicals had entered into an arrangement with Citi Bank for the liquidation of its loan by directing the appellant to pay the amount of Rs. 20 lakhs to that Bank. It was also stated that the Bank of Maharashtra had been negligent in not having taken prompt steps for recovery of the amounts and under the circumstances it was not just and convenient to appoint a receiver.
(2.) The Bank of Maharashtra filed an appeal before the Division Bench. By an interim order dated 4.4.1996, the Division Bench appointed a receiver, the Court Receiver, High Court of Bombay, for the industrial undertaking. The court also directed the receiver to appoint the appellant as his agent in respect of the property on usual terms and conditions without security. The undertaking including the machinery which was already in possession of the appellant as a lessee, was permitted to be continued in the possession of the appellant. Subsequently, the Division Bench confirmed the order appointing the receiver. It noticed the contention of the appellant that the court receiver was not entitled to claim from the appellant anything more than what the appellant was liable to pay to M/s Jyoti Chemicals. The Division Bench did not answer that contention but directed the appellant to make that submission before the receiver and observed that the receiver was bound to take all relevant materials into consideration. The order also directed that the appellant should continue to pay a sum of Rs. 20 lakhs per year to the receiver who in turn would pay over the said amount to Citi Bank. The order also directed that the receiver should separately fix and collect royalty in respect of the plant and machinery located in the State of Andhra Pradesh. By a subsequent order, the order was modified by substituting the figure of Rs. 19 lakhs per year as against Rs. 20 lakhs per year as payable by the appellant since Rs. 1 lakh out of Rs. 20 lakhs was to be adjusted out of the sum of Rs. 11 lakhs paid as security.
(3.) The receiver purported to get a valuation of the plant and machinery. The valuer suggested a valuation of Rs. 1, 15, 16, 000/- and reported that the written down value on depreciation would be Rs. 74, 44, 600/-. It was also suggested by the valuer that 15% of the written down value would be the quantum of royalty that ought to be collected.;