Banerjee, J. - (1.) Leave granted.
(2.) Authority of Receivers to effect sale of immovable properties prior to the passing of the decree is the focal point for consideration in this appeal, by the grant of special leave being directed against the Bench decision of the Bombay High Court. The Bench in deciding the issue however did rely upon the decision of an earlier Full Bench judgment in the case of State Bank of India v. Trade Aid Paper and Allied Products (India) Ltd. (1995) 2 Mah LJ 81.
(3.) Mr. R.F. Nariman, Senior Advocate, appearing in support of the appeal very strongly contended that the Full Bench decision in State Bank of India's case, (supra) cannot be said to have laid down the law in a correct perspective and as such it would be convenient at this juncture to note the observations of the Full Bench pertaining thereto. The Full Bench observed: "10. As mentioned hereinabove, the decisions referred to in the judgment as regards the ambit of power of the Court to appoint Receiver under Order 40, Rule 1 of the Code of Civil Procedure were recorded in suit filed by the individuals to recover the loans or to enforce the mortgages. The economic policy of the Government and the Nationalised Banks has opened new vistas and required the Banks and the financial institutions to advance loans in many areas which were earlier unknown. The benefit available to the citizens of securing loans from Banks and financial institutions cannot be misused by refusal to pay the amount and then indulge in time consuming litigation. Indeed, it is the duty and function of the Court entertaining the suits instituted by Banks and financial institutions to ensure that efforts are made to dispose of the suits as early as possible and even during the pendency of the suits, ensure that not only the properties are protected but the defendant is made to repay the amounts, if desirous of enjoying the benefits secured by obtaining the loan. The powers of the Court under Order 40, Rule 1 of the Code of Civil Procedure are to be exercised to advance cause of justice and what is "just and convenient" depends upon the nature of the claim and the surrounding circumstances. The Court should not close eyes of the realities and blindly follow the principles laid down 50 years before when the suits by Banks and financial institutions were a novelty. The economic liberalisation and the policy of the Government to grant loans for various activities have increased the number of suits by Banks and financial institutions and in this Court every year more than 2,000 suits are instituted. It would not be difficult to imagine how much public money is involved in these suits and how long the Nationalised Banks and Financial Institutions are deprived of their dues. The Court should be conscious of these facts and should be more pragmatic in exercising powers under Order 40, Rule 1 of the Code of Civil Procedure. 11. The Parliament is also conscious of the importance of the claims of the Banks and financial institution and Section 29 of the State Financial Corporation Act, 1951 entitled the Financial Corporation to take up possession of the concern when a default is committed and without resort to the suit. The Parliament had realised that taking advantage of the liberal economic policies and healthy approach of the Banks and the financial institutions to advance loan, there is a growing tendency to misuse the facility by taking advantage of delay in disposal of the cases in Court. The delay in disposal of the cases in the Court is not due to the fault of the litigant and the Banks and financial institutions should not be hampered from recovering the amounts by denial of just relief admissible under Order 40, Rule 1 of the Code of Civil Procedure. 12. The Courts while appointing Receiver under Order 40, Rule 1 of the Code of Civil Procedure may not deprive the defendant of possession, in case of immovable properties provided that the defendant is ready and willing to continue in possession as agent of the Receiver on the terms and conditions to be settled. In case the defendant is ready and willing to accept the agency, then the defendant will continue to hold 'de facto' possession. In case the defendant is not ready and willing to accept the agency or commits default in compliance with the terms of the agency, then it is open for the Court to invite bids from outsiders for use and enjoyment of immovable property. While inviting bids, the Court should ensure that reserve price is fixed after ascertaining the valuation from valuation expert. In no case, immovable property should be sold by the Receiver before passing of the decree in favour of Bank or the financial institution." (Emphasis supplied). ;