C.S.P. Singh, J. - (1.) THE Petitioner is a registered company and owns and operate a vacuum pan sugar Mill at Pipraich in the district of Gorakhpur. It fell into arrears in spite of demands relating to the sugarcane price, commission thereon, cess and purchase tax. It appears that the dues which had fallen into arrears were being paid by instalments, which were being accepted by the Respondents till June 1972. Although the company had been making payments, yet a large amount of arrears was still due from it and as such the District Government Counsel (Civil) Gorakhpur made an application on 15th July 1972 setting out various amounts due for cane price, commission, interest on cane price and commission, cess and purchase tax which amounted to Rs. 33.59 lacs and praying for the appointment of a Receiver Under Section 286 -A of the UP ZA and LR Act. The Collector, Gorakhpur passed an order on the 16th July 1972, which happens to be a Sunday, which is not a normal working day, appointing a Receiver of the Mills. The Petitioners have by this petition challenged this order.
(2.) TO begin with, the counsel for the Petitioners has urged that Section 286 -A of the Act does not authorise the appointment of a Receiver over a running business. This very contention was advanced and repelled in Smt. Vimla Rani v. State U.P CMW No. 3264 of 1971 Dt. 18 -5 -1972, of which one of us was a member. We are in respectful agreement with the view expressed therein and see no reason to take a different view. It is then urged that it was not 'just and convenient' in the circumstances of the present case to appoint a Receiver. Section 286 -A of the Act empowers the Collector to appoint a Receiver for realisation of arrears in addition or instead of any other process of recovery. This section has close similarity to Section 51 of the Code of Criminal Procedure which permits the appointment of a Receiver in execution proceedings. In the case of Smt. Vimla Rani v. State of U.P. (supra) a Division Bench of this Court has held that the Collector should make an order for the appointment of a Receiver only when he is satisfied that it is just and convenient to do so. It is as such to be seen whether in the present case, it can be said that this requirement was satisfied. The order which the Collector has passed is an ex parte one and this order has been passed on the basis of the application moved by the District Government Counsel. A copy of this application had not been filed by the parties but during the course of the hearing, the Advocate General has filed the copy of the application on the basis of which the order came to be passed. In this application, after setting out the dues under the various heads which amounted to Rs. 33.59 lacs, it was stated in paragraph 3 that although a considerable time had passed since the determination of the agreement by the Government and the dismissal of the appeal arising out of the suit filed by the company challenging the exemption of cess, the dues had not been cleared and there was no indication that the company desires to clear off the dues or that it has the capacity to do so. It was then said that a Receiver should be appointed as it would lead to the speedy recovery of the dues. It is further stated that inasmuch as demands had been made repeatedly it is not necessary to have recourse to any other mode provided for recovery of the dues as arrears of land revenue. Giving reasons for the impugned order, the Collector has stated that inasmuch as he was satisfied that unless coercive processes were taken for realisation of the dues, the dues would not be paid and further that recourse to recovery by arrest would also not lead to speedy recovery of the dues and inasmuch as he had power to appoint a Receiver Under Section 286 -A of the Act, he as such was appointing Sri Shanker Dutt Ojha as Receiver of the property of the Mills.
(3.) EXECUTION by way of appointment of a Receiver had been adopted by Courts in England in the exercise of their equity jurisdiction. This jurisdiction was, however, very sparingly exercised and was granted by way of equitable relief on the ground that there was no remedy by execution at law - -See Lucas v. Harris, 18 Q.B.D. 127 at p. 134. CL.J. at page 134 said: Confusion of ideas has arisen from the use of the term 'equitable execution'. The expression tends to error. It has been used by judges and occurs in some orders, as a short expression indicating that the person who obtains the order gets the same benefit as he would have got from legal execution. But what he gets by the appointment of a Receiver is not execution but equitable relief, which is granted on the ground that there is no remedy by execution at law; it is a taking out of the way hindrance which prevents execution at common law. Until recently nobody ever thought that an order for a receiver would be obtained in aid of a legal judgment, unless there was a hindrance in obtaining execution at law. Fry, L.J. in that case on page 134 said: The idea that a receivership order is a form of execution is, in my opinion, erroneous. A receiver was appointed by the Court of Chancery in aid of a judgment at law where the Plaintiff showed that he had sued out the proper writ or execution and was met by certain difficulties arising from the nature of the property, which prevented his obtaining possession at law and in these circumstances only did the Court of Chancery interfere in aid of a legal judgment for a legal debt. Relief by the appointment of a receiver went on the ground that execution could not be had and therefore, it was not execution. Jurisdiction exercised by equity courts was, however, made available to every courts also by the passing of the Judicature Act, 1873, which by Section 25 Sub -section (8) conferred powers of appointment of receiver in all cases where it appeared to be just and convenient that such order should be made. Even though by the passing of the Judicature Act, all courts were clothed with the jurisdiction to grant equitable relief by way of appointment of a receiver, yet on account of the fact that the Judicature Act, 1873 permitted the appointing of a receiver only when it was just or convenient. Courts in England were loath to appoint a receiver merely because it was a more convenient mode of obtaining satisfaction of a judgment than the usual modes of execution - -See Harris v. Beauchamp Brothers, 1894 I.Q.B.D. 801. Davey, L.J. on page 806 of the report said thus: The learned Counsel for the Plaintiff boldly argued, that, if you have got a subject matter which might be made available for the satisfaction of the judgment debt, you may have a receiver, if it is a better mode of getting in than the usual mode. In our opinion, this is wrong. In Morgan v. Hart, 1914 2 K.B.D. 183, after reviewing all the earlier cases, it was held that a receiver could be appointed by way of equitable execution in aid of a judgment at law only in cases in which execution cannot be levied in the ordinary way, by reason of the nature of the property. So far the courts in India are concerned, the consensus of opinion seems to be that the appointment of a receiver is not a matter of course and that before such an order could be made, it has to be made out that ordinary execution cannot be effected with advantage - -See Promothanath Malia v. H.V. Low and Co. : AIR 1930 Cal. 502; Hamendra Nath Roy Chowdhury v. Prokesh Chandra Ghosh : AIR 1932 Cal. 189; and Saileshwar Lakhaiyar v. Kanti Kumar Sinha : AIR 1965 Pat 238. Since the appointment of a receiver is only made by the courts when it is 'just and convenient' courts have insisted that the appointment must be such as is likely to benefit both the judgment debtor and decree -holder - -See Pratap Singh v. The Delhi and London Bank Ltd., 5 ALJ 583 and Bunwaree Lal Sahoo v. Baboo Girdharee Singh, (1871) 16 WR 273. The Calcutta High Court in Hamendra Nath Roy Chowdhury's case (supra) affirmed this test by observing on page 193 of the report as under: The order which the learned Judge has made Under Section 51, Code of Civil Procedure, in the case before us, has been made almost as a matter of course and far from satisfying the requirements of the phrase 'just and convenient' occurring in Order 40, Rule 1, Code of Civil Procedure, which must necessarily mean just and convenient in view of the equities in favour of both the parties, is, in our opinion, exactly the reverse, so far as the judgment -debtors are concerned. This Court in Smt. Vimla Rani's case (supra) while dealing with the question as to whether Section 286 -A offends Article 14 of the Constitution has held that Rules 242 and 281 of the UP ZA and LR Act, even though they do not apply in terms to the appointment of a receiver should serve as a guide line in the appointment of a receiver. Now Rule 242 provides that a writ of citation should be issued before any other process is resorted to and Rule 281 provides that the holding of a defaulter should be sold only when other processes specified in Clauses (a) to (d) of Section 279 would be insufficient for the recovery of arrears. The reasoning given in Smt. Vimla Rani's case (supra) is suggestive of the result that the receiver should normally be appointed only in cases the other processes are insufficient for the recovery of the arrears. This is analogous to the practice Adopted by English Courts and the Indian Courts in execution proceedings that a receiver is only be appointed in case other methods of execution cannot be effected with advantage.;