K.C. Agarwal, J. - (1.) THIS appeal is directed against the judgment and order of the learned Second Additional Civil Judge, Agra, dated February 2, 1976, allowing an application filed by the plaintiff respondent for appointment of receiver over the properties mentioned in Schedules ' C' and ' E' of the plaint.
(2.) BRIEFLY stated the facts are these : Suit No. 64 of 1972 was filed by the United Bank of India, a banking concern against the defendants for recovery of Rs. 14,72,473.42 P. along with future interest against the appellants and others (hereinafter referred to as the defendants). The said defendants were the partners of M/s Hindustan Metal Works which was impleaded as defendant No. 1 in the suit. The defendants 2 to 4 opened an account in the name of defendant No. 1 with the Belanganj Branch, Agra which was of the nature known as the ' Current Account' . The facilities offered by the said current account were not adequate for the trade purposes of the defendants 1 to 4. They, therefore, requested the Bank to give them further facilities in the nature of cash-credit/over draft with the limit and terms to be mutually agreed between the parties. The bank agreed to give these facilities to the defendants on terms mutually agreed between the bank and the defendants. Under the arrangement so arrived at, the amounts advanced were duly entered in accounts maintained by the bank. The defendants 1 to 4 had also executed a number of documents to serve as corroborative evidence or collateral securities. These documents were amongst other the Letters of hypothecation, hypothecating bills, movable goods, stock-in-trade, in process etc. The bank pressed the defendants for the payment of the amounts due on several occasions but the same had been put off by them on one pretext or the other. Consequently, the bank called upon the defendants through a notice to pay the amount due to it, but since the defendants failed and did not pay, therefore, the bank had to file a suit for recovery of Rs. 14,72,473.42 P. The bank claimed a number of reliefs in the plaint. One of the reliefs was to appoint a receiver over the properties mentioned in Schedules ' A' to ' E' for realisation of the amount due to the bank. The bank thereafter filed an application on 10th of May, 1973 for appointment of a receiver over the properties mentioned in Schedules ' C' and ' E' of the plaint. The case of the bank was that in order to secure the payment of the amounts which was advanced to the defendants 1 to 4, the said defendants hypothecated plants and machinery which were mentioned in Schedule ' C' of the plaint and had executed agreement in this connection. This document has been described as Board 1 No. 37-A. The other was Board No. 35-A regarding the hypothecation of the movable goods mentioned in Clause ' E' , One of the terms incorporated in the aforesaid bonds with which we are concerned in the present appeal is cl. (g). The same is quoted below : (sic). " The allegations made in the application by the bank were that in the eye of law the defendants held possession of the properties on behalf of the plaintiff bank and as such they were not entitled either to change possession or encumber that possession in any manner whatsoever without the consent of the bank but as the defendants did not pay the amount and further after filing of the suit they tried to remove certain machinery which had already been hypothecated with the bank. Therefore, the plaintiff was entitled to have a receiver appointed over the properties of Schedules ' C' and ' E' . In this connection, the plaintiff further alleged that the defendants had also leased out the properties to M/s N. K. Woollen and Silk Mills, Agra, hence that was also a ground for appointment of receiver. The application for appointment of receiver was accompanied by an affidavit of Shri P. C. Mazumdar who was the agent of the United Bank of India, Belanganj, Agra.' ' The application was contested by the defendant No. 2 who filed an objection alleging that there was no ground for appointment of receiver inasmuch as he had not done anything which damaged or jeopardised the security of the plaintiff. Further allegations made in the objections were that the plaintiff had no right to take possession of the goods hypothecated with the bank, and, therefore, had no right to the appointment of receiver. It was also contended that the appointment of receiver was not a matter of contract but a matter of judicial discretion of the court. Therefore, the plaintiff could not get the receiver appointed merely by relying on Cl. (g) as quoted above. (sic).
(3.) THE learned Civil Judge held that as the defendants agreed for the appointment of the receiver in the event of danger to the bank security and that since the plaintiff felt that its security had been endangered by giving the properties to M/s N. K. Woollen and Silk Mills, the defendants had no right to raise any objection against the appointment of receiver. It also found that the lessee inducted into possession by the defendants 1 to 4 could create danger or loss to the properties hypothecated. THErefore, the plaintiff had a right in the terms of the agreement to get the receiver appointed. In this view of the matter, the application for appointment of the receiver was allowed by the court below and the receiver was directed to take possession of the plants and machinery mentioned in Schedule ' C' and movable properties detailed in Schedule ' E' . Feeling aggrieved the defendants 1 and 2 have filed the present appeal. The first question raised by the counsel for the defendants was that the court below committed an error in appointing a receiver over the properties of Schedules ' C' and ' E' without examining the merits of the case and finding out whether it was just and convenient in the present case to appoint him. Learned counsel contended that the appointment of receiver could be made by the court only in accordance with the provisions of O. 40 R. 1 of the C.P.C. In the instant case, it was neither just nor convenient to appoint receiver, therefore, the same is liable to be set aside. It is no doubt true that the power of a civil court to appoint a receiver in a civil suit is regulated by the provisions contained under O. 40, R. 1 of the C.P.C.;