AMAL KUMAR GHOSH & ORS.versusBASANTA KUMAR ALMAL

                   [201 O] 5 S.C.R. 357


             AMAL KUMAR GHOSH & ORS.                          A
                             v.
              · BASANTA KUMAR ALMAL
             (Civil Appeal No. 4035 of 2010)
                     APRIL 28, 2010
                                                              B
      [R.V. RAVEENDRAN AND R.M. LODHA, JJ.]

    RECEIVERS:

     Receiver appointed by court - Conduct of - Suit for c
specific performance - Decreed in terms of settlement arrived
at between parties - Receiver appointed - Balance sale
consideration deposited with Receiver, .who was to comply with
the instructions - Receiver partly complied with the
instructions and acted contrary to the other instructions. - 0
Application seeking a direction to Receiver to render accounts
and make payments of the amounts due to applicant-
appellants - Dismissed by High Court - HELD: High Court
has not dealt with the crucial aspect as to whether the Receiver
discharged his obligations - Paragraph 7 of the 'Terms of
Settlement', which required the balance amount to be paid to E
applicant-appellants was not complied with - Receiver should
have either complied with the terms of settlement or should
have complied with the instructions issued by applicant-
appellants - He did neither - On the other hand, he has
chosen to release the amount to the first respondent acting F
on the request of his counsel - Neither the consent decree
nor the appellants' authorization required the amount to be
paid to the 'purchasers' or the first respondent - There was
also no order of the court to pay the amount to first respondent
-ljigh Court has not examined these aspects - The order of G
High Court is set aside and the matter is remitted to it to
examine afresh the entire issue as to whether the Receiver
had discharged his functions properly and complied with the

                            357                               H
    358       SUPREME COURT REPORTS              [2010] 5 S.C.R.


A directions - High Court will also decide as to who is entitled
  to the amount and pass appropriate orders - High Court shall
  give full opportunity to the second respondent to explain his
  conduct as Receiver, and decide the issue uninfluenced by
  the prima facie findings recorded by this Court in regard to ·
B his conduct in dealing with the funds entrusted to him -
  Receivers.

       Receivers appoint.ed by courts - Monitoring of their
  functions by courts - HELD: When courts appoint Receivers
C either during pendency of the proceedings or post decree, the
  courts should ensure that the Receivers submit periodical
  reports and that once their assigned task is completed, they
  are discharged - If it is not dorie, it will cause unnecessary
  hardships and may give room for avoidable irregularities -
  Each court will have to keep track of Receivers (as also
D commissioners) appointed by it and ensure that they duly
  perform their functions in time and thereafter discharge them
  - Suit for specific performance.

       Receivers appointed by courts - Functions and
E responsibilities of - Explained - HELD: Receivers are
  expected to submit periodical accounts/reports to the court with
  copies to parties - If their assigned task is completed, they ·
  should seek discharge - They cannot continue as Receivers
  for decades, without doing anything and holding on to the
F amounts entrusted to them in trust - If a Receiver pays the
  amount belonging to vendor- defendant, to someone else
  without the authority of the court or authorization from the
  vendor-defendant, it will amount to gross negligence or wilful
  default on his part - Consequently, he may become
G personally liable - If the part of the sale price which he was
  holding, is lost by payment to a wrong person, he will be
  answerable to the court and the vendor for the· amount - Suit
  for specific performance.

      CIVIL APPELLATE JURISDICTION : Civil Appeal No.
H 4035 of 2010
AMAL KUMAR GHOSH & ORS. v. BASANTA KUMAR 359
                ALMAL
    From the Judgment & Order dated 8.12.2008 of the High            A
Court at Calcutta in G.A. No. 2498 of 2008.

      Ranjan Mukherjee, Sanjay Kr. Ghosh, Rupali S. Ghosh,
Avijit Bhattacharjee for the Appellants.

    K.V. Viswanathan, Siddharth Gautam, Goodwill lndeevar,           B
Rana Mukherjee, Uttara Babbar for the Respondent.

    The Order of the Court was delivered by

                            ORDER
                                                                     c
     R.V. RAVEENDRAN, J. 1. Leave granted. We have heard
learned counsel for the appellants, the first respondent and the
Receiver appointed by the High Court, who was impleaded on
the direction of this Court as the second respondent.
                                                                     D
     2. The first respondent herein filed a suit for specific
performance against the appellants herein. That suit was
dismissed by a learn~d single Judge of the High Court in the
year 1981. The first respondent filed an apµeal against the
dismissal of the suit before the Division Bench of the High          E
Court. During the pendency of the appeal, the parties (first
respondent and appellants) arrived at a settlement and in terms
of the said settlement, the suit was decreed on 5.8.1986. Under
the terms of settlement, the appellants agreed to sell 90 Kottahs
of land to the first respondent or his nominees at a price of        F
Rs.10,000/- per Kottah. Clauses 3, 6 and 7 of the 'Terms of
Settlement' which are relevant, are extracted below:

    "3. Immediately after the filing of these terms of settlement,
    the plaintiff shall pay to the defendants a sum of
    Rs.3,00,000/- (Rupees Three Lacs only) in part payment           G
    of the consideration and the balance sum of Rs.6,00,000/
    - (Rupees Six Lacs only) shall be paid of the time of
    completion of the conveyance and if severaJ deeds of
    conveyance are executed for the parts of portions of the
    said premises then and in that event the said amount of          H
                                              (j
    360         SUPREME COURT REPORTS                    [2010] 5 S.C.R.


A         consideration shall be apportioned and such amount as
          apportioned shall be paid of the time of execution of each
          deed of conveyance after taking into account the advance
          payment of Rs.3,00,000/- (Rupees Three Lacs only) paid
          by the plaintiff.
B
          6. After approval of the title by the plaintiff if the defendants .
          fail to obtain a certificate under section 230A of the Indian
          Income Tax Act, 1961 or fail to obtain also permission of
          the competent authority if required under the provisions of
          the Urban Land (Ceiling Regulations) Act, 1976 as
c         required then and in that event, Mr. Dip Narayan Mitra is
          appointed Receiver over and in respect of the said
          property without authority and without remuneration and is
          directed to execute a Deed or Conveyance and/or
          conveyance in favour of the plaintiff or his nominee as
D         provided for under these terms of settlement.

          7. Simultaneously with the execution of the Deed or
          Conveyance in accordance with these terms of settlement
          as hereinafter mentioned the plaintiff shall make over to
E         the defendants or to the Receiver as the case· may be the
          balance consideration money less any amount which may
          be ·paid or deducted by the plaintiff on account of
          municipal taxes and other outgoings in respect of the said
          property in accordance with these Terms of Settlement. In
F         that event, the balance consideration is made over to the
          Receiver the same shall be made over by the Receiver
          to the defendants and upon such payment the Receiver
          shall stand discharged and filing of the account by the
          Receiver shall be dispensed with."
G                                                     (emphasis supplied)

    In pursuance of clause (6) of the Terms of Settlement, the
    second respondent herein was appointed as Receiver. In
    pursuance of the settlement, after payment of Rs.3,00,000/- to
H



                                                  \
AMAL KUMAR GHOSH & ORS. v. BASANTA KUMAR 361
        ALMAL [R.V. RAVEENDRAN, J.]
the appellants, the balance sale consideration of Rs.6,00,000/      A
- was deposited with the Receiver.

     3. By letters dated 7.10.1986, 11.12.1986 and
22.12.1986, the appellants informed the Receiver that, in
pursuance of the consent decree, they had transferred the suit      B
premises to eleven nominees of the first respondent under
different deeds of sale and gave the following instructions to
the Receiver in regard to Rs.6,00,000/- deposited by the
purchasers :

    "It has been agreed between us and Mr. Basant Kumar C
    Almal that out of the said amount of Rs.6,00,000/- lying .
    presently with you a sum of Rs.3,00,000/- will be paid to
    Park Services Pvt. ltd. of 119, Park Street, Calcutta
    towards payment of the statutory liability and other
    outgoings in respect of the said premises and such              D
    payment shall be a full and effectual discharge of the
    payment to be made by you. Out of the balance sum of
    Rs.3,00,000/- you are requested to prepare three cheques
    of Rs.1,00,0001- each in the names of Amal Kumar Ghosh,
    Debabrata Ghosh and Subrata Ghosh respectively."                E

                                           (emphasis supplied)

     4. In pursuance of the said three letters, the Receiver paid
Rs.300,000/- to the appellants at the rate of Rs.1,00,000/- each.
The Receiver issued a certificate dated 2.1.1987 to the             F
appellants wherein he confirmed receipt of the instructions of
the appellant as follows:

    "As advised and agreed, I have retained a sum of
    Rs.3,00,000/- (Rupees three lakhs only) for payment to          G
    Park Services Private Limited of No.119, Park Street,
    Calcutta on account of statutory liabilities and other
    outgoings in respect of Premises No.8/2 Palm Avenue,
    Calcutta in terms of three letters dated 7th October, 1986
    written by Sri Amal Kumar Ghosh, 11th December, 1986
                                                                    H
     362        SUPREME COURT REPORTS ;s>"· [2010] 5 S.C.R.


·A         written by Sri Debabrata Ghosh and 22nd December
           1986 written by Sri Subrata Ghosh to me."        '

           (emphasis supplied)

       5. But the Receiver did not pay the sum of Rs.3,00,000/-
 B to Park Services Pvt. Ltd. On the other hand, out of the said
   sum, he paid a sum of Rs.1,08,341.64p. by cheque dated
   13.1.1987 to the Calcutta Municipal Corporation towards the
   property tax due in respect of the premises and deposited the
   balance in a fixed deposit.
 c
        6. On 6.12.1998, the appellants wrote to the Receiver
   requesting for a 'Statement of Account' and also information
   as to whether the Receiver had incurred any expenses in ·
   respect of statutory liabilities etc. on their behalf. This brought
 D forthwith a reply dated 28.12.1998 from the Receiver informing
   the appellants that as on that date, as Receiver, he was holding
   a sum of Rs.5,29,717/- in fixed deposit towards the balance.
   Thereafter, the appellants wrote to the Receiver on 8.1.1999
   requesting for payment of the amount. The Receiver replied on
 E 21.1.1999 that he will release the amount to the appellants on
   their obtaining a 'no objection certificate' from Parks Services
   Pvt. Ltd. The appellants did not furnish 'no objection certificate'
   from Park Services Pvt. Ltd., but again wrote a letter dated
   24.3.2005 calling upon the Receiver to pay the amount that wcis
 F held by him as Receiver.

       7. The Receiver sent a reply dated 28.3.2"105 to the
  appellants stating that whatever amount that had been lying with.
  him had been made over by him to Mr. R.L. Gaggar, Solicitor
  and Advocate representing the purchasers of the premises in
G compliance with Mr. R. L. Gaggar's letter dated 1.8.2002 and,
  therefore, as far as he was concerned, the chapter was closed
  and he stood discharged. A copy of the letter dated 1.8.2002
  sent by Mr. R.L. Gaggar, Solicitor acting on behalf of the
  'purchasers' to the Receiver stated that as per the consent
H decree, the balance amount had to be paid to appellants and
AMAL KUMAR GHOSH & ORS. v. BASANTA KUMAR 363
        ALMAL [R.V. RAVEENDRAN, J.]
the Receiver will stand discharged on such payment and filing          A
of the account. Having said so, Mr. R.L. Gaggar requested the
Receiver to encash the fixed deposit amount and pay the same
to him and confirmed that he will receive, the same on behalf
of the purchasers. It is pursuance of this letter, that the Receiver
paid a sum of Rs.9,23,998/36 (which was the balance amount             B
with accrued interest till that date) to Mr. R.L. Gaggar on
23.8.2002.

     8. In these circumstances, the appellants made an
application to the High Court seeking. a direction to the              C
Receiver to render accounts and make payments of the
amounts due to them. The High Court, after hearing the parties
and the Receiver, passed the impugned order dated
8.12.2008, holding that the reference to Park Services Pvt. Ltd.
in the appellants' letters dated 7 .10.1986, 11.12.1986 and
22.12.1986 was in discharge of the obligation of the appellants        D
to the first respondent in terms of the consent decree on
account of municipal taxes and other outgoings and therefore
the application was liable to be dismissed. The said order is
challenged in this appeal.
                                                                       E
      9. The order of the High Court discloses that the High
Court has not dealt with the crucial aspect as to whether the
Receiver discharged his obligations. Paragraph 7 of the 'Terms
of Settlement' required the balance amount to be paid to the
appellants. That was not complied with. It is true that by letters     F
dated 7.10.1986, 11.12.1986 and 22.12.1986, the appellants
had instructed the Receiver to pay Rs.3,00,000/- to Park
Services Pvt. Ltd. towards statutory liabilities and other
outgoings in regard to the property. But the Receiver did not
comply with the said instructions as he admitted that the sum          G
of Rs.3,00,000/- was not paid by him to the Park Services Pvt.
Ltd .. Nor did Park Services Pvt. Ltd make a demand for
payment of the said amount by the Receiver. There is also no
explanation from the Receiver as to why he directly paid
Rs.1,08,341.64p. to the Calcutta Municipal Corporation as that         H
     364       SUPREME COURT REPORTS                 [2010] 5 S.C.R.


A was not part of the instructions in the letters dated 7.10.1986,
  11.12.1986 and 22.12.1986. The Receiver should have either
  complied with the terms of settlement or should have complied
  wifh the instructions contained in the letters dated 7.10.1986,
  11.12.1986 and 22.12.1986. He did neither. On the other hand,
B he has chosen to release the amount to the plaintiff in the suit
  (first respondent herein), acting on the request of his counsel
  Mr. R. L. Gaggar. Neither the consent decree nor the
  appellants' authorization required the amount to be paid to the
  'purchasers' or the first respondent. There was also no order
c of the court fo pay the amount to first respondent. The High
  Court has not examined these aspects. We are, therefore, of
  the view that the order cannot be sustained.

        10. It is relevant to note here that when appellants (the
  vendors) demanded the amount, the Receiver instructed the
D appellants to furnish a 'no objection certificate' from Park
  Services Pvt. Ltd. for releasing the amount. But when Mr. R.L.
  Gaggar, the Solicitor for the first respondent, wrote to him
  confirming that the balance amount hl:ld to be paid to the
  appellants, but n'lade a demand that the Receiver should pay
E the amount to him acting on behalf of the 'purchasers', the
  Receiver did not insist upon a 'no 'objection certificate' or a
  confirmation from the appellants but proceeded to directly pay
  the amount to the Solicitor for the first respondent. It should be
  noted that first respondent is different from the eleven
F purchasers and also different from Park Services Pvt. Ltd. There
  is also no material to show that except Rs.108,341 /64 which
  was due as Municipal Tax, there was any other outgoing in
  respect of the premises.

G           11. We are unable to comprehend how the sale price in
      regard to a completed sale, entrusted to the Receivef, for
    · payment to vendors, could be refunded to the agreement holder
      who nominated the purchasers. The sum of Rs. 3,00,000/- was
      left with the Receiver to pay to Park Services Pvt. Ltd., towards
      statutory dues and other outgoings in regard to the premises.
H
AMAL KUMAR GHOSH & ORS. v. BASANTA KUMAR 365
        ALMAL [R.V. RAVEENDRAN, J.]
Admittedly, Park Services Pvt. Ltd. never claimed from the         A
Receiver, any amount towards any outgoings in regard to the
premises. The only outgoing was found to be Rs.1,08,341/64
due as Municipal Tax which was paid directly by the Receiver
to the Municipal Corporation. The instruction by the appellants
to pay Rs.3 lakh to Park Services Pvt. Ltd. towards outgoings      B
was an unilateral instruction to the Receiver and when the said
amount was not claimed by Park Services Pvt. Ltd., the
appellants were entitled to issue modified instructions by
seeking payment to themselves. But the demand for payment
was ignored and the Receiver chose to pay the amount to the        c
purchasers without any satisfactory explanation.

      12. Receivers appointed by court are expsct~d to submit
periodical accounts/reports to the court with copies to parties.
If their assigned task is completed, they should seek discharge.
They cannot continue as Receivers for decades, without doing       D
anything and holding on to the amounts entrusted to them in
trust. When courts appoint Receivers either during pendency
of the proceedings or post decree, the courts should ensure
that the Receivers submit periodical reports and that once their
assigned task is completed, they are discharged. If it is nQ~      E
done, it will cause unnecessary hardships and may give room
for avoidable irregularities. Each court will have to keep track
of Receivers (as also commissioners) appointed by it and
ensure that they duly perform their functions in time and
thereafter discharge them.                                         F

     13. When any money belonging to the parties is entrusted
to the Receiver, he should deal with it as per the directions of
the COL!rt. If the appointment is post-decree, he should seek
instructions from the court as to the manner of disposal of the    G
funds entrusted to him, particularly when the Receivership is
dormant and the amount has been lying with him unclaimed for
a considerable period. A Receiver cannot assume that unless
the court directs, he need not submit accounts, or that he need
not account for the amounts lying with him. If a Receiver pays
                                                                   H
    366         SUPREME COURT REPORTS                  [2010) 5 S.C.R.


A   the amount belonging to vendor-defendant, to som.eone -else
  . without the authority of the court or authorization from· the·
    vendor-defendant; it will amount to gross negligence or wilful
    default on his part. Consequently~ he may become personally
    liable: If the part of the sale price which he was holding, is lost
B .by payment to a wrong person, he will be answerable to 1he
    court and the vendor for the amount.

       14. During hearing, Mr. K.V. Viswanathan, learned senior
  counsel appearing for the first respondent admitted and
  confirmed that Mr. R.L. Gaggar had received the amount from
C the Receiver on behalf of the first respondent and that the first
  respondent had in turn received the amount from his counsel
  Mr. R.L. Gaggar. He further stated on. instructions, that the first
  respondent will deposit the entire sum of Rs.9,23,998/36 which
  was received from the Receiver, before the Calcutta High
D Court, within one month from today, for being disbursed in
  accordance with the order that may be made by the High Court.

       1s: Having regard to the facts and circumstances, and the
  aforesaid submissions, we allow this appeal and issue the
E following directions:
                                         ,.·
                                    .'
          (i) The order dated 8.12.2008 of the High Court is set
          aside and the matte~ is remitted to the. High Court.

          (ii) The first respondent is directed to deposit a sum of
F         Rs.9,23,998.36p. with the Calcutta High Court within one
          month from today. The question of liability of first
          respondent to pay interest on the said amount from
          23.8.~002 to date of such deposit, shall be decided by the
          High Court. The amount to be deposited by the first
G         respondent shall be kept in fixed deposit until the disposal
          of.the appeal.

          (iii) The High Court will examine afresh the entire issue as
          to whether the Receiver had discharged his functions
          properly and complied 'With the directions. If it is found that
H
AMAL KUMAR GHOSH & ORS. v. BASANTA KUMAR 367
        ALMAL [R.V. RAVEENDRAN, J.]
       he has not complied with the same, appropriate action may           A
       be initiated. The High Court however will take note of the
       fact that the Receiver had at no time converted the funds
       to his personal use, but had maintained it separately.

       (iv) The High Court will also decide as to who is entitled          B
       to the amount and pass appropriate orders. If the
       appellants are found to be entitled to the amount, then it
       is needless to say they will be entitled to it with interest upto
       the date of payment.

       (v) The High Court shall give full opportunity to the second        C
       respondent to explain his conduct as Receiver, and decide
       the issue uninfluenced by the prima facie findings recorded
       by us in regard to his conduct in dealing with the funds
       entrusted to him.

R.P.                                                 Appeal allowed .




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