Holding

A receiver may be appointed only when it is just and convenient, requiring a prima facie case, emergency or danger, and the High Court’s grant of exclusive powers to a party was unjustified; a neutral officer should be appointed with court‑directed supervision.

Summary

The Supreme Court examined an appeal challenging a Bombay High Court interim order that appointed the High Court’s Official Receiver for the assets of a company and gave Sudha A. Chowgule exclusive powers to execute documents and induct tenants. The Court reiterated that under Order 40 Rule 1 of the Code of Civil Procedure a receiver may be appointed only when it is just and convenient, requiring a prima facie case, an emergency or danger, and the risk of depriving the defendant of de facto possession. It held that the High Court’s grant of exclusive powers to a party to the dispute was unjustified and that such powers should be exercised by a neutral officer subject to court directions. Consequently, the Court modified the interim order, directing that a neutral receiver be appointed with appropriate oversight. The appeal was allowed.

Issues considered

When may a receiver be appointed under Order 40 Rule 1 of the CPC?
Whether the High Court’s interim order granting exclusive powers to Sudha A. Chowgule to execute documents and induct tenants was valid?
Whether the presence of a prima facie case, emergency, danger, and risk of loss of de facto possession are necessary conditions for appointing a receiver
Impact of the testator's mental capacity on the validity of the Will and the need for a receiver

Legislation cited

Code of Civil Procedure, 1908s. Order 40 Rule 1
Companies Act, 1956s. Section 283(1)(g)
Hindu Succession Act, 1956

Subjects

Receiver appointmentOrder 40 Rule 1Interim reliefMental capacityWill validityEmergencyDangerDe facto possessionHindu Succession ActCompanies ActCorporate assets

Judgment

[2009] 4 S. C.R. 172

A PARMANAND PATEL (D) BY LR. & ORS.
V.
SUDHA A. CHOWGULE & ORS.
Civil Appeal No. 1574 of 2009
MARCH 6, 2009
B
[S. B. SINHA AND CYRIAC JOSEPH, JJ.]
Code of Civil Procedure, 1908 - 0. 40 r. 1 - Receiver -
When to be appointed - Held: Is only when it is found to be
;ust and convenient to do so - Appointment of receiver during
C pendency of suit is within the disr.retion of the cowt - Ordinarily
receiver would not be appointed except on a prima facie finding
that plaintiff has excellent chance of success in the suit -
Plaintiff has to show a case of adverse and conflict claims of
property but also emergency, danger or loss demanding
D immediate action - Also it cannot be appointed unless case
is made out depriving defendant of de facto possession - On
facts, interim order by High Court appointing Official Receiver
for assets of Company of testator, with certain directions not
interfered with - However, order as regard giving exclusive
E powers to the beneficiary of the Will to execute documents
and also to induct tenants, not justified in view of the
relationship between the parties.
Appellant no 1 is a testator. Appellant no. 2 is his
widow and respondent nos.1 and 2 are his daughters.
F Appellant no 1 executed a Will and also prepared letters
of gifts in respect of his properties.
In this appeal, the interim order passed by the
Division Bench of High Court that the Receiver of High
G Court is appointed as Receiver for the assets of the
company; that respondent no.1 would act as an Agent of
the Receiver and render necessary information to the
Chartered Accountant; that respondent no. 1 would
operate the bank account singly; and that respondent no.
H 172
PARMANAND PATEL (D) BY L.R. & ORS. V. 173
SUDHA A. CHOWGULE & ORS.

1 would execute documents and also induct tenants, is A
under challenge.
Disposing of the appeals, the Court
HELD : 1.1 A receiver having regard to the provisions
contained in 0.40 r. 1 of the Code of Civil Procedure is B
appointed only when it is found to be just and convenient
to do so.Appointment of a receiver pending suit is a matter
which is within the discretionary jurisdiction of the Court.
Ordinarily the Court would not appoint a receiver save
and except on a prima facie finding that the plaintiff has c
an excellent chance of success in the suit. It is also for
the plaintiff not only to show a case of adverse and conflict
claims of property but also emergency, danger or loss
demanding immediate action. Element of danger is an
important consideration. Ordinarily, a receiver would not
D
be appointed unless a case has been made out which
• may deprive the defendant of a de facto possession. For
the said purpose, conduct of the parties would also be
relevant. [Para 15] [190-A-D]
1.2 1st respondent did not question that part of the E
order of the Division Bench whereby an Official Receiver
of the High Court has been appointed as receiver in
respect of the suit properties. Thus, a strong prima facie
case has been found in favour of the appellants. Parties
• have brought out medical reports in respect of late P F
which gives different pictures about his mental condition
at the relevant time. The relevant date for determining the
mental faculty of late P would be 23rd January 2005 when
the Will was executed, but for arriving at the said
conclusion his mental condition, both prior thereto and
G
later, would be relevant. Prima facie, appellant no.2 was
~
compelled to file a suit in order to protect the interest of
her husband. Suit was entertained and interim order was
passed. The Division Bench in order to satisfy itself, called
late P in their chamber. He was found to be totally
H
174 SUPREME COURT REPORTS [2009] 4 S.C.R.

A confused and incoherent. In the said situation, a panel of
doctors was constituted for examining him and the said
report of the said panel of doctors is considered. [Para
16] [190-D-H; 191-A]
1.3 The property in suit is worth more than Rs.1000
8 crores. There are several companies. Respondent no.5-
company own huge properties. There are two multi-
storeyed buildings which are occupied by a large number
of tenants. Each of the heirs and legal representatives of
late Pin the event he is found to have died intestate, would
C have 1/3rd share. Appellant no.2 does not claim exclusive
interest in respect of the flats purported to have been gifted
in her favour by her late husband. A statement has also
been made on behalf of the first respondent that she would
have no objection to share the entire property half and half
D between herself and appellant no.2. [Para 17] [191-A-C]
1.4 Several attempts were made for reconciliation
between the parties. The dispute was referred to a
mediator. Parties, however, for reasons best known to
them and despite the fact that for all intent and purport
E the dispute hinges on a narrow pedestal, were not able to
settle their disputes. Therefore, it appears that there is a
lot of controversy between the parties. There is also a lot
of bad blood. [Para 18] [191-D-E]
F 1.5 The High Court in its impugned judgment •
proceeded on the premise that prima facie late P had a
desire to settle the properties in favour of his two
daughters in equal shares. He made a meticulous plan
therefor which would be tax efficient. To the said extent,
G 1st respondent's case appears to have been supported
by H, brother of appellant no. 2 herself. But, with respect,
what was not take11 into consideration by the Division
Bench of the High Court was that admittedly two sets of
papers were pr<>pared-one on the basis that the 2nd
H appellant would surrender her 5% share in the company.
PARMANAND PATEL (0) BY L.R. & ORS. V. 175
SUDHA A. CHOWGULE & ORS.

Late P even signed the first SE!t of papers. She, however, A
r refused to part with her share in the company. It was then
the second set of documents were executed which not only
included the undated Will but also the two letters addressed
to respondent no. 1 and 2 respectively. The said letters
prima facie had been drafted in a manner which would B
ultimately be beneficial to the interest of respondent no. 1
alone. Presumably, at that point of time the 2nd appellant
expressed her stray resent in relation to the whole affair.
Rightly or wrongly, she was not ad idem with her husband.
It gave rise to execution of a third set of document which C
was signed not only by late P but also the appellant no.2
conferring a power of review upon SP. It was also attested
by RA. It is understood that the said SP alone was helping
late P in running the business. It is in the said context that
letter dated 26th August 2005 written by SP to RA assumes
0
importance. [Para19] [191-F-H; 192-A-D]
1.6 The Will and the letters of gift as evidenced by
the two letters dated 23rd January 2005 were subject to
review by SP. He having opined that the arrangement
being detrimental to the interest of P should be given E
primacy at this stage. The case of the 1st respondent may
or may not be correct. It is possible that late P had a desire
to divide the property in equal shares between her two
daughters. However, for the purpose of passing an
interlocutory order, it is proceeded on the premise that F
the rights of the parties would have to be considered in
terms of the provisions of the Hindu Succession Act, 1956,
that is, on the assumption that P died intestate in which
event share of each of his heirs would be one third.
Distribution of property amongst the children by the G
parents, however, may be found to be desirable if the
mother wants to retain her share and deal with the same
on her own. No exception can be taken thereto. Ordinarily,
a Court shall presume the existence of a right in the
property of the deceased in favour of the 2nd appellant H
176 SUPREME COURT REPORTS [2009] 4 S.C.R.

A unless a strong prima facie case is made out that she had
-
been deprived therefrom. It is not for the court to consider
as to whether her stand is fair to one of her daughters or
not. Even if it be held that the Will and the letters had been
executed by late P in sound disposing mind, conduct of
B respondent no. 1 cannot be lost sight of. She might be
accompanying her father to various parts of the country
as also abroad to see that P received best of the treatment,
but then respondent no. 2 had also been residing in the
same bungalow with her father despite her marriage in
c 1979. Above all, 2nd appellant had also not only been
looking after her husband but also accompanying him for
his treatment wherever it was found to be necessary. [Para
19) [192-E-H; 193-A-D]
1.7 Having taken into consideration all aspects of the
D matter, it is a fit case where the High Court should have
appointed a receiver and/or an administrator with suitable
directions. To the aforementioned extent, the order of the
High Court is interfered with as respondent no. 1 alone
had been given exclusive powers not only to execute
E documents but also induct tenants. The said job keeping
in view the relationship between the parties should better
be left with an officer of the Court who would be subject
to directions as may be issued by the High Court from
time to time. [Para 20) [193-E-G] II

F CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1574
of 2009
From the Judgement and Order dated 07.09.2006 of the
Hon'ble High Court of Judicature at Bombay in Appeal No. 866
G of 2005 in Notice of Motion No. 2626 of 2005 in Suit No. 2435
of 2005 and Notice of Motion No. 2620 of 2005 in Suit No. 2435
of 2005.

WITH
Civil Appeal No. 1575 of 2009
H
~ PARMANAND PATEL (D) BY L.R & ORS. V. 177
SUDHA A. CHOWGULE & ORS.

Mukul Rohatgi, Anil Divan, S. Ganesh, Shyam Divan, J.P. A
. -:I Sen, Shruti Choudhary, Swati Singh, A.M. Khatllawala,
' Jayashree Singh (Mis Fox Manda! & Co.) C. Rashmi Kant,
Rashna Dastoor, J.P. Sen, Mahesh Agarwal, E.C. Agrawala
Rishi Agrawala, Akshay Ringe, R.F. Nariman, C.A. Sundaram,
Aspi Kapadia, Sameer Parekh, Ranjeeta Rohtagi, Rohini B
Mussa, Abhishek Gupta, Zafar lnayat, Anand Kannan (Mis
Parekh & Co.) Hemant Choudhari, S.W. Haider, Sanjeev
Malhotra, for the appearing parties.

• The Judgement of the Court was delivered by
c
S.B. SINHA, J.

1. Leave granted.
C.A. NO. 1574 of 2009@ S.L.P. (~) No.17162 of 2006
2. Parmanand Patel, since deceased, was a very wealth~ D
person. He floated several companies including the 5
" respondent Company herein known as Mis. Tulsidas V. Patel
Pvt. Ltd. Appellant lndu P. Patel is his widow. He also left behind
his daughters, viz., Sudha A. Chowgule and Jaya P. Patel,
respondent nos.1 and 2 respectively. The company has its E
assets consisting of shares in different companies as also
_..,.
immovable properties. It owns two multi-storeyed buildings
known as "Kanchanjunga" and "D-Tower Building" situated at
... Peddar Road, Mumbai. It also owns a bungalow known as "Bella
Vista" situated at the same road. F
According to the plaintiffs (appellants herein), the
approximate value of the assets held by the company would be
about Rs.367 crores. However, according to the 1st defendant
(respondent no.1 herein), the value of the properties owned by
the company and its subsidiaries would be about Rs.1120 G
~ crores.
Parmanand Patel held 85% shares in the said company.
The remaining 15% shares were held by lndu Patel. Sud ha and.
Jaya in equal proportion.
H
178 SUPREME COURT REPORTS [2009] 4 S.C.R.

A Indisputably, Parmanand Patel had been suffering from
various diseases including some neurological ones. For his
treatment, he used to frequently visit United States of America
accompanied by his wife and daughter Sudha.

One Dr. Hemant Patel, a resident of Mombasa, Kenya is
8 the brother of appellant no.2. One Shirish Patel, who is a
chartered accountant is the nephew of Parmanand Patel.

Indisputably, on 23rd January 2005 late Parmanand Patel
executed a Will. He also signed letters which are in the nature
c of gift and/or arrangements in regard to some of his properties.
It is also not in dispute that he had gifted two flats in favour of the
first appellant apart from making a mediclaim policy for her.

3. Although the Will is undated, it is accepted that the same
was also executed on 23rd January 2005, i.e., on the same date
D when the documents were executerl. By reason of the said Will,
he is said to have bequeathed 5. '.la of his property to Sudha
st
and 50% to Jaya. In a letter addressed to the 1 respondent,
viz., Sudha, he is purported to have recorded that the he had
given all his shares to her. By reason of one of the letters
E addressed to the 1st respondent, he is purported to have given
all of his shares to her with a direction that she should retain
46% to herself and give 39% to Jaya. The said gift is said to .....
have been made on certain conditions. A similar letter was also
addressed to the 2"d appellant herein. It is, however, not in dispute
F that appellant no.2 did not agree to the aforementioned
arrangement. The said Will was attested by one Dr. Zarir F.
Udwadia and one Sh. R.A. Shah, Advocate.
4. Indisputably, when the aforementioned purported Will
was executed and the letters were written, Jaya was in the United •,
G States of America. Shirish Patel was also in United States. As
appellant no.2 admittedly did not agree to the said purported
mode and manner of disposition of properties by her husband,
another document was prepared on 23r" January 2005 itself,
which reads as under :
H
PARMANAND PATEL (D) BY L.R. & ORS. V 179
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J]
" TO WHOMSOEVER IT MAY CONCERN A
All the documents which I have signed today shall be
reviewed by my nephew 1Mr. Shirish Patel (C.A.). His suggestion
will be incorporated in these documents. My (Mrs. lndu Patel)
5% interest in the Tulsidas V. Patel will be given equally to my
daughter Sudha and Jaya upon my demise. B

Sd/- Sd/-
P.T. Patel 1.P. Patel
Mumbai c
Dated 23.1.2005

Sci/-
Solicitor."
D
The said document was signed not only by Parmanand
Patel and lndu Patel but also by Shri R.A. Shah, the Solicitor.
Certain developments took place thereafter. A meeting of
the company was held wherein lndu Patel was shown to have
been present, E
st
However, from perusal of a letter dated 01 September
2005, it now transpires that lndu Patel was given leave of absence
... on that date. In the said meeting various decisions were taken,
namely, transfer of shares, appointment of Chairman, custody
of the minute book, adoption of the company etc. It was claimed F
by Sudha by reason of resolution adopted in the said meeting,
became the Chairman of the company.
5. Yet again, a Board meeting of the Company was called
on 25th January 2005 which was attended only by Sudha and G
Parmanand Patel. Appointment of Shiraj Salelkar, an Advocate
being an Assistant to Mr. R.A. Shah and Ms. Usha Moraes as
Directors in the Board of the company was informed to the
Board and a resolution was adopted appointing them as
Additional Director of the company. Yet again. a meeting of the H
180 SUPREME COURT REPORTS [2009] 4 S.C.R.

1
A Board was held on 06 h March 2005 wherein Sudha and
Parmanand Patel were present. In the said meeting, resignation
of Ms. Usha Moraes was accepted and in his place Arjun A.
Chowgule, son of Sudha, was appointed as Additional Director
of the company. A resolution was also adopted with regard to
B the operation of the bank account in terms whereof Sud ha was
permitted to operate the bank account singly and others were
permitted to operate only with her. Another purported meeting
was held on 21st April 2005 wherein Sudha, Parmanand Patel
and Arjun Chowgule were present. In the said meeting, on the
c alleged ground that Jaya Patel remained absent from the Board
meetings which had taken place for a period of 3 months from
I-
January 2005 to March 2005, applying the provisions of Section
283(1 )(g) of the Companies Act, it was resolved that she would
be deemed to have vacated the office of Director of the company
with immediate effect.
D
0
6. 2" appellant herein ai'eging that her husband
Parmanand Patel was unable to manage the affairs of the
company and his properties, filed a suit on his behalf in the
1
original side of the Bombay High Court on or about 12 h
E September 2005 praying, inter alia, for the following reliefs :
"(a) that it be declared that the document purporting to be
the Will dated 23rd January 2005 of Plaintiff No.1, being Exhibit
"G" hereto, the two letters dated 23rd January 2005, being
Exhibits "J" and "K" hereto and the purported gift I transfer of
F shares of Defendant No.5 by Plaintiff No.1 in favour of
Defendant No.1 as recorded therein are null, void and of no
effect in law;
(b) that Defendant No.1 be ordered and decreed to deliver
up the said document purporting to be the Will dated 23rd
G
January 2005 of Plaintiff No.1, being Exhibit "G" hereto, the two
letters dated 23rd January 2005, being Exhibits "J" and "K" hereto
for cancellation and the same be cancelled by and under the
orders and decree of this Hon'ble Court;

H (c) that the purported transfer of 85% shares held by Plaintiff
PARMANAND PATEL (D) BY L.R. & ORS. V 181
SUDHA A CHOWGULE & ORS. [S.S. SINHA, J.]

... No.1 in Tulsidas V. Patel Pvt. Ltd., Defendant No.5 in favour of A
Defendant No.1 be set aside and cancelled and Defendant No.1
be ordered and decreed, if necessary, to transfer the said shares
to the Plaintiff No.1;
(d) that Defendant No.5 be ordered and directed to record.
Plaintiff No.1 as the holder of the 85% shares in the records of 8
Defendant No.5 and for that purpose to do all acts, deeds and
things and make proper entries· in its records as may be
necessary;

(e) that it be declared that the appointments of Defendant c
No.3 and 4 as directors on the Board of Directors of Tulsidas V.
Patel Pvt. Ltd .., Defendant No.5 are not valid;
(f) that alternately, Defendant No.3 and 4 be removed as
directors from the Board of Directors of Defendant No.5:
D
\, (g) that the appointment of Defendant No.1 as the
Chairperson of the Board of Directors of Defendant No.5 be
set aside;
(h) that Defendant No.1 be directed to return the records,
registers, minutes books and books of accounts of the Defendant E
No.5 company to its registered office;"
Several prayers for grant of interim relief were also prayed
for.
7. A learned Single Judge of the High Court passed an F
1
interim order on 16 h September 2005 relevant portion whereof
reads as under :
" .... However, I have considered the aforesaid contention
in the light of the allegation made in the plaint and large
number of material produced pertaining to mental and G
physical health of plaintiff no.1. I have also taken into
consideration the fact that the right claimed by defendant
no.1 in respect of the said 85% share in the defendant
no.5 company is based on a gift deed. In my opinion till
the hearing and final disposal of the motion said shares H
182 SUPREME COURT REPORTS [2009] 4 S.C.R.

A are required to be frozen and kept intact till the dispute is
decided either way at the hearing of the motion. It is not
possible to permit defendant no.1 at this stage to act as
if there is a valid gift in her favour of the said 85% share
in the defendant no.5 company merely on the ground that
B there are certain documents produced which are
supposed to have been executed by plaintiffs during the
contemporaneous period during the time the said gift deed
is supposed to have been executed. Motion undoubtedly
requires a deeper consideration.

C 2. Till the hearing and final disposal of the motion, none of
the parties to the present suit shall exercise any right whatsoever
in respect of the said 85% shares which are the subject matter
of the gift deed in favour of defendant no.1 in defendant no.5
company.
D
3. In the light of the rival claims about the mental health of
the plaintiffs, I direct constitution of panel of Doctors drawn from
J.J. Hospital, Bombay Hospital and Lilavati Hospital dealing
with psychiatrist and neurological department who will examine
the said plaintiff and make report directly to the court. Plaintiff
E no.2 shall pay the necessary cost, charges and expenses in
respect thereof. Prothonotary and Senior Master, High Court,
Mumbai is directed to intimate the respective Hospital to
nominate one doctor from each of the said Hospitals for the
purpose of aforesaid test of the plaintiff no.1. The report of such
F panel will be furnished within 4 weeks from today.
4. Union Bank of India is directed to continue the
arrangement of joint operation of the bank account between
defendant no.1 and 2. In so far as assets of the company is
G concerned, plaintiff no.2 and defendant no.2 shall maintain the
said assets of the company as it is and will not sell or dispose -I
of the ass~ts or create any third party rights except in ordinary
course of business. Plaintiff no.2 and defendant no.2 shall keep
inform defendant no.1 about the business decisions if any, taken
H by them. Motion made returnable in usual course."
PARMANAND PATEL (D) BY L.R. & ORS. V. 183
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J.]

8. An intra court appeal was preferred thereagainst by A
Sudha.
9. Keeping in view the directions issued by the learned
1
Single Judge in paragraph 3 of the order dated 16 h September
2005, the learned Judges of the Division Bench interacted with
Parmanand Patel (since deceased) in their chambers and found B
him totally incoherent and confused. In the aforementioned
situation, by an order dated 11th October 2005, directed as
under:

"3. After hearing both parties, we direct constitution of a c
panel of Doctors from K.E.M. Hospital, Bombay Hospital
and Lilavati Hospital from their respective departments of
Psychiatry and Neurology. That is to say from each hospital
one doctor each from the aforesaid department shall
examine respondent No.1 from Psychiatric and D
Neurological point of view, with regard to alleged mental
disorder of respondent No.1. We request the panel of
Doctors to expeditiously give their report to this Court.
4. Learned counsel for both appellant and respondents
state that they will render all assistance to the panel and E
bear the expenses of Doctors' fees. Needless to state
that the aforesaid panel of Doctors while examining
respondent No.1 will not be influenced in any manner by
our prima facie view as a lay persons. Place the matter on
board on 27th October 2005." F
10. Indisputably, pursuant thereto or in furtherance thereof,
Parmanand Patel was examined by a panel of six doctors. They
examined him on oih December 2005. So far as his
neurological examination is concerned, the doctors awarded
24 points (wrongly stated to be 23) out of 30 indicating a minimal G
Cognitive Deficit of functioning. He was also examined in regard
to his mental state. It was concluded:
"Conclusion:
It is the unanimous feeling of the six members of this panel H
184 SUPREME COURT REPORTS (2009] 4 S.C.R.

A that Mr. Patel is suffering from definite deficit, in his
cognitive functions and also his working memory, which
lead to an impairment in all aspects of independent
functioning.
The Memory Deficits are significant, in both domains of
B registration and recall of new memories as well as in the
retrieval of his past memories, specifically pertaining to
his personal memories of his Family and Property holdings
and his business ventures.

c The Cognitive Deficits also lead to improper decisions
and behaviors towards people, which can cause problems
with caregivers at this stage. Thus he is incapable of taking
executive decisions regarding his routine living activities
at home and there is a definite impression of his inability
to function independently in a financial or other business
D
activity.
It is also obvious that as Mr. Patel is incapable of living by
himself in an unsupervised environment, he will need to
be monitored, supervised, and assisted, even in his routine
E Activities of Daily Living, at all times."
1
11. Parmanand Patel expired on 20 h November 2006. An
application for amendment of the plaint was filed. Leave was
granted to amend the plaint. Jaya was also allowed to be
transposed to the category of rlaintiff from the category of
1
F defendant by an order dated 10 January 2008.
12. The interim application came up for hearing before a
Division Bench of the High Court. By reason of the impugned
judgment, it was directed:
G "41. In the circumstances, to safeguard the interest of all
the parties, we pass the following interim order which
should meet the ends of justice :-
(1) The Receiver, High Court, Bombay is appointed as
Receiver for the assets of Tulsidas V. Patel (Pvt.) Ltd. and
H
PARMANAND PATEL (D) BY L.R. & ORS. V. 185
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J]
" Defendant No.1 (Sudha) will act as an Agent of the A
-1
Receiver. No steps will be taken hereafter based on the
documents of gift dated 23rd January 2005. Actions taken
so far will also be subject to the result of the suit.

(2) The Receiver will appoint a Chartered Accountant from
his panel who will first get an inventory of the properties of B
Tulsidas V. Patel (Pvt.) Ltd. done in four weeks hereafter.
The foregoing clauses will become operational only
thereafter.

(3) Defendant No.1 (Sudha) will be permitted to execute c
all necessary agreements on behalf of the Company for
the purposes of safeguarding the assets thereof. She will
not encumber nor sell any of the assets of the Company
nor will she create any third party rights in any manner
though she will be at liberty to give the properties/flats on
D
licence basis. The terms of the document of licence and
particularly the licence fee will have to be approved by the
above referred Chartered Accountant.
(4) Defendant No.1 (Sudha) will be permitted to operate
the bank account of the Company with Union Bank of E
India and the restriction to operate the same only along
with Jaya will stand vacated.

.. (5) Defendant No.1 (Sudha) will deposit all the earnings of
the Company in its account with Union Bank of India and
will also honour the liabilities thereof. F

(6) The Company will bear all the medical and travel
expenses of Plaintiff No.1 (Parmanand Patel) and Plaintiff
No.2 (lnduben) as and when required.
(7) From the income of the Company, after the liabilities G
~
are met, 33% will be made over to Jaya (Defendant No.2)
and 5% to Plaintiff No.2 (lnduben). Sudha will be permitted
to retain 33% of the income for herself. The remaining
portion of the income will be invested in fixed deposits
with Union Bank of India from time to time. The aforesaid H
-ef•
186 SUPREME COURT REPORTS [2009] 4 S C.R.

A payments and investments will be made by taking the •
...
accounts at the end of every 6 months. The accounts will
be got approved from the above Chartered Accountant.
(8) Defendant No.1 (Sudha) will render all necessary
information to the Receiver and the Chartered Accountant
B and copies of these accounts will be made over to
Defendant No.2 (Jaya) and Plaintiff No.2 (lnduben)

(9) The payments, receipts and investments will be without
prejudice to the rights and contentions of all the parties
c and subject to the outcome of the suit.
(10) Plaintiff No.1 will continue to remain in possession of
the Bella Vista Bungalow till the hearing and final disposal
of the suit. Plaintiff No.2 (lnduben), Defendant No.2 (Jaya)
and her husband and daughters will be permitted to stay
D with him under the orders of Court.
( 11) All the properties and assets of the Company will
continue to remain in the name of the Company and all
agreements concerning them will continue to be entered
into only in the name of the Company.
E
(12)Defendant No.1 (Sudha) will deposit an amount of
Rs.50,000/- with the Receiver from the Company's account
towards charges and expenses of the Chartered
Accountant and the Receiver to begin with. The costs and
F charges of the Receiver and the Chartered Accountant
will be borne from the Company's account from time to
time."
13. Mr. Mukul Rohatgi and Mr. Anil Divan, learned senior
counsel appearing on behalf of the appellants, inter alia, would
G submit:
i. Sudha meticulously planned the entire strategy to
take control over the company in a systematic
manner beginning from December 2004 when a
second ration card was applied for; shares were
H
PARMANAND PATEL (D) BY L.R. & ORS. V 187
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J ]

said to have been lost and steps were taken even to A
-'! have another common seal, the company was
proclaimed to be the owner of the bungalow and
Parmanand Patel became a licencee in the said
premises for a maximum period of one year and
ultimately not only the purported Will was executed B
but also letters of gifts were prepared and addressed
to Sudha and Jaya followed by various Board
meetings, from a perusal whereof it would appear
that she could acquire complete control over the
company and, thus, the interim arrangement must c
be interfered with.
ii. Keeping in view the fact that Sudha is a party to
forgery of documents, she should not have been
appointed as an agent of the receiver particularly
when the Court had found out a prima facie case in D
favour of the 2nd appellant.
iii. One of the basic legal principles, as propounded by
this Court in various decisions is that when a Will is
unnatural surrounded by suspicious circumstances
and does not satisfy the conscience of a Court, such E
a Will cannot be accepted.
iv. The High Court should not have shown any indulgence
in favour of Sudha. The reports of the doctors as.
also the observations made by the Division Bench F
of the High Court in its order dated 15th September
2005 itself would suggest that late Parmanand Patel
was not mentally fit to take any decision by himself
and thus no credence could have been given to the
documents including the Will executed on 23rd
G
January 2005. It was unnatural, the learned counsel
argued that Parmanand Patel would consult Shri R.A.
Shah who had been appearing against the company
and in fact as lawyer for the companies represented
by Sudha and her husband.
H
188 SUPREME COURT REPORTS [2009] 4 S.C.R.

A 14. Mr. Rohington Nariman and Mr. C.A. Sundaram.
learned senior counsel appearing for the respondents, on the
other hand, would submit
i. The Will and the letters of giving having been ttested
by two independent persons. viz . Dr. Hemant Patel
B and and R.A. Shah and one of them being the brother
of lndu Patel must be held to have been executed by
late Parmanand Patel by way of family arrangement.
ii. lndu Patel having been provided with sufficient
c income as two flats had been given to her as also a
third flat in the joint name of the appellants herein,
the annual income whereof would be about Rs.60
lacs per month, the decision of late Parmanand Patel
that his property should be divided half and half
between his two daughters cannot be said to be
D
either illegal or unfair. Such a process, according to
learned counsel, started in 2003 as Sudha had been
accompanying him for his treatment to other parts of
the country as also United States. The mental
condition of the testator having been found to be
E good by the doctors, as would appear from the
certificate issued by Dr. Peter Black of Brigham And
Women's Hospital, Boston on 21st January 2005 who
examined him in October 2004 at Jaipur, certificate ...
dated 28th January 2005 issued by Dr. M.M. Bahadur,
F Cons Nephorologist at Jaslok Hospital, certificate
dated 30th January 2005 issued by Prof. R. Gokal,
Dept. of Renal Medicine, Manchester Royal Infirmity
and certificate dated 01 st March 2005 issued by Dr.
Ajay Singh, Harvard Medical School, would clearly
G go to show that he had a good mental faculty. In fact,
he attended a meeting of George Noble Pvt. Ltd.
along with his nephew Shirish Patel on 03rd February
2005. It has also been brought to our notice that vide
letter dated 13th April 2005 addressed to Subhash
H Patel, Parmanand Patel refused the letter of
PARMANAND PATEL (D) BY L.R. & ORS. V. 189
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J.]

resignation submitted by him which would show that A
"' he was in complete control of the situation and knew
what he had been doing.
iii. Brother of lndu Patel, viz., Dr. Heman! Patel, a
practising surgeon at Mombasa visited the family
B
and only to him late Parmanand Patel expressed his
intention to divide the assets/shareholding of the
company equally between his two daughters during
his lifetime and to divide his other assets after his
\.: death and for the said purpose he wanted such
separation to be done during his lifetime and in a tax
c
efficient manner. It was pursuant to the said desire,
the aforementioned documents were prepared. The
factual scenario would furthermore be apparent from
a letter written to lndu Patel by her brother on 29th
D
January 2005.
)-
iv. Surrender of tenancy in respect of the bungalow 'Bella
Vista' was necessitated because all formalities were
required to be complied with and it was never the
intention of the first respondent to drive her parents E
out therefrom as would appear from a statement
made by he counsel before the Division Bench.

v. The order of the Division Bench of the High Court
...
having safeguarded the interest of all concerned and
having been passed as the first respondent had been
F
acting as Chairperson of the company for a long
time, the impugned judgment should not be interfered
with particularly when she is required to operate not
only under the receiver but also in close collaboration
G
with a chartered accountant.
15. Although, the learned counsel for the parties have
addressed us at great length and in fact we have been taken
through the minutest details of the relevant and important
documents filed and relied on by the parties, we are of the H
190 SUPREME COURT REPORTS [2009] 4 S.C.R.

A opinion that 1t would not be prudent on our part to discuss the
same in great details.

A receiver, having regard to the provisions contained in
0.40R1 of the Code of Civil Procedure, is appointed only when
it is found to be just and convenient to do so.
B
Appointment of a receiver pending suit is a matter which
is within the discretionary jurisdiction of the Court. Ordinarily
the Court would not appoint a receiver save and except on a
prima facie finding that the plaintiff has an excellent chance of
c success in the suit. It is also for the plaintiff not only to show a
case of adverse and conflict claims of property but also
emergency, danger or loss demanding immediate action.
Element of danger is an important consideration. Ordinarily, a
receiver would not be appointed unless a case has been made
D out which may deprive the defendant of a de facto possession.
For the said purpose, conduct of the parties would also be
relevant.
1
16. 1' respondent did not question that part of the order of
the Division Bench whereby an Official Receiver of the High
E Court has been appointed as receiver in respect of the suit
properties. We would, therefore, proceed on the premise that a
strong prima facie case has been found in favour of the
appellants.
Parties hereto have brought out medical reports in respect
F of late Parmanent Patel which give us different pictures about
his mental condition at the relevant time. It is no doubt true that
the relevant date for determining the mental faculty of late
Parmanand Patel would be 23rd January 2005, but for arriving
at the said conclusion his mental condition, both prior thereto
G and later, would be relevant. Prima facie, appellant no.2 was
compelled to file a suit in order to protect the interest of her
husband. Suit was entertained and interim order was passed.
The Division Bench, in order to satisfy itself, called late Patel in
their chamber. He was found to be totally confused and
H incoherent. It is in the aforementioned situation. a panel of
_.,
~

PARMANAND PATEL (D) BY L.R. & ORS. V. 191
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J.]

doctors was constituted for examining him. We have noticed A
\ the report of the said panel of doctors.
17. The property in suit is worth more than Rs.1000 crores.
There are several companies. Respondent no.5-company
herein own huge properties. There are two multi-storeyed
buildings which are occupied by a large number of tenants. Each B
of the heirs and legal representatives of late Parmanand Patelcl
in the event he is found to have died intestate, would have 1/3'
share. Appellant no.2 does not claim exclusive interest in respect
of the flats purported to have been gifted in her favour by her
late husband. A statement has also been made on her behalf of c
the first respondent herein that she would have no objection to
share the entire property half and half between herself and
appellant no.2.
18. We may also place on record that several attempts
D
have been made for reconciliation between the parties. At the
~ instance of the learned senior counsel appearing on behalf of
the parties, the dispute was referred to a learned mediator.
Parties, however, for reasons best known to them and despite
the fact that for all intent and purport the dispute hinges on a
narrow pedestal, have not been able to settle their disputes. E

It, therefore, appears that there is a lot of controversy
between the parties. There is also a lot of bad blood .
... 19. The High Court in its impugned judgment proceeded
on the premise that prima facie late Parmanand Patel had a F
desire to settle the properties in favour of his two daughters in
equal shares. He made a meticulous plan therefor which would
be tax efficient. To the aforementioned extent, 1st respondent's
case appears to have been supported by Dr. Hemant Patel,
brother of lndu Patel herself. But, with respect, what was not G
taken into consideration by the Division Bench of the High Court
was that admittedly two sets of papers were prepared - one on
the basis that the td appellant would surrender her 5% share in
the company. Late Parmanand Patel even signed the first set
of papers. She, however. refused to part with her share in the H
-.

192 SUPREME COURT REPORTS [2009] 4 S.C.R

A company. It was then the second set of documents were executed
which not only included the undated Will but also the two letters
addressed to Sudha and Jaya respectively. The said letters
prima facie had been drafted in a manner which would ultimately
be beneficial to the interest of Sudha alone. Presumably, at that
B point of time the 2nd appellant expressed her stray resent in
relation to the whole affair. Rightly or wrongly, she was not ad
idem with her husband. It gave rise to execution of a third set of
document which was signed not only by late Parmanand Patel
but also the appellant no.2 conferring a power of review upon
c Shirish Patel. It was also attested by R.A. Shah. We have been
given to understand that the said Shirish Patel alone was helping
late Parmanand Patel in running the business. It is in the
111
aforementioned context that letter dated 26 August 2005
written by Shirish Patel to R.A. Shah assumes importance. It
reads as under :
0
"Further to my letter dated 25th August 2005, I wish to
confirm that all the documents purported to have been
executed on January 23, 2005 by Parmanandkaka dealing
with his assets and the acts of Sud ha pursuant thereto are
E detrimental to the interest of Parmanandkaka and therefore
he should not be bound by the same."

The Will and the letters of gift as evidenced by the two
letters dated 23rd January 2005 were subject to review by Shirish
Patel. He having opined that the arrangement being detrimental
F to the interest of Parmanand Patel, in our opinion, should be
given primacy at this stage. We would, however, refrain ourselves
from making any comment upon the correctness or otherwise
of the one set of reports submitted by the medical experts in
st
preference to another. The case of the 1 respondent may or
G may not be correct. It is possible, as has been contended by
her, that late Parmanand Patel had a desire to divide the property
in equal shares between her two daughters. However, for the
purpose of passing an interlocutory order, we may proceed on
the premise that the rights of the parties would have to be
H considered in terms of the provisions of the Hindu Succession
PARMANAND PATEL (D) BY L.R. & ORS. V. 193
SUDHA A. CHOWGULE & ORS. [S.B. SINHA, J.]

Act, 1956, that is, on the assumption that Parmanand Patel died A
intestate in which event share of each of his heirs would be one
third. Distribution of property amongst the children by the
parents, however, may be found to be desirable if the mother
wants to retain her share and deal with the same on her own.
No exception can be taken thereto. Ordinarily, a Court shall B
presume the existence of a right in the property of the deceased
in favour of the 2"d appellant herein unless a strong prima facie
case is made out that she had been deprived therefrom. It is
not for the court to consider as to whether her stand is fair to
one of her daughters or not. Even if it be held that the Will and c
the letters had been executed by late Parmanand Patel in sound
disposing mind, conduct of Sud ha cannot be lost sight of. Sudha
might be accompanying her father to various parts of the country
as also abroad to see that Parmanand Patel received best of
the treatment, but then Jaya had also been residing in the same
0
bungalow with her father despite her marriage in 1979. Above
~ all, 2"d appellant had also not only been looking after her husband
but also accompanying him for his treatment wherever it was
found to be necessary. We, as at present advised, do not wish
. to comment upon t_he contentions raised before us that the Will
was not only unnatural but was surrounded by a large number of E
suspicious circumstances. Such a question would fall for
consideration of the High Court in the suit.

20. We, therefore, having taken into consideration all
aspects of the matter, are of the opinion that it is a fit case where F
the High Court should have appointed a receiver and/or an
administrator with suitable directions. We have, to the
aforementioned extent, intend to interfere with the order of the
High Court as Sudha alone had been given exclusive powers
not only to execute documents but also induct tenants. The G
,. aforementioned job, in our opinion, keeping in view the
relationship between the parties should better be left with an
officer of the Court who would be subject to directions as may
be issued by the High Court from time to time.

We leave the matter relating to imposition of conditions H
194 SUPREME COURT REPORTS [2009) 4 S.C.R.

A and/or appointment of chartered accountant or others to assist
the receiver completely at the hands of the High Court. In a case
of this nature, however, the official receiver himself may not be
appointed as receiver.
21. Before parting with this case, however, we may place
8 on record that Mr. Hemant Choudhari, learned counsel
appearing for respondent no.6-Bank submitted that appellants
and the respondent-companies owned by appellants and the
first respondent even borrowed a sum of about Rs.5 crore. The
High Court may consider desirability of protecting the interest
C of the bank also.
22. This appeal is allowed to the aforementioned extent
and with the aforementioned observations and directions.
C.A.No. 1575 of 2009 @ S.L.P. (C) No.17396 of 2006
D
23. In view of the order passed in the appeal arising out of
S.L.P.(C)No.17162 of 2006, this appeal would also stand
disposed of on the above terms.
24. Costs of these appeals shall abide by the result of the
E suit.

N.J. Appeals disposed of.