1984 PLP 1408 (CLC)

(a) Civil Procedure Code (V of 1908)‑‑ ‑‑O. XL, r. 1‑Keceiver‑Official Receiver, held, agent of neither party appointed by, acts for and answerable to Court.‑[Receiver]. P L D 1971 S C 8; P. Laxmi Reddy v. L. Laxmi P L D 1957 (Ind.) 251 ; Satyanarayan Banerji and others v. Kalani Prasad Singh Deo Bahadur A I R 1945 Cal. 387; Kahan Singh v. Mohan Lal and another A I R 1916 Lah. 80; Kalyan Mul Mathur v. Emperor A I R 1936 Pat. 577; Gopaldas Khettry Phulchand Purshottamdas and another A I R 1946 Cal. 357; N. Abdul Rahim v. Lingappa Viajappa and another A I R 1943 Bom. 273; Kanhaialal v. Dr. D. R. Banerji A I R 1958 S C 725 arid Collector, Tiruchirapalli v. Trinity Bank Ltd. A I R 1962 Mad. 59 ref. (b) Civil Procedure Code (V of 1908)‑ ‑‑ O. XXI & XL‑Execution of decree‑Official Receiver collect ing various sums, selling shares and receiving sale price of properties of judgment‑debtor and investing same in Khas Deposit Certificate Question whether interest on these amounts should go to judgment debtor or decree‑holder, held, rights of decree‑bolder are determined by decree itself and decree‑holder entitled to no more nor less Amount deposited by Official Receiver under order of Court and any increase coming about cannot be claimed by decree‑holder After payment of decretal amount and interest thereon balance including interest on any deposits or investments made by Official Receiver, under order of Court, shall go to judgment debtor in accordance with law, as decree‑holder cannot claim more either in law or equity. [Receiver]. Syed Sajjad for the Decree‑Holder. Muhammad Nawaz Kasuri for Legal Heirs of the Judgment‑Debtor. Maj. Nazar Muhammad Mufti, Official Receiver. The Muslim Insurance Limited now known as State Life Insurance Corporation and henceforward called Insurance Company filed an applica tion No. 35‑1,/81 under section 106 of Insurance Act, 1938 against Dr. Muhammad Sharif Muttaqi claiming a sum of Rs. 16,61,532/111 on the allegation that he had committed misfeasance and misappropriated the money of the company. A learned Single Judge vide judgment, dated 21st July, 1962 found Dr. Muhammad Sharif Muttaqi liable for Rs. 15,62,074112/1 and allowed interest relevantly at the rate of 7 per cent per annum with half‑yearly rest. On the appeal of Dr. Muhammad Sharif Muttaqi, the principal amount was reduced to Rs. 13,91, 24117/10 and the rate of interest to 6 per cent. This is vide judgment of the learned Supreme Court of Pakistan, dated 15‑6‑1970. It is reported as P L D 1971 S C 8.

2. The decree‑holder, the Insurance Company filed the afore-titled application for execution on 26‑9‑1972. It is stated that the assets of Dr. Muhammad Sharif Muttaqi were already attached when on 19‑10‑1972, Major Nazar Muhammad Mufti, Advocate, was appointed as Official Receiver of the properties of Dr. Muttaqi by the High Court. The Official Receiver collected various sums, sold shares and received sale‑price of properties of the judgment‑debtor, Dr. Muhammad Sharif Muttaqi which were deposited in the Savings Bank Account, invested in Khas Deposit Certificates, etc., from time to time under the orders of the Court.

3. On 7‑4‑1982, the learned Judge dealing with the matter observed that "the only question left to be decided would be whether the Official Receiver was acting as an agent of the insurance company, the judgment- debtor or the Court and whether the interest that has accrued on these amounts in the bands of the Official Receiver should go to the judgment- debtor or the decree‑holder. This is question for arguments".

4. It has come up today for arguments. The admitted position is that the principal amounts in hands of the Official Receiver or paid to the Insurance Company, fully meet the decretal amount alongwith the interest thereon.

5. Learned counsel appearing for the decree‑holder has submitted that though the money involved is not much but the question is one of principle. He has very assiduously argued that the amounts coming into the hands of the Official Receiver from time to time which he deposited in the Saving Bank Account or invested in Khas Deposit Certificate, etc. under the orders of the Court, were for the benefit of the decree‑bolder and if some accretion comes about by way of interest, etc., the decree‑holder is entitled thereto because the amounts were for the benefit of the decree‑holder for the satisfaction of the decree; and if the amounts had been paid straightaway to the decree‑holder, the latter would have invested those and earned profit. The fact that the amounts were withheld from the decree‑holder should not in any manner adversely affect its interest. He has referred to P. Laxmi Reddy v. L. Laxmi (P L D 1957 S C (Ind.) 251) and submitted that the possession of a Receiver during the pendency of a suit is for the benefit of the successful party. Moreso. it should be in the case of a decree‑holder because it is already recognised by the decree of a Court that he is entitled to the property and therefore the possession thereof with the Official Receiver will be for his benefit and consequently accretion or addition to the property will be the good-luck of the decree -holder. He submitted that, for example, in a case of immovable property like land on which sapling of fruit trees were planted, if that is put in the hands of the Official Receiver, then, on the success of the suit and execution proceedings which process usually takes many years, the successful party would obviously be entitled to the land alongwith readymade garden ; so why not it should take benefit of the accretion by the funds in the hands of the Official Receiver ?

6. Learned counsel for the heirs of the judgment‑bebtor bas sub mitted that the rights of the decree‑holder are determined by the decree and if it is laid down that the decree‑holder shall be entitled to so much amount and until that is paid, he shall further be entitled to the interest thereon, that is that. The only rights of the decree‑holder are the decretal amount plus the interest. He has no concern whatsoever with the property of the judgment‑debtor in the hands of the Official Receiver because the Official Receiver is not agent of the decree‑holder but is an Officer of the Court appointed by it to safeguard the interest of all the parties. If the property in the hands of the Official Receiver increases in its value or some accretion comes about, after payment of the decretal amount and the interest, the balance will go to the owner of the property, the judgment‑debtor, as obviously the decree‑holder would not be satisfied if some loss were to come about and he would still insist for satisfaction of his decree.

7. I have heard the learned counsel for the parties at length. There are two points involved in the question formulated by the learned Judge on 7‑4‑1982 as quoted in para. 2 ante. First whether " the Official Receiver was acting as agent of the insurance company (decree‑holder), the judgment‑debtor or‑the Court "? Official Receiver is appointed by l, Court and is answerable to it. He acts for the Court. He has nothing to do with either party. He is agent of neither. Even the judgment quoted by the learned counsel for the decree‑holder makes it quite clear at page 259 of the report when it was observed that "In Woodroffe on the Law relating to Receiver's (4th Edition) at page 63 the legal position is stated as follows "The Receiver being the officer of the Court from which he derives his appointment, his possession is exclusively the possession of the Court, the property being regarded as in the custody of the law, in gremio legis for the benefit of whoever may be ultimately determined to be entitled." The learned counsel however argued that when the title to the property is determined and a decree is granted to the decree‑holder, then, the property should be deemed in the hands of the Official Receiver to be that of the decree‑holder and any acretion thereto will be that of the decree‑holder. The argument is specious but it all depends upon the nature of the claim and character of the decree granted. It may hold true in the case of the example he gave quoted above‑saplings and fruit trees, if the decree be declaratory of title. But not so when the claim is for money and decree grants the principal alongwith interest. Here the fruits are provided in the form of interest allowed on the principal. For the proposition that an Official Receiver is not the representative of any party to the suit but is an Officer of the Court, there are many, decided cases but only some may be referred to : Satyanarayan Banerji and others v. Kalani Prasad Singh Deo Bahadur (4 1 R 1945 Cal. 387), Kahan Singh v. Mohan Lai and another (A I R 1916 Lah. 80), Kalyan Mul Mather v. Emperor (A I R 1936 Pat. 577), Gopaldas Khettry Phulchand Purshottamdas and another (A I R 1946 Cal. 357), N. Abdu l Rahim v. Lingappa Vaijappa and another (A I R 1943 Born. 273), and Kanhaiyalal v. Dr. D. R. Banerji (AIR 1958 S C 725). A Full Bench of the Madras High Court in an elaborated judgment reported as Collector, Tiruchirapalli v. Trinity Bank Ltd. (A I R 1962 Mad. 59) considered a large number of cases and observed on the point at page 70 that ‑the right to levy execu tion by the appointment of a receiver cannot alter the substantive rights governing the parties to the suit. The rights of the decree‑holder are pri marily regulated by the terms of the decree and neither the fact that he has obtained a decree nor the fact that he is permitted to have a receiver appointed as a mode of execution of the decree can clothe him with better rights than what the law otherwise affords him. Delay in the proceedings of Courts is perhaps inevitable and no suitor, however just his claim in the suit may be, can invoke the aid of the Court for reliefs to which he will not be entitled under the substantive law, in anticipation of any prejudice that he may suffer in consequence of a delayed adjudication in his favour " This will also answer the second limb of the question formulated by the learned Judge quoted above : "Whether the interest that has accrued on those amounts should go to the judgment‑debtor or the decree‑holder."? The substantive rights governing the parties are not altered by appoint ment of a receiver and the rights of the decree‑holder are primarily regu lated by the terms of the decree. The rights of the decree‑holder in the case in hand have been determined in terms of the principal amount and interest thereon. The argument of the learned counsel for the decree‑holder C that if the amounts as received by the Official Receiver were handed over to the decree‑holder, the latter might have made profit thereon loses sight of the risk of loss which inheres in money matters. Moreover, the Official Receiver could not pay without the orders of the Court and attention ha not been invited to any such direction which has not been complied with not to any order of the Court whereby it was directed that the amount received by the Official Receiver were allocated or apportioned to the decree‑holder. The rights of the decree‑holder were determined by the decree itself and the decree‑holder is entitled to no more nor less. The amounts deposited or investments made by the Official Receiver were under the orders of the Court and any accretions which have come about cannot be claimed by the decree‑holder because if those investments had failed or gone down in their value, it is obvious that the decree‑holder would not have come forward to share the loss and would have obviously continued to press for the satisfaction of the decree. If it could not suffer the loss, it cannot claim the profit. In the absence of any order of the Court, and nature of the claim and character of the decree in terms of money with interest thereon which is admittedly certifiable or satisfied from the amounts of the judgment‑debtor in the hands of the Official Receiver, the decree‑holder cannot claim more either in law or equity. Therefore, after satisfaction of the decree by payment of the decretal amount and interest thereon, the balance including interest on any deposits or investments made by the Official Receiver under the orders of the Court shall go to the judgment‑debtor in accordance with law. The matter in hand is thus disposed of. M. Y. H. Order accordingly.