ORDER
Issue notice.
Till further orders of this Court, the operation of U.P. Ordinance No. 13 of 1971 shall remain stayed so far as the Receiver is concerned. The status quo, as on July 2, 1971, shall be restored and the petitioner company which admittedly, was running the mills on that date, will be put back in possession, This order will, however, not affect any other proceedings pending and any other orders that may be passed by any competent court or authority hereafter. This order will be further subject to the following condition:-
1. The Receiver shall made arrangements for the off season repairs of the machinery etc. and if he takes advances from Bank for this purpose, final orders regarding repayment of the same would be passed at the time of the final disposal of the writ petition.
2. The amount of money to be spent on the repairs shall not exceed the average amount spent in the last three veers.
3. The Receiver is restrained from removing or disposing of any property of the undertaking other than sugar, molasses and waste products.
4. The Receiver shall maintain the plant and machinery in good repairs to ensure the satisfactory running of the factory in the coming crushing season. The Collector, Deoria, shall, however, have free access to the factory and will be consulted by the receiver in matters of management ft will be open to the Collector to prepare such inventory as he desires. If an inventory is prepared, the Collector shall supply a copy thereof to the Receiver.
5. The Receiver shall not create any long term or unduly heavy liabilities on the property including the mortgage of fixed assets; any loans that he may raise shall be only for the purpose of capital investment or working capital of the undertaking concerned.
6. The Receiver shall make no changes in the terms and conditions of any employee, except with the previous permission of this Court.
Copies of this order may be supplied to the counsel for- the parties on payment of usual charges.
[Emphasis supplied]
21. From the terms and conditions of the above quoted order of stay passed on 9-7-1971, what seems to us is that the operation of the impugned Ordinance/Act was partially stayed on specified conditions to regulate the power of the Receiver which was already managing the Sugar Mill under Section 279(1)(g) read with Section 286A of the Act of 1950. The legal effect of the order of stay (quoted above) was that the Receiver which was appointed under the Act of 1950, was to continue in management of the Mill on the conditions imposed by the High Court. From term No. 3 in the stay order, it is dear that the Receiver had only power to carry on day-to-day business of the Sugar Mill and for that purpose, to sell sugar, molasses and waste products. The Receiver, when entered into the alleged contract in February, 1979 to supply sugar to the plaintiff respondent was acting as a statutory Receiver who was allowed with added conditions to continue in management of the Sugar Mill by the High Court in accordance with Section 279(1)(g) and Section 286-A of the Act of 1950. Under the terms of the stay order, the status-quo as existing on 2.7.1971 i.e. a day before the 'appointed day' was restored and the erstwhile owner was directed to be put back in possession of the Sugar Mill. The de jure possession of the Sugar Mill was thus restored to the erstwhile owner but de facto possession on terms and conditions contained in the order of stay was allowed to be retained by the Receiver with right to manage the Sugar Mill.
22. The next legal question that arises is: what is the legal effect of vacation of the order of stay on ultimate dismissal of the writ petition on 3.5.1979?
23. The other related question is : what was the position of the Receiver who Was managing the Sugar Mill? Whether he was representing the erstwhile owner or the Corporation or he was representing none of them but was representing the Collector who had appointed him under the Act of 1950? For the aforesaid questions, a brief survey of the provisions of the Ordinance/Act and the Act of 1950 would be necessary.
24. The Act of 1950 prescribes appointment of Receiver on the property of the defaulter as one of the modes of recovery of dues as arrears of land revenue. Section 279 (i)(g) reads as under :-
'Section 279. Procedure for recovery of an arrear of land revenue.-
(1) An arrear of land revenue may be recovered by any one or more of the following processes :................................
(g) by appointing a receiver of any property, moveable or immovable of the defaulter.
25. Section 286A of the Act of 1950 is the other relevant Section which empowers the Collector to appoint a Receiver for recovery of dues as arrears of land. It reads as under :-
'Section 286-A. Appointment of Receiver.-(1) Notwithstanding anything in this Act when [an arrears of revenue or any other sum recoverable as an arrear of revenue] is due, the Collector, may in addition to or instead of any of the processes hereinbefore specified, by order -
a) appoint, for such period as he may deem fit, a receiver of any moveable or immovable property of the defaulter;
b) remove any person from the possession or custody of the property;
c) commit the same to the possession, custody of management of the receiver ;
d) confer upon the receiver all such powers, as to bringing and defending suits and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents arid profits, and the execution of documents, as the defaulter himself has or such of those powers as the Collector thinks fit.'
26. As the Statement of Objects and Reasons of the Ordinance/Act indicates that the legislation is brought into force by the State to acquire such Sugar Mills where because of the mismanagement of the Mills, serious problems are faced by the cane-growers and the labour with consequential adverse impact on the general economy of the area where the mills are situated. Under the Act, the scheduled Sugar Mills or undertakings are acquired by the State which stand transferred to and vested in the Corporation from the 'appointed day'. Section 2(a) & (c) of the Act define 'appointed day' and 'Corporation' respectively. Section 2(a) & (c) and Section 3 of the Act read as under:-
Section 2. Definition. - In this Act, unless the context otherwise requires -
(a) 'appointed day' in relation to the undertakings specified in Schedule I means July 3, 1971 and in relation to the undertakings specified in Schedule II means October 28, 1984.
(b) .................
(c) 'Corporation' means the Uttar Pradesh State Sugar Corporation Limited, a Government Company within the meaning of Section 617 of the Companies Act, 1956 (Act I of 1956).
(d) .....................
Section 3. Vesting. - On the appointed day, every scheduled undertaking shall, by virtue of this Act, stand and be deemed to have stood transferred to and vest and be deemed to have vested in the Corporation free from any debt, mortgage, charge or other encumbrance or lien, trust or similar obligation (excepting any lien or other obligation in respect of any advance on the security of any sugar stock or other stock-in-trade) attaching to the undertaking :
Provided that any such debt, mortgage charge or other encumbrance or lien, trust or similar obligation shall attach to the compensation referred to in Section 7, in accordance with the provisions of that section, in substitution for the undertaking :
Provided further that a debt, mortgage, charge or other encumbrance or lien, trust or similar obligation created after the scheduled undertaking or any property or asset comprised therein had been attached, or a receiver appointed over it, in any proceedings for realization of any tax or cess or other dues recoverable as arrears of revenue shall be void as against all claims for dues recoverable as arrears of revenue.
27. One of the consequences of vesting of the sugar mill in the Corporation under Section 3 of the Act, as provided in Section 4(a), is that any receiver appointed by the court on the scheduled undertaking/Sugar Mill shall cease to function from the appointed day. Section 4(a) of the Act reads thus :-
'Section 4. Certain consequences of vesting. - Notwithstanding anything contained in any other law for the time being in force, and save as otherwise provided in this Act, on and from the appointed day-
(a)every appointment of Receiver over any scheduled undertaking by any court shall cease;
(b) --------------'
[Emphasis supplied]
28. The aforesaid provision refers to any 'Receiver appointed by any the court' and not a Receiver appointed by the Collector under the provisions of the Act of 1950. The mode of delivery of possession of the acquired Sugar Mill is contained in Section 5. It provides first delivery of possession of the Sugar Mill by the owner to the Collector who shall prepare inventory of property, assets, books of accounts, registers etc., and thereupon shall deliver the possession of the undertaking/Sugar Mill to the Corporation. Section 5 of the Act reads thus :-
'Section 5. Duty to deliver possession. (1) Where any scheduled undertaking has vested in the Corporation under Section 3, every person in whose possession or custody or under whose control any property or asset, book of account, register or other document comprised in that undertaking may be, shall forthwith deliver the same to the Collector.
(2) The Collector may take all necessary steps for securing possession of any such property or asset, book of account, register or document, and in particular, may use or cause to be used such force as may be necessary.
(3) The Collector shall prepare an inventory of all properties, assets, books of account, registers and documents taken possession of Under this section, so far as practicable in the presence of the occupier or his authorized representative.
(4) Deliv er of possession to the Collector under this section shall amount to delivery of possession to the Corporation.
(5) Without prejudice to the provisions of the foregoing sub-sections, any person referred to in Sub-section (1) shall be liable to account to the corporation for any such property or asset, book of account, register or document which he has failed to deliver to the Collector.
29. The entry at Serial No. 4 in Column Nos. 2 & 3 of Schedule I attached to the Act, shows the Sugar Mill named Maheshwari Khetan Sugar Mills (Pvt.) Ltd., Ramkola, District Deoria stands acquired and vested in the Corporation on the appointed day on payment of fixed compensation of Rs. 11,00,000/-.
30. From the aforesaid provisions of the Act of 1950 and the Ordinance/Act, it is dear that the Receiver who was in the management of the Sugar Mill on the 'appointed day' was not a Receiver appointed by any Court. He was a Receiver appointed by the Collector under the Act of 1950 and on the vesting of the Sugar Mill on the appointed date 3.7.1971, was in possession and management of the Sugar Mill not as an agent either of the erstwhile Sugar Mill owner or the corporation. He was a statutory Receiver appointed under Section 279(1)(g) read with Section 286-A of the Act of 1950 for the purpose of recovery of dues of the cane-growers in the manner as arrears of land revenue. He was allowed to continue in management of the Sugar Mill by the High Court on the terms and conditions imposed in the order of stay passed during pendency of the writ petition.
31. The liabilities incurred by a statutory Receiver in the course of management of the Sugar Mill are liabilities attached to assets or properties of the Sugar Mill because neither the erstwhile owner nor the Corporation, which later acquired the Sugar Mill, was responsible for the alleged losses or damages caused to the plaintiff by the alleged breach of contract committed by the receiver in non-supply of the quantity of sugar.
32. The general rule is that a receiver takes the rights, causes, and remedies which were in the individual or estate whose receiver he is, or which were available to those whose interests he was appointed to represent. Ordinarily none of the parties to the suit in which a receiver was appointed is personally responsible for losses and liabilities incurred in the administration of the receivership, but, except as the receiver may be personally liable therefor, such losses and liabilities fall on the estate. [See statement of law in Corpus Juris Secundum Vol.75 Articles 325 & 187 at pages 833 and 1000, respectively]
33. In the present suit, the Receiver has not been impleaded as a party-defendant and there is no claim against him for any misconduct committed by him in management of the Sugar Mill. He is not alleged to be personally liable for the alleged breach of contract. The liability, therefore, towards the alleged loss or damage arising from breach of contract attaches to the Sugar Mill and can be allowed to be realized from the person in whom the title of Sugar Mill stands vested.
34. A statutory Receiver is merely the legal representative of the property placed in his hands as such. In determining his liability the court will only determine the liability of the property. It is not material whether the liability existed before or has accrued since his appointment. A contractual liability arising against the receiver during the course of management of the property for acts or omissions committed by him for the benefit of the property, is not merely enforceable against the receiver but is a liability attached to the property in his receivership, which can be recovered from the property and through the person in whom the property vests. [See statement of law in Words and Phrases, Permanent Edition Vol.36 at page 742 from the Heading - Representative of property]
35. As is the admitted position, on the coming into force of the Ordinance, the Sugar Mill stood transferred to and vested in the Corporation on the appointed date 3.7.1971. On that date, the Receiver appointed by the Collector under the provisions of 1950 Act was already holding custody of the Sugar Mill and was managing the same. During course of the Writ Petition filed by the owner of the Sugar Mill in which the constitutional validity of the ordinance/Act was challenged, a stay order, on the limited terms and conditions, was passed on 9.7.1971. The terms and conditions of the order reproduced above, restored the de jure possession of the Sugar Mill to the erstwhile owner but de facto possession and management of the Sugar Mill was allowed to remain undisturbed with the receiver although with limited powers to him. The Receiver was specifically allowed in accordance with term No. 3 of the stay order to sell sugar, molasses and other waste products. By virtue of the order of stay passed by the High Court, during pendency of the writ petition, the Receiver appointed under the Act of 1950, continued to manage the Sugar Mill subject to the ultimate result of the writ petition. The Writ Petition ultimately came to be dismissed on 3.5.1979 and the stay order containing the terms and conditions (quoted above) passed on 9.7.1971 stood automatically vacated. The natural consequence was restoration of full operation of the provisions of the ordinance/Act as was originally passed. In accordance with Section 3 of the Act, the Sugar Mill stood transferred and vested in the Corporation from the appointed date 3.7.1971. On vacation of the stay order with effect from the appointed day-3.7.1971, the operation of the Ordinance/Act was revived. The liability arising from breach of contract committed by the Receiver was not of the Corporation. It was an obligation attached to the property of the Sugar Mill which was under the management of the Receiver, initially under the 1950 Act and continued under the order of stay passed by the High Court. Since the liability towards breach of contract was attached to the sugar mill under the management of the Receiver, the Corporation in whom title of the sugar mill stands vested under Section 3 of the Act cannot avoid the liability - it being a burden on the said property and recoverable from it.
36. It is of no importance or consequence that actual or de facto possession of the property was received by the Corporation under a formal order of Collector, Deoria on 23.5.1979, only after dismissal of the Writ Petition on 3.5.1979 and consequent discharge of the Receiver.
37. The Ordinance was stayed by the High Court to restore status quo ante existing on 2.7.1971 that is a day prior to appointed date 3.7.1971. But on the dismissal of writ petition and automatic vacation of the stay order of the High Court, the operation of the Ordinance/Act with ail legal consequences flowing from the said law stood restored from the appointed date. The trial court and the High Court are perfectly right in holding in their judgments that the order of stay passed in writ petition could have no effect of postponing the 'appointed day; statutory fixed under Section 3 of the Ordinance/Act.
38. The argument advanced on behalf of the corporation cannot be accepted that the Sugar Mill came to be transferred to the Corporation only when its actual possession was formally obtained from the Collector, Deoria on 23.5.1979 after dismissal of the writ petition.
39. The legal status and position of a receiver appointed by the Court and a Receiver appointed under in a Statute are different. In the instant case, the receiver appointed under the Act of 1950 and continued by the High Court on terms and conditions contained in the stay order during pendency of the writ petition, was a statutory receiver and his rights and liabilities were attached to the property for the management of which he was appointed. The receiver was not an agent of either of the parties. For his acts and omissions, a third party could raise a claim against the party in whom the property stood vested and to which the liability was attached.
40. The suits were fried by the plaintiff claiming losses and damages for breach of contract committed by the receiver within the prescribed period of limitation. On the date of filing of the suits, the receiver was not in possession of the Sugar Mill as the actual possession of the Sugar Mill had been restored to the Corporation. It was, therefore, not necessary for the plaintiff to implead the receiver as a party to the suits. The Receiver could not be made personally liable for his acts and omissions in the course of management of the Sugar Mill and which are not alleged to be mala fide,
41. Our conclusion, therefore, is that as none of the parties i.e. the erstwhile owner or the Corporation is personally liable for the breach of contract committed by the receiver in the course of management of the Sugar Mill, the contractual liability of the receiver towards the plaintiff is recoverable from the property of the Sugar Mill, and therefore, through the Corporation in whom the property stands vested under the Act.
42. As a result of the detailed discussion of facts and law as above, both the appeals stand dismissed with costs and the decrees granted by the trial court are hereby confirmed.