1986 (9) TMI 428 - HC - Indian Laws

Summary

Issues:
1. Application for appointment of Receiver in a mortgage suit.
2. Rejection of ad interim appointment of Receiver.
3. Delay in filing the application for appointment of Receiver.
4. Just and convenient grounds for appointing a Receiver.
5. Consideration of expert Receiver to run the business.

Analysis:

1. The State Bank of India filed a Mortgage Title Suit against a company and its directors for recovery of a loan. The application for appointment of a Receiver was based on the endangerment of securities due to non-payment by the defendants. The court considered the nature of the securities and the terms of the credit facilities agreement in determining the necessity of a Receiver.

2. The rejection of the ad interim appointment of the Receiver by the Assistant District Judge was based on the lack of evidence showing imminent danger to the securities. The appellate court admitted the appeal and directed a contested hearing for the application, emphasizing the need for prompt action in such matters.

3. The delay in filing the application for appointment of the Receiver was noted by the court, both in the lower court and the appellate court. The absence of material indicating immediate threat to the securities further weakened the case for an urgent appointment of a Receiver.

4. The court discussed the principles guiding the appointment of a Receiver, emphasizing the need for a strong case by the plaintiff, imminent danger to the property, and prompt application. The court referred to legal precedents to support the decision-making process regarding the appointment of a Receiver.

5. The consideration of appointing an expert Receiver to run the business was deliberated upon. The court highlighted the potential negative impact of appointing a Receiver on the functioning of the defendant's business, especially when the company was still operational. The court deemed it unjust and inconvenient to appoint a Receiver that could potentially disrupt the business operations.

In conclusion, the court upheld the rejection of the ad interim appointment of the Receiver, emphasizing the lack of immediate threat to the securities and the ongoing business operations of the defendant. The appeal was dismissed, and the application for the appointment of the Receiver was rejected. The court advised expeditious disposal of the pending application in the lower court, emphasizing the need to protect the interests of all parties involved.