INDUSTRIAL CREDIT & INVESTMENT CORPORATION OF INDIA LTD. AND ORS. versus KARNATAKA BALL BEARINGS CORPN. LTD. AND ORS.

Citation: [1999] SUPP. 2 S.C.R. 133 · Decided: 31-08-1999 · Supreme Court of India · Bench: G.B. PATTANAIK, U.C. BANERJEE · Disposal: Appeal(s) allowed
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Judgment (excerpt)

INDUSTRIAL CREDIT & INVESTMENT CORPORATION OF INDIA A 
LTD. AND ORS. 
v. 
KARNATAKA BALL BEARINGS CORPN. LTD. AND ORS. 
AUGUST 31, 1999 
B 
[G.B. PATTANAIK AND UMESH C. BANERJEE, JJ.] 
Code of Civil Procedure, 1908: 
Order 40 Rule I-Receiver-Appointment of-Prior to passing of C 
decree-To effect sale of immovable property-Discretion of court-Scope-
Held: Court has discretion to appoint Receiver and direct sale of immovable 
properties even prior to passing of decree provided court feels it is expedient 
to do so in the circumstances of the case-However, such discretion should 
be exercised prudently and cautiously with circumspection. 
Words and Phrases: 
"Just and convenient"-Meaning of-In the context of 0.40 R.J of the' 
Code of Civil Procedure, 1908 . 
D 
.., 
"Or such of those powers as the Court thinks fit "-Meaning of-In the E 
.... 
context of 0.40 R l(d) of the Code of Civil Procedure, 1908. 
The appellant filed a suit in the High Court for recovery of a certain 
sum from the respondent. In this suit the appellant filed an application under 
Order 40 Rule 1 of the Code of Civil Procedure, 1908 for appointment of 
Receiver for sale of immovable properties belonging to the respondent. The F 
High Court dismissed the application and the appeal taken therefrom. Hence 
this appeal. 
The authority of Receivers to effect sale of immovable properties prior 
to the passing of the decree was the focal point for consideration in this 
appeaL 
G 
Allowing the appeal, the Court 
HELD: 1.1. Order 40 Rule l(d) of the Code of Civil Procedure, 1908 
specifically provides for realisation and the words 'or such of those powers 
133 
H 
134 
SUPREME COURT REPORTS (1999) SUPP. 2 S.C.R. 
A as the Court thinks fW appearing therein ought to be interpreted in a 
manner so as to give full effect to the legislative intent in the mat~er of 
conferment of powers by the Court to preserve and maintain the property 
through the appointment of a Receiver. (138-E-F] 
1.2. The language of Order 40 being of widest possible import, any 
B restriction as regards the power of the Court to direct a Receiver to effect 
a sale of immovable property prior to the decree does not and cannot arise. 
Order 40 Rule 1 and various sub-rules thereunder unmistakable depict that 
the court has unfettered powers in the event the court feels that the sale of 
property would be just and convenient having due regard to the situation of 
C the matter. However, courts have imposed a self-imposed restriction to the 
use of discretion in a manner which is in consonance with the concept of 
justice and to meet the need ofthesituation-'unfettered' does not and cannot 
mean unbridled or unrestrictive powers and though exercise of discretion is 
of widest possible amplitude, but the same has to be exercised in a manner 
with care, caution and restraint so as to sub-serve the ends of justice. The 
D courts are entrusted with this power under Order 40 Rule 1 so as to brfog 
about a feeling ofsecuredness and to do complete justice between the parties. 
(138-H; 139-A; 138-G] 
1.3. The words 'just and convenient' have to be attributed a proper 
meaning and the intent of the legislature, as regards the extent of the· 
E empowerment by the Code, is rather categorical in nature. The discretion 
empowered cannot thus be said to be non-existing, having the regard to the 
language of Order 40 Rule 1 though, however, the court shall have to be 
rather cautious in its approach and use proper circumspection. 
(141-H; 142-A] 
F 
2. The Court must consider whether special interference with the ·. 
possession of the defendant is required or not and in case the court feels it 
expedient that in the event property is not sold, the initiator of the action 
would be subject to perpetration of a great fraud; the diminution in value of 
the assets, wastage and wrongful entrants or trespassers' attempt to make 
G ari in-road for their permanent settlement, there should not be any hesitation 
in directing the sale of immovable property. However, the instances noted 
above are only illustrative in nature and no hard and fast rule can be laid 
down in regard to the exercise of Court's powers under Order 40 Rule 1, 
the same being dependent on the facts and circumstance of each case as is 
available before the Court. A Court may appoint a Receiver not as a matter 
H of course but as a matter of prudence having regard to the justice of the 
... 
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1.C.l.C.l. v.KARNATAKA BALL BEARINGS CORPN.
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