MR. ANTHONY C. LEO versus NANDLAL BAL KRISHAN AND ORS.

Citation: [1996] SUPP. 7 S.C.R. 669 · Decided: 24-10-1996 · Supreme Court of India · Bench: G.N. RAY · Disposal: Appeal(s) allowed

Judgment (excerpt)

MR. ANTHONY C. LEO 
v. 
NANDLAL BAL KRISHAN AND ORS. 
OCTOBER 24, 1996 
(G.N. RAY AND B.L. HANSARIA, JJ.] 
Code Of Civil Procedure, 1908-0rder 40, Rules 1 & 3-Property in 
'custodia legis--Rights and obligations of third party, the tenant-Summary ad-
judication of-On the report of receiver-U'hether justified--H eld, any in-
cidence of tenancy which is regulated and controlled by special statute, cannot 
be altered varied or inteif ered with except in accordance with the provisions 
of such statute-But the tenant cannot claim protection of any assumed 1ight, 
not flowing from the incidence of tenancy, in such situation, it is within right 
of the court to pass suitable order or direction against the tenant on providing 
A 
B 
c 
him reasonable opportunity to def end, to which he would have been entitled D 
in a regular court of law-Thus the question of summary adjudication to 
depend on the nature of dispute and the defence claimed by third pafty-ln 
the present case in view of the facts, report of the receiver could not have been 
decided in summary proceeding. 
Order 40, Rule 1(2) & (3)--Receiver-Duty of-Right and obligations of E 
third party in respect of property in Custodia legis-fnteif erence wit~Whether 
pem1itted-Held, since the property is managed by the court through receiver, 
the receiver is under. obligation to take all reasonable steps for preservation 
and maintenance of such property-The receiver cannot inteifere with any 
right of the third party, as the property does not rest free from incumbrances. 
F 
In a suit with regard to dispute over a property, receiver was ap-
pointed by the High Court. The appellant was assigned tenancy of the 
above property. During pendency of the suit, the landlords demanded 
additional compensation for the structure of lifts and 2 box like stands in 
the tenanted property from the appellant which was paid by him. This G 
understanding was communicated to the receiver. After 16 years. of the 
agreement, the receiver submitted a report to the High Court, in the 
pending suit complaining against the appellant of having constructed the 
above structures and prayed for directions of removal of the .same. In a 
further report, the receiver alleged that the appellant was serving liquor H 
669 
670 
SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R. 
A in permit room which was illegal and contrary to terms of lease granted 
by Municipal Corporation to the Landlords and prayed for stopping the 
activity. The appellant contended that when tenancy was assigned to him, 
the structures were already in existence. Several affidavits were filed in 
support of the fact; and that the landlords as well as the receiver were 
B aware of the structure as additional compensation was paid by the appel· 
lant to the landlords with regard to the structures and the receiver was 
communicated of the same. He further contended that he was operating 
the permit room after obtaining licence from the statutory authority. 
The High Court on the basis of the reports directed the receiver to 
C demolish the construction and directed the concerned authorities not to 
renew 'the permit of the appellant. The Division Bench of High Court 
dismissed the appeal against the above order. 
In appeal to this court, the appellant contended that since he was 
not party to the suit, his rights and protection as a tenant could not have 
D been adjudicated in a summary manner on the basis of reports filed by a · 
receiver; and that the appointment of the receiver does not amount to 
vesting of the properties in respect of which receiver was appointed by 
annulling all encumbrances and rights of third parties and tenants in the 
suit properties and that the right of a tenant over a suit property, well 
E protected by the statute governing the relationship between a landlord and 
tenant. 
Allowing the appeal, this court 
HELD : 1.1 In view of the fact that the appellant tenant has came 
F out with a specific case, the contentions raised by the appellant should not 
be decided in a summary proceeding to dispose of reports of the receiver 
of a complaint by a party to the suit about alleged illegal activities by a 
tenant in a property in suit. Any summary disposal of such dispute on the 
claim of some legal right by the tenant is likely to seriously affect the tenant 
because once some constructions in the tenanted premises are removed on 
G a finding that such constructions were made illegally and unauthorisedly 
by the tenant

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