U.P. STATE SUGAR CORPORATION AND ANR. versus M/S. MAHALCHAND M. MOTHARI AND ORS.

Citation: [2004] SUPP. 5 S.C.R. 762 · Decided: 29-10-2004 · Supreme Court of India · Bench: D.M. DHARMADHIKARI · Disposal: Dismissed

Judgment (excerpt)

A 
U.P. STATE SUGAR CORPORATION AND ANR. 
v. 
M/S. MAHALCHAND M. MOTHARI AND ORS. 
OCTOBER 29, 2004 
B 
[D.M. DHARMADHIKARI AND P.P. NAOLEKAR, JJ.] 
Civil Appeal Nos. 357-358 .of 1999: 
U.P. Sugar Undertakings (Acquisition) Ordinance 197 I/Act 197 I-
C Section 3-U.P. Zamiridari Abolition and Land Reforms Act, 1950-Sections 
279(1) (g), 286A-Receiver of a mill appointed by Collector for recovery of 
dues of cane growers-Statutory receiver-Powers of-Held, contractual 
liabilities arising against the Receiver is not merely enforceable against him 
but is a liability attached to the property in his receiver-ship-It can be 
recovered from the party in whom the property stand vested-Further Held, 
D since the receiver was not in possession of the property, he need not be 
impleaded in the suit. 
Words and Phrases-'Receiver'-'Statutory Receiver'-Meaning of 
Respondent No. l filed two suits in 1982 in the Court of Assistant 
E District Judge, Guwahati for recovery of damages caused to it as a result of 
non-supply of sugar by the Receiver who was managing the Sugar Mill for 
the orders placed by the plaintiff for supply of different quantities of sugar in 
the year 1979 on payment of advance money. The prices of sugar having gone 
up in the period of supply under the contract, the Receiver neither sent the 
F quantity of sugar nor returned the advance price paid by the plaintiff. The 
erstwhile Mill owner and the Appellant Corporation were made defendants to 
the suits because by tliat time, Sugar Mill already stood transferred to, vested 
in and been in actual possession of the Corporation in accordance with section 
3 of the U.P. Sugar Undertakings (Acquisition) Act, 1971. 
G 
H 
The Appellant repudiated the claims made in the two suits pleading inter 
alia that there was no privity of contract between the plaintiff and the 
Corporation that the Receiver was managing the Sugar Mill on the date of 
alleged non-supply of quantity of sugar; and that the erstwhile owner of. the 
Sugar Mill had filed writ petition in the High Court of Allahabad challenging 
the constitutional validity of the Uttar Pradesh Sugar Undertakings 
762 
U.P. STA TE SUGAR CORPN. v. MAHALCHAND M. MOTHARI 
7 63 
' (Acquisition) Ordinance, 1971 in which operation of the Ordinance was stayed A 
and the possession of the Sugar Mill was restored to the erstwhile owner on 
specified terms and conditions of the.order of stay. 
The Assistant District Judge, Guwahati decreed both the suits holding 
inter alia that the Corporation cannot avoid its liability towards the claims of 
the plaintiff as the Sugar Mill stood transferred to and vested in it from the B 
'appointed day' i.e. 3.7.1971 under Section 3 of the Act. 
The Appellant preferred two appeals to the High Court of Guwahati 
which were allowed solely on the ground that the suits were not maintainable 
as the Respondent No. l was not a registered partnership firm and was, 
therefore, incompetent to sue as a firm. This Court, on appeal, remitted the C 
appeals to the High Court for their decision on merits. 
After remand, the High Court dismissed both the appeals of the 
Corporation and confirmed the decrees granted by the trial court. 
Before this Court, the Appellant contended that there was no privity of D 
contract between plaintiff and the Corporation, therefore, it could not be held 
liable towards the losses and damages caused to the plaintiff by alleged breach 
of contract committed by the Receiver in not supplying the sugar, that for 
transferring and vesting of Sugar Mill in the Corporation, the 'appointed day' 
fixed under Section 3 of the Ordinance/ Act was 3. 7.1971 but the erstwhile E 
owner of the Sugar Mill challenged the validity of the Ordinance in the 
Allahabad High Court and obtained a stay order on 09.7.1971 where under 
the Receiver, who was already managing the Sugar Mill as a nominee of the 
Collector under section 279(1 )(g) read with Section 286A of the Act of 1950, 
continued in the management of the Sugar Mill for and on behalf of the 
erstwhile owner that when two orders for supply of sugar were alleged to have F 
been placed on 02.2.1979 and 09.2.1979 by the plaintiff, the Receiver was in 
possession and management of the sugar mill, and that he was acting not for 
the Corporation but for and on behalf of the erstwhile owner of the mill who 
was in de Jure possession of the mill. 
The respondent contended that the order obtained by the erstwhile owner G 
of the Sugar Mill on 

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