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of <h1>Court Receiver Legal Action: Contempt Without Permission. Inherent Jurisdiction to Grant Leave.</h1> <h3>Everest Coal Company (P) Ltd Versus State Of Bihar & Ors</h3> Everest Coal Company (P) Ltd Versus State Of Bihar & Ors - 1977 AIR 2304, 1978 SCR (1) 571, 1978 SCC (1) 12 Issues involved: The issue in this case is whether a court appointing a receiver can grant leave to continue a suit against the receiver when a third party wants to prosecute such action initiated without permission, and what are the guidelines for granting such leave.Summary:The appellant filed a suit against the respondent, who is a receiver appointed by the court under Order 40, rule 1 of the Civil Procedure Code. The appellant alleged that the receiver wrongfully canceled a contract related to a coal mine without notice to him. The appellant sued the receiver for damages but did not initially seek permission from the court to do so. The court dismissed the appellant's application for permission to continue the suit against the receiver, stating that since the suit was filed without leave, no fresh permission was required. The High Court affirmed this decision, leading to the appellant's challenge of its propriety and legality.The Supreme Court clarified that when a court appoints a receiver, the property comes under court custody, and any legal action without the court's permission may be considered contempt of court. The court has the inherent jurisdiction to grant leave to sue or continue proceedings against the receiver. The court emphasized that the grant of leave is the rule, and refusal is the exception, as long as the action is not meritless or vexatious. The court cited legal principles and precedents to support the requirement of obtaining leave to sue a receiver.The court highlighted that failure to obtain leave before instituting a suit may be cured by obtaining leave during the proceedings, but failure to do so till the end of the case may have adverse consequences. The court rejected the extreme view that a suit must be dismissed if leave was not obtained before filing it. The court emphasized the importance of obtaining leave from the court appointing the receiver to avoid contempt of court and ensure the validity of legal proceedings.In conclusion, the Supreme Court allowed the appeal, granting the appellant permission to prosecute the suit against the receiver. The court emphasized the need for a pragmatic view in such cases to prevent unnecessary delays in litigation.
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