Leave to sue a receiver requires prima facie claim and may be corrected for material irregularity

Leave to sue a receiver should generally not be refused where the applicant shows a prima facie legal basis for the claim and a threatened injury to the alleged property interest. The text treats such a situation as one requiring factual inquiry and quia timet protection, rather than postponing relief until after irreversible prejudice occurs. It also states that a refusal made without adequate inquiry into disputed facts may amount to material irregularity, making the order amenable to supervisory correction under revisional and constitutional powers. The application is therefore described as succeeding on the footing that the applicants were permitted to proceed against the receiver.

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Issues: (i) whether leave should be granted to sue a receiver where the applicants showed a prima facie case and a threatened injury to their alleged property interest; (ii) whether the High Court could interfere with the subordinate court's refusal of leave on the ground of material irregularity and the court's supervisory power.

Issue (i): Whether leave should be granted to sue a receiver where the applicants showed a prima facie case and a threatened injury to their alleged property interest.

Analysis: The application to sue a receiver is governed by the principle that leave should not ordinarily be refused unless there is no question to try or no legal foundation for the claim. The applicants asserted a benami purchase in their favour, challenged the inclusion of their interest in the proposed sale, and sought to protect their alleged property before irreparable injury occurred. The materials showed at least a prima facie foundation for a legal claim, and the situation was one for quia timet relief rather than postponing the dispute until after sale.

Conclusion: Leave to sue the receiver ought to be granted.

Issue (ii): Whether the High Court could interfere with the subordinate court's refusal of leave on the ground of material irregularity and the court's supervisory power.

Analysis: The subordinate court declined leave without adequate inquiry into disputed questions of fact, including the alleged benami transaction and the scope of the attachment. Such omission was treated as material irregularity in the exercise of jurisdiction. The High Court held that the order was revisable under section 115 of the Civil Procedure Code and also susceptible to correction under section 107 of the Government of India Act, 1915, because the refusal implicated the court's inherent power to regulate suits against a receiver and amounted to a denial of a fair trial in the circumstances.

Conclusion: The High Court could interfere and correct the refusal of leave.

Final Conclusion: The application succeeded, and the applicants were permitted to proceed with their suit against the receiver.

Ratio Decidendi: Leave to sue a receiver should not be refused where the applicant shows a prima facie legal claim requiring factual inquiry, and a refusal made without adequate inquiry into disputed facts amounts to material irregularity justifying supervisory interference.

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