1. These three applications under Order LX, rule 1 have followed the main application under section 20 of the Arbitration Act which was filed by the plaintiff (Motherwell Bridge Contracting and Trading Co. Ltd.) against the defendants (Mrs. Phyllis Talia and her three sons). Plaintiffs in their Application (No. 66) have prayed for appointment of receiver" to carry on the business of Joint Ventures, to effect settlement of accounts, to effect realisations and payments and generally to wind up all the affairs covered by the Joint Venture Agreements subsisting between the parties. It is further prayed that full powers of sale be conferred on the receiver". This application is supported by an affidavit filed by John McMillan who has described himself as Pakistan area manager of the plaintiff's Company. It recites that the Joint Venture agreement subsists between the parties for execution of the works mentioned in paragraph 2 of this affidavit. Para--graphs 4, 5 and 6 further recite that the joint venture have to continue until their completion, that huge outstandings are to be recovered from various parties" and a number of debts have to be paid, and lastly that joint ventures own a great deal of movable property valued at about rupees 15 lacs. This application is dated 23-2-1966.
2. This application was followed by another Application No. 420/66. It is filed by 12 creditors and they too have prayed for the appointment of a receiver under Order XL, rule 1, section 51, C. P. C. Read with section 41 of the Arbitration Act. Their case is that plaintiff is a foreign Company and the parties are winding up their business in Pakistan and the Joint Ventures have to pay a sum of Rs. 5 lacs to the petitioners. They have further alleged that the parties "have in collusion with each other filed the suit mentioned above, before this Hon'ble Court, under section 20 of the Arbitration Act, falsely of their own choice appointed by this Hon'ble Court". This application further recites that the "plaintiff and defendants by filing these proceedings in collusion with each other, want to do away with as much assets of the Joint Ventures, as they can, in order to defeat the interest or claim of the petitioners/creditors". They have further pleaded that if they succeed in their aforesaid design the petitioners would suffer great loss and would be deprived of their genuine claims. They have therefore prayed that one of the creditors or any other independent person having no affiliation with the parties be appointed receiver to settle the account of and pay off all the dues of the creditor of the Joint Venture. Third application was filed on 2-3-1966 by the defendants for the appointment of Messrs M. W. Watkins and M. A. Mannan are receivers "with full powers" to wind up the Joint Ventures, including powers to sell all the assets of the Joint Ventures. It further recites that "I and the plaintiff have reached an agreement that Mr. Maurice Willts Watkins, Chattered Accountant, Financial Co-ordinator of the plaintiff and Mr. M. A. Mannan, Advocate of Lahore be appointed as joint receivers". Mr. Muhammad Akram, the learned counsel for the defendant, had argued before me that if the Court was not prepared to appoint these two gentlemen as receiver her application should be dismissed. Same argument was advanced by Mr. Fazlur Rehman, the learned counsel appearing for the plaintiff. I was very much surprised when such arguments were advanced by two senior lawyers of this Court, while narrating the facts I have already referred to the pleas raised on behalf of the creditors. Mr. Mubarak Hassan their Advocate has consented to the appointment of an official receiver or Nazir of this Court to be sole receiver for the purposes stated above i.e. In the three applications referred to above. He had even conceded to the appointment of these two gentlemen as receivers in addition to one of the creditors/petitioners, but both Messrs Fazlur Rehman and Muhammad Akram were not agreeable to this proposal.
2. Provisions of Order LX, rule 1 are very clear. It authorises civil Court to appoint a receiver whenever it appears to be just and convenient to do so. The matter is therefore left to the discretion of the Court but this discretion is to be exercised according to judicial principles and further that a Court cannot act outside this Rule in the appointment of a receiver under Order LX, rule 1, C. P. C. Thus the petitioner has to satisfy the Court before he succeeds in this request that it would be just and convenient to appoint receiver. These two words have not been defined under the Civil Procedure Code. Appointment of a receiver is the harshest remedy provided under Code of Civil Procedure.
3. However, there is no dispute about the object and purpose of the appointment of a receiver and generally stated it is for the preservation of the subject-matter of the litigation pending judicial determination of the rights of parties thereto. The Court does not, at the time of the appointment of a receiver arrive at any final decision on the merits of the case. Its aim being merely to preserve the status quo ante during the litigation. In order to make out a case for the appointment of a receiver the petitioner must make out a prima facie case. The main application filed under section 20 of the Arbitration Act recites that most of the joint ventures have been completed but realisations have to be made and the creditors have to be paid. It further recites that there are huge assets of the joint ventures which have to be disposed of and accounts settled. Under clause (3) of the Joint Ventures Agreement the joint ventures are to continue until their completion and clause (15) is a reference clause. Paragraph 7 of this application appears relevant and it is reproduced below : "That having regard to the differences between the parties and the difficulties in winding up the joint ventures it is necessary to refer the matter to arbitration."
4. It is evident that this application does not refer to any dispute. It is vague allegation. It also does not mention the nature of the dispute and/or when this dispute arose between the parties. Lastly it recites that one of the parties of the joint venture (Mr. George Talia) died on 21-12-65 and it appears that the petitioners have felt that his death has caused dispute or difference amongst the parties. The creditors have alleged that the parties have falsely alleged disputes for the winding up of the joint venture and have therefore prayed for the appointment of a receiver of their own choice in order to defeat their interest or claim. They have further alleged collusion between the parties. It is thus evident that both the parties to application under section 20, Arbitration Act have failed to show prima facie case I.e. They have a strong case. There is no allegation regarding wastage. Parties have approached for the appointment of a receiver to wind up the affairs of the Joint Venture Agreement, to settle accounts and to sell its assets a well as to recover (sic) does not require an application by a party for the appointment of a receiver. A Court can appoint a receiver suo motu or on the application of the third party who is interested in the preservation of the suit property. In this particular case the creditors who are admittedly interested in the assets of the Joint Venture have approached this Court for the appointment of independent persons as receivers. Question of the preservation of the suit property does not arise as none of the petitioners have alleged wastage. The powers of a civil Court under Order XL, rule 1 are not controlled by Advocate's statement withdrawing the application for the appointment of a receiver. Court can appoint a receiver notwithstanding such withdrawal if it is just and convenient to do so. Lastly the Court is not to be guided for the appointment of a person of the choice of the parties as the receiver. As a general rule absolute disinterestedness is an indispensable qualification for a receiver. Therefore a party to the litigation should not be appointed a receiver except under very special circumstances or with the consent of the other parties. In this particular case one of the proposed receivers (Mr. M. W. Watkins) is Financial Adviser of the plaintiff while Mr. Mannan, it was brought to my notice was an Advocate for the defendant at Lahore. The creditors have vehemently opposed to their appointments as receivers for the reasons that parties are in collusion and secondly that these two receivers are interested in the parties. I have already referred to the arguments advanced by Messrs Fazlur Rehman and Muhammad Akram in this respect. They have suggested that they would prefer that their applications be dismissed in case these two proposed gentlemen were not appointed receivers. I have referred to the legal position in this respect. Parties have failed to make out a prima facie case. No wastage is alleged by them. Similarly no case is made out by the creditors for an appointment of a receiver. For all these reasons these three applications are dismissed with costs.