AIR 1995 BOMBAY 268 ::1995 (2) Bom CJ 399 ::(1995) 2 MahLR 567 ::(1995) BankJ 668 ::(1999) 4 ComLJ 323 ::1995 (3) Civ LJ 7 ::(1995) 2 CivilCourtC 174 ::1996 (1) BankCas 309 ::(1996) 85 ComCas 453 ::(1995) 2 Mah LJ 81 ::(1995) 4 CurCC 225

Bombay High Court

Hon'ble Judge(s): M. L. Pendse, A. V. Savant, S. H. Kapadia , JJJ

Civil P.C. (5 of 1908) , O.40 R.1— Suits by Banks and financial institutions - Recovery of loans - Appointment of a Court Receiver is a must. AIR 1995 Bom 14, Overruled. The suits instituted by Bank and financial institutions for realisation of loans advanced to borrowers form a class by itself. The in amounts advanced by the Nationalised Bank or the financial institutions are out of the funds deposited by common citizens and the loans are advanced with a view to generate more employment and creation of additional wealth. To hold that the Receiver should not be appointed unless it appears that sale proceeds of the properties secured or other securities are insufficient to satisfy the claim or Receiver should be appointed only in extreme cases and where the interest of the creditor is exposed to manifest peril would lead to serious prejudice. The experience indicates that huge amounts are secured from Banks and financial institutions and repayment is refused for no valid reason. The institution of the suit and the pendency of the suit enables the defendants to create more encumbrances on the properties and some of the encumbrances are like failure to pay income-tax, property taxes, provident fund dues of the employees, etc. All these liabilities though subsequent to the date of the institution of the suit have a preferential claim of recovery a....