Definition: The term ‘Receiver’ has not been defined in the Code of Civil Procedure and the Specific relief Act. According to Kerr, he is “an impartial person appointed by the court to collect and receive, pending the proceeding, the rents, issues and profit of land or personal estate, which it does not seem reasonable to the court that either party should collect or receive, or for enabling the same to be distributed among the persons entitled’.
In other words, he is an indifferent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation pendente lite when it does not seem reasonable to the court that either party should hold it.
Case: Thomas vs. Indian Bank, 1984, AIR
Appointment of receiver
According to section-44 of the S R Act – the appointment of a receiver pending a suit is a matter resting in the discretion of the Court.
Reference to Code of Civil Procedure- The mode and effect of his appointment, and his rights, powers duties and liabilities, are regulated by the Code of Civil Procedure, 1908.
In a suit for a declaration and permanent injunction, a civil court is competent to appoint a receiver. But this power should not be used only in exceptional case. Section 44 declares that the appointment of a receiver pending a suit rests in the discretion of the court and makes a reference to the civil procedure court for the mode and effect of his appointment and for his rights, powers, duties and liabilities.
According to Order-40 Rules-1 to 2 of the CPC –
1. where it appears to the court to be just and convenient, the court may be ordered-
a) appoint a receiver of any property, whether before or after decree;
b) removing person from the possession or custody of the property;
c) commit the same to the possession, custody or management of the receiver; and
d) confer upon the receiver all such power as to bringing and depending suits and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as such owner himself has, or such of those power as the court thinks fit.
2. Nothing in this rule shall authorize the Court to remove from the possession or custody of property any person whom any party to the suit has not a present right so to remove.
The receiver is appointed on the basis of the following principles:
i) the appointment of a receiver is a discretionary power of the court
ii) It is a protective relief the object is preservation of the property in dispute pending a judicial determination of the rights of the parties to it.
iii) A receiver should not be appointed unless the plaintiff prima facie
Proves that he has very excellent chance of succeeding in the suit.
iv) It is one of the harshest remedies which the law provides from the enforcement of the rights, and therefore should not be lightly restored to. Since it deprives the opposite party the possession of property before a final judgement is pronounced, it should only be granted for the prevention of manifest wrong or injury. A court will never appoint receiver merely on the ground that it will never do any harm.
v) Generally, an order appointing a receiver will not be made where it has the effect of depriving the defendant of a defector possession, since that might cause irreparable loss to him. But if the property shown to be in medio, that is to say in enjoyment of no one, it will be in the common interest of all the parties to appoint the receiver.
vi) The court should look at the conduct of the party who makes an application for appointment of a receiver. He must come with clean hands and should not have disentitle himself to this equitable relief by laches, delay or acquiescence.
Case: S.B Industries vs United bank of
AIR 1978. India
Powers of receiver
According to Order- 40 Rule-1(d) of the CPC –
A receiver is an officer or representative of the Court and his functions under its discretion. Reddy vs. Reddy, AIR 1957. The court may confer upon the receiver any of the following powers:
i) To institute an and defends suit
ii) To realize, manage, protect, preserve and improve the property;
iii) To collect, apply and dispose of the rents and profits;
iv) To execute documents; and
v) Such other powers as it thinks fit.
But he has no power except such as are conferred upon him by the order by which he was appointed. It is open to a court not to confer all of the above powers. They are conditions by the terms of his appointment. Case: S.B Industries vs United bank of
AIR 1978. India
But even when full powers are conferred on him he should take the directions of the court in all important matters if he wants to protect himself. A receiver cannor sue or be sued without the leave of the court. Everest coal Co. vs. State of
1977. Bihar AIR
The status of the receiver has been appropriately explained in the leading case of Jagat Tarini Dasi vs. Naba Gopal Chaki ILR in the following words:
“The receiver is appointed for the benefit of all concerned; he is the representative of the court, and of all parties interested in the litigation, wherein he is appointed. He is the right arm of the court in exercising the jurisdiction invoked in such cases for administering the property; the court can only administer through a receiver. For this reason, all suits to collect or obtain possession of the property must be prosecuted by the receiver, and the proceeds received and control by him alone.”
According to Order-40 Rule-3 of the CPC,
Every receiver so appointed shall—
a. furnish such security (if any) as the Court thinks fit, duly to account for what he shall receive in respect of the property;
b. submit his accounts at such periods and in such form as the Court directs;
c. pay the amount due from him as the Court directs; and
d. Responsible for any loss occasioned to the property by his willful default or gross negligence.
A receiver has to furnish such security as the Court thinks fit duly to account for what he shall receive in respect of the property. He has to submit accounts at such period and in such forms as the Court directs. He has to pay the amount due from him as per the direction of the Court. B a representative of the Court is bound to discharge his duties personally and cannot delegate or assign any of his rights or duties entrusted to him by the Court.
Case: Balaji vs. Ram Chandra, 1895.
According to Order-40 Rule-4 where a receiver—
a) fails to submit his accounts at such periods and in such as the Court directs, or
b) fails to pay the amount due from him as the Court directs, or
c) occasions loss to the property by his willful default or gross negligence the Court may direct his property to be attached and may sell such property and may apply the proceeds to make good any amount found to be due from him where any loss occasioned by him, and shall pay the balance (if any) to the receiver
A receiver is bound to exercise the same diligence in keeping down expenses and in carrying for the estate in his possession as a prudent man would observe in connection with his own property under similar circumstances. Mohini vs. Sarkar AIR 1941.thus he is not responsible for sums actually received by him but also for all sums which he might have received but for his default or negligence. Where he fails to pay the amount ordered by the Court, the Court would be justified in directing the attachment and sale of his property the court has also an inherent power to remove the receiver appointed by it, when he does not comply with the orders of the Court or abuses his powers or authority. Thomas vs. Indian Bank 1890.
When collector may be appointed receiver: According to Order- 40 Rule-5 of CPC where the property is land paying revenue to the Govt. of which the revenue has been assigned or redeemed and the Court considers that the interest of those concerned will be promoted by the management of the collector, the Court may with the consent of the Collector, appoint him to be receiver of such property.
Lecturer _ Mosume Madam.
Lecturer _ Mosume Madam.