RECEIVER UNDER ORDER XL OF THE CODE OF CIVIL PROCEDURE, 1908

Introduction:

The object and purpose of appoint of receiver may generally be stated to be the preservation of the subject matter of litigation pending for judicial determination of the rights of the parties. It must be with the dominant object to prevent the ends of justice from being defeated. The rule empowers the court to appoint a receiver for the proper management of any property which is subject matter of the suit. The receiver is appointed for the benefit of all concerned; he is a representative of the court and all the parties interested in the litigation where in he is appointed. He is supposed to be an impartial person appointed by the court to manage the property in suit during the pendency of the suit when the court is satisfied none of the parties to the suit should be allowed to manage it. A receiver is not being appointed unless there is some substantial background for such interference. In Code of Civil Procedure the appointment of receiver has great importance.

Appointments of Receivers (Rule-1)

Where it appears to the Court to be just and convenient, the Court may by order—

  1. a) Appoint a receiver of any property, whether before or after decree;
  2. b) Remove any person from the possession or custody of the property;
  3. c) Commit the

same to the possession,

custody or management of the receiver; and

  1. d) confer upon the receiver all such powers, as to bringing and defending 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 the owner himself has, or such of those powers as the Court thinks fit.

Appointment means the designation of a person such as a no elected public official, for a Job on duty or a formal arrangement to meet on visit some one at a particular time and place. And receiver means a disinterested person appointed by a court for the protection on collection of property that is the subject of divers, claims. So, we can say that appointment or receiver means, receiver is on officer of the court to whom is given the possession custody and management of a property, he is the custodian of the property and is liable to render accounts to the court and he functions under the direction of the court.

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.

In other words, Receiver who was given power to collect outstanding and to do all things necessary for the realization and preservation of the assets of a firm had to authority to mortgaged the property. But a receiver of mortgaged properties with power of realization, management, protection, presentation and improvement has a discretionary power of sale. [1]

Appointment of Receiver is the right arm of the court in exercising the Jurisdiction involved in such cases for administrating the property, the court can only administer through a receiver. For this reason all suits of collect on obtain possession of the property must be prosecute by the receiver and the proceeds received and controlled by him alone. The primary duty of a receiver over leasehold is to discharge head rents out of sub rents.

Who can be appointed as Receiver?:

Basically there is a no inflexible rule that a party to the suit should not be appointed receiver. But it is desirable not to do so. The Calcutta High Court observed, it is a settled rules that one of the parties to a cause shall not be appointed receiver without the consent of the other party unless a very special case in made out.[2]

However, where  it is found that the defendants conduct is not absolutely straight foreword and above board thus giving sufficient justification to the plaintiff to urge that he has no more  any confidence in his honesty and integrity the defendant was allowed to be a joint receiver of the dispute property along with a third person. On the other hand, be exceptional circumstances in which it may be just and convenient to appoint a party as a receiver.

Joint receiver:

As a general rule appointment of more than one receiver whether by the same or a different court is not to be preferred. When a receiver is appointed by one court to take charge of certain properties, another receiver by a different court should not be appointed is respect of the same properties without leave of the former court.[3]

But where bona fide of the receiver is suspect, the court may appoint a joint receiver.

Discretion of the Court:

The rule confers wide discretion to the court and appointment of receiver can not be claimed as a matter of course.[4]

Such discretion must be exercised very sparingly as it takes away certain property out of the possession of parties litigating against each other.

The discretion conferred by this rule must be exercised after consideration of the whole of the circumstances of the Case .The discretion of the court is not absolute arbitrary on unregulated and it must be exercised on sound Judicial principles after taking all the circumstances of the case for the purpose of serving the ends of justice and protecting the rights of all the parties interested in the controversy, Long it is found that the discretion has been properly exercised by the trail court, the appellate court will not interfere with exercise of the discretion. In exercise of this discretionary power, the court has to state the circumstances under which the appointment of a receiver was consider just and convenient.[5] So for as the need for or desirability of appointing the receiver and granting of injunction the court should take into account the over all necessity to balance the interested of the contending parties.

The court can appoint a receiver in a particular suit by consent of the parties but mostly the special circumstances must be proved.  In such case before the court takes a property into its custody through its officers, the parties must be willing to extend to the receiver financed and all other necessary assistance which is needed for the subsequent custody and disposed of the goods.[6]

Principles governing appointment of receiver:

To following principles have been laid down for the counts to consider while deciding the question of appointment of receiver-

  • The appointment of receiver is discretionary with the court.
  • It is protective relief. The object is preservation of the property is dispute pending judicial determination of the right of the parties to it.
  • A receiver should not be appointed unless the plaintiff prima facie proves that he has very excellent chance of succeeding in the suit.
  • It is not of the harshest remedies which the law provide for the enforcement of the rights and therefore should not be lightly resorted to since it deprives the opposite party of possession of the property before a final judgment is pronounced, it should only be granted for the prevention of manifest wrong or injury. (A court will neverappoint a receiver merely on the ground that it will do harm.
  • Generally on order appointing a receiver will not be made where it has the effect of depriving the defendant of a de facto to possession since that might cause irreparable loss to him. But if the property. Shown to be in media, that is to say in enjoyment of no one. It will be the common interest of all the parties to the suit to appoint a receiver. [7]
  • The court should look at the conduct of the party who makes on application for appointment of a receiver. He must come with clean hands and should not have disentitled himself to this equitable relief by latches, delay on acquiescence.[8]

Scope and Application:

The receiver is appointed for the benefit of all concerned, he is a representative of the court and of all parties interested in the litigation where is he is appointed (Faiz Ahmed V. Bakhtear Ahmed 36 DLR (AD) 97) He is supposed to be an impartial person appointed by the court to manage the property is suit during the pendency of the suit when the court is satisfied that more of the parties to the suit should be allowed to manage it. That means the object and purpose of appointment of receiver may generally be stated to be the preservation of the subject matter of the litigation pending judicial determination of the right of the parties. (Ma Hnin yeik V. KARK Chettyar, AIR 1939 Rang 321) It must be with the dominant object to prevent the ends of justice form being defected. In taking any action under this rule, it is the duty of the court to see that the rights of the parties are not jeopardized and the ends of justice not defeated. The rule empowers the court to appoint a receiver for the proper management of any property which is subject matter of suit.[9]

When receiver may be appointed:

The expression before or after decree in clause (a) rule I order 40 shows that the court can appoint a receiver even after passing of decree in an appropriate case. A receiver may be appointed after passing of mortgage a decree where it is necessary decree for sale (Pashumarthi central Bank AIK 1980 AP 283) A receiver can be appointed even after passing of a decree where it is necessary to safeguard the interest of the decree holder (Nur Mohammad V. KA Gani 27 DLR 503). Even though the remedy by way of execution is available (Remaswami V. Ramaswami AIR 1964 Mad

39) where proceedings subsequent to the preliminary  decree are pending in the trial court, it can appoint receiver (Ram chandra V Jeetmal AIR 1962 MP 380] A receiver can be appointed during the pendency of appeal (Shamsuddin V. Bangladesh 45DIR 675]

Receiver in Various cases:

Appointment of receiver is one of the harshest remedies. It will be made only when a property is exposed to manifest peril of waste, damage or alienation (Ram Kishore V. Balaram, AIR 1978 pat 210]. Before passing an order appointing receiver, the court must state the circumstances in which such appointment is found necessary.[10]  A plaintiff applying for appointment of receiver must show that he has a strong case and good title to the property, [SB Industries V United Bank, AIR 1978 All 189 (the plaintiff must established a reasonable possibility that he will ultimately succeed in obtaining the relies claimed in the suit); Ram kishore V. Balarm, AIR 1978 pat 210 has a special equity in his favour. (Srinivas Babura Air, 1970 Mys 141] and the property in the hands of the defendant is in danger of being wasted. However, receivers in various cases are as follows:

Mortgage suit: A receiver may be appointed in a suit on a simple mortgage (Krishna V, Maharaja, and AIR 1956 MB 44]. the appointment of a receiver after preliminary decree in a simple mortgage on equitable mortgage with a direction to deposit to the credit of the suit the rents and profits from the mortgaged property does not amount to a charging order in favors of the mortgagee. The court has power to give directions as to the disbursement of the money received and such directions may also be for the benefit of the mortgagor [Collector V Trinity Bank, 19612 ML 398/ A receiver may be appointed in a mortgage suit for safeguarding the interest of the mortgagee even after a decree for sale (Kshitish V Janaki, 35

CWN 1141]. When the mortgagor got possession of the property by a lease and owed heavy amount of rent and interest a receiver should be appointed in a suit filed by the mortgagee (Bhawariram V Mohammad Hossain AIR 1955 MB 199] Where the security has diminished by the actor default of the security has diminished by the act on default of the mortgagor or is apparently insufficient to cover the entire dues of the mortgagee the executing court may appoint a receiver. A receiver may be appointed at the instance of a simple mortgagee or equitable mortgagee. If the interest is in arrears it may be just and convenient to appoint a receiver though the security is sufficient (Venkamma V. Mangamma, AIR

1936 Rang 296]. Partnership suit: If the partnership is sought to be dissolved in a suit on is dissolved under the order of the court, a receiver can be appointed to take charge of the assets of the partnership. [Khaderan V. Sharida, AIR 1988 All 34]. Is the partnership has been dissolved on is sought to be dissolved by the filling of the suit, a receiver can be appointed as a matter of course provided his appointment is sought for taking of the assets of the firm and ultimately for distribution there of to the partners, and the relationship between the partners is extremely strained. [Khaderan V. Sharda AIR 1986 All 34] the appointment of a receiver in respect of a dissolved partnership is in the discretion of the court and in the exercise of the discretion the court will be guided by theconsideration of preserving and protecting the property and assets of the firm and will not permit it to be dissipated or used by one partner exclusively to the detriment and manifest disadvantages of other partners who are excluded from such property on assets.[11]

Suit for possession: Generally a receiver should not be appointed in a suit for possession [Kumiruddin V. Moksed Ali, 48 DLR (AD) 14. But if the circumstances so require, receiver may be appointed for the disputed properties in a suit for possession. [Aktaruzzaman

  1. Ali Amjad, So DLR (AD) 199, when a decree holder in respect of a property is prevented from taking possession of the property by an order of injunction at the instance of the judgment debtor, the proper course is to appoint a receiver in respect of the property. [Saliendra V. Steuart, (1981) 2 (6) 26. where the plaintiff applied for appointed of receiver in a suit for declaration of title and recovery of possession and after taking repeated adjournment the defendant failed to submit his written objection the court ought to presume that them is no serious objection to appointment of a receiver and it would be impermissible for a court to require the plaints to prove the facts. [12]

Partition suit: The court will not a general rule appoint a receiver in a partition suit where the family property consist of immovable property unless the parties consents to it or special circumstances are proved, [ Faiz Ahmed V. Bakhtear Ahmed, 36 DLR (AD) 97] but it will be ordered if there is prima facie case of misappropriation. [Monohar V Kishen, AIR 1938 Lat 10].  Where the members of a family are in a separate possession for a long time under a registered deed of partition, there should not be appointment of receiver even though the deed of partition is challenged as fraudulent, illegal void and not acted upon.

Rent Suit: A receiver can not be appointed in a suit for rent except where it is sought to enforce forfeiture clause. [ Dharendra V. Surendra, AIR 1930 cal 610] However, a receiver can be appointed to collect rent from the tenants. [Jaya Motion pictures V. Ramakrishman, AIR 1958 ker 303] In a suit for recovery of mesne profits, a receiver can be appointed for collecting crops grown on the lands in possession of the tenants.

Money suit: If there are extraordinary grounds a receiver can be appointed in a simple money suit.’ The government is entitled to appointment of a receiver to realize tax dues from the assessed company. In suits filed by banks and financial institutions, the court should consider appointment of a receiver where a condition for appointment of receiver is fulfilled.

Suit for maintenance: A receiver can be appointed of properties charged for maintenance, though no receiver of future maintenance allowance can be allowed. Where decree maintenance and a charge is created on a specified property to secure payment of allowance, a receiver may be appointed to facilitate execution of the decree.

Specific Relief Act, S.9. In a suit for possession under S.9 of the specific Relief Act, the Court is not competent to appoint a receiver. Appointment of receiver in a suit under section 9, Specific Relief Act (1877) without examining whether title of plaintiffs/applicants, was valid and without considering whether it was just and convenient to appoint receiver, would not be sustainable in law.

Power which may be conferred as a receiver:

A receiver is an officer of the court and he functions under the direction of the court. The court may confer all or any of the following powers to the receiver-

  1. To institute and defend suits;
  2. To realize, manage, protect,reserve and improve the property.
  3. To collect apply and dispose of the  rents and profits;
  4. To execute documents’ and
  5. Such other powers as it thinks

fit. [Hari nagar sugar mills V. Court Receiver, AIR 1966 Se 1707]. The receiver has no power except that which is conferred upon him expressly or impliedly by the order of the court appointing him. His powers are conditioned by the terms of his appointment. [SB Industries V. United bank AIR 1978 All 189.] It is open to the court not to confer all the power to the receiver once a receiver is appointed under clause (a) of the order 40 rule1, all other clause (a) of the order 40 rule 1, all other clause from (b) to (d) will not automatically apply to his appointment. A receiver who has been given the powers of realization, management and protection of properties under clause (d) will have impliedly discretion any power of sale. A receiver is merely an officer of the court. His holding is the holding of the court and he can do nothing which is likely to seriously diminish the funds of the estate on incur expenditure or impose liability on the estate without the special leave of the court. The receiver must seek the courts direction as regards employment of agents. [13]

In the management of an estate,the receiver possesses the power to employ servants but no power to delegate his authority. Whenever the necessity of employing agents or servants it felt, the receiver should apply to the court for its sanction and whenever any difficult is apprehended to seek the directions of the court as otherwise the receiver takes upon himself the onus of proving that whatever he has done as for the benefit of the estate and runs the risk of suit against him for recovery of any loss or damage suffered by the estate. Even it he has been given full power, he has to function taking directions from the court in all important matters if he want to protect himself.[14]

Liability of the receiver:

A receiver is liable to duly account for the income and the properties which come into his hands and he is responsib1e for any loss occasioned by his willful default or gross negligence.  A receiver disregarding the court’s order actuated by his own interest is liable to be removed or committed for contempt. A ‘cannot be prosecuted for criminal breach of trust in respect property without the sanction of the court which appointed him sanction is necessary in respect of other offences committed by the receiver in his capacity as receiver. But no such ii will be necessary where the offense committed have nothing with the office held by him.

Liability of the estate in the hands of the receiver:

A receiver is not the agent or representative of any party to the suit and the loss from the default of the receiver, subject to the liability of that has to be borne by the estate and not by any party at whose receiver was appointed. However, it has been held that where receiver in execution misappropriates the amount paid by the judgment debtor, the decree-holder and not the judgment-debtor is to bear the loss as the judgment-debtor is absolved when he made, the payment to the receiver.

A receiver put in charge of a property for managing it, is ordinarily personally liable in incurred or contracts entered into by him in respect of debts the estate, but he is entitled to indemnify from the estate for such debts.’ But the ordinary rule that the creditors can proceed against the receiver personally cannot apply where the advance has been expressly made on the condition that the estate alone should be liable.  A creditor is entitled to proceed against the representative of the estate for the recovery of a debt incurred by management of the estate in as much as the long as they fall within his authority, are estate cannot have the benefit of those corresponding obligations arising out of them obtained a charge on the estate in respect of entitled to a decree personally against the assets of the estate of indemnity as receiver against me estate.[15]

Attachment of properties in the hands:

Property in the hands of the receiver is in law in court and as a general rule is exempt from judicial the extent permitted by the court. The possess  cannot be interfered with by taking judicial process except to property without the permission of the receiver  execution of a decree by attachment and sale can be taken against a  property in the hands of the receiver without the leave of the court. But no leave of the court is necessary for such execution when the receiver is appointed to collect the rents and property.

Rule.2. (Remuneration):

The court may by general or special order fix the amount to be paid as remuneration for the services of the receiver.

Comment. A receiver is entitled to such remuneration as may be by the court for the service rendered by him and he is entitled indemnified for the debts incurred or contracts entered into by in the course of management of the estate under his charge as a receiver. The court is to fix remuneration with reference to the period which the receiver worked and the quantum of work done by 6 An agreement without leave of the court by a party to pay creation to the receiver is contrary to law and such agreement is not enforceable.

Rule-3 (Duties):

Every receiver so appointment 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 Be responsible for any loss occurred to the property by his willful default or gross negligence.[16]

Rule.4.Enforcement of receiver’s duties:

Where a receiver-

(a)

fails to submit his accounts at such periods and in such from 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,

Rule-5: When Collector may be appointed as receiver.

Where the property is land paying revenue to the Government or land of which the revenue has been assigned or redeemed and the Court considers that the interest of those connected 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.

Conclusion:

By looking over the above discussion we can conclude that the receiver is appointed for the benefit of all concerned; he is a reprehensive of the court and all parties of the litigation. A receiver is appointed to maintain the property as it is. The court can appoint receiver in a particular suit with the consent of all the parties. In a Code of Civil Procedure the appointment of receiver has great importance.

Bibliography

Oxford Dictionary

of LAW, (Fifth Edition 2002,

Edited by Elizabeth A. Martin.)

THE CODE OF CIVIL

PROCEDURE, 1908 (Act V of 1908) Government publication, ( As modified up

to 31st june,1984)

www.catalogue.nla.gov.au

[1] (Remeshwar V

Hitendra A1924 Pc 202 : 40 CLJ 431).

[2] (Kali Kumari V Bachhan Singh 17 CWN

974).

[3] (Allasabad Bank V. Raja Ram AIK

1933 Lah 671)

[4] (Faiz Ahmed V. Bakhtear Ahmed, 36

DLR (AD) 97)

[5] (Abdul Mannan V Bangladesh 39 DLR 19)

[6] (Stephen commerce

ltd v. MT Zaima Navard AIR 1999 Cal 64.

[7] (Al kama

Bibi V. Istak 29 CWN 836).

[8]

[9]

[10] (A Mannan v. Bangladesh 38 DLR 420]

[11] [Textiles V.

Sugonathi, AIR 2000 Mad 62

[12] [

Sanjeevammav. Yeeram runnamma, AIR 1984 AP 28.]

[13] [Rahimuddin Ahmed

  1. Fasiuddin, 9 DL R23].

[14]

[15]

[16] THE CODE OF CIVIL PROCEDURE, 1908 (Act

V of 1908) p.p-241-42

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.