Receiver- Order 40

The Receiver is an officer of the court who helps the court to protect and preserve the subject

matter of suit till the time the court decides the matter. Merely Interim protection.

Court thinks (not absolute, arbitrary or unregulated but just and convenient section 51(d)), it

is in the best interest of both the parties to appoint a receiver who will be responsible for the

management of the subject matter (movable or immovable property).

Officer of the court extended arm and hand of the court working in the interest/or

representative of neither plaintiff nor defendant but for the common benefit of all the parties.

Order 40 - The Receiver is an independent and impartial person who is appointed by the

court to administer/manage, that is, to protect and preserve a disputed property involved in a

suit.

The fund or property entrusted to his care is regarded as being in ‘custodia legis’, for the

benefit of who-ever may finally establish title thereto, the Court itself having the care of the

property by its receiver, who is merely its creature or officer, having no powers other than

these conferred upon him by the order of his appointment, or such as are derived from the

established practice of Courts of equity.

Can collect the income accruing like rent or any other profits and utilize it to maintain the

property. After deducting the expenses incurred in maintenance from the income received

from the property, the receiver will have to submit the remaining income, if any, in the court.

When a party in possession of the disputed property exhausts the property or causes

irreparable damages to it, the whole object of the suit gets defeated because the subject matter

ceases to exist or its value gets affected.

Objective- to protect and secure the property or funds during the pendency of the litigation.
Term- When a receiver is appointed for specified time limit his appointment shall expire on

expiry of such duration. In other case, his appointment shall expire after the judgment or

decree is passed by the court.

Who May Apply- Plaintiff, defendant may also, normally stranger or 3 rd party cannot but if

he is interested in realisation, management, protection, preservation, or improvement of

property he may apply. Court Suo moto can also appoint.

Order refusing or appointing receiver is appealable. Where no appeal lies apply for revision.

S. 94(d)- Receiver can be appointed to prevent the ends of justice being defeated.

S. 51(d)- for the execution of a decree, the court has the power to appoint a receiver.

Rule 1 - Where it appears to the Court to be just and convenient, the Court may by order

appoint a receiver of any property, whether before or after, decree. Remove any person form

possession or custody of property except where no party to the suit has present right to

remove.

Power- Rule 1d-

1. To institute and defend suits;

2. Realization, management, protection, preservation and improvement of the property;

3. Collection of the rents and profits;

4. Execution of documents as the owner himself has;

5. Such of those powers as the Court thinks fit.

Renumeration- as fixed by court. Also, a receiver has to be provided for the loss or expenses

incurred by him for maintaining the property. If no remuneration is specified such

remuneration can be granted, as the court may think reasonable, on the application of the

receiver.
Rule 2- Court can fix the remuneration to be paid to the receiver for the services provided by

him (general or specific order).

Duty- Rule 3-

1. Furnish security to account for what he will receive from the property as income.

2. Submit accounts (half yearly) for such period or form as directed by the court. The

account basically includes the income received and expenses incurred for the

protection and preservation of the property.

3. Pay the amount due to the court.

4. Take responsibility for any reduction in the value of the property because of the

receiver’s willful negligence.

5. Discharge the duties personally and should not delegate or assign any of the rights

entrusted to him by the court.

Liability- Rule 4- When a receiver fails:

1. To submit the reports as specified by the court

2. pay the amount due from him as directed by the court

3. Causes loss to the property due to gross negligence.

4. Any other duty which court directed him to do

The court may order the attachment of property of the receiver to recover the loss caused due

to his wilful default or negligence.

The court, after recovering all the losses from the proceeds received after selling receiver’s

property, will pay the balance (if any) to the receiver.

possession as a prudent man would observe in connection with his own property under

similar circumstances. (Like bailor bailee treat it as your own property and take care).

Rule 5- Collector as receiver- Property is land paying revenue to govt, revenue has been

assigned or redeemed- court considers that the interest of those concerned will be promoted

by the management of the collector- with the consent court may appoint him as a receiver.

1. T. Krishnaswamy Chetty vs C. Thangavelu Chetty, 1955- A receiver, 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. He is not the agent or

representative of either party to the action, but is uniformly regarded as an officer of

the Court, exercising his functions in the interest of neither plaintiff nor defendant, but

for the common benefit of all parties in interest.

Guidelines-

 Appointment of a receiver is a discretionary power.

 It is a protective relief to the plaintiff. The object is to protect and preserve the

disputed property till the time the suit is pending in the court.

 A receiver should not be appointed unless the plaintiff shows prima facie that

he has a strong case against the defendant and it is more than likely that he

will succeed in the suit.

 Appointment of a receiver is one of the hardest remedies as it deprives the

defendant of his right to possession before the final decree. Therefore, the

 court should not resort to it merely on the ground that it will do no harm.

There should be strong apprehension that there is a danger to the property or

delayed.

 The court should appoint a receiver only when there is a possibility of wrong

or injury. Also, if it is shown that the subject matter is not in the possession of

any of the parties and it is in the common interest of both the parties to appoint

a receiver for the protection and preservation of the property.

 The court should look at the conduct of the party who makes the application

for appointment of a receiver. The party should come to the court with clean

hands and their conduct should be such that they are not disentitled to this

equitable relief.

2. P. Lakshmi Reddy v. L. Lakshmi Reddy, 1957- the purpose of appointment of

receiver is to preserve the suit property and safeguard interests of both the parties to

the litigation.

3. S.B. Industries, Freegunj v. United Bank Of India, 1978- the appointment of a

receiver is, as a general rule, discretionary, and not a matter of right, a court will make

an appointment of a receiver with great caution and circumspection. In a case where

the remedy of the appointment of a receiver seems necessary to prevent fraud, to

protect and preserve the property against an imminent danger of loss or diminution in

value, destruction, squandering, wastage or removal from jurisdiction, the court may

appoint a receiver.

4. Hiralal Patni v. Loonkaram Sethiya, 1962- the continuance of receivers is that:

(i) if a Receiver is appointed in a suit until judgment, the appointment is brought to

an end by the judgment in the suit;

(ii) if a receiver is appointed in a suit without his tenure being expressly defined, he

will continue till he is discharged

court may grant to the receiver such powers as to bringing and defending suits and for

the realization, management protection, preservation and improvement of the

property, the collection of rents and profits thereof, the application and disposal of

such rents, and the execution of instruments in writing etc. as the owner himself has

or such of those powers as the court thinks fit. It is open to a court not to confer all

those powers stated in the aforesaid paragraph. It may confer upon him only such

powers as may be necessary to preserve the property pending litigation so that it may

not be damaged or dissipated.