Write a detailed note on receiver.
The main objective of every court is to administer proper justice to each and every aggrieved party and for administering proper and complete justice to parties it is necessary that every court must have requisite powers so that they may determine the rights and liabilities of parties completely and provide proper relief to the aggrieved party. These powers not only include power to try the suit but also include power to pass interim orders like order regarding appointment of receiver.
The term “receiver” has not been defined in the Code of Civil Procedure, 1908. But according to Kerr, “Receiver is an impartial person appointed by the court to collect and receive, pending the proceedings, the rents, issues and profits 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 person entitled”.
In the leading case of K.T. Thomas v. Indian Bank (SC 1984), the Hon’ble court held that, “Receiver is an independent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in the litigation pendente lite, when it does not seem reasonable to the court that either party should hold it.
Order 40 of the Code of Civil Procedure, 1908, deals with the provisions of the appointment of receiver. According to Order 40 Rule 1 of Code of Civil Procedure, 1908, the court has power to appoint receiver and it can appoint receiver when it appears to court just and reasonable. The court can appoint receiver with respect to any property either before the decree or after the decree. Moreover, the court can remove any person from the possession or custody of the property and commit the same to the possession, custody or management of the receiver. If court appoints receiver with respect to any property, then court also provides power to the receiver to manage the property and protect the property and also to collect the rent or profit derived from that property.
In the leading case of P. Lakshmi Reddy v. L. Lakshmi Reddy (SC 1957), the Hon’ble court held that the main objective of appointment of receiver is to preserve the suit property and safeguard interests of both the parties to the suit.
In the leading case of ICICI v. Karnataka Ball Bearing Corprn. (SC 1999), the Hon’ble court held that appointment of receiver is in the discretion of the court. But the mode of appointment of receiver is recognized as one of the harshest remedies for the protection and enforcement of rights of the parties and it should be allowed in extreme cases and in the circumstances where the interest of justice require such power to be exercised.
According to the provisions of Code of Civil Procedure, 1908, an application for appointment of receiver is made by the plaintiff in a properly instituted suit but a defendant may also apply for the appointment of receiver if it is just and convenient. If the application for appointment of receiver has been filed before the trial court, then this court has power to appoint the receiver. But where an appeal has been preferred against a decree passed by trial court, then in such a case the appellate court has power to appoint the receiver.
In the leading case of Kasturi Bai v. Anguri Chaudhary (SC 2001), the Hon’ble court held that a person who is independent, impartial and totally disinterested should normally be appointed as receiver. Generally, a party to the suit should not be appointed as receiver by the court. But the rule is not rigid or inflexible. In exceptional circumstances or for special reasons, a party to a suit or proceedings can also be appointed as receiver.
In the leading case of Krishna Kumar v. Grindlays Bank P.L.C. (SC 1990), the Hon’ble court stated that the following principles must be borne in mind before the receiver is appointed by a court: –
- The power to appoint receiver is a discretionary power and it should be exercised by court judiciously and after appreciating all the facts and circumstances.
- Appointment of receiver is a protective relief and its objective is to preserve and protect the property in dispute. So, it should be appointed only to achieve this objective.
- It should not be appointed unless the plaintiff proves that he has very good chance of succeeding in the case.
- Appointment of receiver is one of the harshest remedies which the law provides for the enforcement of rights, and therefore, should not be lightly resorted to. Since it deprives the opposite party possession of property before a final judgment is pronounced, it should only be granted for the prevention of a manifest wrong or injury. A court will never appoint receiver merely on the ground that it will do no harm.
- The court must 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 disentitled himself to this equitable relief by latches, delay or acquiescence.
According to Order 40 Rule 3 of Code of Civil Procedure, 1908, it is duty of receiver to furnish such security as the court thinks fit duly to account for what he will receive in respect of the property and to submit the accounts at such period as the court directs and he will be held responsible for any loss which is occasioned to the property by his willful default or gross negligence. If the receiver fails to fulfill his duties, then in such a case the court has power to attach the property of receiver and sell such property so that the amount recovered from selling the property may be used to make good the loss occasioned to the property by his willful conduct or gross negligence.
According to Order 40 Rule 5 of Code of Civil Procedure, 1908, if the property is a land paying revenue to the government or the land of which the revenue has been assigned or redeemed then in such a case if the court considers that the interest of those will be promoted by the management of collector then with the consent of collector court can appoint him receiver of such property.