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PROJECT TITLE: SCOPE AND POWER OF RECEIVER APPOINTED BY THE

COURTS

SUBJECT: CIVIL PROCEDURE CODE

NAME OF THE FACULTY: Ms Bhagyalakshmi N

SUBMITTED BY: CHANDRIKA CHOUDHARY

ROLL NO.: 2013038

SEMESTER: 5TH SEMESTER

ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Ms Bhagyalakshmi

N, as well as our vice chancellor R.G.V. BHAGWAT KUMAR who gave me the golden
opportunity to do this project on SCOPE AND POWER OF RECEIVER APPOINTED
BY THE COURTS, which also helped me in doing a lot of research and I came to know
about so many new things I am really thankful to them.
Secondly I would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited frame. I want to convey a most sincere thanks to
my concerned faculty for helping me throughout the project without whose exorbitant
support this project would not have become a reality.

ABSTRACT

The receiver is an independent person, who is appointed by a court to manage property

or money during a lawsuit. The receiver is an officer of the court, and as such, he is
responsible for good faith and reasonable diligence. The power of appointing a receiver
is a discretionary power vested in the Civil Court and can be exercised only if there exist
a strong reason that the property and/or money would be disposed of by any of the
parties to the suit by the time the suit is finally decided. The guiding principles behind
appointing the receiver is that the receiver should not be appointed unless the party has an
excellent chance of succeeding in the suit, that the party himself shall show that there was
some emergency or danger or loss that may be caused to the right involved in the suit,
that an order appointing a receiver should not be made if it has the effect of depriving a
defendant of de-facto possession and lastly, the court should always look into the conduct
of the parties who seek for an appointment of a Receiver.
The court receiver has a right to take all steps in the matter since the court receiver has
been appointed with full powers to administer the property which is custodial legis.
Order XL Rule 1(d) of Civil Procedure Code has specifically given all such powers
including bringing and defending the suits and for the realization, management,
protection and preservation of the properties, which the receiver held on behalf of the
courts.
Considering the importance of the role performed by the receiver, the provision of Order
XL Rule 1 of CPC cannot be given any narrower construction so as to frustrate the
right/authority given to the receiver by the courts. Even in many cases, the Honble
Supreme Court of India has held that the receiver has a right to even institute a suit
against any person without the leave of the court, when the expressed or implied
authority has been given to the receiver to preserve the estate and such authority is wide
enough to empower the receiver, as he though necessary, for preserving the estate.
In this project I am going to dealt with these two case laws which briefly help us in
understanding the scope and power of receiver appointed by the courts:
(1) Srinivasa Rao Versus Baburao and Another, (AIR 1970 Kant. 141)
(2) Shree Ram Urban Infrastructure Limited Versus the Court Receiver, High court of
Bombay, (2015 5 SCC 539).
TABLE OF CONTENTS

S. No.

CONTENTS

1.

Objectives of the Study

2.

Introduction

3.

4.

5
6-7

Meaning of Receiver

Object of appointment of Receiver

Appointment of Receiver

PAGE No.

8-11

When collector may be appointed receiver.

Powers and Functions of Receiver

Powers

Duties

Liabilities

5.

Conclusion

6.

Bibliography

11-13

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OBJECTIVES/AIMS OF THE STUDY:

There are two objectives/aims of this project are:

By the study of this project the researcher will helps in understanding the concept
appointment of receiver and in which situations receiver can be appointed by the
courts.

This project also helps in understanding the various powers of the receiver
appointed by the courts.

SIGNIFICANCE AND BENEFIT OF THE STUDY:

This research study provides the information and concept of the receiver appointed by the
courts in civil proceedings. This study would be beneficial for understanding the concept
of appointment of receiver and the various powers given to him by the courts.
SCOPE OF THE STUDY:
In the proposed study, it includes the appointment of receiver in civil proceedings and the
various powers given to the receivers by the courts. This research would focus on multi
aspect.
Key Research Question would be:

What is the meaning of the receiver?

What is the importance of appointing the receiver by the courts?

What are the various powers given to the receivers by the courts?

Its origin and importance in civil law.

RESEARCH METHODOLOGY:
For this project the research methodology is doctrinal. The information and the data for
the project will be from various books, articles and other resources. The research will also
focus on the origin and importance of receiver in civil law.
INTRODUCTION:
Meaning of Receiver6

The term receiver is not defined in the Code of Civil Procedure. It simply means, a
receiver is one who receives money of another and renders account. 1 According to Kerr2,
he is an impartial person appointed by the court to collect and receive pending the
proceedings, the rents, and profits of lands 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 independent 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.3
The court may appoint a receiver for protection of the property in dispute. In simple
language, receiver is an impartial person who is appointed by the court with the object of
preserving the suit property until final disposal of the suit. Receiver is an empowered to
collect and receive the rents and profits of the property during pendency of proceedings.
He is a representative of the court. He is also a public officer within the meaning of
clause 17 of section 2 of the Code of Civil Procedure (C.P.C). As he is an officer of the
court, so he is responsible for good faith and reasonable diligence. When the property is
lost or injured by any negligence or dishonest execution of the trust, he is liable in
damages; but he is not, as of course, responsible because there has been an embezzlement
or theft. He is bound to such ordinary diligence, as belongs to a prudent and honest
discharge of his duties, and such as is required of all persons who receive compensation
for their services.4
The power of appointing a receiver is a discretionary power exercised by the court. The
appointment is provisional, for the speedy getting in of the estate in dispute, and scouring
it for the benefit of such person as may be entitled to it, and does not affect the right. It is
not within the compass of this work to state in what cases a receiver will be appointed.

Concise Oxford English Dictionary (2002) at p.1195; P.R. Aiyar, Advanced Law Lexicon (2005) Vol. IV
at p. 3980.
2
Kerr on Receivers (2001) at p.3.
3
T. Krishnaswamy Chetty v. C. Thangavelu Chetty, AIR 1955 Mad 430 at p. 432, K.T. Thomas v. Indian
Bank, 1984 Supp SCC 703; Maharaj Jagat Singh v. Lt. Col. Sawai Bhawani Singh, 1993 Supp (2) SCC
313: AIR 1993 SC 1721.
4
Story, Bailm. Sec. 620, 621, http://legal-dictionary.thefreedictionary.com/Receiver.

In the landmark case i.e., Krishnaswamy Chetty v. C. Thangavelu Chetty 5, it was

observed that the principles, which guide the English Courts in regard to cases in
appointment of receiver is, the appointment is made to preserve property pending
litigation to decide the rights of the parties, or to prevent a scramble among these entitled,
as where a receiver is appointed pending a grant of probate or administration, or to
preserve property of persons under disability, or where there is danger of the property
being damaged or dissipated by these with the legal title, such as executors or trustees, or
tenants for life, or by persons with a partial interest, such as partners, or by persons in
control, as where directors of a company with equal powers are at variance.
Object of appointment of Receiver:
The primary object of appointment of receiver is to protect, preserve and manage the
property during the pendency of the litigation. A receiver is an officer and is an extended
arm and hand of the court, a part of the court machinery by which the rights of the parties
are protected. The purpose of appointment of receiver is to preserve the suit property and
safeguard interests of both the parties to the suit.
The case related to object of appointment of receiver is P. Lakshmi Reddy v. L.
Lakshmi Reddy6 In this case; court in support of the contention relies on the well known
legal principle that when a court takes possession of properties through its receiver, such
receivers possession is that of all the parties to the action according to their titles. The
legal position stated is that: The receiver being officer of the court from which he
derives his appointment, his possession is exclusively the possession of the court, the
property being regarded as in the custody of the law, in gremio legis, for the benefit of
whoever may be ultimately determined to be entitled thereto.7

Discretion of the Court:

AIR 1955 Mad 430.

AIR 1957 SC 314: 1957 SCR 195.
7
Kerr on Receivers, 12th Edition. P. 153
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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 interests of justice require such power to be exercised.8
APPOINTMNET OF RECEIVER:
Where it appears to the court to be just and convenient, it may appoint a receiver.9 The
principles followed by the Chancery Courts in England for the appointment of receivers
are adopted by Indian Courts also. Courts in India have very wide jurisdiction to appoint
as well as to remove a receiver in the exercise of their discretion. The discretion,
however, is not absolute, arbitrary and unregulated. It is a sound and judicial discretion
and must be exercised cautiously, judicially and after taking into account 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.10
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:

Benoy Krishna v. Satish Chandra, AIR 1928 PC 49; ILR 1951 Mys 55 (FB).
Order 40 rule 1 (1)(a) and section 94(d).
10
T. Krishnaswamy Chetty v. C. Thangavelu Chetty, Supra at p. 434; Hiralal Patini v. Loonkaran Sethiya,
AIR 1962 SC 21: (1962) 1 SCR 868.
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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 following principles must be borne in mind before a receiver is appointed by the
court, and these principles are given in a landmark case T. Krishnaswamy Chetty v. C.
Thangavelu Chetty, principles are as follows:

(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 is 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
a very excellent chance of succeeding in the suit.

(iv)

It 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 party before final judgement is pronounced, it should only be
granted for the prevention of a manifest wrong or injury. A court will never appoint a
receiver merely on the ground that it will do no harm.

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(v)

Generally, an order appointing a receiver will not be made where it has the effect of
depriving the defendant of a de facto possession, since that might cause irreparable
loss to him. But of the property is 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 a 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
disentitled himself to this equitable relief by laches, delay or acquiescence.

S.B. Industries vs. United Bank of India11

In this case Order 40 Rule 1 of C.P.C., was discussed which lays down that whether 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 a decree. In order to justify the appointment of receiver,
the plaintiff must establish a reasonable possibility that the plaintiff will ultimately succeed in
obtaining the relief claimed in the suit. The requirement thus is that he must establish a good
prima facie case. It may further be remembered that 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. It may further be
stated in this connection that a court in exercise of its discretion to appoint or refuse a
receiver must take into account all the circumstances and facts of the case, the presence of
conditions and grounds justifying the relief, ends of justice, the rights of all the parties
interested in the subject-matter and the adequacy of other remedies.

When Collector may be appointed receiver:

11

S.B. Industries vs. United Bank of India, AIR 1978.

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According to Order 40 Rule V of C.P.C. 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.
POWERS AND FUNCTIONS OF RECEIVER:
Though the word receiver has not been defined in the Code of C.P.C. However, the
Supreme Court in Thomas versus Indian Bank,12 explained the meaning of the word
receiver as 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.
Order 40 of C.P.C. provides for appointment, remuneration and duties of a receiver and
enforcement of receivers duties.
Powers of Receiver:
According to Order 40 Rule 1(d) 0f C.P.C. a receiver is an officer or representative of the
court and his functions under its discretion. Reddy vs. Reddy13. The court may confer upon
the receiver 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.

(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.
12
13

Thomas vs. Indian Bank, 1984 AIR.

Reddy vs. Reddy, AIR 1957.

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In Everest coal Company vs. State of Bihar,14 Court said that 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 cannot sue or be sued without the leave of the court.
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 the parties interested in litigation, wherein he is appointed. He is the right
arm of the court in exercising the jurisdiction invoked in such case 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.
Duties:
According to Order 40 Rule 3 of the C.P.C. 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.
(d) Responsible for any loss occasioned to the property by his wilful default or gross
negligence.
In Balaji vs. Ram Chandra,15 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
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15

Everest coal co. vs. State of Bihar, AIR 1977.

Balaji vs. Ram Chandra, 1895.

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discharge his duties personally and cannot delegate or assign any of his rights or duties
entrusted to him by the Court.
Liabilities:
According to Order 40 Rule 4 of the C.P.C. where a receiver(a) Fails to submit his accounts at such periods and in such as the court directs.
(b) Fails to pay the amount due from him as the court directs.
(c) occasions loss to the property by his wilful 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.
In Mohini vs. Sarkar,16 court said that 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.
But in Thomas vs. Indian Bank,17 court said that 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.
CONCLUSION:
The appointment of a court appointed receiver is a formidable weapon in the armoury of
litigation lawyers. Resorting to the appointment of a receiver make sense if your client
has genuine misgiving about disappearance of vital assets and is an attractive alternative
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17

Mohini vs. Sarkar, 1941.

Thomas vs. Indian Bank, 1890.

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to a freezing order since the receiver will work proactively to preserve value. Unlike a
formal insolvency process, the insolvency of the defendant does not need proving of the
appointment of a receiver.
The appointment of receiver is an equitable remedy that allows judges to protect and
preserve assets while parties are in legal disputes. The use of receivers can be traced back
to England during the rule of Queen Elizabeth when they established courts to deal with
equitable issues. These courts were called chancery courts. The American colonies gave
the courts the same equitable powers to use receivers with the adoption of the
Constitution in 1787. Receivers are most commonly appointed over real estate but they
can also be appointed over businesses, health and safety issues, environmental issues,
family estates, government regulatory matters, and to enforce judgments.
Finally, I conclude that it can be stated that receiver is considered agent of mortgagor, and
mortgagor is responsible for acts and defaults of receiver particularly when receivers
acts and defaults are not caused through mortgagees improper intervention.

BIBILOGRAPHY:

Law of Civil Procedure- Mahmudul Islam & Probir Niogi;

Law of Civil Procedure- Naim Uddin Ahmed;

Civil Procedure- CK Takwani;

Principles of Civil Litigation- Ishrant Azim Ahmed & Md. Ershadul Karim.
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