Order XL of the Code of Civil Procedure, 1908 (CPC), empowers Indian courts to appoint receivers for property when it is deemed just and convenient. This provision ensures the protection and preservation of property during legal proceedings, safeguarding the interests of all parties involved.
MEANING AND DEFINITION
A receiver is an impartial individual appointed by the court to manage, protect, and preserve property that is the subject of litigation. The primary role of a receiver is to maintain the property’s value and prevent its misuse or deterioration until the court reaches a final decision. This mechanism ensures that the property remains in a state that respects the rights and claims of all parties involved.
LEGAL PROVISIONS UNDER ORDER XL CPC
Order XL of the CPC comprises five rules detailing the appointment, powers, duties, and removal of receivers:
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Rule 1: Appointment of Receivers
- The court may appoint a receiver of any property, whether before or after a decree, if it appears just and convenient.
- The court can remove any person from the possession or custody of the property and commit it to the receiver’s management.
- The receiver may be granted powers such as bringing and defending suits, realizing, managing, protecting, preserving, and improving the property, collecting rents and profits, and executing documents as the owner himself could.
- However, the court cannot remove from possession or custody any person whom any party to the suit has not a present right to remove.
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Rule 2: Remuneration
- The court may fix the amount to be paid as remuneration for the receiver’s services by general or special order.
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Rule 3: Duties
- Every receiver appointed must:
- Furnish security (if required) as the court deems fit.
- Submit accounts at specified periods and in the prescribed form.
- Pay the amount due from him as directed by the court.
- Be responsible for any loss to the property caused by his wilful default or gross negligence.
- Every receiver appointed must:
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Rule 4: Enforcement of Receiver’s Duties
- If a receiver fails to submit accounts, pay amounts due, or causes loss through wilful default or gross negligence, the court may attach and sell his property.
- The proceeds from such a sale can be used to make good any amount found due or any loss occasioned, with the balance (if any) paid to the receiver.
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Rule 5: When Collector May Be Appointed Receiver
- For property that is land paying revenue to the government, or land with assigned or redeemed revenue, the court may, with the Collector’s consent, appoint him as the receiver if it promotes the interests of those concerned.
PRINCIPLES GOVERNING APPOINTMENT OF RECEIVERS
The appointment of a receiver is a discretionary power of the court, exercised judiciously based on established principles:
- Just and Convenient: The court must be satisfied that appointing a receiver is just and convenient, considering the case’s specifics.
- Protection of Property: The primary objective is to protect and preserve the property in dispute for the benefit of all parties until the court determines their rights.
- Prima Facie Case: The applicant must demonstrate a prima facie case in their favor, indicating a likelihood of success in the suit.
- Risk of Damage: There should be a real risk of damage, misuse, or mismanagement of the property if a receiver is not appointed.
- Balance of Convenience: The court must assess whether the harm caused by appointing a receiver outweighs the potential benefits.
In the case of T. Krishnaswamy Chetty v. C. Thangavelu Chetty (AIR 1955 Mad 430), the Madras High Court outlined key considerations for appointing a receiver:
- The appointment is a discretionary power, not arbitrary or absolute.
- It is considered a harsh remedy, depriving a party of property possession before a final judgment.
- A receiver should not be appointed if other remedies are available.
- The applicant must show a chance of success and potential damage or loss.
- The appointment should not cause irreparable loss to the defendant.
- The applicant must act in good faith without delays or laches.
DUTIES AND POWERS OF A RECEIVER
A receiver, as an officer of the court, has specific duties and powers:
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Duties:
- Furnish security as directed by the court.
- Submit periodic accounts in the prescribed form.
- Pay amounts due as directed by the court.
- Be responsible for any loss due to wilful default or gross negligence.
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Powers:
- Bring and defend suits related to the property.
- Realize, manage, protect, preserve, and improve the property.
- Collect rents and profits.
- Apply and dispose of rents and profits.
- Execute documents as the owner could.
CASE LAWS ILLUSTRATING APPOINTMENT OF RECEIVERS
- Parmanand Patel v. Sudha A. Chowgule (2009)
- Facts: The dispute involved the management and possession of a hotel property.