AN ASSIGNMENT ON

Receiver, Injunction, Instrument, Rescission

 Assignment

Receiver
Defination of Receiver:
A neutral person (often a professional trustee) appointed by a judge to ta
ke charge of the property and business of one of the parties to a lawsuit and re
ceive his/her rents and profits while the right to the moneys has not been finall
y decided.

A person appointed to receive rents and profits coming to a debtor either while
a bankruptcy is being processed or while an arrangement is being worked out
to pay creditors, so that funds will be paid for debts and possibly available for d
istribution to creditors.

Halsbury said ― A receiver is the representative of the court and of all

parties interested in the litigation‖ …On the other hand Lord Hard wick said
the power to appoint a receiver is a discretionary power exercised by the court
with great utility to yhe subject as any sort of authority that belongs to them.

[source: https://legal-dictionary.thefreedictionary.com/receiver]

Appointment of Receiver:
According to section 44 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.

[Source:Syeda afroja Zerins text book; page no:185]

Aims to appoint a receiver:

Generally we know a receiver is a person who is appointed by the
court to protect and preserve the property.

The objective to appointment of a Receiver are mainly two kinds:

 1) To protect and preserve the litigated property. 2)
To enforce the judgment of the court.

To protect and preserve the litigated property:

When a suit is filed in the court about disputed property and the court
can not determine the actual owner of that property, then the court can
appoint a receiver to preserve and manage of the disputed property until the
suit is ended.

To enforce the judgment of the court:

If the court thinks that the disputed property is not safe, then court can
appoint a receiver to protect that.

According to Hard Wick- ― The power to appoint a receiver is a discretionary

power exercised by the court with great ability to the subject as any sort of
authority that belongs to them,‖

Receiver is also appointed for collecting receiving the rent and profit of the
property. He is also the representative of the court. It is crucial duty to save the
property from wasting.

Duties and Liabilities of receiver:

The duties of a receiver are numerous. Among others, they include:

A duty to act in good faith and for a proper purpose (section 18(1)).

A duty to exercise one‘s powers in the best interests of the person in whose
interest he or she was appointed (section 18(2)).

A duty, when exercising a power of sale of property, to obtain the best price
reasonably obtainable at the time of sale (section 19).

A duty to distribute surplus proceeds in accordance with the priorities set out
in the Act (section 30A).

A duty to keep proper accounting records (section 22).

A duty to report on the state of affairs with respect to the property (sections 23
– 24).
A duty to notify the Registrar if it is believed that the company or a director has
committed an offence (section 28).
[source: https://www.awslegal.co.nz/receiverships-who-what-and-why]

A receiver does not represent the individual whose property is being administer
ed, since the receiver is an officer of the court and is responsible to the court fo
r protecting the interests of all opposing parties fairly. Where it is not clear how
the receiver must perform his or her duty, he or she may properly apply to the
court for instructions. He or she can be removed and held financially liable for f
ailure to obey orders of the court, for neglect of duties, or for abuse of authority
. The receiver must exercise judgment in fulfilling the duties, and her decisions
must be reasonable. The receiver might be required to post a bond to ensure fai
thful performance of the duties and is required to account to the court at regul
ar intervals for all the property entrusted to her during, and at the termination
of, the appointment.

Enforcement of Receivers duties:

A receiver that fails to comply with any of the above duties, or a duty
imposed by the security agreement under which he or she was appointed, may
be the subject of an application brought in the High Court (sections 36 – 37).
Those persons entitled to bring an application include: the company; a creditor
or guarantor of the company; a liquidator of the company; and a shareholder of
the company (by mechanism of a derivative action).

In response to an application, the court may remove a receiver from office and
impose a prohibition order on him or her (section 37), whilst also making any
other orders it thinks fit for preserving the property in receivership (section 39).

Powers of Receiver:
The powers of a receiver in respect of the property in receivership include those
listed in section 14(2) of the Act, the most notable of which are:

The power to demand and recover income of the property.

The power to manage the property.

The power to insure the property.

The power to repair and maintain the property.

The power to inspect the books and documents that relate to the property.
Additionally, a receiver has the powers expressly or impliedly conferred by the
security agreement they were appointed under (section 14(1)). In almost all
cases, such powers will include a power to sell the company‘s assets for the
purpose of repaying its debts.

Another notable non-statutory power is the ability to compel a grantor to

complete its obligations under a pre-receivership contract. Alternatively, a
receiver may repudiate a contractual obligation binding on the grantor, thereby
leaving the other party to the contract to a remedy in damages. The
determining factor will be the receiver‘s obligation to act in the best interests of
the person in whose interests he or she was appointed.

A receiver is also empowered to lawfully terminate the employment contracts of

a company‘s employees within 14 days of his or her appointment (section 32).
Electing not to do so will render a receiver personally liable for payment of the
remuneration due to existing employees.

Remuneration of Receiver
The remuneration of a receiver may be by the terms of the debentures or
by the debenture holdersin accordance with its terms.But a receiver appointed
by the Courts has the amount of hisremuneration fixed by the Courts.Although
a receiver appointed by the debenture holders underpower in the debentures
has his remuneration fixed by agreement, the Courts may, on theapplication of
the liquidator, fix the amount to be paid by way of remuneration to the
receiver.Section 350(1)

Where a receiver or manager of all (or substantially all) the property of the
company is appointedeither under the power of the debentures or the Courts
on behalf of the holders of debenturessecured by a floating charge, the Receiver
must send to the company notice of his appointmentforthwith, and the
company within fourteen days makes out and submits to him (i.e. the
Receiver)a statement of its affairs.Within two months after receiving this
statement, the receiver must send to the Registrar and to theCourts (if he was
appointed by the Courts) a copy of the statement and any comments he sees fit
tomake and must send to the Registrar a summary of the statement and of his
comments, and mustsend to the company a copy of his comments, and to the
trustees and all debenture holders a copyof the summary. Section 351.The
receiver must also within two months after the end of each year and within two
months afterhe ceases to act as a receiver or manager, send to the Registrar
and to the trustees (if any) and thecompany and the debenture holders any
abstract of his receipts and payments during the relevantperiod.Contravention
of the aforesaid requirements renders the receiver liable to a fine of one
hundredshillings for every day during which the default[Source:
https://www.coursehero.com/file/p5g8oik/Remuneration-of-Receiver-The-remuneration-of-a-receiver-
may-beby-the-terms-of/]

Injunction
Definition:
An order of the court preventing someone from doing something. It is a c
ontempt of court to disobey. In certain circumstances damages maybe awarded
in place of an injunction.

According to Prof. Maitland ― An Injunction is an order made by thr court for

binding a person or a class of person from doing certain acts‖.

S.C. Sarkar said ―An Injunction is a specific order or command of the court
preventing a party from doing that which he is under a legal obligation not to
do or directing the performance of a particular act or thing.‖

Lord Halsbury said ― An Injunction is a judicial process where by a party is

orderd to restrain from doing or to do a particular act or thing..

Importance of Injunction
The importance of injunction is immense from todays society.It is given in
below

o By imposing a ban the court can restrain any person or persons from
doing wrong.
o Again, if the wrong doing is done it can be removed through sanction.
o It is important toimpose sanctions for protect the content of the case as if
it is not damaged or loss or waste or transfer or removal or to change
natural shape.
o Prohibition is necessary to prevent irreparable damage to the plaintiff. o
It is important to enforce the security of all property.
o In the event of a dispute over property it becomes important to impose a
ban on the property
o When a property is affected by forcible occupation it becomes important
to impose a ban on it.
 o Restrictions are Important to protect the right to permanent enjoyment of
property.

Charecteristics Of Injunction
1) Prohibition is a type of preventive or preventive remedy
2) The main purpose of injunction is to order a person to refrain from doing
anything legally specific
3) Injunction is a kind of judicial system
4) It is the discretion of the court to grant or not to grant the Injunction
5) Giving orders of Injunction depends on the justice and discretion of the
court.
6) Those who disobey the injunction order given by the court have
provisions in the punishment mentioned in the law
7) Injunction is a judgment and decree of a court of competent jurisdiction
8) It must be an unjust act to be instructed to Injunction from doing
something that is forbidden
9) Injunction are the remedy created by the equity court

Classification of Injunction
According to requirement and purpose court has to give several kind of order
for injunction. Mainly injunction can be classified in 2 ways. such as;

a) in terms of time
b) nature of the work

In terms of time it is classified by 4 ways.

1. Permanent Injunction
2. Temporary Injunction
3. Ad-interim Injunction
4. Interlocutory Injunction

Nature of the work it can be classified in 2 ways

1. Mandatory Injunction
2. Prohibitory Injunction
Against whom injunction may be granted:
According to the maxim of equity ―Equity acts in personam‖. Therefore
an injunction can issue only against a named person. It must be addressed
against the defendant individually.

1. Against the person who intends to do wrong 2.

Against a person who has done wrong
3. Against the government.
4. Against the municipality.
5. Against abroad

Cases in which cases temporary injunction maybe

granted:
According to order 39 Rule 1,2 & S-151 CPC-SR. 53 temporary injunction
maybe granted in following ways:

1) When any property in dispute is in danger,

2) When any property in dispute is being wasted,

3) When any property in dispute is damaged,

4) When any property in dispute is alienated by any party,

5) When any property in dispute is wrongfully sold in execution of a decree,

6) when defendant threatens,

7) when defendant intends to remove,

8) when defendant dispose of his property with a view to defrauding his

creditor,

9) when defendant threatened to dispossess the plaintiff,

10) when defendant otherwise cause injury to the plaintiff in relation to any
property in dispute in a suit,

11) where defendant is about to commit a breach of contract or other injury of

any kind,
12) where a court is of the opinion that in the interest of just so requires.

PERPETUAL INJUNCTION WHEN GRANTED

As per 38 of Specific Relief Act-

(1) Subject to the other provisions contained in or referred to by this

Chapter, a perpetual injunction may be granted to the plaintiff to prevent the
breach of an obligation existing in his favour, whether expressly or by
implication.

(2) When any such obligation arises from contract, the court shall be guided
by the rules and provisions contained in Chapter II.
(3) When the defendant invades or threatens to invade the plaintiff‘s right to,
or enjoyment of, property, the court may grant a perpetual injunction in the
following cases, namely:—

(a)where the defendant is trustee of the property for the plaintiff;

(b)where there exists no standard for ascertaining the actual damage

caused, or likely to be caused, by the invasion;

(c)where the invasion is such that compensation in money would not

afford adequate relief; (d)where the injunction is necessary to prevent a
multiplicity of judicial proceedings

When th court may not grant the application for

Injunction
According to 1877 Specific Relief Act SR 56 it is said that in the following
matter a court may not grant injunction

1. Postponement of previous judicial proceedings

2. To adjourn the proceedings of a court other than the subordinate
court
3. Obstruction of application to law enforcement authorities
4. For the purpose of interfering in any work of government or foreign
government
5. For the purpose of suspending criminal activities
6. For breach of contract ineligible to perform specific functions
7. On the pretext of nuisance
 8. In which case the plaintiff has tacit consent
9. Equal fruitful remedy
10. Behavior of the applicant

11. Unless the applicant has a personal interest

Distinction between

1) Tmporary & permanent Injunction

MAJOR DIFFERENCES BETWEEN PERMANENT AND TEMPORARY

INJUNCTIONS

1. A temporary injunction is granted at any point during the suit for a

specified period of time, or as adjudged by the court.A permanent
injunction, on the other hand, is granted after the examination of the
facts and merits of the case by the decree of the court.
2. Rules 1 to 5 of Order 39 of the Civil Procedure Code, 1908, governs
temporary injunctions. Whereas, permanent injunctions are covered in
sections 38 to 42 of The Specific Relief Act, 1963.
3. A temporary injunction is a temporary order and non-conclusive rather
than a permanent solution. Whereas a permanent injunction deals with
the finality of a judgment, thereby providing a conclusive and long term
solution.

4. A temporary injunction may be one-sided. But a permanent injunction

focuses on the Plaintiff as well as the Defendant. It hears both the sides
and then provides an appropriate solution.
5. The court can revoke the temporary injunction order. But in the case of a
permanent injunction, it is non-revocable by the court that decides to
pass such order.
6. A lack of immediate response or request by the Plaintiff may lead to a
dis-approval of the grant of an injunction order. Whereas a permanent
injunction order allows the parties to elaborate, explain and provide
details at a later and more relaxed pace, provided there are sufficient and
valid grounds for the same.
2.Temporary & Ad-Interim Injunction
 1. Ad-interim Injunction refers to a type of prohibition where the court
orders to maintain the status quo on the subject property until the
orginal litigation is settled. On the other hand temporary
Injunction is a type of Injunction which is continue until a specified
time or until the further order of the court.
2. Ad-interim Injunction can not be granted at any stage of the case..
on the other hand temporary Injunction can be granted of any stage
of the case.
3. Ad-interim Injunction is used for maintain the status Quo of the
property.,,, On the other hand Temporary Injunction can be
applicable without this reason.So the court can grant a temporary
injunction even though it does not feel the need to maintain thr status
quo.
4. The main fundamental difference between Ad-interim and temporary
is Ad-interim is used after the hearing of the respondent… On the
other hand , Temporary injunction issued on the basis of unilateral
hearings.

Stay Order & Injunction; Status quo

Stay order:

Stay order means the temporary revocation of any proceedings

judgment decree, order of the lower court by the higher court.

Injunction:

An Injunction is a specific order or command of the court

preventing a party from doing that which he is under a legal obligation not to
do or directing the performance of a particular act or thing.

Status quo:
A status quo order may be issued by a judge to prevent any of the
parties involved in a dispute from taking any action until the matter can be
resolved. It seeks to prevent harm or preserve the existing conditions, so that a
party's position isn't prejudiced in the meantime until a resolution is reached.
 Rectification of Instrument
Meaning of Rectification
Section 26 of the Specific Relief Act talks about rectification. Rectification‘
means correction and here ‗instrument‘ means any legal document/contract.
So rectification of instruments means correction or changes in the contract.
Under Section 26 of the Specific Relief Act,1963, it is provided that when any
contract may be rectified:

1. When there is a fraud or when there is a mutual mistake by both the parties.
Now the person who is entitled for the rectification of instrument are as follows:

• Either party or his representative can file.

• The plaintiff in any suit can file if any rights arising under the
rectification of instruments.
• Defendants can file in any suit as mentioned in sub-clause (B).
2. If in any case in which a contract or instrument is to be rectified under
clause (1), the court finds that contract is done by fraud or by mutual
mistake of the parties, then the court has discretionary power to rectify it.

3. If parties claim for rectification and the court thinks fit, then it will be
specifically enforced.

Person who capable to apply for rectification

The person who are legally eligible to apply for the rectification are as follows.

1. Either party to a contract or their legal representative in interest can take

action for the rectification of the instrument under Section 26. Any other
person does not have any right to maintain a suit for its rectification.
Proper parties can apply for the same. ‗Proper parties‘ are those parties
when a case is brought for rectification of sale deed at that time the other
parties who are affected by it are called proper parties.
2. The plaintiff in any suit
3. A defendant in such suit

Essential element of a suit for rectification

There are certain requirements under Section 26 of the specific relief act.

Existence of fraud or mutual mistake: – for the rectification of instrument, one

has the proof regarding the fraud and the mutual mistake. The intention must
be truthful which is owing to fraud or common mistake.

‗Fraud‘ means an act done by any party through a contract to deceive

another party to enter into a contract.

‗Common mistake‘ means when the mistake in any contract or in any deed
done by both the parties.

‗Real intention of the parties‘ means it‘s not only the party to prove fraud or
mutual mistake but also the court has to find out and further the court has to
also ascertain the real intention of the parties.

The burden of proof lies on the person who wants rectification of the
instrument.
Instrument can be rectified
Any instrument can be rectified.But articles of association of a company
cannot be rectified. Because the articles are a contract of between the company
and its share holders and the company cannot have had a different intention
before incorporation. Nor is there any power to rectify a will because of fuard.

Rescission of contract
Defination
Rescission is an equitable remedy and is discretionary. It is used as a
synonym for termination at law. A court may decline to rescind a contract if
one party has affirmed the contract by his action, or a third party has acquired
some rights or there has been substantial performance in implementing the
contract. To improve chances of being granted rescission, parties may do well
to describe those circumstances which may give rise to an entitlement to
terminate.

Who can file suit for rescission of contract

The rescission is granted at the instance of either party when the
contract is void and at the instance of the party entitled to it when the contract
is void and at the instance of the party entitled to it when the contract is
voidable. It must be noted here that a right of rescission is not assignable.
Where a contract is irrevocable and not voidable the section does not apply.

So it is clear that section 35 provides for the case of rescission of voidable

contract but section 39 covers a wider field and applies not only to a case of an
instrument which is voidable but also one that is void.

When the court can refuse to grant rescission of

contract
The court will refuse rescission where the plaintiff has expressly or impliedly
ratified the contract where parties cannot be restored to their orginal position
in which they were at the time the contract was made, where third parties have
acquired rights in good faith for value and without notice during the
subsistence of the contract,or where only apart of the contract is sought to be
rescinded and it is not severable from the rest of the contract. In such cases
court can grant cancellation of the document.
 Cancellation of Instruments

Scope and Object

Cancellation of a document is an equitable relief based on the maxim ―
he who seeks equity must be prepared to do equity‖. Section 39 of the Specific
relief act has used the term cancellation in the sense of removal of written
character or other from of record. By cancellation a document is made
inoperative and invalid.

According to the provision of this section any one not even a party to an
agreement can sue for cancellation of an instrument provided that the
instrument is either void or voidable against him. But it cannot be cancelled
without serving on its beneficiary a show cause notice. However void and
voidable documents should be distinguished from each other. Because the
documents which are null and void ab in itio needed not be set aide, it maybe
treated as non-existent. On the other hand a voidable contract is valid until it
is avoided or specially set aside. In case of a void document a person may rely
on its invalidity as against himself without suing for its cancellation and a suit
by him for declaring it invalid is not a suit for a declaration with consequential
relief.
Conditions to be fulfilled in a suit under section 39
Following conditions should be fulfilled for cancellation of an instrument:

(i) written instrument in question must be either void or voidable as against

the plaintiff

(ii) plaintiff must have reasonable apprehension of serious injury from the
instrument being left outstanding; and

(iii) in view of all the circumstances of the case, the Court should consider it
reasonable and

proper to administer the protective and preventive justice asked for.

Who May sue for cancellation of instruments

Section 31 does not give a right to sue all persons for cancellation except the
person against whom a written instrument if void or voidable is made and if
such person has reasonable apprehension that such instrument if left
outstanding may cause him serious injury. Where a stranger to an instrument
seeks to have it adjudged void, he has to show that it casts a cloud upon his
title.

Difference between rescission of contract and

cancellation of instrument
1. Rescission of contract is said on section 35 and 36 on the other hand
cancellation of instrument is said on section 39.
2. Section of 35 provides for the case of rescission of voidable contract but
section 39 covers a wider field and applies not only to a case of an
instrument which is voidable but also one that is void. Under the
provision of section 39 any person not even a party to an agreement can
sue for cancellation of a document provided that it is voidable against
him and it maybe injurious to him if left outstandings. But a person
cannot come under section 39 if he has no interest in the subject matter
of the instrument.
3. Moreover section 35 and 36 has been mentioned about the rescission of
contract only but section 39 covers not only contract but also will
settlement or any other instrument.