KIRIT P.

MEHTA SCHOOL OF LAW

KIRIT P MEHTA SCHOOL OF LAW

BBA LLB HONS. / 5th SEMESTER

Transfer of Property Acts
TOPIC – Appointment of receiver and his
responsibilities.

SUBMITTED TO –
Prof. Amandeep Singh
SUBMITTED BY –
Aarti Jaiswal
Sap ID- 81022019503

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Table of Contents

Introduction..............................................................................2
Who is a receiver?....................................................................3
Appointment and Power...........................................................4
Powers of a Receiver................................................................5
Responsibilities and Liabilities................................................6
Conclusion...............................................................................6

Introduction
According to the requirements and circumstances of each case, the Indian Civil
Court may issue a variety of interim orders. In accordance with Order 40 of the
Code, one of these powers is the authority to designate a receiver, or an officer
of the court who oversees the subject of the lawsuit while it is pending. He
performs his tasks in a fair, impartial, and autonomous manner, acting as a

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cautious, rational individual would. The Court considers the conduct of the
party making the application when considering a receiver's application, and it
typically declines to get involved unless that party's conduct has been blame-
free. He must appear in court with no prior wrongdoing, and he must not have
waived his right to equitable remedy through inaction, delay, acquiescence, etc.
Only when it is determined that doing so is just and practical must the Court
choose a Receiver. In every circumstance, the receiver serves as a court officer.
The receiver must behave in a fair and impartial manner. Because there are so
many various situations in which a court may appoint a receiver, it is impossible
to describe in detail what they perform. The court may order the management of
a company, the collection of rent, the sale of assets, or simply the preservation
of property while a dispute is being resolved. At any point, the receiver may ask
the court for instructions regarding his or her responsibilities. After considering
these factors, the court will often award the receiver compensation that is
reasonable and proportionate. The receiver may be required to compile and
serve accounts by the court

Who is a receiver?
The word "Receiver" is not defined in the Code of Civil Procedure. However, it
is widely understood to mean "a person appointed by a court because the court
believes neither party should be in possession of the subject property."1
A receiver, according to Kerr, is "an impartial person appointed by the Court to
collect and receive, pending the proceedings, the rents, issues, and profits of real
estate, or of personal property, which it does not seem reasonable to the Court
that another party should collect or receive, or for enabling the same to be
distributed among the persons entitled."
Simply stated, wherever the Court is of the opinion that it would not be
reasonable for either of the parties to hold the estate which is the subject matter
of the suit, then, till it is disposed, the Court may appoint an independent and
impartial third party who will take over such property. He will manage this
property as a reasonable man would and is responsible for the maintenance of
the property.
It is to be noted, that the receiver acts neither on behalf of the plaintiff nor the
defendant but is an officer of the court who acts in general benefit of the
property.
1
Consise Oxford English Dictionary (2002), p 1195.

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In Anthony C. Leo v. Nandlal Balakrishnan2, the Apex Court described a

receiver as an impartial/ neutral person. He is an agent of the Court. The
property in the custody of the deceiver is custodio legis i.e., in the Custody of
law or the court. The receiver has all powers as the real owner of the property,
but he always acts under the supervision of the Court.
Two classes of receivers can be appointed by Courts: -
Two classes of receivers can be appointed by Courts, viz., (a) under the statutes
and (b) under the Civil Procedure Code, the Specific Relief Act and the Original
Side Rules of the High Court. See. Krishnaswamy Chetty’s case (supra).

Appointment and Power

The Court before whom the proceedings are pending, may appoint a receiver of
the property, whether before or after decree, wherever it appears to be just and
convenient.
It may remove any person from the possession or custody of the property; and
commit the same to the possession, custody or management of the receiver.
Thus, the provision confers a discretionary power on the Court to remove any
person and appoint a receiver so as to serve the ends of justice. However, where
no party to the suit has the right to remove a person from the possession or
custody of the property, the Court cannot dispossess such a person.
The Landmark Case of T. Krishnaswany Chetty v. C. Thangavelu Chetty, the
Madras High Court enumerated the five principles that must be kept in mind
before appointing a receiver.
These “panch sadachar” are:
 The appointment of a receiver is a discretionary power of the Court.
However, this discretion is neither arbitrary nor absolute, and must be
exercised taking into account all the circumstances of the case, for
protecting the rights of all parties interested in the controversy and the
subject-matter. It is one of the harshest remedies under law as it deprives
a party of the possession of property even before final judgement is
pronounced, and so, must only resorted to where no other adequate
remedy exists.
2
Anthony C. Leo v. Nandlal Balakrishnan, AIR 1996 SC 1323.

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 A receiver can only be appointed if the plaintiff prima facie proves that
he has an excellent chance of succeeding in the suit.
 The plaintiff must show some emergency or danger or loss demanding
immediate action, and a court must not appoint a receiver merely on the
ground that it will do no harm.
 An order appointing a receiver will not be. made where it has the effect of
depriving a defendant of a ‘de facto’ possession since that might cause
irreparable wrong.
 The party who makes the application must be free from blame and must
not have resorted to laches, delay, acquiescence etc.
An application for the appointment of a receiver is generally made by a
Plaintiff. However, nothing bars a defendant from applying for the appointment
of a receiver if it is just and convenient.
Further, where a third party is interested in the realisation, management,
protection, preservation, or improvement of property, he may also make such
application. There is disagreement on whether or not the Court can appoint a
receiver suo moto.

Powers of a Receiver

Being a representative of the Court, the receiver functions its directions. Order
40 R 1(1)d) enumerates that the Court may confer upon the receiver any or all
of the following powers:
 To institute and defend suits;
 to realize, manage, protect, preserve, and improve property;
 collect, apply, and dispose of rents and profits;
 execute documents;
 such powers as the court thinks fit.
In Krishna Kumar v. Grindlays Bank P.L.C., it was held that the receiver cannot
sue or be sued without the leave of the Court, and if the suit is filed without
such leave, it is liable to be dismissed and its decree set aside. However, grant
of leave in the rule and refusal is generally an exception.
In Prabodh Nath Shah v. SBI, it was held that the list of powers of the receiver
under order 40 is not exhaustive and can be added to from time to time. The
receiver could even get the rent increased.

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In ICICI Bank v. Karnataka Ball Bearing Corporation Ltd., it was held

that under residuary powers, the receiver also has, in extreme cases, the power
to sell any property.

Responsibilities and Liabilities

Under Rule 3, the duties of the Receiver have been mentioned as follows:
 furnishing security accounting for the income that he will receive from
the property;
 submission of accounts as directed by the Court;
 payment of amount due;
 responsibility for any loss to the property that lapped due to his wilful
default or gross negligence.
It must be borne in mind that the, the receiver, being a representative of the
Court must discharge all his rights and duties personally, and cannot delegate or
assign such rights or duties entrusted to him by the Court.
According to Rule 4, where a receiver fails to submit his accounts or pay such
amount in the time and manner as prescribed by the court, or, where, by his
wilful default or gross negligence, there has been a loss to the property, the
Court may have the receiver’s own property attached and sold to recover the
loss caused by him. The balance (if any) shall be paid to the receiver.
The receiver must act diligently, as a reasonably prudent man in the
maintenance of the estate entrusted to him, as if it were his own property. Thus,
he must endeavour to keep down expenses.
Further, in K.T. Thomas v. Indian Bank, the receiver is responsible not only for
sums actually received but also for all sums he might have received but for his
own default or negligence.

Conclusion
A receiver, therefore, is an important part of the Court machinery that functions
to safeguard the interests of the parties to the suit, by managing a
property pendente lite. He is supposed to be impartial, neutral, and must act as a
reasonably prudent man would with respect to his own property.
As was held by the Hon’ble Supreme Court in Parmanand Patel (Dead) by LR.
and another Vs. Sudha A. Chowgule and others, 2009 (5) SCJ 550 (D.B.), Court
has to appoint a Receiver only when it is found that such an appointment is just

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and convenient to do so. It is well-settled law that a Receiver cannot be

appointed in respect of agricultural lands especially in a dispute between family
members. (Ref. Bollareddy Brahmananda Reddy and another v. Bollareddy
Seethayamma @ Seethamma, 2006 (6) ALT 207). , But, in Chundru Srinivasa
Rao Vs. Chundru Venkata Rao, 1992 (2) ALT 733, it was observed that
appointment of receiver in partition suit-Not barred in all types of cases-Suit
filed by sons against father for partition alleging that their father is no providing
anything to them for their livelihood-In such circumstances of the case, normal
rule that no receiver can be appointed in cases of partition may be deviated. 

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