Appointment of Receiver

Receiver is a person appointed by the court to receive the profits and proceeds of the property or personal estate that is under question in a suit, which does not seem appropriate to the court that either party to the suit should receive or for enabling distribution of such proceeds to the parties entitled.  In other words, receiver is an independent person appointed by the court to receive the proceeds of a property that is in question in relation to a suit during the pendency of that suit and which the court thinks that neither of the party should hold it.

The main objective of appointing receiver is to preserve the rights of both the parties and to protect the property during the pendency of the suit. The receiver is an officer who manages, preserve the property, and has the right to take all actions that are required for the protection of the property during the pendency of the suit. Appointment of receiver is at the discretion of the court.

Order 40 of the Code of Civil Procedure deals with provisions relating to appointment, remuneration, powers, duties, and liabilities of Receiver. There are certain principles that must be considered before appointment of a receiver, that are:

  • Receiver is appointed only when the plaintiff prima facie proves to the court that there is a very high chance that he/she will succeed in the suit.
  • Appointment of receiver is the discretion of the court, and the main object of appointing receiver should be to protect and manage the property in question during the pendency of the suit.
  • Appointment of receiver is the harshest remedy available for enforcement of rights provided by law. So before appointing a reiver the court should carefully conder all the facts and circumstances of the case, as it denies the defendant the possession of property till the final judgment is passed. This remedy is provided by the courts in some cases only.
  • The party applying for appointment of receiver should not have a lethargic behaviour or delayed work, the conduct of that party should be looked by the court before such appointment.

Power given to receiver for management of the property are given under Order 40 that are:

  • The court can confer upon receiver to institute and defend suits.
  • The court can also give receiver the power to manage, protect, improve, and preserve the property.
  • Court can also give receiver the power to collect rent and profits.
  • Any other powers that the receiver thinks fit.

Duties of receiver are specified under Rule 3 of Order 40 which are:

  • Furnish security which the court thinks fit, to account for the amount he/she shall receive from the property.
  • Submit his account for certain periods specified by the court and in forms specified by law.
  • He/she has the duty to pay the amount due from him to the court as the court desires.
  • To be responsible for loss incurred to the property due to his/her own negligence or default.

The remuneration paid to receiver will be fixed by the court by a general order and is the discretion of the court (given under Order 40 Rule 2 of CPC).

The code does not specify the duration for which the receiver is to be appointed it is the discretion of the court to either to appoint the receiver for a specific period or till the final judgement or decree is passed. The appointment will end in the first situation at the expiry of such period and in the second situation after the decree or judgment is passed. But, court has the power to extend the appointment of the receiver even after the judgment is passed if it thinks fit and thinks that it is necessary for this case.

Aishwarya Says:

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