CPC, 1908: Appointment of Receiver

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INTRODUCTION

A receiver plays an important role in helping the court in civil cases. The Receiver is known to be a court officer who supports the court before the court determines the case, to protect and maintain the subject matter of the suit. The court sometimes assumes that it is in the best interest of all parties to nominate a recipient to be responsible for the management of the subject. Movable or immovable property is usually the subject matter.

Just as a wise man takes care of his own personal property, the receiver is responsible for taking care of another’s property. He should obey the court’s instructions and failure to do so will make the court attach his property to recover the sum that is due to him.

WHO IS A RECEIVER?

The Receiver is an independent and impartial person under order 40 of the Civil Procedure Code, 1908 who is appointed by the court to administer, that is, to safeguard and maintain the disputed property involved in a lawsuit. He is not a representative of either of the parties to the action and is uniformly regarded as a court officer working in the interests of neither the plaintiff nor the defendant, but for the common purpose of the court and benefit of all parties involved.

OBJECTIVE OF APPOINTMENT OF RECEIVER

When a party in possession of the disputed property exhausts the property or causes irreparable damage to it, because the subject matter ceases to exist or its value is impacted, the entire object of the suit is defeated. Therefore, if the court considers that the disputed property must not be delegated to either party, pendente lite, the court shall designate a recipient to whom the security and maintenance of that property is entrusted. It is a form of temporary security given by the court to the parties making the request before the court adjudicates the matter.

ROLE OF A RECEIVER

The Receiver is regarded as a court officer and is the court’s extension. He is responsible for receiving disputed property or money provided by the court and managing such property or money until a decree is passed or the parties have compromised, or any other period considered appropriate by the court. Custodia legis, i.e. in the custody of the law, is considered to be the property or fund entrusted to the receiver. The Receiver has no authority other than what is entrusted to him during his appointment by the court.

APPOINTMENT OF RECEIVER

According to the Code of Civil Procedure, if it appears fair and convenient for the court to appoint such a recipient [section 51(d)], the court before whom the proceedings are pending may appoint the recipient. It is within the court’s discretionary authority to appoint the receiver. In a suit, for instance, a receiver can be appointed by the trial court. Whereas the appeal court can appoint a receiver. However, there is no absolute, arbitrary, or unregulated discretion. The phrase “just and convenient” does not mean that the appointment is based on the judge’s whims and fancies on any ground that stands against equity.

WHO CAN APPLY FOR RECEIVER?

the request for the appointment of a receiver is made by a claimant, but defendants may also file such an application. A third party is not authorized to file an application, but if he is involved in protecting and maintaining the land, he can also file an application after having secured the court’s permission.

PROCESS OF APPOINTMENT

Before naming a receiver, the Court must keep the following principles in mind:

  1. A receiver’s appointment is a discretionary power.
  2. To the complainant, it is a defensive relief. The aim is to safeguard and retain the disputed property until the court is awaiting the suit.
  3. Unless the plaintiff shows prima facie that he has a good argument against the defendant and it is more than probable that he will prevail in the action, a receiver should not be named.
  4. One of the most challenging remedies is the appointment of a receiver since it deprives the defendant of his right of ownership before the final decree. The court should not, therefore, appeal to it solely on the ground that it would do no harm. There should be strong concern that if the appointment of a recipient is postponed, there is a risk to the property, or the complainant will be in a worse position.
  5. And where there is a risk of mistake or injury should the court assign a recipient. It is also shown that the subject-matter is not in the hands of either party and that it is in the best interest of all parties to appoint a receiver to secure and retain the properties.
  6. The court should look at the actions of the party making the motion for a receiver’s appointment. The group should come to the court with clean hands and their actions should be such that this equal relief is not disenfranchised.

The process of appointment of receiver is:

The process of appointment of a receiver is provided by the courts in their individual court rules.

  1. Application for appointment shall be created in writing and shall be supported by official document.
  2. Receiver aside from the official receiver has got to provide security.
  3. The security is to lean to the satisfaction of the registrar.
  4. He has got to offer personal bonds with the amount of surety needed by the registrar the non-public bond are going to be double the number of annual rental worth of the property or the full worth of the property that the receiver goes to administer.
  5. Within per week of appointment, the receiver can ought to submit a report providing the main points relating to the property like inventory of property or books of account etc.
  6. The registrar can provide directions on wherever to speculate the cash received by the receiver from the property. Generally, such cash is submitted in scheduled banks or government bonds.

POWERS AND DUTIES OF A RECEIVER:

Powers:

Under order forty rule 1(d) powers of the receiver are provided as following:

  1. Collection of rents and profits arising out of the property.
  2. Application and disposal of such rents and profits.
  3. Execution of documents because the owner himself.
  4. To institute and defend the suit.
  5. Such powers because the court could reckon match.

Duties:

Under order forty rule (3), duties of a receiver area unit provided as follows:

  1. Furnish security to account for what he can receive from the property as financial gain.
  2. Submit accounts (half yearly) for such amount or kind as directed by the court. The account essentially includes the financial gain received and expenses incurred for the protection and preservation of the property.
  3. Pay the quantity thanks to the court.
  4. Take responsibility for any reduction within the price of the property attributable to the receiver’s willful negligence.
  5. Discharge the duties in person and may not delegate or assign any of the rights entrusted to him by the court.

The receiver needs to fulfill all the duties and responsibilities entrusted to him by the court. Otherwise, the court will act against him and create him in person answerable for any loss which could occur thanks to his negligence or willful failure to shield and preserve the property.

CONCLUSION

Thus, the receiver plays a crucial role whenever the court needs the receiver to manage the topic matter during a suit to safeguard and preserve it until the time, the court decrees the suit. The receiver is an official of the courts and therefore the material managed by him is in custody of the law. The court appoints a receiver once the court is of the opinion that neither of the party ought to manage the property until the time the matter is set. somebody will become a receiver provided they fulfil the wants set by the court. Courts have unconditional bound powers and responsibilities on the receiver that he ought to use to manage the property within the best manner potential. The receiver ought to watch out whereas creating a crucial call associated with the topic matter as he is in person chargeable for any harm thereto. He will ask for the permission of the court before creating such selections to be safe.

Author: Mythri Murali

Editor: Kanishka VaishEditor, LexLife India.

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