Question: What do you know about Receiver? How they are appointed? State the power, duties and liabilities of a receiver?
The term receiver has not been defined in the Code of Civil Procedure 1908. Receiver is an important person appointed by Court to collect, receive pending the proceedings, the rents, issue and profit of land or personal estate, which it dose not seem reasonable to the Court that either party should collect or receive, or for enabling the same to be disbursed among the person entitled.
In other words, the receiver is an indifferent person between the parties to a case, appointed by the Court to receiver and preserve the property or fund in litigation pendent elite, when it dose seem reasonable to the Court that either party should hold.
So, receiver is an officer of the Court to whom is given possession or custody and management of property. He has no power except those which has been conferred of him expressly or impliedly by the Court. The property dose not vests in the receiver; the receiver is not the representative or agent of the parties. His holding of property is holding of the Court. He is also a public officer within the meaning of clause 17 of section 2 of the Code of Civil Procedure (C.P.C).
Appointment of Receiver
Relief by way of appointment of a receiver is discretionary with the Court. According to section 44 of the Specific Relief Act 1877, “The appointment of a receiver pending a suit is a matter resting in the discretion of the Court.
The mode and effect of his appointment, and his rights, powers, duties and liabilities are regulated by the Code of Civil Procedure.”
In a suit for a declaration and permanent injunction, a civil court is competent to appoint a receiver. But this power should be used only in exception cases [PLD 1957 Kar. 625, PLR 1957 (2) W.P. 1001]. A receiver can be appointed of any movable or immovable [e.g., Share in companies, lands, stock in trade etc.].
The Court is competent to appoint a receiver for a disputed property only when the conditions laid down in Order XL Rule-1 of the Code is fulfilled. According to Order XL Rule-1 of the Code of Civil Procedure 1908, “Where it appears to the Court to be just and convenient, the Court may by Order-
a) appointment a receiver of any property, whether before or after decree;
b) remove any person from the possession or custody of the property;
c) commit the same to the possession, custody or management of the receiver; and
d) confer upon the receiver all such powers, as to bringing and defending suits and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such those powers as the Court thinks fit.”
The Code of Civil Procedure Order XL Rule-2 deals with the Remuneration of a Receiver. Following discuss
- Receiver remuneration is in the discretion of the Court.
- A party is not to get any remuneration.
- If a person appointed receiver accepts to keep account in a partnership without remuneration he does not thereby forego his right to remuneration for managing the business.
- Any agreement between the receiver and a party regarding in remuneration is a gross contempt and void.
- Remuneration is to be fixed having regard to the nature of the work and the responsibility to be shouldered by the receiver. It may be fixed a fixed sum or on the percentage basis.
The Code of Civil Procedure Order XLRule-3 deals with the Duties of a Receiver
Receiver cannot delegate his duties. Following discuss
- The Court has discretion to appoint receiver without securities, but it should be done in most exception cases.
- Where a receiver is appointed, the property does not west in him free of the encumbrance to which it is already subject.
- Duty to receiver in regard to monies receiver.
- Receiver is not cable to account for any period other than for which he was appointed.
- A purchase of property by a receiver in an executions sale without the special leave of the Court is void.
- A receiver must furnish details of expenditure.
- Appeal: – See (rule 1) ante. An Order refusing to accept security offered by an interim receiver is not appealed.
Enforcement of receiver’s duties
The Code of Civil Procedure Order XL Rule-4 deals with the Enforcement of receiver’s duties. Following discuss
- If the receiver is to be found guilty of gross negligence, it must be first shown by those who so allege that it would have been profitable to the estate if the debtor’s property has been attached.
- Where a receiver is found guilty the only provision for taking action against him, apart from proceeding against the security, is that his property can be attached, and that is the only way of enforcement of the Order and arrest and imprisonment are not the methods.
- The Court can in the course of passing the accounts of the receiver, make an Order to make good the loss caused by the receiver through his willful negligence, no separate suit against him is necessary.
- Receiver may be removed for failure to submit accounts
- A receiver who has once been appointed should be discharged only on the ground of proved incapacity.
- A receiver appointed by consent of the decree-holder can be discharged only for malfeasance or for futility of the administration.
- Appeal: – Rule 4 is appeal able but Order making the receiver liable for a certain sum or to pay a certain amount into Court is not appeal able unless accompanied by an Order of attachment and sale which is the operative part of the rule.
When Collector may be appointed receiver
The Code of Civil Procedure Order XL Rule-5 deals with the When Collector may be appointed receiver. Where the property is land paying revenue to the Government, or land of which the revenue has been assigned or redeemed, and the Court considers that the interests of those concerned will be promoted by the management of the Collector, the Court may, with the consent of the Collector appoint him to be receiver of such property.
Appointment of Receivers is the discretionary power of the Court. It must be made pending a suit and it is only be way of specific Relief. A receiver appointment by the High Court, Who has under its Order taken possession of property, cannot be prosecuted for criminal branch of trust in respect thereof without first obtaining the leave of the Court.