CHAPTER 1

INTRODUCTION
1.1 INTRODUCTION
The term Receiver has not been defined in the Code of Civil Procedure. According to
Kerr, he is an impartial person appointed by the court to collect and receive, pending the
proceeding, the rents, issues and profit of land or personal estate, which it does not seem
reasonable to the court that either party should collect or receive, or for enabling the same to
be distributed among the persons entitled.
A person appointed by a court possessing chancery jurisdiction to receive the rents and
profits of land, or the profits or produce of other property in dispute. The power of appointing
a receiver is a discretionary power exercised by the court. the appointment is provisional, for
the more speedy getting in of the estate in dispute, and scouring it for the benefit of such
person as may be entitled to it, and does not affect the right. It is not within the compass of
this work to state in what cases a receiver will be appointed. The receiver is an officer of the
court, and as such, responsible for good faith and reasonable diligence. When the property is
lost or injured by any negligence or dishonest execution of the trust, he is liable in damages;
but he is not, as of course, responsible because there has been an embezzlement or theft. He is
bound to such ordinary diligence, as belongs to a prudent and honest discharge of his duties,
and such as is required of all persons who receive compensation for their services.

1.1 RESEARCH METHODOLOGY:
In making this project report the doctrinal method of research has been used.
1.2 FOCUS AREA:
This project report focuses on Duties and Powers of Receiver.
1.3 SCOPE OF THE STUDY:
In this project report provisions related to Appointment of Receiver under Order XL of Civil
Procedure Code, 1908 has been explained.

CHAPTER-2
CONCEPTUAL ANALYSIS
2.1 APPOINTMENT OF RECEIVERS:
Where it- appears to the court to be just and convenient, the court may, by order, appoint a
receiver of any property whether before or after decree; remove any person from the
possession or custody of the property; and commit the same to the possession, custody or
management of the receiver (Order XL, Rule 1).
The appointment of a receiver is in the discretion of the court. That discretion has to be
exercised not arbitrarily but cautiously, judicially and according to legal principles after a
consideration of the circumstances of the case. The main object and purpose of his
appointment is the preservation of the subject-matter of the litigation pending a judicial
determination of the rights of the parties thereto.
He is appointed for the protection of rights of the parties or for the prevention of injury. The
court should not appoint a receiver of property in the possession of the defendant claiming
the same by legal title, unless the plaintiff can show prima facie that he has a strong case and
a good title to the property. He must have an interest in the property to be affected by the
order.
The person who holds possession under agreement in expected to act pending suit as
Receiver on behalf of the court and his possession cannot be disturbed and no application of
other party for appointment of Receiver can be entertained.
In the matter of appointment of receiver of the property in dispute before it, the court has
wide discretion. But it will not appoint a receiver unless from the materials brought to its
notice it is satisfied that it is just and convenient to do so.
1

Different considerations will arise in different cases; but in a case of disputed title where the
plaintiff seeks recovery of possession, the court will appoint a receiver if it is satisfied on two
matters: (1) that the title which the plaintiff has set up is prima facie good; and (2) that the

1
Bokaro v. State of Bihar, AIR 1996 Pat 154.
property is in danger of being so dealt with as to get irretrievably out of the reach of the
plaintiff who is prima facie entitled to its possession.
A receiver should be appointed not only where it is necessary for the realization, preservation
or better custody or management of any property, movable or immovable, the subject of a
suit or attachment, but also where it appears to the court to be just and convenient.
But the bona fide possessor of the property should not be disturbed by the appointment of a
receiver unless some substantial ground for such interference has been made out and there is
a well-founded fear that the property will be dissipated unless the court gives its protection.
A receiver should not be appointed merely because no harm would be done by such
appointment. Nor should he be appointed because the relationship between the parties is
strained. He should also not be appointed where no risk of loss is made out.
Satisfaction of court for appointment of receiver is only necessary:
The words of Order XL, Rule 1, make it abundantly clear that the court would be justified in
appointing a receiver where it is satisfied that it would be just and convenient. It cannot,
therefore, be said that it is only in the case where there is an application by the plaintiff for
the relief that a receiver could be appointed.
The words appoint a receiver of any property are also significant. The fact that in a partition
action, the defendant asking for appointment of a receiver only claims the properties, to be
his own separate property and resists the suit of the plaintiff for partition and does not claim
any relief, would not matter so long as the court is convinced that it would be just and
convenient to appoint a receiver for the protection of the interests of the parties. The rule is
intended to safeguard the interest of the parties pending final disposal of the suit.
The suits instituted by Bank and financial institutions for realisation of loans advanced to
borrowers form a class by itself. The amounts advanced by the Nationalist Bank or the
financial institutions are out of the funds deposited by common citizens and the loans are
advanced with a view to generate more employment and creation of additional wealth.
To hold that the Receiver should not be appointed unless it appears that sale proceeds of the
properties secured or other securities are insufficient to satisfy the claim or Receiver should
be appointed only in extreme cases and where the interest of the creditor is exposed to
manifest peril would lead to serious prejudice.
The experience indicates that huge amounts are secured from Banks and financial institutions
and repayment is refused for no valid reason. The institution of the suit and the pendency of
the suit enable the defendants to create more encumbrances on the properties and some of the
encumbrances are like failure to pay income-tax, property taxes, provident fund dues of the
employees, etc.
All these liabilities though subsequent to the date of the institution of the suit have a
preferential claim of recovery and that leaves the Bank without any real relief after obtaining
the judgment.
It is the duty and function of the court entertaining the suits instituted by Banks and financial
institutions to ensure that efforts are made to dispose of the suits as early as possible and even
during the pendency of the suits ensure that not only the properties are protected but the
defendant is made to repay the amount, if desirous of enjoying the benefits secured by
obtaining the loan.
The powers of the Court under Order XL, Rule 1, C.P.C. are to be exercised to advance cause
of justice and what is just and convenient depends upon the nature of the claim and the
surrounding circumstances. The Court should not close eyes to the realities and blindly
follow the principles laid down 50 years before when the suits by Banks and financial
institutions were a novelty.
Limitation of the courts power:
The courts power to appoint a receiver is limited to the case where the proceedings are still
pending before it. It has no power to direct the appointment or the continuance of a receiver
to hold charge of property after the litigation has been determined, and the property has
ceased to be the subject-matter of litigation.




Selection of Receiver:
A party to litigation should not, in the absence of exceptional circumstances, be appointed a
receiver. He should be an impartial person wholly disinterested in the subject-matter of the
suit.
2.2 POWERS OF RECEIVER:
Being a servant of the court, a receiver has only such power and authority as is conferred on
him by the court. His powers are entirely conditioned by the term of his appointment, which
may be varied by the court subsequently.
The court may confer upon him all such powers, mentioned in Order XL, Rule 1 (1) (d), viz.
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 of those powers as the court thinks fit.
Under Order XL, Rule 1, a receiver is an officer or representative of the court and he
functions under its directions. The court may for the purpose of enabling the receiver to take
possession and administer the property by order remove any person from the possession or
custody of the property. Further, when a person is a party to the suit, the court can direct the
receiver to remove him from the possession of the property even if the plaintiff has not a
present right to remove him.
Thus where the appellant was a party to the suit and the court, through the receiver, took
possession of certain mills and thereafter the receiver, during the course of the administration
of the property under compromise arrangement for running the mills, leased out one of the
mills to the appellant with an express condition that the appellant should re-deliver the
property to the receiver on the expiry of the lease and the term of the lease had expired, it was
held that the court was legally competent to confer a power on the receiver under Order XL,
Rule 1 (1) (d) to recover the property from the appellant.
It was further held that this was a simple case of a court in the course of its administration of
the estate through the agency of a receiver making a suitable provision for the running of the
mills. As the agreed term had expired, the court could certainly direct the appellant to put the
mill in the possession of the receiver and no question of deciding the conflicting claims of a
lessee and a third party arose in the case.
On appointment of receiver the property is not vested in receiver or in court free from
encumbrances even pendente lite. The court becomes custodia legis of the suit properties and
de jure possession of court is exercised through the receiver. Rights and obligations of third
parties in respect of properties remain unaffected. Court or receiver cannot interfere with the
rights of third parties. Court and its officer, the receiver, has no higher right than the right a
party to the suit has.
Where receiver is appointed to property in which tenants are protected by Rent Act, the
complaints of receiver against tenants cannot be decided in summary which might expose
tenant to eviction. Court cannot pass orders affecting the rights of such tenants, but illegal
and unauthorised activity of tenant not consistent with rights of tenancy can be prevented by
the court.
When a receiver is appointed under Order XL, Rule 1 the property is in custodia legis. The
receiver is an officer or representative of the Court. His possession is possession of the Court
through receiver and when he is appointed to receive rent and profits of immovable property,
the tenant becomes virtually the tenant of the court and the Court becomes his landlord.
Therefore, the receiver is competent to bring a suit for ejectment against the tenant on the
authority of the Courts permission.
In order to justify the appointment of a receiver, the plaintiff must establish a reasonable
possibility that he will ultimately succeed in obtaining that relief claimed in the suit. The
requirement thus is that he must establish a good prima facie case. It may further be
remembered that the appointment of a receiver is, as a general rule, discretionary, and not a
matter of right.
A court will make an appointment of a receiver with great caution and circumspection. In a
case where the remedy of the appointment of a receiver seems necessary to prevent fraud, to
protect and preserve the property against an imminent danger of loss or diminution in value,
destruction, squandering, wastage or removal from jurisdiction, court may appoint a receiver.
A court in exercise of its discretion to appoint or refuse to appoint a receiver must take into
account all the circumstances and facts of the case, the presence of conditions and grounds
justifying the relief, ends of justice, the rights of all the parties interested in the subject-matter
and the adequacy of other remedies.
It may be said in general way that a receiver has no powers except such as are conferred upon
him by the order by which he is appointed. Under Order XL, Rule 1 the court may grant to
the receiver such powers as to bringing and defending suits and for the realization,
management, protection, preservation and improvement of the property, the collection of
rents and profits thereof, the application and disposal of such rents, and the execution of
instruments in writing, etc. as the owner himself has or such of those powers as the court
thinks fit.
It is open to a court not to confer all these powers stated in Order XL, Rule 1. It may confer
upon him only such powers as may be necessary to preserve the property pending litigation
so that it may not be damaged or dissipated.
There is no such law that the issue of a temporary injunction affects the rights of the plaintiff
to get the receiver appointed. A receiver can be appointed even after the issue of injunction if
exigencies of the situation require it and the court feels that it would be just and convenient to
make an order in that respect.
2.3 DUTIES OF RECEIVER:
The duties of a receiver are enumerated in Rule 3 of Order XL. That rule provides
Every receiver so appointed shall
(i) Furnish such security (if any) as the court thinks fit, duly to account for what he shall
receive in respect of the property;
(ii) Submit his accounts at such periods and in such form as the court directs;
(iii) Pay the amount due from him as the court directs; and
(iv) Be responsible for any loss occasioned to the property by his wilful default or gross
negligence.
He is expected to keep his accounts and vouchers ready for examination at any time.
It is not always necessary that a receiver should take immediate possession of the estate but
his general duty is not discharged by not taking possession of the subject-matter of the
dispute for a long time after his appointment and by not doing all acts of ownership, despite
the courts directions.
The mere fact that an application for setting aside the appointment of the receiver is made by
a party to the dispute is no ground for his not taking steps for recovery of the properties. Even
when a party is asserting his title and exclusive interest without bringing an action in law and
without having obtained the leave of the court, he will be enjoined to make over possession
of the movables regardless however clear his right may be.
It is not open to any party to question by disobedience the orders of the court or the
appointment of the receiver. While the orders exist, they must be obeyed and it ought, on all
occasions, to be inflexibly maintained. If a party is prejudiced by the appointment, he can
only apply to the court for setting it aside.
As such the receiver cannot say for his failure to take possession, that the parties are claiming
exclusive interest in some of the properties. The fact of partys possession does not give him
the privilege to interfere with the receiver.
The first duty of the receiver is to collect the assets. If a party in possession refuses to deliver
it, the receiver may proceed against him or can act according to the direction of the court.
The purpose of receivership is to preserve the fund of the estate but not to retain it for his
personal use. Even if such fund is in his hand for a short period, its proper investment is
essential. The receiver will, therefore, be personally liable for every loss resulting from his
acting without or beyond his appointment.
The receiver cannot be allowed to make profits out of the property he handles. The fund is
always regarded as fund in custody of the Court and as such it is always his duty to let the
Court know its actual condition.
Though the receiver has discretion, it is not the limit of the expenditure and he is amenable to
the Courts judgment as to the necessity of such expenditure. The correctness of expenditure
must appear from something more than the statement made by him in his report.
The receivers duty is not finished and is not limited only to collection of amounts actually
made. He is responsible both for sums actually received and for those which might have been
received by him but for his willful neglect and default. For this, he will be surcharged on his
accounts.
When it is found that the receiver has made a loss to the estate by breach of his duty, he has
to make good such loss. But such loss must be traced to his neglect. It cannot also be said that
it is not his duty to find out the liabilities of the estate and this should be avoided unless the
law compels that conclusion.
It is essential that he is absolutely free from any influence of the parties and nothing should
be done which might lend a colour or to any suggestion that he is concerned with the interest
of any particular party or with any matter other than the preservation and protection of the
property as a whole. He should maintain the rule that the guidance is to be sought only from
the Court and not from any party.
The receiver does not enjoy a wider measure of protection than is given to other accounting
persons in a fiduciary position.
Liability of Receiver:
A receiver is personally liable for breach of contracts for which sanction of the court has not
been obtained.
Application for summoning before court receiver for serious allegations against him cannot
be dismissed without examining the merits of allegations against him.

Enforcement of Receivers Duties:
When a receiver fails to submit his accounts at such periods and in such form as the court
directs, or fails to pay the amount due from him, as the court directs, or occasions loss to the
property by his wilful default or gross negligence, the court may direct his property to be
attached and may sell such property, and may apply the proceeds to make good any amount
found to be due from him or any loss occasioned by him, and shall pay the balance (if any) to
the receiver. (Order XL, Rule 4).
Position of Receiver:
A receiver is a servant of the court and not the legal representative or assignee of the parties
to the suit. He is a public officer appointed for the benefit of all concerned. He is the
representative and also an officer of the court subject to its orders. His possession is the
possession of the court by its receiver.
He does not represent the estate, but is merely an officer of the court and, as such, cannot sue
and be sued for acts done in his official capacity by a third party except with the leave of the
court appointing him. A receiver appointed by the court cannot be sued without notice under
S. 80 of the Civil Procedure Code. Property in the hands of a receiver cannot be attached
without the leave of the Court first obtained.
When a receiver is appointed in execution under S. 51, he has all the powers under Order XL,
Rule 1, that is, power of a receiver appointed in ordinary suits and proceedings other than
execution proceedings.
The negative effect of the receiver appointed in execution proceedings is that the judgment-
debtor is prevented from collecting amounts due from the garnishee. Any payment made by
the garnishee to the judgment-debtor would not operate as a discharge but the garnishee
would still continue to be liable to pay to the receiver.
Where a decree-holder is appointed as a receiver he collects the debts not as his own money.
He cannot appropriate or adjust it towards the amounts due from the judgment-debtor. He
does not either step into the shoes of the judgment-debtor or act as a representative of the
decree-holder. He acts merely as the officer of the court. The fruits of the litigation realised
by the receiver are therefore subject to the control and supervision by the Court.
The receiver acts as an officer of the court for the purpose of getting the fruits of the litigation
into the custody of the Court, i.e., custodia legis.
It is sufficient to extract the following observations from Venkata Mallayya v. T. Ramaswami
and Co.
2
, to emphasise that the receiver, when once appointed, must take all the necessary
steps to safeguard the interest of the judgment-debtor to file a suit to recover the entire
amount due and that too before it gets barred by limitation.
On the whole, we are disposed to take the view that, although a receiver is not the assignee
or beneficial owner of the property entrusted to his care, it is an incomplete and inaccurate
statement of his relation to the property to say that he is merely its custodian. When a Court
has taken property into its own charge and custody for the purpose of administration in
accordance with the ultimate right of the parties to the litigation it is in custodia legis.
The title of the property for the time being, and for the purpose of the administration, may,
in a sense, be said to be in the Court. The receiver is appointed for the benefit of all
concerned; he is the representative of the Court, and of all parties interested in the litigation,
wherein he is appointed. He is the right arm of the Court in exercising the jurisdiction
invoked in such cases for administering the property; the Court can only administer through a
receiver. For this reason, all suits to collect or obtain possession of the property must be
prosecuted by the receiver, and the proceeds received and controlled by him alone. If the suit
has to be nominally prosecuted in the name of true owners of the property, it is an
inconvenient as well as useless form of inconvenience, because in many cases the title of
owners may be the subject-matter of the litigation in which the receiver has been appointed,
unless because the true owners have no discretion as to the institution of the suit, no control
over its management, and no right to the possession of the proceeds.
The receiver is an officer of the Court. He is not the owner of the property which he takes
into his possession. When the dividend or the money has been realised by the receiver in
execution of a decree on shares owned by the judgment-debtor, the receiver is holding the
same for payment of his judgment-debts in the suit in which he was appointed; but till
payment out of it has been made by him, the dividend realised by him does not cease to be
the property of the judgment-debtor. The money is held by the receiver for payment of the
judgment-debts of the judgment-debtors, so the money is held for his benefit.
Proceedings instituted against a receiver without the permission of the court constitute
contempt of the court.

2
1964 AIR 818.
A receiver is not an agent of the party for and on whose behalf he is appointed by the court.
He is an officer of the court.
His Remuneration:
A receivers remuneration is determined by the court. (Order XL, Rule 2). It represents the
price of the work done by him, and must bear some relation to the labour involved and time
spent in the execution of the work entrusted to him. Any agreement between the receiver and
a party regarding his remuneration is gross contempt of court and void.
2.4 DURATION OF APPOINTMENT AND DISCHARGE OF A
RECEIVER:
In Halsburys Laws of England
3
, under the heading Duration of appointment by court, the
following statement occurs:
When a receiver is appointed for a limited time as in the case of interim orders, his office
determines on the expiration of that time without any further order of the court, and if the
appointment is until judgment or further order it is brought to an end by the judgment in the
action.
The judgment may provide for the continuance of the receiver, but this is regarded as a new
appointment. If a further order of the court, though silent as to the receivership, is
inconsistent with a continuance of the receiver, it may operate as a discharge.
When a receiver has been appointed on an interlocutory application without any limit of
time, it is necessary to provide for the continuance of his appointment in the final judgment.
The silence of the judgment does not operate as discharge of the receiver or determination of
his powers. So also the appointment of a receiver generally by the judgment in an
administration action need not be continued by the order on further consideration.
In Kerr on Receivers, 12th Edn. In Chapter XII under the heading Discharge of a Receiver,
the legal position is explained thus:

3
3rd Edn., Volume 32 (Lord Simonds) at p. 386.
The appointment of a receiver made previously to the judgment in an action will not be
superseded by it unless the receiver is appointed only until judgment or further order.
Neither S. 51 (d) nor Order XL of the Code of Civil Procedure prescribes for the termination
of the office of receivership. Their lordships of the Supreme Court in Hiralal Patni v.
Loonkaran Sethiya
4
, stated the law thus:
(1) If a receiver is appointed in a suit until judgment, the appointment is brought to an end
by the judgment in the action. (2) If a receiver is appointed in a suit, without his tenure being
expressly defined, he will continue to be receiver till he is discharged. (3) But after the final
disposal of the suit as between the parties to the litigation, the receivers functions are
terminated; he would still be answerable to court as its officer till he is finally discharged. (4)
The court has ample power to continue the receiver even after the final decree if exigencies of
the case so require.
Removal of receiver:
The court that appoints a receiver has also power to remove him. The burden of proving
circumstances to justify his dismissal rests upon the party applying for such removal or
dismissal. An application to withdraw the prayer for the appointment of a receiver should not
be granted as a matter of course and the court should consider it on merits.









4
AIR 1962 SC 21.
CHAPTER 3
CONCLUSION
A person appointed by a court possessing chancery jurisdiction to receive the rents and
profits of land, or the profits or produce of other property in dispute. The power of appointing
a receiver is a discretionary power exercised by the court. the appointment is provisional, for
the more speedy getting in of the estate in dispute, and scouring it for the benefit of such
person as may be entitled to it, and does not affect the right. It is not within the compass of
this work to state in what cases a receiver will be appointed. The receiver is an officer of the
court, and as such, responsible for good faith and reasonable diligence. When the property is
lost or injured by any negligence or dishonest execution of the trust, he is liable in damages;
but he is not, as of course, responsible because there has been an embezzlement or theft. He is
bound to such ordinary diligence, as belongs to a prudent and honest discharge of his duties,
and such as is required of all persons who receive compensation for their services.