We all are acquainted that there are certain orders which are given by the court before pronouncement of the judgement. These orders are called interim orders. According to Concise Oxford English Dictionary, interim means for the time being or in the meantime or provisional and therefore interim orders mean those orders which are passed by the court during the pendency of a suit or proceeding. It is to be kept in mind that such orders do not determine finally the substantive rights and liabilities of the parties in respect of the subject-matter of the suit or proceeding. These orders can be in form of payment in courts, security for costs, commissions, and arrest before judgement, attachment before judgement, temporary injunctions, interlocutory orders and appointment of receiver.
Dealing with the appointment of receiver particularly, as such the term is not defined in the Code. Order 40 deals with the provisions in regard to appointment of receiver. In simple words, it can be said that a receiver is a person who receives money of another and renders account[1]. Before defining a receiver is equally imminent to point out that a receiver is an officer. It has been observed that a receiver is one who is an independent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation pedente lite, when it does not seem reasonable to the court that either party should hold it.[2] Basically the intent of the legislature behind the introduction of this provision is to protect, preserve and manage the property during the pendency of the litigation. The purpose, as it was observed in P. Lakshmi Reddy v. L. Lakshmi Reddy[3], is to preserve the suit property and safeguard interests of both the parties to the suit.
Basically the provisions as to appointment of receiver were opted from the Chancery Courts in England. It is a discretionary power of the court to appoint a receiver or not but it has been also held that it is a sound and judicial discretion and must be exercised cautiously, judicially and after taking into account all the circumstances of the case for the purpose of serving the ends of justice and protecting the rights of all the parties interested in the controversy.[4] But all in all wherever the court considers it convenient to appoint a receiver, the court shall appoint a receiver in such a requirement. Though a court can suo moto can appoint a receiver but generally an application is to be made by a plaintiff. It is through an application made by plaintiff based on the property which is constituted in a suit that can be made for the appointment of a receiver. Such an application requires no notice to the opposite party since the very object of the appointment of receiver may be defeated if notice to opposite party is insisted upon.
In fact, a third party may also make an application for appointment of a receiver provided if such person is interested in realization, management, protection, preservation or improvement of property. And henceforth such receiver is appointed by the court as the court may deem fit. In case of a suit, receiver can be appointed by the trial court. When an appeal is preferred against the decree passed by the trial court, it is the appellate court that has the power to appoint the receiver.
Now the question arises that who can be appointed as a receiver and what are his powers, duties and liabilities. Instead who considering who may be appointed as one, there is a general rule that who must not be appointed as a receiver? A party to the suit should not be appointed but this rule is not hard and fast as in exceptional circumstances and special situations even a party was held to be appointed as a receiver.[5] Such receivership is not bound by any duration. In case, if a receiver is appointed for a limited time then it shall come to an end on the date of expiration. Otherwise, if such is appointed till the date of judgement or decree, then it must come to an end accordingly.
The powers given to receiver though not very vast but all considered very important. These involve around institution and defending of suits. Receiver’s main power is to realize, manage, protect, preserve and improve the said property. Other powers involve collection, application and disposal of rents and profits. Execution of documents and other extra powers which the court may deem fit can also be conferred upon a receiver. At the same time a receiver has to furnish such security, as the court deems fit, duly to account for what he shall receive in respect of such property. It is also his duty to submit those accounts in the prescribed form by the court. Not just collection but also the payment of accounts which is due to him, ins such capacity of a receiver is his bound duty. Most importantly, a receiver is bound to discharge all his duties personally and cannot delegate it to any other person.
Along with powers, comes responsibilities and non compliance thereto comes liabilities. Any such negligence, non compliance or wilful default on part of receiver with regard to the said powers and duties, the court may direct his property to be attached and even sold off. The court has also inherent power to remove the receiver which is appointed by it if he does not comply with the orders of the court.
As a concluding remark, it can be observed that appointment of a receiver is a protective relief and it is considered one of the harshest remedy, in fact, an interlocutory order for the enforcement of rights of the parties to the suit thereto, which shall not be lightly resorted to an henceforth, shall only be granted for the prevention of a manifest wrong or injury.
[1] Concise Oxford Dictionary(2002)
[2] Maharaj Jagat Singh v. Lt.Col. Sawai Bhawani Singh AIR 1993 SC 1721
[3] AIR 1957 SC 314
[4] T. Krishnaswamy Chetty v. C. Thangavelu Chetty AIR 1955 Mad 430
[5] Kasturi Bai v. Anguri Chaudhary (2001) 3 SCC 176
