Rule 1 of Order 40 of the Code of Civil Procedure, 1908 enables all courts to appoint a receiver “where it appears to the court to be just and convenient.”

The words “just and convenient” in Order XL, Rule 1 are derived from the English Judicature Act which greatly enlarged the powers which the court of Chancery formerly exercised and the courts in India have the fullest jurisdiction to appoint as well as to remove a receiver in the exercise of a sound judicial discretion.

See Also: Sm. Mathuria Debya v. Shibdayal Singh Hajari, (1910) 14 CWN 252

It must be exercised on the same principle, that is to say, with a sound discretion, on a view of the whole circumstances of the case, not merely circumstances which might make the appointment expedient for the protection of the property, but all the circumstances connected with the right which is asserted and is to be established.

See Also: Sidheswari Davi v. Abhoyeswari Dabi, ILR (1888) 15 Cal 818

The term “receiver” has not been defined in the Code. Stated simply receiver is a person who receives money of another and renders account.

In Halsbury’s Laws of England, (4th Edn), Vol.39, para 801, p. 403, it is stated,

“A receiver is a person appointed for the collection or protection of property.”

According to Kerr on Receiver (2001), he is

“an impartial person appointed by the court to collect and receive, pending the proceedings, the rents, issues and profits 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”.

The primary object of appointment of receiver is to preserve, protect and manage the property during the pendency of the litigation and determination of the rights of the parties by a competent court. A receiver is an extended arm and hand of the court, who has been appointed for the benefit of all concerned.

He is the representatives of the court. His appointment is in the interest of justice, where the court feels that it is not proper or reasonable that either party should hold the property pendente lite. He is the representative of the court and holds the property as custodia legis subject to orders and directions of the court.

See Also: S. Saleema Bi v. S. Pyari Begum, (2000) 9 SCC 560

In Parmanand Patel v. Sudha A. Chowgule, reported at (2009) 11 SCC 127: AIR 2009 SC 1593, the Apex Court ruled that a receiver can only be appointed when it is found to be just and convenient to do so. Appointment of a receiver pendente lite is a matter in the discretion of the court. The plaintiff must show not only prima facie case in his favour but also emergency, danger or loss demanding immediate action. Danger to property and conduct of parties are important considerations.

In several cases, the Supreme Court has held that a receiver can only be appointed when it is found to be “just and convenient” to do so. It has been described as the “most basic principle” governing the discretion of the court in appointing a receiver.

See Also: Firm Ashok Traders v. Gurumukh Das Saluja, (2004) 3 SCC 155: AIR 2004 SC 1433

It has, therefore, been said,

“A court may appoint a receiver not as a matter of course but as a matter of prudence having regard to the justice for the situation.”

See Also: Industrial Credit & Investment Corpn. Of India Ltd. v. Karnataka Ball Bearings Corpn. Ltd., (1999) 7 SCC 488 : AIR 1999 SC 3438

The words “just and convenient” mean that it is practicable and in the interest of justice to appoint a receiver.

See Also: Edwards & Co. v. Picard, (1909) 2 KB 903 (CA)

The term “just” indicates that the action of appointment of receiver is in consonance with justice, equity and good conscience while the word “convenient” means that it is practicable, expedient and desirable on the facts and in the circumstances of the case.

See Also : Aslatt v. Corpn. Of Southamption, (1880) 16 Ch D 143

The remedy of appointment of receiver is discretionary and equitable and must be exercised in the interest of justice. No receiver can be appointed by the court simply because the court thinks it to be so, or such appointment would not cause harm or injury to the other side.

There are certain settled principles which have to be satisfied before a receiver is appointed. The applicant has to show strong prima facie case in his favour. He must also show that the property in dispute is in danger of being wasted or damaged and such appointment is intended to safeguard rights of the parties and is in the larger interests of justice.

See Also: Bhupendra Nath Mookherjee v. Monoher Mukherjee, AIR 1924 Cal 456

A receiver can be appointed in respect of “any property”. Such property need not be the subject-matter of the suit nor the property need be situated within the territorial jurisdiction of the court. Only thing is that the court must find it “just and convenient” to appoint a receiver in respect of such property.

See Also: Madhu Lal v. Ramji das Chironji Lal, AIR 1953 MB 85

The exercise of the jurisdiction to appoint a receiver or issue an injunction is not a matter ex debito justice but one which is purely within the discretion of the Court. The discretion should be governed by a view of the whole circumstances of the case and not merely by the consideration that it is lawful to do so. A receiver should not be appointed in supersession of a bona fide possessor of property in controversy unless there is some substantial ground for interference.

See Also: Mathuria Debya v. Shibdayal Singh Hajari (1904)14 CWN 252

The words just and convenient in Or. XL, r.1 of the Civil Procedure Code, 1908 mean that the court should appoint a receiver for the protection of property or the prevention of injury, according to legal principle and not that the court can make such appointment because it thinks convenient to do so.

See Also: Habibillah v. Abtia Kallah, (1915) 23 CLJ 567

Kerr on Injunction states:-

“A receiver will not be appointed at the instance of a subsequent mortgagee if a prior mortgagee is in possession, unless the applicant will pay off the prior mortgagee’s demand. If the prior mortgagee be not in possession, a subsequent mortgagee may obtain the appointment of a receiver, without prejudice to the right of the prior mortgagee to apply for possession.

See Also: Berney v. Sewell, 1 J &W 647

A mortgagee by deposit of deeds may obtain an injunction, or the appointment of a receiver, for the protection of his security. So also may a person who is possessed of an equitable lien.”

{The above quoted paragraphs extracted from a recent judgment of Calcutta High Court in Sesa International Vs. Avani Projects & Infrastructure authored by Justice Soumen Sen}

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