Appointment of Receivers

Note on the Order number

The syllabus prints this topic as "Appointment of Receivers (Order XV)". Order XV of the Code is headed Disposal of the Suit at the First Hearing and has nothing to do with receivers. The provisions on receivers are Order XL.

That is worth knowing for two reasons. If you look up Order XV you will find the wrong thing. And an examiner asking about receivers is asking about Order XL, whatever the syllabus prints, because that is where the law is.

In one line

A receiver is a person appointed by the court to take charge of property during a dispute, so that the property is preserved and its income collected while the parties fight about who owns it.

He is an officer of the court, not the agent of either party. That single fact explains all his duties.

Why the Code allows it

Litigation about property takes years, and someone must hold it meanwhile. Ordinarily that is whoever is already in possession, which is usually the defendant. But that is not always safe: he may have no interest in preserving what he expects to lose, he may pocket the rents, or the property may be a business that needs running rather than merely holding.

An injunction can stop a party doing something. It cannot make anyone collect rent, repair a building or run a factory. That is what a receiver is for, and it is why he is the most intrusive of the interim remedies: he does not restrain the parties, he displaces them.

The Code accordingly makes it a matter of the court's judgment rather than a party's right, and hedges it with security, accounts and personal liability.

The power: Rule 1

Rule 1(1): where it appears to the Court to be just and convenient, the Court may by order:

(a) appoint 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 (d) confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, 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

Three things to take from Rule 1(1).

The test is "just and convenient". The Code lays down no list of grounds. That is deliberate, and it means an answer should state the test in those words and then say what courts look for in practice: a strong prima facie case, a real danger to the property or its income, and the absence of any less drastic remedy that would do.