1. Suit for partition and separate possession of suit properties — Appointment of receiver under Order XL Rule 1 CPC. (Para 3 , 4 , 5 , 6 )
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2001 Supreme(SC) 373
SUPREME COURT OF INDIA
D.P.Mohapatra : S.N.Variava
Kasturi Bai And Another
Versus
Anguri Chaudhary
Case No. : 1466 of 2001
Date of Decision : 2/23/01
Advocates Appeared: Gaurav Jain : Abha Jain : B.S.Banthia
Important Points
The court affirmed the appointment of a receiver under Order XL Rule 1 CPC for properties with tenants to prevent misappropriation of rents and mismanagement, provided the remuneration of the receiver is reasonable and proportionate to the actual rental income of the suit property.
Subject
Civil Law - Civil Procedure
Act Referred
Headnote
(A) Code of Civil Procedure, 1908 - Order XL Rule 1 - Appointment of a Receiver - Suit for partition and separate possession - Trial court rejected the application for appointment of a receiver; High Court reversed this and ordered appointment of a receiver to manage suit properties containing tenants - It is appropriate to appoint a third party as receiver when one party is an elderly lady unable to manage properties and the opposing parties are accused of misappropriating rents and inducting new tenants without authorization (Para 8).
(B) Remuneration of Receiver - High Court ordered monthly remuneration of Rs. 10,000/- - Where the actual rental income of the suit property is significantly lower than initially presumed, the remuneration of the receiver should be reduced accordingly to be reasonable and proportionate to the income (Paras 9, 10, 11).
Facts of the case:
A suit for partition and separate possession of structures occupied by tenants was filed. The plaintiff alleged that the defendants were misappropriating rent and inducting new tenants while taking advantage of the plaintiff's elderly mother. The trial court initially dismissed the application for the appointment of a receiver, but the High Court ordered such appointment. The defendants challenged this order in appeal, questioning the necessity of a receiver and the amount of remuneration fixed.
Findings of Court:
The appointment of a receiver is justified because the elderly widow of the original owner cannot manage the rent collection and maintenance, and the defendants are not trusted to perform these tasks given the allegations. The order of appointment is upheld, but the receiver's remuneration is reduced from Rs. 10,000/- to Rs. 1,000/- per month.
Issues: Whether the High Court was justified in ordering the appointment of a receiver under Order XL Rule 1 of the CPC and whether the fixed remuneration for the receiver was appropriate given the actual rental income.
Ratio Decidendi: A receiver may be appointed when the property is at risk of mismanagement or when the parties are unable or effectively entrust the property's management to one another. The remuneration of such a receiver must be reasonable and proportionate to the the income generated by the property.
Result: Appeal disposed of with modified remuneration for the receiver.
(B) Remuneration of Receiver - High Court ordered monthly remuneration of Rs. 10,000/- - Where the actual rental income of the suit property is significantly lower than initially presumed, the remuneration of the receiver should be reduced accordingly to be reasonable and proportionate to the income (Paras 9, 10, 11).
Facts of the case:
A suit for partition and separate possession of structures occupied by tenants was filed. The plaintiff alleged that the defendants were misappropriating rent and inducting new tenants while taking advantage of the plaintiff's elderly mother. The trial court initially dismissed the application for the appointment of a receiver, but the High Court ordered such appointment. The defendants challenged this order in appeal, questioning the necessity of a receiver and the amount of remuneration fixed.
Findings of Court:
The appointment of a receiver is justified because the elderly widow of the original owner cannot manage the rent collection and maintenance, and the defendants are not trusted to perform these tasks given the allegations. The order of appointment is upheld, but the receiver's remuneration is reduced from Rs. 10,000/- to Rs. 1,000/- per month.
Issues: Whether the High Court was justified in ordering the appointment of a receiver under Order XL Rule 1 of the CPC and whether the fixed remuneration for the receiver was appropriate given the actual rental income.
Ratio Decidendi: A receiver may be appointed when the property is at risk of mismanagement or when the parties are unable or effectively entrust the property's management to one another. The remuneration of such a receiver must be reasonable and proportionate to the the income generated by the property.
Result: Appeal disposed of with modified remuneration for the receiver.
Legal Category Hierarchy
Table of Contents
2. Plaintiff sought receiver due to alleged misappropriation of rent; defendants opposed, claiming long possession and no damage. (Para 4 , 5 )
3. Widow unable to manage properties; allegations against defendants justified appointment of third party as receiver. (Para 8 )
4. Receiver may be appointed to collect rent and maintain accounts when tenants occupy property and parties cannot manage. (Para 8 )
5. Appeal disposed of; receiver appointment confirmed, remuneration modified from monthly specified amount to lower amount. (Para 11 )
6. What is the standard for appointing a receiver in a partition suit involving tenanted properties?
The court may appoint a receiver to collect rent and maintain accounts when the widow is old and the other parties face allegations of misappropriation. (Para 4 , 8 )
7. Can the High Court direct the trial court to appoint a receiver suo motu?
Yes, the appellate court can reverse the trial court's rejection of a receiver application and direct appointment with directions. (Para 2 , 6 )
8. Is the court required to fix receiver remuneration based on actual collections or exaggerated claims?
The court should fix remuneration based on actual collections, not exaggerated estimates; here, the Supreme Court reduced it from a higher amount to a lower amount. (Para 9 , 10 , 11 )
1. Leave granted.
2. The defendant in the civil suit No. 2-A of 1993 of the Court of Additional District Judge, Shahdol, has filed this appeal assailing the order passed by the Madhya Pradesh High Court on 20th June, 2000 in miscellaneous appeal No. 1191 of 1998. In the said order the High Court ordered appointment of a Receiver to be in charge of the suit properties with other consequential directions. The relevant portion of the order reads as follows :
"As a result of the aforesaid discussion, this appeal succeeds and is allowed. The impugned order dated 14.8.1998 is hereby set aside. The Trial Court is directed to require both the parties to suggest an agreed name of a person within fifteen days from the receipt of the record and a copy of this order, for his appointment as a receiver in the case. In case, they fail to do so, within the time fixed by the Trial Court, the Trial Court shall be free to appoint a person of integrity as the receiver of the suit property, who is well conversant with the legal procedures and is capable of maintaining true and honest accounts of the suit property during the pendency of the suit. The said appointment of the receiver shall be made initially for a period of two years and it shall be extended by the Trial Court on an application being filed by the receiver or the appellant, in case, by that time the civil suit remains pending before it. The trial court is further directed that it shall, after the appointment of the receiver, try to dispose of the Civil Suit within a period of one year from the date of receipt of copy of this order. The Trial Court shall, from time to time, call for the accounts from the receiver so appointed and supervise his work and in case, the work or accounts of the receiver is found unsatisfactory by the Trial Court, it shall be free to appoint a new receiver".
3. The respondent herein filed the aforementioned suit impleading the appellants herein as defendants. The plaintiff prayed for a decree for partition and separate possession of the suit properties. The suit properties are structures in occupation of tenants.
4. The case of the plaintiff, shortly stated, was that the suit properties were the exclusive properties of late Kishore Chand her father and husband of appellant No.1 Appellants 2 and 3 are the sons of Virender Kumar, a nephew of Kishore Chand. According to the plaintiff neither Virender Kumar nor his sons (appellants 2 and 3 herein) have any right title and interest in the suit properties. Taking advantage of the old age of her mother they have kept her under their clutches and have been enjoying the suit properties. The plaintiff further alleged that defendants 2 and 3 have been collecting and appropriating the rent paid by the tenants without giving her any share therein. They are also inducting new tenants and collecting premium money from them. The plaintiff also alleged that defendants 2 and 3 are making new constructions spending the money collected from the tenants as rent. On these allegations the plaintiff filed the application under Order XL Rule 1 C.P.C. for appointment of a receiver. She had also filed an application seeking interim injunction against the defendants not to change the status quo of the suit property and not to alienate the same.
5. The defendants refuted the allegations made in the petition for appointment of receiver mainly on the ground that they have been in possession and enjoyment of the properties since long, for more than 50 years. It was their contention that they have not caused any loss or damage to the suit properties and therefore, no case for appointment of receiver is made out. They agreed not to alienate any part of the suit property during pendency of the suit.
6. The trial court rejected the prayer for appointment of receiver and dismissed the application filed by the plaintiff. On appeal being filed under Order 43 Rule 1 (s) C.P.C. the High Court by the order passed on 20th June, 2000 ordered of a receiver a
