Jharkhand High Court Upholds Receiver Appointment for M/s Hotel Swarn in Partition Suit

Jharkhand High Court Upholds Receiver Appointment for M/s Hotel Swarn in Partition Suit

Court finds trial court’s order balanced, allowing appellant to continue business while preserving records.

The Jharkhand High Court has dismissed an appeal challenging the appointment of a receiver for M/s Hotel Swarn, a hotel business at the center of a partition dispute between two brothers. A single bench of Justice Sanjay Kumar Dwivedi upheld the trial court’s order, observing that the receiver ’s role was limited to inspecting and reporting, and did not oust the appellant from possession or management of the business.

Brothers’ Battle Over Hotel Swarn

The dispute arose between Harjit Singh (appellant) and his brother Birendra Pal Singh (respondent) over a commercial property in Ranchi’s Mouza Siram area, along with the multi-storied hotel business “M/s Hotel Swarn” operating on it. Birendra Pal Singh filed a partition suit (O.S. No. 780 of 2024), claiming the property was jointly developed and that the hotel business was their only source of livelihood. Harjit Singh, however, asserted that he had purchased the land solely, paid the entire consideration, and developed the building at his own cost, making him the sole proprietor of the hotel.

In the suit, the respondent moved an application under Order XL Rule 1 of the Code of Civil Procedure, 1908 , seeking appointment of a receiver to manage, protect, and preserve the hotel business and its accounts. The trial court allowed the application on May 22, 2026 , leading Harjit Singh to appeal.

Trial Court’s Cautious Approach

The trial court’s order was carefully tailored. It directed the appointment of a receiver from the panel of the Judicial Commissioner, Ranchi , but expressly allowed the appellant to continue day-to-day operations of the hotel. The only conditions imposed were that the appellant maintain proper accounts of income and expenditure, preserve all GST records, bank statements, and business documents, and refrain from alienating or encumbering the property or making structural changes without prior court permission. The receiver was tasked with inspecting the property and business and submitting a detailed report on physical condition, possession, mode of operation, account books, and income-generating activities.

High Court’s Verdict: No Illegality

Before the High Court, Senior Advocate Amar Kumar Sinha , representing Harjit Singh, argued that a receiver could be appointed only if the plaintiff proved a chance of success and demonstrated damage, loss, or emergency. He contended that the appointment would deprive the appellant of de facto possession. Counsel for the respondent, Mr. Shresth Gautam , countered that the brothers had jointly purchased the property, as evidenced by sale deeds and loan documents showing both as co-borrowers from Tata Capital Housing Finance Limited . He emphasized that the trial court had not restrained the appellant from running the business.

Justice Dwivedi examined the loan documents, noting that the loan number matched in both the application and the agreement schedule, and that the respondent was a co-borrower along with his son. The Court observed, “ prima facie , it is proved that the loan was taken by both the brothers .”

The Court further noted that the impugned order did not restrain the appellant from running the business or maintaining the premises. “ The learned court by way of aforesaid direction, has only sought a report about the business, the physical condition, mode of operation, maintenance of account books, maintenance of GST records, License, Bank transactions, approximate nature of income generating activities and not to create a third-party interest ,” the judgment stated.

Key Observations

• “ the learned court has not restrained the appellant herein to run the business and maintain the said premises. ”
• “ prima facie , it is proved that the loan was taken by both the brothers ”
• “ there is no illegality in the impugned order ”

Decision and Implications

Finding no illegality in the trial court’s order, the High Court dismissed the appeal (M.A. No. 452 of 2026). The ruling reaffirms that a receiver may be appointed in a partition suit to preserve assets and business records without necessarily dispossessing the party in control, provided the order balances the interests of both sides. The receiver ’s report will aid the trial court in determining the true nature of ownership and the business’s income, ensuring transparency pending final adjudication.