Well, this article is about the Landmark Judgment which every lawyer practicing on civil side in India must have come across.
Yes, we are talking about The Madras High Court in T. Krishnaswamy Chetty V/s. C. Thangavelu Chetty, 6th Dec, 1954.
FACTS OF THE CASE:
The Applicant-plaintiff T. Krishnaswamy Chetty had filed C. S. No. 295 of 1953 in the pauper form for a declaration that the alienations made in favour of defendants 1 to 3, respondents herein, of the suit houses described as items 1 and 2 of Schedule B to the plaint are not valid and binding, for mesne profits, for possession and for other reliefs.
The allegations as quoted in the Plaint were as under:
"These properties originally belonged to one Rangiah Chetty, my grand-father who executed his last will and testament on 19-11-1910 of which probate was also obtained on 5-9-1913 in O. P. No. 29 of 1911 and T. O. S. No. 4 of 1911 on the file of this Honble Court. Under the said will the testator made a provision for his heirs including his wife, daughters and daughters children, so that, the properties may be enjoyed by them during their lifetime and subsequently by their children absolutely, but in spite of the intention of the testator and the best care he has taken to secure the enjoyment of properties for his relations, the properties have now fallen into the hands of strangers by malpractices of some of the heirs of the testator with the result while the relations of the testators suffering, strangers who are not thought of by the testator are in unjust and illegal enjoyment of the properties for a very long time....... If the respondents are allowed to enjoy the income of the properties during the pendency of the suit herein, it may be even impossible after the decree to recover anything from them. Further the respondents are not taking care of the properties on account of which the houses have fallen into disrepair and they are not fetching good rent."
The Five Principles or “Panch Sadachar” guiding our Hon’ble Courts in appointment of court receiver as carved out by the said landmark judgment is as under:
(1) The appointment of a receiver pending a suit is a matter resting in the discretion of the Court. The discretion is not arbitrary or absolute: it is a sound and judicial discretion, taking into account all the circumstances of the case, exercised-for the purpose of permitting the ends of justice, and protecting the rights of all parties interested in the controversy and the subject matter and based upon the fact that there is no other adequate remedy or means of accomplishing the desired objects of the judicial proceeding.
(2) The Court should not appoint a receiver except upon proof by the plaintiff that prima facie he has very excellent chance of succeeding in the suit.
(3) Not only must the plaintiff show a case of adverse and conflicting claims to property, but, he must show some emergency or danger or loss demanding immediate action and of his own right, he must be reasonably clear and free from doubt. The element of danger is an important consideration. A Court will not act on possible danger only; the danger must be great and imminent demanding immediate relief. It has been truly said that a Court will never appoint a receiver merely on the ground that it will do no harm.
(4) An order appointing a receiver will not be. made where it has the effect of depriving a defendant of a de facto possession since that might cause irreparable wrong. If the dispute is as to title only, the Court very reluctantly disturbs possession by receiver, but if the property is exposed to danger and loss and the person in possession has obtained it through, fraud or force the Court will interpose by receiver for the security of the property. It would be different where the property is shown to be in medio, that is to say, in the enjoyment of no one, as the Court can hardly do wrong in taking possession: it will then be the common interest of all the parties that the Court should prevent a scramble as no one seems to be in actual lawful enjoyment of the property and no harm can be done to anyone by taking it and preserving it for the benefit of the legitimate who may prove successful. Therefore, even if there is no allegation of waste and mismanagement the fact that the property is more or less in medio is sufficient to vest a Court with jurisdiction to appoint a receiver.
(5). The Court, on the application of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame. He must come to Court with clean hands and should not have disentitled himself to the equitable relief by laches, delay, acquiescence etc.
The “Panch Sadachar” is recapitulated in point wise format below:
The appointment of receiver pending a suit is a matter resting in the sound discretion of the court. The decision shall also be based upon fact that there is no other adequate remedy or means of accomplishing the desired object of the judicial proceeding.
The court should not appoint a receiver except upon proof by the plaintiff that primafacie he has very excellent chance of succeeding in the suit.
Not only must the plaintiff show a case of adverse and conflicting claims to property but, he must show some emergency or danger or loss demanding immediate action and of his own right, he must be reasonably clear & free from doubt.
An order appointing a receiver will not be made where it has the effect of depriving a defendant of a "defacto" possession since that might cause irreparable wrong.
The Court, on the application of a receiver looks to the conduct of the party who makes the application & will usually refuse to interfere unless his conduct has been free from blame.
Conclusion: “The Hon’ble Madras High Court rejected the application for appointment of Court Receiver in above case observing that In Dozier v. Logan, 101 ga 173 (Z29) Atkinson J. said
"The appointment of a receiver is recognised as one of the harshest remedies which the law provides for the enforcement of rights and is allowable only in extreme cases and in circumstances where the interest of the creditors is exposed to manifest peril,"
Therefore, this exceedingly delicate and responsible duty will be discharged with the utmost caution and only when the panch sadachar or five requirements embodied in the words just and convenient (Order 40, Rule 1) are fulfilled by the facts of the case under consideration -- (Ramachandrayya v. Nethi Iswarayya, AIR 1952 Hyd 139 (Z30).
15. Bearing these principles in mind, if we examine the facts of this case as set out in the contentions of the respective parties above, we find that none of the requirements for granting the appointment of a receiver is made out.
16. This application is dismissed with costs”.
This judgment is being followed since ages and is considered as a guiding authority whilst dealing with application for appointment of Court Receiver.
Hope the above article helps in retain the information on vital topic such as appointment of Court Receiver!
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