A receiver", in the language of High, "is an indifferent (American expression for impartial) person between the parties to a cause, appointed by the Court to receive and preserve the property or fund in litigation "pendente lite', when it does not seem reasonable to the Court that either party should hold it. He is not the agent or representative of either party to the action, but is uniformly regarded as an officer of the Court, exercising his functions in the interest of neither plaintiff nor defendant, but for the common benefit of all parties in interest. Being an officer of the Court, the fund or property entrusted to his care is regarded as being in 'custodia legis', for the benefit of who-ever may finally establish title thereto, the Court itself having the care of the property by its receiver, who is merely its creature or officer, having no powers other than these conferred upon him by the order of his appointment, or such as are derived from the established practice of Courts of equity.
"A receiver" is frequently spoken of as the "hand of the Court", and the expression very aptly designates his functions, as well as the relation which he sustains to the Court."
A Receiver has been defined by Kerr as follows :
"A receiver in an action 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." (Kerr on the Law and Practice as to Receivers appointed by the High Courts of Justice or order of Court, Twelfth Edition, Walton and Sarson, Special Edition for India, N. M. Tripathi & Co. (1932) P. L).
The appointment of a Receiver being an equitable relief, the history of its development in Court of Chancery in England should be studied. In his monumental work relating to "the Law arid Practice relating to Receivers in British India"
The principles which, guide English Courts in regard to cases in which the appointment is made to preserve property can be culled out from the standard English text books and the case law on the subject as follows :
"the appointment is made to preserve property pending litigation to decide the rights of the parties, or to prevent a scramble among these entitled, as where a receiver is appointed pending a grant of probate or administration, or to preserve property of persons under disability, or where there is danger of the property being damaged or dissipated by these with the legal title, such as executors or trustees, or tenants for life, or by persons with a partial interest, such as partners, or by the persons in control, as where directors of a company with equal powers are at variance."
In all these cases, it is necessary to allege and prove some peril to the property; the appointment then rests on the sound discretion of the Court.
"In exercising its discretion the Court proceeds with caution, and is governed by a view of all the circumstances. No positive or unvarying rule can be laid down as to whether the Court will or will not interfere by this kind of interim protection of the property. Where, indeed, the property is as it were 'in medio', in the enjoyment of no one, it is the common interest of all parties that the Court should prevent a scramble, and a receiver will readily be appointed: as, for instance, over the property of a deceased person pending a litigation as to the right to probate or administration. But where the object of the plaintiff is to assert a right to property of which the defendant is in enjoyment, the case presents more difficulty; The Court by taking possession at the instance of the plaintiff may be doing a wrong to the defendant; in some cases an irreparable wrong. If the plaintiff should eventually fail in establishing his right against the defendant, the Court may by its interim interference have caused mischief to the defendant for which the subsequent restoration of the property may afford no adequate compensation. (See -- 'Marshall v. Charteris', 1920-1 Ch 520 (I)). Where the evidence on which the Court is to act is very clear in favour of the plaintiff, then the risk of eventual injury to the defendant is very small, and the Court does not hesitate to interfere. Where there is more of doubt, there is, of course, more of difficulty. The question is one of degree, as to which, therefore, it is impossible to lay down any precise or unvarying rule. (-- 'Owen v. Roman', (1853) 4 HLC 997 at p. 1032 (J), per Lord Cranworth,) If the Court is satisfied upon the materials it has before it that the party who makes the application has established a good prima facie title, and that the property the subject-matter of the proceedings will be in danger if left the trial in the possession or under the control (-- 'Cummins v. Perkins', (1899) 1 Ch 16 (K); -- 'Leney & Sons, Ltd. v. Callingham', (1908) 1 KB 79 (L) of the party against whom the receiver is asked for (-- 'Evans v. Coventry', (1854) 5 Do G M & G 911 at p. 918 (M)) or, at least, that there is reason to apprehend that the party who makes the application will be in a worse situation if the appointment of a receiver be delayed (-- 'Aberdeen v. Chitty', (1838) 3 Y & C 379 at p. 382 (N); -- 'Thomas v. Davies, (1847) 11 Beav 29 (O) ), the appointment of a receiver is almost a matter of course (See -- "Middleton v. Dodswell', (1800) 13 Ves Jun 260 (P); -- 'Old-field v. Cobbett', (1835) 4 LJ Ch 271 (Q); --'Heal and Personal Advance Co. v. Macarthy, (1879) 27 WR 706 (R)). If there is no danger to the property, and no fact is in evidence to show the necessity or expediency of appointing a receiver, a receiver will not be appointed, unless there be some other urgent reason for making the appointment (See -- 'Whitworth v. Whyddon', (1850) 2 Mac & G 52 (S); -- 'Wright v. Vernon', (1855) 3 Drew 112 (T); -- 'Micklethwait v. Micklethwait', (1S57) 1 De G & J 504 (U)) "The duty of the Court upon a motion for a receiver is merely to protect the property for the benefit of the person or persons to whom the Court, when it has all the materials necessary for a determination, shall think it properly belongs (-- 'Blakeney v. Dufaur', (1851) 15 Beav 40 (V)). On a motion for a receiver the Court will not prejudice the action (-- 'Huguenin v. Baseley', (1806) 13 Ves Jun 105 at p. 107 (W)), or say what view it will take at: the trial (--'Fripp v. Chard. Rly. Co., (1853) 11 Hare 241 at p. 264 (X); -- 'Skinners' Co. v. Irish Society', (1836) 1 My & Cr 162 at p. 164 (Y)). Indeed, the Court will not appoint a receiver at the instance of a person whose right is disputed, where the effect of the order would be to establish the right, even if the Court be satisfied that the person against whom the demand is made is fencing off the claim (-- 'Greville v. Fleming", (1845; 2 Jo & Lat 335 (Z); (1920) 1 Ch 520 (1)). Nor will the appointment be made where it might affect legal rights; a receiver will not, for instance, be appointed merely to prevent an executor exercising his right of retainer (-- 'Re. Wells Molony v. Brooke', (1890) 45 Ch D 569 (Z1))"
The Court, on the application for a receiver, always 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 (See -- 'Baxter v. West', (1858) 28 LJ Ch 169 (Z2); -- 'Cf. Wood . Hitchings', (1840) 2 Beav 289 at p. 297 (Z3)). Parties who have acquiesced in property being enjoyed against their own alleged rights cannot except in special circumstances come to the Court for a receiver (-- 'Gray v. Chaplin', (1826) 2. Russ 126 at p. 147 (Z4); (1836) 1 My & Cr 162 (Y)) (Kerr on Receivers 12th edition pp. 5 to 7)".
In regard to American Courts, High sets out these principles in Chap. 1 on the Law of Receivers, Third Edition, 1894 at p. 13 as follows;
"The principal grounds upon which Courts of equity grant their extraordinary aid by the appointment of receivers 'pendente lite* are that the person seeking the relief has shown at least a probable interest in the property, and that there is danger of its being lost unless a receiver is allowed, the element of danger being an important consideration in the case. And a remote or past danger will not suffice as a ground for the relief, but there must be a well-grounded apprehension of immediate injury. The power of appointment is usually invoked either for the prevention of fraud, to save the subject of litigation from material injury, or to rescue it from threatened destruction. And to warrant the interposition of a Court of equity by the aid of a receiver, it is essential that plaintiff should show, first, either a clear legal right in himself to the property in controversy, or that he has some lien upon it, or that it constitutes a special fund out of which he is entitled to satisfaction of his demand. And, secondly, it must appear that possession of the properly was obtained by defendant through fraud; or that the property itself, or the income from it, is in danger of loss from the neglect, waste, misconduct or insolvency of the defendant. Not only must the plaintiff show a case of adverse and conflicting claims to the properly, but he must also show some emergency or danger of loss demanding immediate action, and that his own right is reasonably clear and free from doubt. If the dispute is as to title only, the Court very relunctantly disturbs possession by a receiver, hut if the property is exposed to danger and to loss, and the person in. possession has not a clear legal right thereto, the Court will interpose by a receiver for the security of the property."
Earlier at p. 4 the learned author says, "The jurisdiction exercised by Courts of equity in administering relief by the extra-ordinary remedy of a receiver 'pendente lite' is a branch of their general preventive jurisdiction, being intended to prevent injury to the thing in controversy, and to preserve it for the security of all parties in interest, to be disposed of as the Court may finally direct. The power is justly regarded as one of a very high nature, and not to be exercised when it would be productive of serious injustice or injury to private rights. The exercise of the extra-ordinary power of a chancellor in appointing receivers, as in granting writs of injunction or 'ne exeat', is an exceedingly delicate and responsible duty, to be discharged by the Court with the utmost caution, and only finder such special or peculiar circumstances as demand summary relief.
Indeed, the appointment' of a receiver is regarded as one of the most difficult and embarrassing duties which a Court of equity is called upon to perform. It is a peremptory measure, whose effect, temporarily at least, is to deprive of his property, a defendant in possession, before a final judgment or decree is reached by the Court determining the rights of the parties. It Is therefore not to be exercised doubtingly, but the Court must be convinced that the relief is needful, and that it is the appropriate means of securing an appropriate end, And since it is a serious interference with the rights of the citizen, without the verdict of a jury and before a regular hearing, it should only be granted for the prevention of manifest wrong and injury. And because it divests the owner of property of its possession before a final hearing, it is regarded as a severe remedy, not to be adopted save in a clear case, and never unless plaintiff would otherwise be in danger of suffering irreparable loss."
Madras High Court
T. Krishnaswamy Chetty vs C. Thangavelu Chetty And Ors. on 6 December, 1954
The five principles which can he described as the "panch sadachar' of our Courts exercising equity jurisdiction in appointing receivers are as follows :
(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.
Otherwise a receiver should not be appointed in supersession of a bone fide possessor of property in controversy and bona fides have to be presumed until the contrary is established or can be indubitably inferred.
(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.
To sum up as stated in -- 'Crawford V. Ross', 39 Ga 44 (Z28), "The high prerogative act of taking property out of the hands of one and putting it in pound under the order of the Judge ought not to be taken except to prevent manifest wrong imminently impending."
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.
Supreme Court of India
P. Lakshmi Reddy vs L. Lakshmi Reddy on 5 December, 1956
But does this doctrine enable a person who was not previously in possession of the suit properties, to claim that the Receiver must be deemed to have taken possession adversely to the true owner, on his behalf, merely because he ultimately succeeds in getting a decree for possession against the defendant therein who was previously in possession without title. A 'Receiver is an officer of the Court and is not a particular agent of any party to the suit, notwithstanding that in law his possession is ultimately, treated as possession of the successful party on the termination of the suit. To treat such Receiver as plaintiff's agent for the purpose of initiating adverse possession by the plaintiff would be to impute wrong-doing to the Court and its officers. The doctrine of Receiver's possession being that of the successful party cannot, in our opinion, be pushed to the extent of enabling a person who was initially out of possession to claim the tacking on of Receiver's possession to his subsequent adverse possession. The position may conceivably be different where the defendant in the suit was previously in adverse possession against the real owner and the Receiver has taken possession from him and restores it back to him on the successful termination of the suit in his favour. In such a case the question that would arise would be different, viz., whether the interim possession of the Receiver would be a; dis- continuance or abandonment of possession or interrupt. ion of the adverse possession.
Supreme Court of India
Mahendra H. Patel vs Ram Narayan Singh on 2 March, 2000
In our opinion, it was not open to the High Court in a Writ Petition against that order to appoint a Receiver in respect of the property in question under Order 40 Rule 1 C.P.C. particularly when none of the parties had asked for it. The power to appoint a Receiver suo motu cannot be exercised in the manner in which it was exercised by the High Court.
Rajdai Nandlal Shaw Vs Mahendra Mangruram Gupta order dated 26/11/2019.
It would also be advantageous to refer to the decision of
this Court in Mulji Umershi Shah and Etc. Vs. Paradisia Builders Pvt.
Ltd AIR 1998 Bom 87. The question before the Court was whether the
Trial Court was justified in appointing a receiver while refusing to
grant temporary injunction in favour of the Plaintiff and in absence of
any application for appointment of receiver. The observations of the
learned Single Judge of this Court, (as his lordship then was) are as
" 19. In my view, in suitable cases, the Court is not
powerless to pass appropriate order for appointment of
receiver without any application by any of the parties while
rejecting the application for temporary injunction. Such
power of course has to be exercised sparingly and in
exceptional cases where dismissal of an application for grant
of temporary injunction may lead the parties to take law in
their own hands and use their own devices either for
protection of unlawful possession of recent origin or for
gaining possession or such like circumstances. There is no
impediment put by the Code of Civil Procedure in passing
such order to prevent the ends of justice being defeated. Such
order may be imminently required to be passed also so that
possession may be made over to that party who is prima facie
entitled to possession but is deprived by unlawful conduct or
illegal act of the other party. An appointment of receiver can
be made on the application of either parties to the litigation
as well as suo motu and therefore, absence of application
shall not preclude the Court from passing such order if it is
just and convenient The cases may be varied and many. A
party may not have any right to the property and still comes
in possession of the property unlawfully and illegally which
may be of recent origin and on that basis may seek to protect
his possession by filing suit for injunction and by making an
application for temporary injunction. The Court may find that
such person has no title, right or interest in the property and
is not in lawful possession and, therefore, is not entitled to
grant of any temporary injunction. To avoid grave situation
where the parties may take law in their own hands even while
temporary injunction has been refused, in the absence of any
application, the Court may make an order of appointment of
receiver. Such exceptional order is permissible under law to
prevent larger mischief if it is just and convenient in the facts
and circumstances of the case. There is nothing wrong if by
taking such recourse the plaintiff who has unlawfully come in
possession recently is dispossessed during pendency of suit. In
suitable and appropriate case, if the trial Court appoints the
receiver while rejecting the application for temporary
injunction, it cannot be said that such power is without
Delhi High Court
Indira Transport vs Rattan Lal on 16 May, 1997
Whether a receiver appointed in execution of a decree for partition of joint Hindu family property can be aided by the Court to remove persons not parties to the suit from possession over the property is the question arising for decision in this appeal.
) It is true that decree for partition of property is a decree for delivery of immovable property within the meaning of Rule 35 of Order 21 of CPC. Only such persons as are bound by the decree can be physically' ousted from possession during the course of execution of the decree. If the property be in possession of persons not parties to the suit and not bound by the decree then the decree can be executed only by delivering symbolic possession leaving appropriate legal proceedings being initiated for recovery of possession from the persons holding the property. However, under Order 40 Rule 1 of Civil Procedure Code the Court has jurisdiction to appoint a receiver and that jurisdiction can be exercised before or after the passing of the decree.. A party to the suit can be appointed receiver. A receiver if obstructed in taking possession of the property, can be aided by the Court so as to secure possession of the property. Sub Rule (2) of Rule I of Order 40 provides that nothing in Rule I shall authorise the Court to remove from the possession or custody of the property any person whom any party to the suit has not a present right to remove from possession of the property.
In our opinion, the learned single Judge should have applied the provisions of Rules 35 and 97 of Order 21 Civil Procedure Code and held an enquiry before directing delivery of possession by police aid extended to the receiver. The application could not have been disposed of merely by looking into the record and deciding the application by probabilities. A positive finding should have been recorded whether the persons obstructing delivery of possession were the persons bound by the decree and whether the decree-holder had a right to immediate possession from them. In Bhawar Lal v. Satya Narain , it has been held ; "Order 21 Rule 35(3) postulates that the person in possession of the immovable property to be delivered under the decree must be per force bound by the decree. The person resisting delivery of possession must be bound by the decree for possession. In other words the resistor must claim derivate title from the judgment-debtor. The Court gets power under Order 21 Rule 97 to remove such obstruction or resistance and direct its officer to put the decree holder in possession of (he immovable property after conducting enquiry under Rule 97. Rule 97 envisages that any person even including the judgment debtor irrespective of whether the claims derivative title from the judgment debtor or set up his Own right title or interest dehors the judgment debtor and he resists execution of a decree, then the court in addition to the power under R. 35(3) has been empowered to conduct an enquiry whether the obstruction by that person in obtaining possession of immovable property was legal or not. The decree holder gets a right under R 97 to make an application against third parties to have his obstruction removed and an enquiry thereon could be done. Each occasion of obstruction or resistance furnishes a cause of action to the decree holder to make an application for removal of the obstruction or resistance by such person."
(15) So also is the view of law taken in Babu Lal vs. Raj Kumar . In the execution application filed under Order 21 Rule 32 of the Civil Procedure Code the appellant had filed an objection on the ground that he could not be dispossessed. The appellant was not a party to the decree for specific performance. His objection was overruled by the executing Court holding that since he had not been dispossessed, application under Order 21 Rule 97 was not maintainable. The High Court of Rajasthan upheld the view. The objector went in appeal to the Supreme Court. Having referred to the law laid down in Bhawar Lal's case (supra), their Lordships held : "AN adjudication is required to be conducted under Order 21 Rule 98 before removal of the obstruction caused by the objector or the appellant and a finding is required to be recorded in that behalf. The order is treated as a decree under Order 21 Rule 103 and it shall be subject to an appeal. Prior to 1976, the order was subject to suit under 1976 Amendment to Civil Procedure Code that may be pending on the date the commencement of the amended provisions of Civil Procedure Code was secured. Thereafter under the amended Code, right of suit under Order 21, Rule 63 of old Code has been taken away. The determination of the question of the right, title or interest of the objector in the immovable property under execution needs to be adjudicated under Order 21, Rule 98 which is an order and is a decree under Order 21 Rule 103 for the purpose of appeal subject to the same conditions as to an appeal or otherwise as if it were a decree. Thus, the procedure prescribed is a compete code in itself. Therefore, the executing Court is required to determine the question, when the appellants had objected to the execution of the decree as against the appellants who were not parties to the decree for specific performance."
It is, therefore, clear that once the appellants had preferred an objection inviting attention of the Court that they were not bound by the decree and could not be dispossessed, the decree-holder should have made an application under Order 21 Rules 97 and 98 of the Civil Procedure Code for removal of obstruction caused by the objector. Even if this was not done, the Court was bound to enquire into the objections preferred by the appellants in view of the law as laid down by the Supreme Court.
In Hira Lal Patni v. Loonkaran Sethiya , 11 April, 1961- , it has been held: "Under this order, a receiver is an officer or representative of the Court and he functions under its directions. The Court may, for the purpose of enabling the receiver to take possession and administer the property, by order, remove any person from the possession or custody of the property. Sub Rule (2) of R I of the order limits that power in the case of a person who is not a party to the suit, if the plaintiff has not a present right to remove him. But when a person is a party .to the suit, the Court can direct the receiver to remove him from the possession of the property even if the plaintiff has not a present right to remove him."
Supreme Court of India
Kanhaiyalal vs Dr. D. R. Banaji And Others on 31 March, 1958
So far as the Indian Courts are concerned, it is settled law that a sale held without making attachment of the property, or without duly complying with the provisions of the law relating to attachment of property, is not void but only voidable. Rule 52 of 0. 21 of the Code of Civil Procedure, requires that where the property is in the custody of any court or public officer, attachment shall be made by a notice to such court or officer. But the absence of such a notice would not render the sale void ab initio, because the jurisdiction of the court or the authority ordering the sale, does not depend upon the issue of the notice of attachment. It is also settled law that proceedings taken in respect of a property which is in the possession and management of a Receiver appointed by Court under 0. 40, r. I of the Code of Civil Procedure, without the leave of that Court, are illegal in the sense that the party proceeding against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the proceedings so held, do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who, ultimately, may be adjudged by the Court to be entitled to the same. The learned counsel for the respondent was not able to bring to our notice any ruling of any Court in India, holding that a sale held without notice to the Receiver or without the leave of the Court appointing the Receiver in respect of the property, is void ab initio. In the instant case, we do not think it necessary to go into the question raised by the learned counsel for the respondents that a sale of a property in the hands of the Court through its Receiver, without the leave of the Court, is a nullity. The American Courts appear to have taken the view that such a sale is void. In our opinion, it is enough to point out that the High Court took the view that the sale was voidable and could be declared illegal in a proper proceeding or by suit. We shall assume for the purposes of this case that such a sale is only voidable and not void ab initio. On the assumption that the sale held in this case without the leave of the Court and without notice to the Receiver, is only voidable and can be declared illegal on that very ground, the suit had been instituted for the declaration that the sale by the revenue courts was illegal. The plaint was subsequently amended by adding the relief for recovery of possession, because in the meanwhile, the auction- purchaser had obtained delivery of possession of the property through the revenue authorities, some time in 1940. The general rule that property in custodia legis through its duly appointed Receiver is exempt from judicial process except to the extent that the leave of that court has been obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts. If a court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other Courts or Tribunals of co-ordinate or exclusive jurisdiction were to permit proceedings to (lo on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a likelihood of confusion in the administration of justice and a possible conflict of jurisdiction. The Courts represent the majesty of law, and naturally, therefore, would not do anything to weaken the rule of law, or to permit any proceedings which may have the effect of putting any party in jeopardy for contempt of court for taking recourse to unauthorised legal proceedings. It is on that very sound principle that the rule is based. Of course, if any Court which is holding the property in custodia legis through a Receiver or otherwise, is moved to grant permission for taking legal proceedings in respect of that property, the Court ordinarily would grant such permission if considerations of justice require it. Courts of justice, therefore, would not be a party to any interference with that sound rule. On the other hand, all Courts of justice would be only too anxious to see that property in custodia legis is not subjected to uncontrolled attack, while, at the same time, protecting the rights of' all persons who may have claims to the property. After making these general observations, we have to examine the provisions of the Code, to find out how far that general rule of law is affected by those provisions.
The Supreme Court in Everest Coal Company (P) Ltd. vs. State of Bihar and Ors. (1978) 1 SCC 12. The Supreme Court observed thus in para 7 and approved the law stated by Mulla. :
"7. Mulla with characteristic clarity, has condensed the whole law correctly :
A receiver cannot sue or be sued except wth the leave of the Court by which he was appointed receiver.
A party feeling aggrieved by the conduct of a receiver may seek redress against him in the very suit in which he was appointed receiver, or he may bring a separate suit against the receiver in which case he must obtain the leave of the Court.
There is no statutory provision which requires a party to take the leave of the Court to sue a receiver.
The rule has come down to us as a part of the rules of equity, binding upon all Courts of Justice in this country.
It is a rule based upon public policy which requires that when the Court has assumed possession of a property in the interest of the litigants before it, the authority of the Court is not to be obstructed by suits designed to disturb the possession of the Court. The institution of such suits is in the eye of the law a contempt of the authority of the Court, and therefore, the party contemplating such a suit is required to take the leave of the Court so as to absolve himself from that charge. The grant of such leave is made not in exercise of any power conferred by statute, but in the exercise of the inherent power which every Court possesses to prevent acts which constitute or are akin to an abuse of its authority."
Therefore, there is no doubt that the Receiver cannot sue or be sued except with the leave of the Court by which he was appointed as such.