AIR 1955 madras 430 krshna swamy chetty v/s C T chetty
he 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 receier 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)".