Prima Facie Case Alone Insufficient to Appoint Court Receiver; Compelling Reasons Required : Supreme Court

The Supreme Court recently observed that expressions like "prima facie case" or "conduct" alone are insufficient to justify the appointment of a Court Receiver. The Court emphasized that a compelling reason must be provided, demonstrating how the property would deteriorate without the Receiver's intervention.

The appellant contested the High Court's decision to appoint a court receiver for the disputed property, a decision previously rejected by the City Civil Court, Borivali. The key issue was whether the mere recording of a prima facie case in favor of the respondent justified the appointment of a receiver.

The bench comprising Justice PS Narasimha and Justice Manoj Misra set aside the High Court's decision and invalidated the appointment of the Court Receiver, highlighting that the mere acknowledgment of a prima facie case was insufficient to warrant such an appointment.

“Except for employing the expression prima facie case and conduct, there is no indication whatsoever as to how the property would deteriorate without the intervention of the court receiver. Needless to say, that mere recording of the expressions 'prima facia case' and 'conduct' by themselves are not sufficient.”, the court said.

The Court stated that when appointing a court receiver, it is not enough for the courts to consider whether there is a prima facie case. Instead, the decision must be backed by evidence showing that the property would be degraded or destroyed if the court did not intervene in a timely manner.

“It is a well settled principle that the court would not appoint a receiver until and unless there are certain compelling reasons. Respondent No.1 has not indicated any special circumstance in the notice of motion requiring the need to appoint a receiver.”, the court said.

The Court advised that the expression 'prima facie' case is mentioned only while granting an injunction, and not when the receiver is appointed.

“the prima facie case as indicated by the City Civil Court related only to the grant of injunction and not about the appointment of a receiver.”, the Court added.

Accordingly, the appeal was allowed.

Appearance:

Mr. Shishir Deshpande, Adv. for the appellant

Mr. Devashish Bharuka, Sr. Adv. for the respondent(s)

Case Title: HITESH BHURALAL JAIN Vs. RAJPAL AMARNATH YADAV & ORS.

Citation : 2024 LiveLaw (SC) 903

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