Strong Prima Facie Cases Of Mismanagement Needed To Appoint Receiver: Karnataka HC Upholds Order Removing Receiver Appointed For Hindu Temple

Stating that the power to appoint a Receiver under Order XL Rule 1 of CPC cannot be exercised lightly but only when the facts prima facie disclose substantial harm, improper utilization, or mis-administration of the property in question, the Karnataka High Court recently dismissed a Writ Petition challenging the order of the Appellate Court which set aside the order of the trial Court appointing a Receiver for a Hindu temple. 

Justice S.G. Pandit, presiding over a single-judge bench, was dealing with a petition filed under Article 227 of the Constitution seeking the appointment of a Senior Advocate from the Udupi Bar as a Receiver to supervise the management of the temple. The Trial Court had initially appointed a Receiver, but this decision was subsequently overturned by the Appellate Court.

The Appellate Court reasoned that the determination of whether temple assets had been misappropriated should await a comprehensive trial. Furthermore, the Appellate Court emphasized that a Receiver could only be appointed if the petitioners or plaintiffs could substantiate allegations of misappropriation or harm to the Daivasthana property. Being aggrieved with the same, the Petitioners approached the High Court.

The petitioner argued that the defendants, who assert themselves as members of the Committee known as Shree Jarandaya Bunta Seva Samithi, lack the authority to oversee the management of Daivasthana or handle any financial matters related to it. Additionally, the petitioner contended that the respondents or defendants do not possess the requisite authority to conduct Nemothsava.

It was also argued that to safeguard the interests of the plaintiffs, as well as those of the devoted followers and the assets of Daivasthana, it is imperative to appoint a Receiver until the legal issues raised in the lawsuit are conclusively determined. However, on the other hand, the respondent objected that the current writ petition has been filed with the suppression of crucial material facts.

Respondent stated that the trial Court had noted that the plaintiffs must first establish both their legal right and possession of Daivasthana. It was also argued that the mere establishment of a Trust is insufficient to establish a prima facie claim to a right in the Daivasthana. 

Considering the submissions of both sides, the Court in its judgement observed that while the provision grants the Court the authority to appoint a Receiver when it deems it fair and suitable and to bestow upon the Receiver the necessary powers related to litigation, property management, protection, preservation, and enhancement, this authority should not be exercised casually.

The Court noted that it is only when the involved parties present a compelling prima facie case that clearly demonstrates damage, misuse, or mismanagement of the property in question that the Court can exercise its authority to appoint a Receiver under Order XL Rule 1 of the Civil Procedure Code.

"The appointment of Receiver would result in serious consequences. When the parties make out strong prima facie case showing damage, misuse or mismanagement of the property in question, then only the Court could exercise its power to appoint Receiver", stated the Judgement. 

It was also observed by the Court that the power to appoint a Receiver is within the Court's discretion, and this discretion should be judiciously exercised, taking into account the specific facts and circumstances of the case, as well as the conduct of the parties involved in the proceedings.

The Judgement stated, "Power to appoint Receiver under Order XL Rule 1 of CPC is discretion of the Court and the said discretion is to be exercised judiciously, taking note of the facts and circumstances of that particular case and also the conduct of the parties to the proceedings." The Court also held that "A party who seeks appointment of Receiver shall come to the Court with clean hands and the intention shall be bonafide and shall establish that appointment of Receiver is to preserve and protect the interest of subject matter of the suit."

The Court emphasized that any party seeking the appointment of a Receiver must approach the Court with sincerity and integrity, ensuring that their intentions are genuine and well-intentioned. Accordingly, the Petition was dismissed.

Cause Title: Prashanth K Shetty & Ors. v. Jayaksha K Suvarna & Ors. [WRIT PETITION No.20764/2023]

Click here to read/download the Judgement