Order XL Rule 3 CPC: Duties of a Court-Appointed Receiver

Order XL Rule 3 (also called Order 40 Rule 3) of the Code of Civil Procedure, 1908 sets out four essential duties of a receiver appointed by a civil court: furnishing security when directed, submitting accounts, paying amounts due and answering for property losses caused by wilful default or gross negligence.

Text of Order XL Rule 3 - Duties

Source: First Schedule, Order XL, Rule 3, Code of Civil Procedure, 1908. Consult the official India Code record and the official statutory PDF.

Meaning and scope of the rule

A receiver is a person appointed by the court to take custody of, preserve or manage property involved in litigation, within the powers stated in the appointment order. Under Order XL Rule 1, the court may appoint a receiver where it appears just and convenient, before or after a decree. A receiver acts subject to the court's directions; appointment does not itself confer unrestricted ownership rights.

The four statutory duties explained

1. Security for proper accounting - clause (a)

The court may require a receiver to furnish security to ensure proper accounting for money or other receipts relating to the property. Security is not automatic: the words "if any" leave the requirement and its terms to the court.

2. Submission of accounts - clause (b)

The receiver must submit accounts in the form and at the intervals specified by the court. These accounts should enable the court to examine receipts, expenditure and management of the property. The particular reporting schedule depends on the court's directions.

3. Payment of amounts due - clause (c)

The receiver must pay the amount due from the receivership as directed by the court. The court's order determines the relevant payment obligation, including where and how payment is to be made.

4. Liability for loss - clause (d)

A receiver is responsible for loss to the property occasioned by wilful default or gross negligence. Wilful default generally involves deliberate failure to perform an obligation; gross negligence describes a serious departure from the care required in the circumstances. Liability under this clause is tied to loss caused by the specified conduct, not automatically to every decline in property value.

Enforcement under Order XL Rule 4

Order XL Rule 4, titled Enforcement of receiver's duties, provides a remedy where the receiver fails to submit accounts as directed, fails to pay amounts due as directed, or causes property loss through wilful default or gross negligence. The court may attach and sell the receiver's property, apply the proceeds towards amounts due or losses, and return any balance to the receiver. The court must assess the applicable facts and the relief warranted.

Related provisions

Order XL Rule 1: Appointment of receivers and powers that may be conferred by the court.

Order XL Rule 2: Remuneration of the receiver, fixed by general or special court order.

Order XL Rule 4: Enforcement of receiver's duties.

Order XL Rule 5: Appointment of the Collector as receiver in specified revenue-land cases, with the Collector's consent.

Practical significance

When a receiver is appointed, the parties and the receiver should carefully examine the appointment order, any security requirement, the accounting timetable and directions for handling receipts and payments. If a breach is alleged, the court's directions, records of management, evidence of loss and the statutory threshold for liability are particularly important. Applicable High Court rules and local amendments should also be checked.

This article explains the central CPC provision for general information and is not a substitute for advice on a specific proceeding.