Civil Procedure Code, 1908 — Order 40 Rule 1 — Appointment of Receiver — Discretionary jurisdiction — Panch Sadachar principles — Delay and absence of urgency — Improper exercise of discretion — Receiver appointment set aside. Where a receiver was appointed in a suit between a Trust and a Society (permissive occupant) despite absence of urgency, imminent danger, or proof of misuse, and where similar issues were already adjudicated in earlier litigation, Held, the trial court failed to apply the “panch sadachar” principles laid down in T. Krishnaswamy Chetty v. C. Thangavelu Chetty, AIR 1955 Mad 430. Appointment of receiver after three years of suit filing without emergent circumstances amounts to arbitrary exercise of discretion. Held further: Appointment of receiver is a drastic remedy and must be exercised sparingly when the plaintiff shows (i) adverse and conflicting claims, (ii) imminent danger or loss, and (iii) excellent prima facie chance of success. Mere allegations of misuse or defunct status of defendant society are insufficient.

APHC0103832025

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

(Special Original Jurisdiction)

MONDAY, THE FIFTEENTH DAY OF SEPTEMBER, TWO THOUSAND AND TWENTY-FIVE

PRESENT
THE HONOURABLE SRI JUSTICE CHALLA GUNARANJAN

CIVIL MISCELLANEOUS APPEAL No. 383 of 2025

Between:
The Nellore Progressive Union (Sri Nellore Vardhamana Samajam), represented by its Secretary.
... Appellant / Defendant

And
The Town Hall Trust Board, represented by its Secretary and Trustee.
... Respondents / Plaintiffs

Counsel for the Appellant: Sri C. Subodh
Counsel for the Respondents: Smt. Y.L. Sivakalpana Reddy

HEADNOTES

Civil Procedure Code, 1908 — Order 40 Rule 1 — Appointment of Receiver — Discretionary jurisdiction — Panch Sadachar principles — Delay and absence of urgency — Improper exercise of discretion — Receiver appointment set aside.

Where a receiver was appointed in a suit between a Trust and a Society (permissive occupant) despite absence of urgency, imminent danger, or proof of misuse, and where similar issues were already adjudicated in earlier litigation, Held, the trial court failed to apply the “panch sadachar” principles laid down in T. Krishnaswamy Chetty v. C. Thangavelu Chetty, AIR 1955 Mad 430. Appointment of receiver after three years of suit filing without emergent circumstances amounts to arbitrary exercise of discretion.

Held further: Appointment of receiver is a drastic remedy and must be exercised sparingly when the plaintiff shows (i) adverse and conflicting claims, (ii) imminent danger or loss, and (iii) excellent prima facie chance of success. Mere allegations of misuse or defunct status of defendant society are insufficient.

SUMMARY OF FACTS

1. The plaintiff–Trust filed O.S. No. 239 of 2016 before the Principal District Judge, Nellore, seeking declaration that the termination of permissive possession of the defendant–Society over certain trust properties (Town Hall complex portions) was valid, and for consequential delivery of possession and damages for alleged misuse of property.

2. The defendant–Society, a registered cultural body, was in permissive possession since 1917 under a trust deed (Doc. No.1334/1917) for maintaining a library, reading room, and tennis court.

3. Earlier litigation: in O.S. No. 467 of 2006, the Society obtained permanent injunction restraining the Trust from interference. The appellate court in A.S. No. 9 of 2010 upheld the injunction, recognising the Society’s right to use and lease the premises for cultural, literary, and allied purposes in accordance with the trust deed and bye-laws, while granting liberty to the Trust to file a fresh suit in case of misuse.

4. On that basis, the Trust filed the present suit (O.S. No. 239/2016). During pendency, after three years, it filed I.A. No. 1080 of 2019 under Order 40 Rule 1 CPC seeking appointment of receiver to manage the property and deposit rents, alleging (i) misuse of premises for commercial activities, and (ii) that the Society was defunct and non-functional.

5. The trial court, by order dated 02.04.2025, allowed the application and appointed a receiver, directing management of the property for library, reading, and tennis court purposes only, fixing remuneration at Rs.15,000 per month.

6. Aggrieved, the Society (defendant) preferred the present Civil Miscellaneous Appeal No. 383 of 2025 under Order 43 Rule 1 CPC.

CONTENTIONS

Appellant (Society):

• The order violates the settled “panch sadachar” principles in T. Krishnaswamy Chetty v. C. Thangavelu Chetty (AIR 1955 Mad 430).

• No urgency, imminent danger, or risk of dissipation shown; allegations are part of the suit itself.

• The application was filed belatedly after three years, showing acquiescence.

• Prior judgments (O.S. No.467/2006 and A.S. No.9/2010) recognised Society’s right to lease the premises for cultural and allied purposes — the same issues cannot be re-agitated through a receiver petition.

Respondents (Trust):

• Property is being misused for commercial purposes; rents are misappropriated by Society members.

• Society failed to cooperate with trial and has become defunct.

• Receiver necessary to safeguard property and apply income strictly per the trust deed.

• Relied on Bhaskar Aditya v. Minati Majumdar, 2002 SCC OnLine Cal 610 = AIR 2003 Cal 178, that appointment of receiver is permissible when just and convenient to prevent misuse.

COURT’S REASONING

1. Principles governing appointment of Receiver:
   Justice Challa Gunaranjan reaffirmed the five classic principles (“panch sadachar”) from T. Krishnaswamy Chetty, AIR 1955 Mad 430, for exercising equitable discretion under Order 40 Rule 1 CPC:

   • Adverse/conflicting claims to property.

   • Imminent danger of loss or damage.

   • Urgency requiring immediate court intervention.

   • Plaintiff’s excellent prima facie chance of success.

   • Clean hands, absence of delay, and bona fide conduct.

2. Application to the case:

   • There was no dispute as to ownership or possession; property ownership vested in the Trust and possession in the Society.

   • The alleged misuse or defunct status were issues already in the suit and did not constitute immediate danger warranting interlocutory interference.

   • The application was filed three years after the suit without new circumstances, violating the requirement of urgency.

   • The trial court’s reasoning focused on alleged non-cooperation by the defendant and prior use of premises for public meetings — factors irrelevant for appointment of receiver.

   • Previous judicial findings (O.S. No.467/2006; A.S. No.9/2010) had conclusively held that the Society was entitled to lease the premises for cultural and exhibition purposes. Ignoring these findings amounted to perversity.

3. Exercise of discretion:
   The trial court’s order was found to be mechanical and arbitrary, lacking any finding of (i) excellent prima facie case, (ii) imminent loss, or (iii) urgency. The discretion was not exercised in accordance with judicial principles.

JUDGMENT / CONCLUSION

“The trial Court, ignoring binding findings in the earlier litigation, could not have appointed a receiver merely on allegations already forming part of the suit. No imminent danger or emergency was shown. The discretion exercised is perverse and contrary to the spirit of the ‘panch sadachar’ governing receivership.”

Accordingly, the impugned order dated 02.04.2025 in I.A. No.1080 of 2019 in O.S. No.239 of 2016 on the file of the Principal District Judge, Nellore, is set aside.

The Civil Miscellaneous Appeal is allowed.
No order as to costs.
Pending interlocutory applications, if any, stand closed.

— Challa Gunaranjan, J.
Date: 15.09.2025

ANALYSIS 

This judgment is a textbook reaffirmation of the equitable principles guiding receivership under Order 40 Rule 1 CPC. Justice Challa Gunaranjan meticulously revisits the T. Krishnaswamy Chetty “panch sadachar,” underscoring that:

• Appointment of a receiver is not a matter of course;

• It must rest on urgency, danger, and a strong prima facie case;

• It cannot be used to gain possession indirectly or to prejudge issues pending in trial.

The Court also emphasizes the continuity of findings — when earlier judicial determinations uphold the right of a party to possess or manage property under a trust, later interlocutory orders cannot unsettle those rights absent a demonstrable change in circumstances.

This decision aligns with consistent precedent that receiver appointments are exceptional, not substitutive of adjudication. The analysis also highlights the balance between trust management interests and society’s lawful occupation rights, reaffirming judicial restraint in property disputes with long-standing permissive possession.

FINAL DISPOSITION

• Civil Miscellaneous Appeal No. 383 of 2025 — Allowed.

• Order appointing receiver (dated 02.04.2025) — Set aside.

• No order as to costs.

• Pending applications — Closed.