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Criminal Procedure Code QUESTION #9520
Question 1
A suit for dissolution of a firm is filed. The trial Court appoints a receiver to manage the firm's affairs pending the suit. The receiver, acting in that capacity, enters into a contract with a third party T. T later sues the firm for breach of this contract. The firm argues T should have sued the receiver personally. Is the firm liable?
  • Yes; but only the Court can be sued for the receiver's acts
  • Yes; a receiver acts as an officer of the Court and on behalf of the parties; contracts entered into by the receiver in the ordinary course of managing the firm may bind the firm and the estate under receivership, subject to the terms of the Court's order✔️
  • No; T should have obtained the Court's leave before contracting with the receiver
  • No; the receiver acts in personal capacity alone
Correct Answer Explanation
Under Order XL CPC, a receiver is an officer of the Court appointed to preserve and manage property. He acts under the Court's authority and for the benefit of the estate. Contracts entered in the ordinary course by the receiver in managing the firm bind the estate. Third parties dealing with the receiver in good faith may proceed against the assets of the estate.