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Bhagawan Ram Kairi Vs. Radhika Ranjan Das and ors. - Court Judgment

LegalCrystal Citation
Subject;Civil
CourtGuwahati High Court
Decided On
Case NumberFirst Misc. Appeal No. 9 of 1951 with Civil Rule No. 68 (M) of 1951
Judge
ActsPartnership Act, 1932 - Sections 44; Code of Civil Procedure (CPC) , 1908 - Order 40, Rule 1
AppellantBhagawan Ram Kairi
RespondentRadhika Ranjan Das and ors.
Appellant AdvocateS.M. Lahiri, S.K. Ghose and B.C. Barua, Advs.
Respondent AdvocateG.K. Deb and N.M. Dam, Advs.
DispositionAppeal disallowed
Prior history
Ram Labhaya, J.
1. This First Miscellaneous Appeal is against an order of the learned Additional District Judge, U. A. D., dated 6-4-1951, by which the plaintiff's application for the appointment of a receiver was disallowed. The prayer contained in the plaint was: (a) that the partnership known as 'Ranjan Talkies' be dissolved; (b) that the plaintiff be granted a decree for Rs. 78740-10-9 pies due to him up to the time of institution of the suit; (c) that he may also be granted a decree for
Excerpt:
.....possession would take undue advantage of his position, a receiver must be appointed in a suit for dissolution of partnership when such an appointment is prayed for. if the plaintiff should ultimately fail in establishing his right to obtain a dissolution of the firm, the court by its interim interference would have caused mischief to the defendants for which the subsequent restoration of the property may afford no adequate compensation. a well-grounded fear that the property in dispute will be wasted or damaged or that irreparable harm may be done to it unless the court extends to it its protection, may afford necessary justification for the appointment of a receiver. but at this stage we are not prepared to say that the plaintiff's apprehension is well-founded. 15. the learned counsel..........agreement (defendants) repaid to the 2nd party (plaintiff) the amount of advance made by him, the partnership business was to come to an end. it the amount advanced could not be repaid within the stipulated period of 5 years, the partnership was to continue, and the 2nd party (plaintiff) was to continue to share the profit and loss of the business to the same extent as the 1st party. 3. the partnership deed was executed on 23-6-1950. the suit out of which this appeal arises was instituted on 8-3-1951 in spite of the plaintiff's allegation that the amount advanced by him to the partnership has not so far been repaid. the dissolution of the partnership long before the expiry of the stipulated period of 5 years is claimed on the following grounds: (1) that contrary to the terms of the.....
Judgment:

Ram Labhaya, J.

1. This First Miscellaneous Appeal is against an order of the learned Additional District Judge, U. A. D., dated 6-4-1951, by which the plaintiff's application for the appointment of a receiver was disallowed. The prayer contained in the plaint was: (a) that the partnership known as 'Ranjan Talkies' be dissolved; (b) that the plaintiff be granted a decree for Rs. 78740-10-9 pies due to him up to the time of institution of the suit; (c) that he may also be granted a decree for whatever amount may be found to he due to him after taking of accounts, including whatever amount may become due to him after the institution of the suit; (d) that a receiver be appointed for the management of the business till plaintiff's claim is satisfied; (e) that the business be wound up after the plaintiff's dues are realised.

2. The partnership was for 5 years but this term as to the duration of the partnership was subject to the qualification that if within 5 years, the 1st party to the partnership agreement (defendants) repaid to the 2nd party (plaintiff) the amount of advance made by him, the partnership business was to come to an end. It the amount advanced could not be repaid within the stipulated period of 5 years, the partnership was to continue, and the 2nd party (plaintiff) was to continue to share the profit and loss of the business to the same extent as the 1st party.

3. The partnership deed was executed on 23-6-1950. The suit out of which this appeal arises was instituted on 8-3-1951 in spite of the plaintiff's allegation that the amount advanced by him to the partnership has not so far been repaid. The dissolution of the partnership long before the expiry of the stipulated period of 5 years is claimed on the following grounds: (1) that contrary to the terms of the partnership agreement which required settlement of accounts and the division of profits at the end of each month, the defendants had failed to render accounts; thus giving ground for the suspicion that they were making and appropriating undisclosed gains by deceitful means; (2) that defendants failed to render accounts of receipts from sources, such as the income from rent of shops and stalls within the compound of Ranjan Talkies, and the exhibition of slides of different concerns. These are said to have been dishonestly misappropriated; (3) fabrication of accounts and (4) the failure on the part of the defendants to appoint any Manager with the approval of the plaintiff in accordance with the terms of the partnership.

4. It is further alleged both in the plaint and in the application for the appointment of a Receiver that the defendants have no properties within the jurisdiction of the Court or anywhere else in the Dominion of India from which the money due to the plaintiff could be realised.

5. All the allegations made in the application for the appointment of a Receiver are strenuously denied. Both sides have put in affidavits in support of their respective statements. We have thus the word of the plaintiff against the word of the de-fendants. on all matters which bear on the question of the appointment of a Receiver, at this stage of the litigation.

6. The contingency provided in the deed of partnership on the happening of which the partnership was to stand dissolved, has admittedly not occurred. The plaintiff, in these circumstances, could pray for an order of dissolution of the partnership from the Court only on the grounds stated in Section 44, Partnership Act. The Court, under that section may order the dissolution of a firm on a partner becoming insane or otherwise permanently incapable of performing his duties as partner, or if a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business, or where a partner other than the partner suing wilfully or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business, or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him; or where the business of the firm cannot be carried on save at a loss; or on any other ground which renders it just and equitable that the firm should be dissolved.

7. The plaintiff has alleged that there have been serious and persistent breaches of the partnership agreement on the part of the defendants. He has also alleged fabrication of accounts and misappropriation of the income of the firm. If these allegations could be substantiated, the Court will have the power to order dissolution of the firm. In view, however, of the very serious conflict between the parties on these points, and in the absence of any evidence which the plaintiff may have led against the defendants, we do not feel justified in holding at this stage that the plaintiff will succeed in proving to the satisfaction of the Court the allegations on which he relies for obtaining dissolution of the partnership before the happening of the contingency which is to result in its dissolution. The most that may be said is that there is a real contest on these points between the parties, and the ultimate result of the litigation cannot fee envisaged with any degree of certainty. Speculation about it, when the litigation is just commencing, is not desirable, and we have no valid reason for the conclusion at this stage that the dissolution of the partnership, as prayed for, is something inevitable. No basis for such a view is available. Any observation to that effect will really prejudge the issue, which cannot be decided without evidence, in the circumstances of this case.

8. The question that next arises is--whether, in these circumstances, it is just and convenient to appoint a receiver. If dissolution of partnership is ordered, a receiver may be appointed in the normal course for the winding up of the business. Before dissolution, when it is a question whether dissolution could be ordered or not, the status quo should not be interfered with merely because there are differences between the partners and one of the partners has prayed for dissolution of the partnership. If it could be said from the circumstances of the case that the dissolution of the partnership is inevitable and the partners are on bad terms some method of safeguarding the interests of the parties may have to be devised. The appointment of a receiver may be one of these methods. But where such is not the case, it could not be said that it would be either just or convenient that a receiver be appointed.

As observed by Lindley on p. 633 of his work on the Law of Partnership,

'if a partnership is still subsisting no receiver will be appointed unless some special grounds can be shown or unless it is plain that an order for a dissolution will be made, whilst if a partnership is already dissolved the Court usually appoints a receiver as a matter of course.'

This view was followed in Eakuf Ali v. Meajan, 29 ind. cas. 686 (cal.) which has been relied on by Mr. Lahiri himself. The learned Judge of the Lower Burma High Court reproduced from p. 511 of 'Lindley on Partnership' the following proposition :

'That so far as is possible having regard to the right of every partner to carry on business himself, the Court will on dissolution interfere to protect and preserve the good will until it can be sold.'

9. They then pointed out that the way in which it (the Court) does interfere is to appoint a receiver of the partnership assets and further observed as follows :

'A dissolution is inevitable in the present case and we may regard as done what should have been done by the preliminary decree.'

10. The preliminary decree had been passed in that case though not in accordance with law. The learned Judges in any case held that the dissolution was inevitable. In these circumstances, they appointed a receiver. The head note of the case is misleading. The real basis of the order for the appointment of the receiver in the case was that the Court could in the circumstances of the case find that the dissolution was inevitable.

11. The observations in Kin Foo v. Whee Seik Cheng, A. I. R. 1925 Rang. 287 are to the effect that a partnership suit is not only an action in which the appointment of a receiver is usually claimed in the plaint itself but it is also one in which it is desirable and even necessary in most cases to appoint a receiver to preserve the property in dispute during the pendency of the suit and to prevent the partner in possession of the partnership property from taking undue advantage of his position, as against his co-partners who in the eye of law are equally with him the owners of the property. These observations do not seem to be in conflict with the statement of the law as contained in Lindley on Partnership. It may be true that in most partnership cases it would be necessary and desirable to appoint receivers to prevent the partner in possession from taking undue advantage of his position, but there is nothing in these remarks which would justify the contention that without regard to the position whether dissolution is inevitable or not and without being satisfied that there are reasonable grounds for believing that the partner in possession would take undue advantage of his position, a receiver must be appointed in a suit for dissolution of partnership when such an appointment is prayed for. Differences between partners may not necessarily make dissolution inevitable for it is not for every trivial departure from duty or violation of the articles of partnership or for every trifling fault or misconduct that a Court of Equity will interfere and decree a dissolution (vide Ghosh's 'Partnership Law in India and Pakistan' p. 372).

12. In Gus Alexander Mackenzie v. Himalaya Assurance Co. Ltd., A. I. R. 1926 cal. 745, circumstances which justify dissolution are brought out. Before dissolution is decreed, these circumstances must exist patently in order that the Court may be able to hold that the dissolution is inevitable. Such however is not the case here and therefore even this case is of no assistance to the appellant.

13. The plaintiff in his plaint has asked for the appointment of a receiver for the management of the business till his claim is realised. The appointment of a receiver for the management of a partnership business has no justification in law : vide Radha Kanta v. Benode Behari, A. I. R. 1934 cal. 444. A receiver may be appointed for realising the assets and for winding up purposes. The Court may, by taking charge of the partnership business through a Receiver, be doing wrong to the defendants which may prove to be irreparable. If the plaintiff should ultimately fail in establishing his right to obtain a dissolution of the firm, the Court by its interim interference would have caused mischief to the defendants for which the subsequent restoration of the property may afford no adequate compensation. The discretion that the Courts have in the matter of appointment of receivers has to be exercised not only judicially and according to recognised legal principles, but also with great caution. A well-grounded fear that the property in dispute will be wasted or damaged or that irreparable harm may be done to it unless the Court extends to it its protection, may afford necessary justification for the appointment of a receiver.

In this case, misappropriation of the income of the property is alleged; fabrication of accounts is pleaded, and fear of loss and damage is alleged. But at this stage we are not prepared to say that the plaintiff's apprehension is well-founded. Even the allegation that defendants have no property within the Dominion of India, from which the amount that may ultimately be found due to the plaintiff could be recovered, has been denied, and defendants have stated that they have properties worth about 4 lacs of rupees from which any sum due to the plaintiff could be easily recovered. We do not see any special equity in plaintiff's favour at this stage which would justify the appointment of a receiver. The defendants have to become the sole owners of the partnership business after the plaintiff's dues have been paid off. They are interested, therefore, even more than the plaintiff, in carrying on and continuing the business of the partnership. Plaintiff's advances are a charge on certain properties of the partnership business, though in case of loss, the claim of the plaintiff to recover the advance made by him may be reduced.

14. In these circumstances, the available material does not justify any finding which may form the foundation of an order for the appointment of a receiver.

15. The learned counsel for the appellant has also complained that the plaintiff was not given any opportunity to produce evidence in support of his allegations for the appointment of a receiver. We do not think the plaintiff has got any just grievance on this score. Objections by the defendants to the prayer for the appointment of a receiver were pat in on 17th March 1951. It is after this that the plaintiff put in certain documents which the learned Judge received on 2nd April 1951. He also heard arguments on the question on 2nd and 3rd April 1951 and gave his decision on 6th April 1951. The plaintiff did not ask for any opportunity to produce any other evidence. His counsel was content to argue the matter on the material which was then available to the Court, and cannot now turn round and urge that he was deprived of any reasonable opportunity to produce evidence in support of his application for the appointment of a receiver. In his anxiety to have an immediate order, he permitted the case to be argued without producing evidence which, if led, may possibly have justified the appointment of a receiver. We are not satisfied that the order of the learned Additional District Judge is open to any serious objection in point of propriety or principle. The exercise of discretion by the trial Judge has not been shown to be improper in any way. It should not be lightly interfered with in appeal in these circumstances. We, therefore, decline to allow this appeal. The Rule is discharged.

16. Hearing fee Rs. 32 to be paid to the respondents.

Deka, J.

17. I agree.


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