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Krishna Bhagwan Agarwal and Another Vs. Ist Additional District Judge, Badaun and Others - Court Judgment

LegalCrystal Citation
SubjectCivil;Commercial
CourtAllahabad High Court
Decided On
Case NumberC.M.W.P. No. 6404 of 1999
Judge
Reported in1999(2)AWC1753
ActsCode of Civil Procedure (CPC), 1908 - Order 40, Rule 1; Constitution of India - Articles 225, 226 and 227; Indian Partnership Act - Sections 43
AppellantKrishna Bhagwan Agarwal and Another
Respondentist Additional District Judge, Badaun and Others
Appellant AdvocateSwapnil Kumar, Adv.
Respondent AdvocateAjit Kumar, Adv. and;S. C.
Cases ReferredIn K. P. A. V. Vellayappa Nadar v. Bhagirathi Ammal and
Excerpt:
civil - appointment of receiver in dissolution of partnership - order 40, rule 1 of code of civil procedure, 1908 - appointment of receiver discretionary relief - order should be passed on satisfaction that partnership property was in danger of being wasted or destroyed - it protects the interest of partner not involved in management of partnership - object of appointment to maintain things in their present condition during pendency of suit - special grounds of appointment may be misconduct or mismanagement or non-cooperation of one of the partners - court can give direction to appoint joint receiver also. - - kasganj, bisauli, though sharawan kumar is alleged to have managed delhi and kasganj branches up to the year 1979. sharawan kumar agarwal, it appears, was aggrieved on account of.....o. p. garg, j.1. the present writ petition under article 226 of the constitution of india involves the determination of the validity justification. correctness and propriety of the order of appointment of receiver under the provisions of order xl, rule 1 of the code of civil procedure in a suit for the relief of dissolution of the firm, rendition of accounts and partition and distribution of the properties and assets between the partners.2. the woodcut profile of the case is that a firm known as m/s. ayodhya prasad and sons, a partnership firm was constituted and brought into existence for carrying on the business in burmah shell products. hindustan livers limited products and cement, etc. on 1st april. 1963. the partnership business of the firm was initially spread-over at five places,.....
Judgment:

O. P. Garg, J.

1. The present writ petition under Article 226 of the Constitution of India involves the determination of the validity justification. correctness and propriety of the order of appointment of receiver under the provisions of Order XL, Rule 1 of the Code of Civil Procedure in a suit for the relief of dissolution of the firm, rendition of accounts and partition and distribution of the properties and assets between the partners.

2. The woodcut profile of the case is that a firm known as M/s. Ayodhya Prasad and Sons, a partnership firm was constituted and brought into existence for carrying on the business in Burmah Shell Products. Hindustan Livers Limited Products and Cement, etc. on 1st April. 1963. The partnership business of the firm was initially spread-over at five places, namely. Bilsi. Shaswan. Mathura. Ujhiani and Badaun. After sometimes, the business establishments at Mathura and Badaun were closed down on account of the policy of the Government to promote Indian Oil Corporation in preference to Burmah Shell. The firm business further got fillip as it was expanded in Delhi. Kasganj, and Biswauli. The headquarters of thefirm were at Ujhiani where the consolidated account of all the branches of the firm business were maintained. The partners of the firm. as would be apparent from the deed of partnership, which is Annexure-C.A. 1 to the counter-affidavit, were (1) Krishna Bhagwan Agarwal (present petitioner No. 1), (2) Ayodhya Prasad Agarwal (3) Sharawan Kumar Agarwal (plaintiff respondent No. 2), (4) Krishna Murari and (5) Hari Bhagwan. Krishna Bhagwan Agarwal, petitioner No. 1 had 50 per cent share of the profit or loss in the business while Ayodhya Prasad Agarwal had 20 per cent share. The other three remaining partners. namely Sharawan Kumar. Krishna Murari and Hari Bhagwan each had a share to the extent of 10 per cent. The various branches of the partnership firm were managed by different partners for the sake of convenience and efficient working. Ayodhya Prasad Agarwal was in the control and supervision of the branch at Ujhiani while Hari Bhagwan Agarwal was looking after the business at Bilsi and Shaswan. Krishna Bhagwan Agarwal petitioner No. 1 came to control and supervise the business of the branches at Delhi. Kasganj, Bisauli, though Sharawan Kumar is alleged to have managed Delhi and Kasganj branches up to the year 1979. Sharawan Kumar Agarwal, it appears, was aggrieved on account of the fact that the other partners who were in collusion with each other and had stopped working honestly, failed to submit the true accounts after 31.3.1979 and that the Income and Sales Tax returns had not been filed regularly with the result recovery of huge amounts were taken out and he was harassed for the payment of dues which he alone was not liable to pay. He served a notice dated 21.4.1981 on all the partners manifesting his intention to dissolve the partnership which was At Will and thereafter instituted a Suit No. 55 of 1982 in the Court of Civil Judge. Badaun, for the relief of dissolution of partnership, rendition of accounts and for partition and distribution of the properties and assets of the firm. The details of all the branches of partnership business are given at thefoot of the plaint. With the filing of the suit, the plaintiff-respondent No. 2 moved an application for appointment of receiver. The contesting partners who are defendant No. 1 to 4 to the suit, filed the objection as well as written statement. The plea taken by them is that the plaintiff-respondent No. 2 had no share in the partnership business and its properties and that' the firm had been dissolved on 30.9.1979 with the consent of all the partners after settling the accounts and that a new firm was brought into existence on 1.10.1979 of which the present petitioner Krishna Bhagwan and Vishnu Bhagwan only are the partners. It was further maintained that Bisauli Petrol Pump is only property subject to partition and the petitioner-respondent No. 2 has no share in the properties of the other branches of the business establishment. Ayodhya Prasad and Krishna Murari who were defendant Nos. 2 and 3 in the suit respectively died on 18.1.1980 and 20.9.1991. Their legal heirs and representatives have been substituted. The application for the appointment of the receiver moved by the plaintiff-respondent No. 2 was rejected by the trial court on 11.9.1987. The plaintiff-respondent No. 2 preferred a Misc. Civil Appeal No. 59 of 1992 which came to be decided by the 1st Additional District Judge. Badauh, who passed an order dated 9.2.1999 for the appointment of receiver. To challenge the said order passed in appeal, the petitioners have invoked the extraordinary jurisdiction of this Court under Article 225 of the Constitution of India with the prayer that the Order of appointment of receiver dated 9.2.1999 passed by the 1st Additional District Judge. Badaun, in Misc. Civil Appeal No. 59 of 1992 be quashed.

3. Counter and rejoinder-affidavits have been exchanged and with the consent of the parties' counsel this writ petition is being finally disposed of on merits in accordance with the Rules of the Court,

4. Heard Sri Pradeep Kumarassisted by Sri Swapnil Kumarlearned counsel for the petitioners and Sri Ajit Kumar on behalf of the plaintiff-respondent No. 2 atconsiderable length.

5. To begin with, it may be mentioned that it is an indubitable fact that a firm M/s. Ayodhya Prasad and Sons was brought into existence in the year 1963 by Ayodhya Prasad and his four sons who entered into a partnership agreement. Vishnu Bhagwan, petitioner No. 2--one of the five sons of Ayodhya Prasad was not associated as a partner in the firm. The business of the firm was carried out from branches located in different cities and ultimately in course of time, it came to be confined at six places, namely. Bisli. Shaswan Ujhiani, Delhi. Kasganj, and Bisauli. None of these business establishments was being looked after by Vishnu Bhagwan. He had no concern with the firm business. It is also a common case of the parties that it was a partnership At Will. Under the provisions of Section 43 of the Indian Partnership Act. a partnership At Will may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved from the date mentioned in the notice as the date of dissolution of it no date is mentioned, from the date of communication of the notice. Sharawan Kumar, plaintiff-respondent No. 2 undoubtedly was a partner of the firm and he served a notice in writing on other partners of his intention to dissolve the firm on 21.4.1981. The main thrust of the contesting defendant Nos. 1 to 4 was that a partnership firm which was constituted in the year, 1963 was dissolved with the consent and agreement of all the partners on 30.9.1979 and that w.e.f. 1.10.1979 a new firm came into existence in which plain tiff-respondent was not a partner. According to the petitioners, they are the only partners in the newly constituted firm. This aspect of the controversy has been dealt with in some details by the lower appellate court. It has come to the conclusion that the partnership firm constituted in the year, 1963 was not dissolvedon 30.9.1979. In this connection, evidence in the form of applications for renewal of the firm as well as the affidavit of late Ayodhya Prasad dated 12.2.1985, a copy of which is Annexure-C.A. 10 to the counter-affidavit, were considered in the context of the facts and circumstances attending the case. The firm which came into existence in the year 1963 continued to run on the business at least till 12.2.1985 a date which falls much after the institution of the suit by the plaintiff-respondent No. 2. Ayodhya Prasad father of the other four partners of the firm and who himself was a partner and had a share to the extent of 20 per cent in the firm business had filed an affidavit on 12.2.1985 deposing therein in unerring terms that the original partners of the firm including plaintiff-respondent No. 2 continued to run the business. Not only this, petitioner No, 2. Vishnu Bhagwan had asserted in Suit No. 230 of 1991 that the firm as was constituted on 1.4.1963 is still in existence. From the fact that there had been some changes in the managerial hands of the different branches. It cannot be inferred that the original firm came to be dissolved. There can be no presumption of dissolution of the partnership. That fact has to be proved and established because the presumption is always in favour of the running of the business and not in favour of its closure or its dissolution. The appellate court has recorded a prima facie finding of fact that the firm constituted in the year. 1963 continued to carry on the business and that its dissolution had never taken place on 30.9.1979. Some other prima facie findings have also been recorded by the lower appellate court in respect of which a roving enquiry is not possible and cannot be made by this writ court.

6. The findings recorded by lower appellate court are well reasoned based on fair reading and analysis of the material brought on record. In writ jurisdiction, controversial facts cannot be gone into and sifted in the absence of evidence, in the case of Chandauarkar Stta Ratna Rao v. Ashalata S. Guram, : [1986]3SCR866 , the question raised was whether the High Court was justified in taking the view and in upsetting the finding recorded by the appellate Bench. It was held that while considering this question, it has to be borne in mind that the High Court was exercising its jurisdiction under Article 227 of the Constitution of India. In the exercise of this jurisdiction the High Court can set aside or ignore the findings of fact of an inferior court or Tribunal, if there was no evidence to justify such a conclusion and If no reasonable person could possibly have come to the conclusion which the Court or Tribunal has come or in other words it is a finding which was perverse in law. Except to the limited extent indicated above, the High Court has no jurisdiction to interfere with the findings of fact. This decision was later on considered and approved by the Apex Court in the case of Mani Nariman Daruwala v. Phiroz N. Bhatena and others AIR 1991 SC 1494. In the decision of this Court in Syed Mazhar Mustafa Jajri and another v. Rent Control and Eviction Officer, Allahabad, 1992 AWC 190, scope of sifting of the facts in writ jurisdiction came to be considered. In that case the following observations of the Apex Court in Swarana Singh v. State of Punjab. AIR 1975 SC 232, were noticed :

'It is well-settled that certiorari jurisdiction can be exercised only for correcting errors of jurisdiction committed by inferior courts or tribunals. A writ of certiorari can be issued only in the excise of supervisory jurisdiction which is different from appellate jurisdiction. The Court exercising special jurisdiction under Article 226 if not entitled to Act as an appellate court, this limitation necessarily means that findings of fact reached by the inferior court of tribunal as a result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, howsoever, grave it may appear to be.'

Similar view was taken by Babhoot Mal Rai Chand Oswal v. Laxmi Bai R. Tarte : AIR1975SC1297 . Applying the tests laid down in the aforesaid cases. I am unable to persuade myself to hold that the findings of fact recorded by the lower appellate court suffer from such infirmity so as to justify interference with the said findings either under Article 226 or 227 of the Constitution of India. Therefore, the prima facie finding of fact recorded by the tower appellate court that originally firm M/s. Ayodhya Prasad and Sons brought into existence in the year, 1963 was never dissolved on 30.9.1979 with the consent of the partners cannot be reappraised by this Court in writ jurisdiction. The said finding cannot be said to be perverse, arbitrary or based on no evidence.

7. Now it is the time to consider the question whether the lower appellate court was justified in appointing the receiver to take over and manage the firm business which is being carried out through various branches in different cities. The main thrust of the learned counsel for the petitioners was that it is never advisable, just or proper to appoint a receiver in the case where the partnership business is in its strides. In support of his contention, the learned counsel for the petitioners placed reliance on the decision of the Apex Court in the case of K. P. A. Vellayappa Near v. Bhagirathi Ammal and others : (1997)1SCC211 ; Khaderan Ram and others v. Sharda Prasad and others : AIR1985All34 ; Subhash Chandra Agarwal and others v. District Judge, Mathura, 1995 AWC 262 and Amar Nath Gupta u. Om Prakash Verma, 1995 RD (HC) 79. The considerations which determine the grant or refusal rest on well-known principles but no Court has been able to lay down unvarying and inflexible rules applying to all circumstances and eventualities. The fact of the actual case are of primary consideration which determine the exercise of the discretionary power. It is true that the power is exercised sparingly and with caution and circumspection where circumstances require a summary relief. A receiver isto be appointed only in a clear case and where there is necessity or occasion for the appointment. Appointment of a receiver must not be a mere weapon of coercion and the Courts do not exercise this discretionary power in the absence of a strong case. The discretion of the trial court ought not to be disturbed where it is rested on a consideration of the facts and circumstances bearing in mind the principles applicable.

8. The question which stares atour face is whether the principles oflaw laid down in the aforesaid casesapply to the factual matrix of thepresent case. There is no doubt aboutthe fact that the appointment of areceiver is recognised as one of theharshest remedies which the lawprovides for the enforcement of therights and is allowable only inextreme cases and in circumstanceswhere the interest of the personseeking the appointment of a receiveris exposed to 'manifest peril'.Therefore, this exceedingly delicateand responsible duty has to bedischarged by the Court with utmostcaution only when five requirementsembodies in the words 'just andconvenient' in Order XL. Rule 1 arefulfilled by the facts of the case underconsideration. The aboveobservations came to be made in thecase of T. Krishna Swamy Chetty v. C.Thangavelu Chetty. : AIR1955Mad430 . The five requirements laid downtherein are as follows :

'1. The appointment of a receiver pending a suit is a matter resting in the discretion of theCourt.

2. The Court should not appoint a receiver except upon proof by the plaintiff that prima facie he has a very excellent chance of succeeding in the suit.

3. Not only must the plaintiff show a case of adverse and conflicting claims to property. but he must show some emergency of danger or loss demanding immediate action and of his own right he mustbe reasonably clear and free from doubt. The element of danger is an importantconsideration.

4. An order appointing a receiver will not be made where it has the effect of depriving a defendant of a 'de facto' possession, since that might cause irreparable wrong. It would be different where the property is shown to be 'in medio' that is to say, in the enjoyment of no one. And.

5. The Court, on the application made for the appointment of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame.'

The above case was followed by the Mysore High Court in Srinivasa Rao u. Babu Ran. AIR 1970 Mys 141. In the case of Dilman Rai v. Srinivasa Sharma. AIR 1983 Sikkim 11, it was observed that an order appointing receiver will not be made where it has the effect of depriving the defendant of a 'de facto' possession since that might cause irreparable wrong. It was cautioned that the Court will not act on a possible danger only and 'remote or part damage' will not suffice as a ground, but there must be well grounded apprehension of immediate 'injury and danger' and 'danger of suffering irreparable loss'. A Division Bench of this Court had held in S. B. Industries Freegunj v. United Bank of India. : AIR1978All189 , that to justify the appointment of receiver plaintiff must establish firstly, a primafacie good case and secondly, that it is necessary to prevent fraud and to protect and preserve the property against imminent danger, before he comes and seeks the relief of appointment of receiver. Before the plaintiff can have a receiver appointed he has to satisfy the Court that he has an interest in the property involved in the suit, i.e., the subsisting interest on the basis of partnership, and that he has special equity in his favour. Appointment of areceiver is an equitable relief and will be granted on equitable considerations mainly.

9. In a suit for dissolution of partnership, rendition of accounts and partition and distribution of its property and assets, various imponderables and contingencies arise in the matter of appointment of receiver. The only object and effect of the appointment of receiver is to maintain the things in their present condition during the pendency of the suit. The effect of appointment of receiver of running a partnership is that it operates as an injunction against other partners. Therefore, unless some special grounds are established for doing so, the Court would generally be slow enough in appointing a receiver. The special grounds may be misconduct of a partner which may be of such a nature as to show that he is no longer to be trusted, as for example, he is carrying on trade of his own with partnership property or if there is any mismanagement which may endanger the whole concern or if that partner is acting in a manner inconsistent with his duties and obligations or has excluded other partner from fruits of partnership firm, or apart from non-cooperation of one of the partners in the management, if the quarrels are such as to occasion a complete deadlock in carrying on the business. Prem Prakash Kapoor v. Govind Ram Kapoor, AIR 1976 J&K; 37. is an authority on the point that if it is established that the plaintiff had been excluded from the business of the firm and the Court is of the view that the firm assets were exposed to 'manifest peril', the order of appointment of a receiver would be eminently suited particularly when the defendants had taken over the stock in trade and the business of the firm and were dealing with the same as their own property after entering into a new partnership. A reference may also be made to the earlier decision in the case of Nihalchand L. J. Narain and others . Ram Niwas Munna Lal and others. , in which it was held that a receiver may be appointed where there is a reasonable apprehension tothe property, assets or income and are in danger of being injured, misused or dissipated. The property should be preserved from loss of wastage so that the final relief may be effective. The appointment of a receiver in such circumstances does not result in harassment to a party but protects the rights of the injured party by keeping intact, where a partner excludes another from the management of the partnership affairs, a case is made out for appointment of a receiver and this doctrine has been acted upon even where the defendant contends that the plaintiff is not a partner or that he has no interest in the partnership assets. Abni Kumar Mukherji v. Nand Kishore , is a decision in which it was held that as a general rule the Court will not appoint the receiver unless the dissolution of the partnership firm is sought. In an oft quoted case of Ramchandrayya v. Nethi Iswarayya AIR 1952 Hyd 139. the view taken was that in a suit relating to the partnership concern, even though no circumstances tending to jeopardize the partnership assets be shown, the Court would be justified in appointing the receiver if the defendant seeks to exclude co-partners from the Management. A more precise view was taken in the case of Sharyau Armando Pareira v. Vishnu Yeshwant Sawant and another. AIR 1981 Goa Daman and Diu 57, in which it was observed that a receiver is to be appointed 'as a matter of course' when a partnership is dissolved under the orders of the Court if a partnership is already dissolved and any of the parties has come to the Court for seeking relief due to him as an ex-partner. The main purpose to appoint a receiver is to take charge of the partnership assets, collect the same and convert it into cash, if necessary, and to discharge the debts of the firm and thereafter divide the surplus between the partners.

10. The extension of the above principles is to be found incorporated in the Division Bench case of Patna High Court in Sudhanshu Kant v. Mahendra Nath. : AIR1965Pat144 .Paragraph 4 of the report reads as follows :

'4. Before the plaintiff can have a receiver appointed, he has to satisfy the Court that he has an interest in the property involved in the suit and that he has special equity in his favour. Appointment of a receiver is an equitable relief and will be granted on equitable grounds mainly. Though Order XL. Rule 1. Civil Procedure Code, has authorised the Court to appoint a receiver when it is found just and convenient in a suit, it is nothing more than the equitable considerations that used to weigh in the mind of the Court for giving an equitable relief by appointment of a receiver to a suitor. This is only a provision which declares what used to be done before it was put under an enactment. There are certain guiding principles which the Court takes into account when a party asks for the appointment of a receiver in respect of the subject-mater of a suit. Some of those principles are that the applicant must have special equity in his favour and make out a strong prima facie case against the opposite parly and show that he has a fair chance of success in the suit. If there is any apprehension of any danger or waste to the suit property or where the applicant makes out that the property is exposed to manifest peril, the Court will feel, inclined to prevent that by putting a receiver in charge of the same. A mere shadowy claim woven in the plaint with allegations which are inconsistent and apparently misleading cannot invoked the Court's assistance in this respect.'

The cases of Bhupendra Nath v. Manohar Mukherjee. : AIR1924Cal456 ; P. C. L. Choudhuri v. V.K. Singha and H.C. Dutt. AIR 1922 Pat 318 ; Banwari Lal v. Moti Lal. AIR 1922 Pat 492 : Kunhan Menon v. Kannan Menon. AIR 1924 Mad 482 ; Benoy Krishna v. Satish Chandra. 55 Ind App 131 : AIR 1928 PC 49 ; Alkama Bibi v. Istak Hussam : AIR1925Cal970 ; Krishnaswamy v. Thangauelu : AIR1955Mad430 and Munianmal v.Ronsonathan Nayagar : AIR1955Mad571 . lay down such tests. Again in Moti Lal v. Badri Nath. AIR 1982 J&K; 1, which was a suit by one of the partners for dissolution of partnership, the Court accepting the ground that the plaintiff had no access to management and the accounts of the business, held the appointment of the receiver justified. It is well embedded principle of law that a receiver is to be appointed as a matter of course when a partnership is dissolved. In a suit for dissolution of a partnership, a receiver can also be appointed before the adjudication if the circumstances of the case justify such a measure.

11. In the case of Khaderan Ram (supra) relied upon by the learned counsel for the petitioners, the legal position has been succinctly summarised as below :

The sum and substance of a perusal of this entire law on the subject is that if the partnership has been dissolved or is sought to be dissolved by filing of the suit receiver can be appointed as a matter of course provided his appointment is sought for the taking of the assets of the firm and ultimately for distribution thereof to the partners and the relationship between the partners is extremely strained. In the cases in which one of the partners has completely excluded the other from the Management and the profits of the firm and funds are misappropriated, receiver can again be appointed but for a running firm, the dissolution of which is not established, because that will affect the position of the person who is running the business and is in de facto possession of the same.'

In the above case, the application for appointment of receiver was held to have been rightly rejected on the ground that it appeared from the circumstances on the record that that was not a case of exclusion of plaintiff-partners from the business but their voluntary non-cooperation in the management and that therewas nothing on record to show that the defendants were stopping the plaintiff-revisionist from exercising their rights from going to cinema premises or looking the accounts that were being maintained. It was a case where the application for appointment of receiver was rejected in view of the established facts as mentioned above. In K. P. A. V. Vellayappa Nadar v. Bhagirathi Ammal and others (supra), relied upon by the learned counsel for the petitioners, the appellant due to his old age, had stepped out from the business, forgoing his right to share in the goodwill of the firm and the partners had agreed to lake over the old partnership in consideration of setting off of losses, if any, from the business the amount payable towards the share of the appellant in the goodwill of the firm etc. Consequently, the partnership firm mutually stood dissolved and the new partnership had come into existence to which admittedly the appellant was not a partner, nor did they claim that he was being paid any profits out of the business carried on thereafter. It was in these circumstances that the appellant was not found liable to render the accounts.

12. In the backdrop of the above legal position, it is clear that the appointment of a receiver is a discretionary relief, and such an order must be passed with great caution and circumspection and only on being satisfied that the partnership property was in danger of being wasted or destroyed. Now let us examine the correctness and propriety of the impugned order passed by the lower appellate court. The entire edifice of the partnership rests on mutual faith and confidence and co-operation. The partners are bound to cany on the business of the firm to' the greatest common advantage ; to be just and faithful to each other and render true accounts and full information of all things affecting the firm to any partner. Similarly, every partner has a right to have access and to inspect any of the books of the firm. A partner has interest in each and every asset of the firm. Including in the intangible innature and nebulous in character of good will. In the absence of all these basic and essential elements/ requirements, the partnership is bound to crumble down. According to the petitioners, the original partnership stood dissolved on 30.9.1979 as it had been substituted by a new one. The plaintiff/ respondent No. 2 manifested his intention to dissolve the partnership At Will by serving a notice in writing on 21.4.1981. Therefore, it is a case where both the warring groups are unanimous on the point that the original partnership has failed, Even though on facts, as has been prima facie found by the first appellate court that the original partnership is still surviving and has not been dissolved, the fact remains that its properties and assets have to be properly partitioned and distributed amongst the partners in proportion to their respective shares. The lower appellate court has rightly observed that the accounting does not only mean that the profits and losses have been understood by the partners. On the other hand, it necessarily implies that the properties and assets of the firm are yet to be partitioned and distributed amongst the partners. Unless this exercise is completed, the dispute between the partners continues and the aggrieved partner, who has been denied the access to the accounts and the right to get his share in the property and assets, has a strong case for the appointment of the receiver. Here, the petitioners have adopted an attitude of hostility by totally excluding the plaintiff-respondent No. 2 from the partnership business. They have taken the plea that he is no longer a partner in the firm and, therefore, has no share, whatsoever, in the properties and assets of the firm. This amounts to bizarre denial of the rights of a partner and his deliberate expulsion from the firm business. The relations between the partners, who are the real brothers, are not only strained but extremely bitter. The concept of mutuality and cohesion between the partners stands shattered. Its natural consequence is that the plaintiff-respondent No. 2stands deprived of his valuable and indefeasible right to take part in the business or to have access to the accounts of the firm. It will not be out of place to mention that there has been a protracted litigation between the partners. Even the present suit has continued to pend for the last about 17 years. During this period, the petitioners and other partners who do not see eye with the plaintiff-respondent No. 2, must have been successful in their design to further damage his interest and to make manipulations in the accounts of the firm. The petitioners, it is alleged, have no regard to the rights of their own brother i.e., plaintiff-respondent No. 2. There are allegations that the petitioners have been dealing with the properties and assets of the partnership firm as their own. At one stage, they had held out themselves to be the only partners of the firm but their attempts to get them recognised as such by the Sales (now Trade) Tax Department were foiled due to the intervention of the plaintiff-respondent No. 2 as well as affidavit filed by their father-Ayodhya Prasad. Not only this, the petitioners have also attempted to procure the licence of the dealership in oil in their own names treating the establishment at Shaswan as their own personal in contradistinction to the partnership business. The plaintiff-respondent No. 2 was eager to participate in the business activities of the firm and to discharge his duties as a partner but he was prevented from doing so by the petitioners. From the above facts, the exclusion of a partner from the partnership is complete. The thrust of the various decisions, referred to above, is that where a partner has been excluded from the partnership and its properties and assets have not been partitioned or distributed, appointment of receiver, as an interim measure, should be the most efficacious relief. In view of the well established facts and the circumstances attending the case, the order of appointment of receiver should have been passed as a matter of course for the preservation of the assets and the properties of the firm. The plain tiff-respondent No. 2 hasmade out a case that there is danger of waste and dissipation of the assets of the firm.

13. There is yet another aspect of the matter. The appointment of receiver as stated above, la a discretionary relief. If the appellate court has exercised its discretion according to well established judicial norms and parameters. In that event, there can possibly be no occasion to interfere with the order. In the case of Subhash Chand jain v. Hari Singh AIR 1997SC1148, the Apex Court pointed out that in the matter pertaining to dissolution of partnership and accounts, in case the Court is prima facie satisfied that the discretion has been correctly exercised, in that event the appellate court would not be justified in interfering with an order of appointment of receiver. This dictum of the Apex Court applies on all fours to the facts of the present writ petition. The first appellate court has taken all precautions in exercising the judicial discretion and consequently, this Court would not be justified in making any interference with the order. In my quest to reach the correct conclusion, I have scrutinised and analysed the various facts and circumstances of the case and find that the learned lower appellate court has approached the matter in a most judicious manner. As a matter of fact, if a receiver is not appointed, the partnership property and the assets would run the serious and probable risk of being squandered and wasted. The order passed by the lower appellate court, therefore, is quite circumspect, reasonable and equitable. As it is, the order of appointment of receiver does not call for any interference in the writ jurisdiction.

14. However, an unsavoury feature of the order of the lower appellate court is that It has passed a blanket order of appointment of receiver and has left the matter to be tackled for implementation by the trial court. No guidelines have been provided by the lower appellate court. The question, therefore, remains who should be appointed the receiver and with what powers and functions? One cannot lose sight of the fact that thepartnership consists of a huge business dealing in oil products and cement spread over in different cities, having its headquarters at Ujhiani. Krishna Bhagwan Agarwal petitioner No. 1 is a partner of majority share. i.e., 50 paise in a rupee while the share of the rest of the partners is either 20% or 1O% in the partnership business. He is obviously in the effective control of the affairs of the business. Every commercial establishment has its own ways of dealing with the business, its suppliers and customers. Needless to say. the ultimate object of every business house is to make greater profits and at the same time, to give maximum satisfaction to those who come to deal with--be they its suppliers or customers. Every partner, particularly managing partner, who is in the control of its affairs is expected to assiduously work to achieve that end. If an outsider is inducted as a receiver, he would be a total stranger to the partnership business ignorant of the methodology of the existing business and the feelings of the other partners, suppliers and the customers. Even though the relations between the plaintiff-respondent No. 2 and the contesting petitioners and other partners do not appear to be quite cordial--on the other hand, bitterness and strained relations have crept in, in their relationship--It cannot be forgotten that they are the brothers and other close family members. It would, therefore, be desirable that' instead of appointing a stranger as a receiver some of the partners are appointed as joint-receivers. If by any arrangement, the interest of the plaintiff-respondent No. 2 can be safeguarded and the partnership properties and assets are preserved and protected while the petitioner No. 1 and other partners continue in their position as before in regard to that, neither party is likely to suffer. In that view and in consideration of all the circumstances of the case. I feel that the petitioner No. 1 who has substantial share in the partnership business and the plaintiff-respondent No. 2, who is actually the aggrieved party, are appointed joint receivers.

15. This writ petition, therefore. is finally disposed of with the following directions :

(i) The order of appointment of receiver dated 9.2.1999 passed by 1st AdditionalDistrict Judge. Badaun, is hereby upheld ;

(ii) With effect from 26th April. 1999, the petitioner No. 1 Krishna Bhagwan Agarwal and plaintiff-respondent No. 2 Shrawan Kumar are appointed as the Joint Receivers of the partnership business, its properties and assets, which is being carried out in the firm name of M/s. Ayodhya Prasad and Sons. having its principal office/ headquarters at Ujhiani and branches of different business establishments at Bilsi, Shaswan, Ujhiani, Delhi, Kasganj and Biswaull ;

(iii) Both of them will be required to maintain proper accounts of the assets of the partnership--both capital and liquid including the Income accruing from the business. and submit quarterly returns before the trial court pending final conclusion of the suit;

(iv) They will also be required not to draw money from the business for personal use in excess of the normal businessrequirements ;

(v) Lest the petitioners or other partners should misuse the property or cook up the accounts it will be proper if a nominee of plaintiff-respondent No. 2 is associated as a co-Accountant with the existing accountant and the accounts of the firm are required to be maintained under the Joint signatures of the two accountants, i.e., nominee of the plaintiff-respondent No. 2 in addition to keep watch over the business and its assets generally. The plaintiff-respondent No. 2 or hisnominee shall have access to and to inspect and copy any of the books of the firm without any let or hindrance from the petitioners or other partners ;

(vi) The plaintiff-respondent No. 2 or his nominee shall have access to all parts of the commercial establishments and branches in the different cities ;

(vii) All the financial transactions and withdrawals of money shall be carried out under the joint signatures of the petitioner No. 1 Krishna Bhagwan Agarwal and plaintiff-respondent No. 2 Shrawan Kumar Agarwal and none of the partners shall be entitled to receive payment of money in their individual capacity ;

(viii) The trial court shall bring to the notice of the Indian Oil Corporation ; Trade Tax Department : Income Tax Department ; Bankers and suppliers as well as all concerned authorities and the Departments the aforesaid directions ;

(ix) If for any reason, whatsoever. the trial court finds that the arrangement of joint receivership as ordered above, is not workable and any of the partners is creating bottlenecks in the implementation of the above directions, it shall be at liberty to appoint a body of two or more persons, may be strangers, as receiver to run the partnership business and to manage and protect its properties and assets ;

(x) In view of the fact that the suit was instituted in the year 1982, the trial court is directed to decide the same with all expedition preferably within a period of six months from the date a certified copy of this judgment and order is produced before it.

Let certified copies of this judgment and order be supplied to the learned counsel for the parties on payment of usual charges within 48 hours fromtoday.


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