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Bishambhar Dayal Vs. Moolchand and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 163 of 1962
Judge
Reported inAIR1964Raj179
ActsSpecific Relief Act, 1877 - Sections 54
AppellantBishambhar Dayal
RespondentMoolchand and ors.
Appellant Advocate C.L. Agrawal and; R.S. Kejriwal, Advs.
Respondent Advocate P.C. Bhandari, Adv. for Respondents No. 2 and 3 and; J.S. Rastogi, Adv. for Respondent No. 1
DispositionAppeal allowed
Cases ReferredClements v. Norris
Excerpt:
.....and granting it is based on well known equitable principles. there are good number of instances where relief by way of injunction dan be granted as between the partners. these opening words written by the defendant sharvan lal himself clearly go to show, thatwhat is detailed in this document was agreed uponby all the partners. thisdocument clearly shows that the whole cinemabusiness was to be managed by the plaintiff throughhis manager inderjit. there is on the other hand, a good volume of evidence on record which has been discussed in the judgment of the trial court to show that defendants sharvanlal and bishambhar dayal paid salaries to the employees, realised rent from shopkeepers and sharvanlal was a nominee on behalf of prakash talkies for securing films from central circuit cine..........the cash and tomake payments according to the vouchers. thisdocument clearly shows that the whole cinemabusiness was to be managed by the plaintiff throughhis manager inderjit. the other defendants wereto do some duties connected with the busings andthose duties were evidently to be performed underthe supervision and instructions of the manager.this also finds support from the compromise arrived at in ex. a-1.' no finding was recorded by the learned judge whether the defendants had interfered with the management of the plaintiff or of his manager inderjit. similarly, there is no finding that the defendants had misconducted themselves and made the running of the business impossible. the defendants have denied the allegations made by the plaintiff with regard to their misconduct. it may.....
Judgment:

C.B. Bhargava, J.

1. This is a second appeal by the defendants Bishambhar Dayal and Sharvanlal. The latter died during the pendency of this appeal and his legal representatives have been brought on record. By the decree passed in this case by the learned Civil Judge, Gangapur and confirmed by the District Judge, Bharatpur, the defendants have been restrained from interfering by themselves or through others in the exhibition of films in cinema building known as Prakash Talkies or outside it at Hindaum Further by the decree, plaintiffs have been given possession of the cinema, house, its furniture and cinematograph etc. which was in possession of the receiver.

2. Moolchand plaintiff filed the suit and the plaint has been drawn in a very disingeneou's manner. There is no reference in the plaint to the partnership between the parties in the cinema business. Plaintiff describes himself as the sole proprietor of the cinema house known as Prakash Talkies in the town of Hindaun having a licence granted under the Rajasthan Cinema Regulations Act, 1952 expiring on 3ist March, 1960.

3. According to the plaint allegations, defendants were mere interlopers who on account ofbad relations with the plaintiffs were interferingin the exhibition Of films at the cinema house. Italso mentions that on account of the illegal activities of the defendants, the plaintiff had to take recourse to proceedings under Section 107 of the Codeof Criminal Procedure against the defendants. Onthese allegations the plaintiff proved for a permanent injunction being granted against thedefendants, from interfering in the running of thecinema business and other connected incidentalmatters.

4. According to the defendants there was a partnership between the parties and Prakash Talkies was a partnership concern there being a deed of partnership dated 15th July, 1958 embodying the terms of the agreement between them whichwas to govern their relationship. They stated thatall the management of the cinema was done bydefendant No. 4 Sharvanlal. Defendant No. 1Bishambhardayal kept cash and maintained accounts. It is admitted that licence for exhibitingthe films was obtained in the name of the plaintiff alone for the sake of convenience. It wasfurther stated that the plaintiff wanted to oustthem from the partnership business and in thefirst instance gave them a notice for dissolving thepartnership and also instituted criminal proceedingsbut having failed to achieve his object, filed thepresent suit for the purpose of depriving them oftheir legitimate rights in the partnership business.After the defendants' above reply the plaintiff submitted his replication and generally denied theallegations made in the written statement and saidthat the so-called partnership was illegal because itcontravened the terms of the licence granted tohim.

5. Learned counsel for the appellants has contended in this appeal that the relationship between the parties was that of partners and if there were any differences between them proper remedy for the plaintiff was to institute a suit for dissolution of partnership. It is contended that the plaintiff deliberately suppressed material facts in the plaint and had not come with clean hands. His own conduct showed that he wanted to oust defendants from the partnership business and under such circumstances relief by way of injunction which is an equitable relief should not have been granted to him merely on the ground that the licence for the exhibition of films stood in his name.

6. Learned counsel for the respondents on the other hand urges that the partnership let up by the defendants was illegal and it was not necessary for the plaintiff to file a suit for dissolution of partnership. It is urged that even according to the arrangement made between the parties vide Ex. 21, the entire management was to remain with the plaintiff. Even according to the finding of the courts below the business was being managed by the plaintiff through the manager Inderjit appointed by him till the institution of the suit. Further according to the terms of the licence, it is only the plaintiff who could undertake the exhibition of films and that right could not be assigned to any one else. In either case, therefore, learned counsel contends whether the partnership between the parties was legal or illegal, it is the plaintiff alone who was to manage the business and was entitled to exhibit the films.

It was also pointed out that the cinema building belonged to the plaintiff and he had made large investment in the business and now that one of the defendants i. e , Sharvanlal had died partnership even if it was not illegal, stood dissolved it is equitable that the plaintiff be put upon reasonable terms for the relief granted to him by the courts below. In support of his contention that the partnership set up by the defendants is illegal learned counsel for the respondents relies on a Full Bench decision of the Madras High Court in Velu Padayachi v. Sivasooriam Pillai, AIR 1950 Mad 444 and Viswanath v. Namak Chand Gupta, AIR 1955 Mad 536. Learned counsel for the appellantssays that the partnership in the present case was already in existence before the plaintiff obtained a licence and as such it cannot be held to be illegal, At any rate it is argued that an Agreement to share the profits and losses of the business does riot amount to assigning, subletting or otherwise transferring of licence so as to contravene the terms of the licence. Reliance is placed on Shiam Bihari Lal v. Malhi, AIR 1917 All 54 (1), Radhey Shiyam v. Mewa Lal, AIR 1929 All 210, Karson v. Gatlu Shivaji, ILR 37 Bom, 320, Shiv Dayal, Mela Mal v. Firm Bishan Dass Shankar Dass, AIR 1961 Punj 405, Mt. Manbharibai v. Bajrang Rice Mill Warasheoni, AIR 1956 Nag 225 and Gordhandas Kessowji v. Champsey Dossa, AIR 1921 PC 137.

7. The question about the legality of partnership has not been decided by the courts below although there was an issue on this point. The deed of partnership does not contain any term about obtaining the licence for exhibition of films. Whether there was any assigning, subletting or transferring of the licence by the plaintiff in pursuance of the deed of partnership has not been determined by the courts below. In the absence of such finding it would not be prudent to decide this question in this suit.

8. The main point for consideration is whether the plaintiff should be allowed the relief sought by him in the present suit irrespective of whether there is a legal partnership or not.

9. Injunction is an equitable relief and granting it is based on well known equitable principles. The Court has to consider in each case not merely whether the plaintiff's legal right has been infringed but also whether under all the circumstances of the case he ought to be granted an injunction as the proper and appropriate remedy for such infringement. It is a general rule that an injunction will not be granted for any purpose where the statute provides a particular remedy for the infringement of a right or property. At the same time jurisdiction of the court to protect the right by injunction is not excluded unless the statute so provides,

In India in the matter of granting injunction the rules for the guidance of the courts are to be found in Chapter X of the Specific Relief Act (sections 54, 55 and 56). The exercise of the court's jurisdiction to grant relief by injunction must, it is plain, in dispute between the partners, be attended from their very nature with great difficulty. Illustration (1) to Section 54 runs thus:

'A, B and C are partners, the partnership being determinable at will. A threatens to do an act tending to the destruction of the partnership property. B and C may, without seeking a dissolution of the partnership, sue for an injunction to restrain A from doing the act.'

It will be clear from the above illustration that as between the partners an injunction will not be refused simply because the dissolution of partnership is not sought. There are good number of instances where relief by way of injunction dan be granted as between the partners. Where a partner has been wrongfully expelled from the firm orwrongfully excluded from the enjoyment of the affairs of the partnership business by its co-partners, the court can grant an injunction restraining the other partners from preventing him from taking part in the business of the firm: Ganpat v. Annaji, ILR 23 Bom 144 and Virudachala Nattan v. Ramasami Nayakan, I Mad HCR 341. An injunction may also be issued against a partner res-training him from using the assets of the firm la a separate business carried on for a partner's own benefit and from using the partnership assets for renewal of a lease against the will of his partner: Clements v. Norris, 1878-8 Ch D 129.

'Where a partnership is not determinable at will, those partners who are desirous of carrying on the business in the proper way will be protected by the Court from the unwarranted acts of a copartner, whose only object may be to force the others to submit to him or to agree to a dissolution (Lindley on Partnership, I2th Edition page 552), Similar other instances can also be cited'.

In the instant case plaintiff's allegations are about the misconduct of the defendants that they had interfered with the exhibition of films and caused the disturbance of the peace with the result that the plaintiff had to keep the cinema closed for a week resulting in financial losses to him it is stated by Lindley on Partnership, 12 Edition at page 555 that:

'Mere squabbles and improprieties, arising from infirmities of temper, are not considered sufficient ground for an injunction; but if one partner excludes his co-partner from his rightful interference in the management of the partnership affairs, or if he persists in acting in violation of the partnership articles on any point of importance, or so grossly misconducts himself as to render it impossible for the business to be carried on in a proper manner, the Court will interfere for the protection of the other partpers.'

Keeping the above-principles in view it is to be seen whether it is established that the defendants have been illegally interfering in the management of the partnership affairs by the plaintiff or have been acting in violation of the terms of partnership or have so grossly misconducted themselves as to render the carrying on of the business impossible in a proper manner.

No proper issues were framed on these points beyond issue No. 2, which was in general terms viz., 'whether the plaintiff is entitled to permanent injunction in terms of para 7 of the plaint.' The trial Court only says that:

'Facts show that defendant threatened to invade the plaintiff's right. As a licensee the plaintiff should be allowed to run the cinema without interference from the defendants and ail injunction can be issued under Section 54 of the Specific Relief Act.'

No finding was recorded on these questions whether the defendants had interfered, if so in what manner with the plaintiff's management and whether the defendants had so grossly misconducted themselves as to render the carrying on of the partnership business impossible. The appellate Court considered the terms of Ex. 21 and observed that:

'These opening words written by the defendant Sharvan Lal himself clearly go to show, thatwhat is detailed in this document was agreed uponby all the partners. According to this documentthe plaintiff was assigned a duty of managing thewhole cinema. He alone was authorised to appoint and to remove the servants of the cinema tofix the salaries. The defendant Balchand wasassigned the duty of looking after the machinery.The manager Inderjit was to manage, the wholecinema under his supervision. Basant Kumar sonof the defendant Hari Charan was assigned thework of booking and they were to work accordingto the directions of the manager. Had Charanand Shaivan Lal were to do office work. Bishambhar Dayal defendant was to keep the cash and tomake payments according to the vouchers. Thisdocument clearly shows that the whole cinemabusiness was to be managed by the plaintiff throughhis manager Inderjit. The other defendants wereto do some duties connected with the busings andthose duties were evidently to be performed underthe supervision and instructions of the manager.This also finds support from the compromise arrived at in Ex. A-1.'

No finding was recorded by the learned Judge whether the defendants had interfered with the management of the plaintiff or of his manager Inderjit. Similarly, there is no finding that the defendants had misconducted themselves and made the running of the business impossible. The defendants have denied the allegations made by the plaintiff with regard to their misconduct.

It may be pointed out that the plaintiff has not based his case on Ex. 21, which was only produced during the course of the suit. It also does not bear the signatures of either party. According to Sharvarilal he had Only jotted down his suggestions but the same were not finalised and, the document was incomplete. The question whether this agreement was arrived at between the parties and was binding upon them was not put in issue. There is on the other hand, a good volume of evidence on record which has been discussed in the judgment of the trial Court to show that defendants Sharvanlal and Bishambhar Dayal paid salaries to the employees, realised rent from shopkeepers and Sharvanlal was a nominee on behalf of Prakash Talkies for securing films from Central Circuit Cine Association, Bhusawal. In the absence of a finding on the questions detailed above, it is difficult, to hold in the instant case, that the defendants had acted in a manner which was prejudicial to the proper carrying on of the partnership business or had in any way acted in violation of the agreement between the parties.

Even the finding of the learned District Judge shows that though under the terms of Ex. 21 the plaintiff was to supervise the business generally, yet the other defendants were also taking part in the management and were performing various other duties which are essential component parts of partnership business. It is also clear from the terms of the partnership deed that all the partners had invested money in proportion to their shares in the partnership. It is also admitted by the plaintiff in his statement, that the defendants had alsomade investments in the business. The defendents' case as stated above was that the plaintiff wanted to oust them from the partnership business. They have also produced a notice Ex. A-10 dated 7th, December, 1959 given by the plaintiff for the dissolution of the partnership.

10. From the facts which have come on record it seems that some differences had arisen between the parties and their relations had become strained, and that is why the plaintiff gave a notice for dissolution of the partnership. But it is not established nor has it been found by the Courts below that the defendants by their conduct had made the proper running of the business impossible. In re, Yenidje Tobacco Co. Ltd. 1916-2 Ch 426 where there was a private limited company, disputes had arisen amongst the directors and they became so hostile that neither of them would speak to each other, communications having been conveyed to them through the Secretary of the Company, it was observed by Lord Cozens-Hardy M.R. upholding the decision of Astbury, J. :

'In those circumstances, supposing it had been a private partnership, an ordinary partnership between two people having equal shares, and there being no other provision to terminate it, what would have been the position? I think it is quite clear under the law of partnership, as has been asserted in this Court for many years and is now laid down by the Partnership Act, that that state of things might be a ground for dissolution of the partnership for the reasons which are stated by Lord Lindley in his book on Partnership at p. 657 in the passage which I will read, and which, I think, is quite justified by the authorities to which he refers: 'Refusal to meet on matters of business, continued quarrelling, and such a state of animosity as precludes all reasonable hope of reconciliation and friendly co-operation have been held sufficient to justify a dissolution. It is not necessary, in order to induce the Court to interfere, to show personal rudeness on the part of one partner to the other, or even any 'gross misconduct as a partner. All that is necessary is to satisfy the Court that it is impossible for the partners to place that confidence in each other which each has a right to expect, and that such impossibility has not been caused by the person seeking to take advantageof it.'

Same is the law under the Indian Partnership Act (See Section 44 Clauses (c,d,f and g). Therefore, the proper remedy for the plaintiff in this situation was to sue for the dissolution of the partnership.

Although after the death of one of the partners, partnership stands dissolved yet until its affairs have been completely wound up it will not be proper to allow the plaintiff to carry on the same business in the firm's name or to use the properties of the firm for his own benefit. The effect of giving a decree to the plaintiff in this suit would be to oust the defendants completely from the partnership business in disregard of their rights. I have given my anxious consideration to the question whether relief prayed for by the plaintiff, should be allowed to him by imposing certain terms as conditions for the grant of an injunction but I could not persuade myself to convert these proceedings into a suit for dissolution of partnershipand accounts as suggested by the learned counselfor the respondents. I am conscious that the parties will be driven to another litigation but thisresult is unavoidable. They have not been ableto settle their differences despite several opportunities being given to them.

11. Even if the partnership in the present case be held to be illegal, in the circumstances of the case the plaintiff is not entitled to the equitable relief of injunction claimed by him. There can be no doubt that the appellants have also made some investment in the business though its extent at present is not known, machines, furniture and other movable properties must in all probability have been acquired from the joint funds and the premises used for the exhibition of films though owned by the plaintiff respondent have been leased out to partnership. In such circumstances to grant relief to the plaintiff would mean the depriving of the appellants from the benefits of their investment etc. On the part of the plaintiff it would also be a betrayal of the confidence which the defendants had placed in him.

Further it appears from the order of the, District Magistrate, who was the licencing authorityvide Ex. D-11 dated 17-12-1959, that Sharvanlal, had made a request to include his name also in the licence and in the alternative had suggested that no action regarding cancellation and stopping of cinema should be taken on the application of plaintiff alone. During those proceedings the plaintiff agreed to the second alternative. (Therefore, it was considered unnecessary to include Sharvanlal's name in the licence and it was ordered that without the consent of Sharvanlal no action affecting the interest in the running of the cinema will be taken on the application of the plaintiff alone. Now by the present action the plaintiff wants to remain in exclusive possession and management of the entire business to the complete exclusion of the appellants which would be quite unjust to allow.

Plaintiff's own conduct has also not been very straightforward. At first he served a notice upon the appellants for dissolving the partnership and then brought the present action completely suppressing the facts about their partnership. Having regard to all the circumstances of the case, I amof the view that it will not be just and proper to grant relief to the plaintiff respondent in this suit. The Courts below were not justified in decreeing the plaintiff's suit merely on the ground that the licence for exhibiting films stood in his name alone. The interest of the appellants cannot properly besafeguarded in this suit and therefore, it would in my opinion be oppressive to grant an injunction against them in this case.

12. The result, therefore is that this appeal is allowed, judgment and decrees of the Courts beloware set aside and the plaintiff's suit is dismissed. He will pay costs of the appellants of all the Courts.

13. Learned Counsel for the respondents praysfor leave to appeal which is refused.


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