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1913 DIGILAW 146 (ALL)

Mumtaz Ali v. Kasim All

1913-03-17

BANERJI

body1913
JUDGMENT : BANERJI, J. The parties to the suit out of which this appeal has arisen, are brothers. The plaintiff holds a share in the Zamindari of the village and the defendant holds some cultivator lands. They entered into a partnership to carry on a market and a fair and to maintain an inn for the convenience of persons resorting to the market. For this purpose they executed a document on the 18th of January 1911 by which it was agreed that the market, the fair, and the inn would be jointly carried on, each brother doing his best to promote the business of the partnership. There was no specific covenant in this document that the defendant should not carry on any other business in the neighbourhood. The plaintiff brought the present suit on the allegation that the defendant had pulled down a part of the inn which stood on his cultivatory holding and had begun building shops thereon in order to set up another market and he prayed either that the contract of partnership be rescinded or that an injunction be issued to the defendant restraining him from carrying on a rival market to the prejudice of the market in which the parties were partners. After the institution of the suit the plaintiff filed an application stating that the defendant had removed the market which he had begun to set up, to another patti in the village and was carrying it on in partnership with another person and that the injunction should restrain him from carrying on and maintaining that rival market also. He prayed for an amendment of plaint. This prayer was granted, but I find that the amendment was not embodied in the plaint. This is an irregularity, an omission to which the attention of the court below should be drawn. Issues were framed and the case went to trial after the amendment granted by the court and the court of first instance made a decree for an injunction restraining the defendant from carrying on a rival market. It dismissed the claim for rescission of the partnership contract. This decree of the court of first instance was affirmed by the lower appellate court. 2. It dismissed the claim for rescission of the partnership contract. This decree of the court of first instance was affirmed by the lower appellate court. 2. The defendant has preferred this appeal and it is first of all contended on his behalf that the amendment sought ought not to have been allowed, that the plaintiff added a new cause of action which had come into existence after the institution of the suit and that upon this cause of action the plaintiff ought not to have been permitted to go to trial. It seems to me that the provisions of Order 6 Rule 17 of the Code of Civil Procedure are wide enough to allow of an amendment of this nature, specially as in this case the amendment was made before the parties actually went to trial. The result of not granting the amendment would have been a multiplicity of actions and this it is apparently the object of the rule referred to to prevent. By the amendment the real questions in dispute between the parties could be determined and relief adequately granted without resort to further litigation. I therefore disallow the first objection as to the amendment allowed by the court of first instance. 3. The real question in the case is whether an injunction could be granted in a case of this kind. Section 257 of the Contract Act provides that partners are bound to carry on the business of the partnership for the common object of the partnership and to be just and faithful to each other and by section 259 if a partner without the knowledge and consent of the other partners carries on any business competing or interfering with that of the firm, he must account to the firm for all the profits made in such business and must make compensation to the firm for any loss occasioned thereby. Therefore the defendant, whose duty as the plaintiff's partner is to carry on the business of the partnership for the greatest common advantage of the partnership, may be liable to the plaintiff to account for the profits made by him in the competing firm or to make compensation to the plaintiff. Therefore the defendant, whose duty as the plaintiff's partner is to carry on the business of the partnership for the greatest common advantage of the partnership, may be liable to the plaintiff to account for the profits made by him in the competing firm or to make compensation to the plaintiff. Is that the plaintiff's only remedy or is he also entitled to restrain the defendant from carrying on the rival shop, which according to both the courts below could only be carried on to the detriment of the market in which the parties are partners? The learned Counsel for the respondent has relied on a passage in the Tagore Law Lectures on Specific Relief by Dr. Banerji, page 773, which is to the following effect:— “Partners, therefore, even in the absence of express covenants may be restrained from engaging in another concern of such a character as will necessarily give rise to a conflict of interests.” In support of this proposition the learned author refers to the case of Glassington v. Thwaites, [1823] 18. and S. 124. S.C. 24 R.R., 153. In the case Vice-Chancellor Leach observed:— “The principles of courts of equity would not permit that parties, bound to each other by express or implied contract to promote an undertaking for the common benefit, should any of them engage in another concern, which necessarily gave them a direct interest adverse to that undertaking.” It is thus clear that one partner can restrain another from carrying on business in rivalry with the partnership when that business could only be carried on to the detriment of the original business. It is true that under section 56 of the Specific Relief Act, clause (a) an injunction should not be granted when equally efficacious relief can be obtained by any other usual mode of proceeding and it is contended by the learned Counsel for the appellant that as the plaintiff may recover profits or compensation under section 259 of the Contract Act an injunction should not be granted, Section 54, clause (e) however, provides for the issue of a perpetual injunction, where such injunction is necessary to prevent a multiplicity of judicial proceedings, although the plaintiff may claim profits or compensation, that would lead to multiplicity of proceedings. If the defendant's rival market be continued, the plaintiff would have to bring an action every year for the profits of that year. If the defendant's rival market be continued, the plaintiff would have to bring an action every year for the profits of that year. The case of Whitwood Chemical Company v. Hardman,[1891] L.R. 2 Ch. 416 cited by the learned Counsel for the appellant has in my opinion no bearing on this case. There the defendant was a manager, who entered into a covenant to render service to the plaintiff's firm, which is not the case here. The present case is that of one of two partners carrying on a rival business in competition with and to the prejudice of the partnership. In such a case it seems to me that the plaintiff is entitled to an injunction restraining the defendant from carrying on the rival business and therefore the decree of the court below is correct. I dismiss the appeal with costs.