Judgment 1. This appeal is directed against the order dated 2nd March, 1982 passed by the Subordinate Judge, Patna appointing a Receiver in the suit. 2. The plaintiff instituted the suit impleading the defendants praying for the following reliefs:- (a) That the partnership be wound up and a decree for dissolution of partnership be passed, (b) In the event of the Court finding that the partnership had not been dissolved prior to the institution of the suit, it should now be dissolved and a decree for dissolution be passed in accordance therewith, (c) A decree for a sum of Rs. 52,500.00 be passed in favour of the plaintiff against the defendants, and (d) Interest pendente lite and future be awarded along with the cost of the suit. It has been stated in rite plaint that the parties to the suit entered into a partnership carrying on a business of eating house, restaurant, serving sweets, etc. under the name and style of "Vrindavan". It was housed in a portion of the building bearing Holding No. 334, Circle No. 6, Ward No. 2 of the Patna Municipal Corporation situate at Dak Bunglow Road, Patna. The agreement was entered into under a deed dated the 5th day of April, 1979. After the said agreement, the plaintiff disclosed his intention to remain out of the affairs of the partnership and a further agreement was entered into between the parties on the 20th April, 1979. This partnership deed provided, amongst others, as follows :- "that the 4th party Sri Narain Das shill be entitled to get Rs. 2,000.00 per month only by way of fixed profit from the partnership and shall not be responsible for any loss and shall not be liable for any liability of the partnership business nor shall invest any capital for the business." Clause 3 provided : "The partners shall pay a sum of Rs. 500.00 only towards rent of the premises to Sri Narain Das for making payment to the owner of the premises and he sum so paid shall not be adjustable towards his monthly fixed profit of Rs. 2,000/-." It was further alleged that the partners paid the amount as stipulated above for some time but stopped payment since April, 1980 and thus the total outstanding amount was Rs. 52,500/-. He claimed a decree for that amount. 3.
2,000/-." It was further alleged that the partners paid the amount as stipulated above for some time but stopped payment since April, 1980 and thus the total outstanding amount was Rs. 52,500/-. He claimed a decree for that amount. 3. While the suit was pending, the plaintiff filed a petition under O.40, R.1 of the Civil P.C. for appointment of a Receiver on the allegation that the books of the partnership firm are in possession of the defendants and it was apprehended that the defendants will either alter or do away with the books of the partnership firm and would realise money from the constituents and misappropriate the same. It was Submitted that it was necessary that the assets and liabilities of the business should be administered and discharged under the supervision of an independent person during the pendency of the suit. Notice of this application was given to the defendants and both the parties were heard on the question of appointment of the Receiver and an order, as referred to above, was passed. The defendants have preferred this miscellaneous appeal against the order of appointment of the Receiver. 4. Learned counsel for the appellants submitted that the suit in the present form was hit by the provisions of Sec. 69 of the Partnership Act, 1932 (9 of 1932) (hereinafter referred to as the Partnership Act) and as such, prima facie, the plaintiff has no case and, therefore, this is not a fit case for appointment of a Receiver. Sec. 69 of the Partnership Act reads thus : "69. (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect :- (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm." It would appear that sub-sections (1) and (2) of S.69 of the Partnership Act bar the institution of a suit to enforce a right arising from a contract by or on behalf of partner or by a firm, as the case may be, unless the firm is registered and the person suing is or has been shown in the Register of Firms as partners in the firm. Clause (a) of sub-section (3) of S.69 of the Partnership Act, however, provides that a right to sue for dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm can be enforced. It is admitted in this case that the firm in question was an unregistered firm. Therefore, though a suit for dissolution of this firm may be maintained, the right arising from the partnership contract cannot be enforced by a suit by a partner inasmuch as the firm is not a registered and there is nothing on the record to show that the plaintiffs name has been shown in the Register of Firms as a partner in the firm. 5 The learned counsel submitted that the plaintiffs claim for Rs. 52.500.00 arises from the partnership contract and is hit by the provisions of sub-section (1) of S.69 of the Partnership Act. The Court below, however, relying on a decision reported in AIR 1951 Pat 196 (Mahendra Lal Kushiary V/s. Gurdeyal Singh), held that the suit is not, prima facie, barred under the provisions of Sec. 69 of the Partnership Act.
52.500.00 arises from the partnership contract and is hit by the provisions of sub-section (1) of S.69 of the Partnership Act. The Court below, however, relying on a decision reported in AIR 1951 Pat 196 (Mahendra Lal Kushiary V/s. Gurdeyal Singh), held that the suit is not, prima facie, barred under the provisions of Sec. 69 of the Partnership Act. From the facts of the Patna case ( AIR 1951 Pat 196 ), it would appear that there was a partnership business between the parties who entered into an agreement. One of the conditions of the agreement was that in case of any dispute or differences between the parties, the matter would be referred to arbitration. Differences arose between the parties and one of the partners, namely. Mahendra Lal Kushiary filed a suit in the Court of the Munsif. Gurdeyal Singh, another partner, filed application before the Subordinate Judge for referring the matter in dispute to arbitration. The learned Subordinate Judge allowed the application and decided to refer the matter to arbitration and parties were called upon to suggest the names of the arbitrators. Mahendra Lal felt aggrieved by the order of the Subordinate Judge and preferred revision in the High Court which was dismissed. Thereafter, he filed an application under Sec.151 of the Code of Civil Procedure before the Subordinate Judge for reviewing the order. He also made out a point that the partnership being an unregistered firm. Sec. 69 of the Partnership Act was a bar to the application for sending the matter to arbitration and the order referring the matter for arbitration was without jurisdiction. In that context, their Lordships considered the question of bar of Sec. 69 of the Partnership Act and held that the provisions of Sec.69 of the Partnership Act are no bar to the maintainability of the application made by the opposite party and that the same is covered by the provisions contained in the exception (in) Sec.69(3)(a) of the Partnership Act. 6. The learned counsel for the appellants relied on a decision of the Supreme Court reported in AIR 1964 SC 1982 (Jagdish Chandra Gupta V/s. Kajaria Traders (India) Ltd.).
6. The learned counsel for the appellants relied on a decision of the Supreme Court reported in AIR 1964 SC 1982 (Jagdish Chandra Gupta V/s. Kajaria Traders (India) Ltd.). In the context of almost similar facts, the Supreme court considered the provisions of Sec.69 of the Partnership Act and held that the provisions of S.69 of the Partnership Act is a bar to the maintainability of the suit of the present kind. The principle decided in the case relating to Sec. 69 of the Partnership Act seems to be that no right arising out of a partnership contract can be enforced by a suit. Right to refer the dispute to arbitration was a right conferred under the Partnership Contract in those cases. The suit to enforce such a right was held to be barred under Sec.69 of the Partnership Act. The Patna case was thus specifically overruled. In the present case, so far as the claim of the amount of Rs. 52.500/is concerned, it was a right created under the Partnership Contract on the own showing of the plaintiff in the plaint. Order of the Court below based on the Patna case is thus illegal. The learned counsel for the respondent submitted that the claim for Rs. 52,500.00 was consequential - the main relief was the dissolution of the partnership. I am not in a position to agree with this argument. Claim for Rs. 52,5000.00 is not dependent on the relief of dissolution nor does it flow from it. It is an independent relief based on the term of the partnership contract and can be granted, if permissible, irrespective of the fact whether the partnership is or is not dissolved. The Relief No.(c) is hit by the provisions of S.69(i) of the Partnership Act and the suit to that extent is prima facie, not maintainable. 7. Learned counsel for the respondents submitted that the present suit falls within the mischief of Clause (a) of sub-section (3) of S.69 of the Partnership Act and the suit for dissolution of the partnership is maintainable. Prima facie, this argument seems to be correct but the plaintiff himself made out a case in the plaint that he was not concerned with the assets and liabilities, profit or loss of the firm. He was only concerned with the money which he has claimed in Relief No. (c) of the plaint.
Prima facie, this argument seems to be correct but the plaintiff himself made out a case in the plaint that he was not concerned with the assets and liabilities, profit or loss of the firm. He was only concerned with the money which he has claimed in Relief No. (c) of the plaint. Since the suit with regard to aim of money has been held to be, prima facie, not maintainable, it is difficult to say that a Receiver may be appointed with regard to the dissolution of the firm with which the plaintiff has no concern. 8. This is a suit for dissolution of a partnership firm and the guidelines for appointment of a Receiver in such a suit have been laid down by this Court in AIR 1965 Pat 144 (Sudhansu Kanta V/s. Manindra Nath). It was said that "the appointment of a Receiver is an equitable relief and there are certain guiding principles which the Court takes into account when a party asks for appointment of a Receiver in respect of the subject matter of the suit. Some of those principles are that the applicant must have special equity in his favour and makes out prima facie a strong case against the opposite party and 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". Applying these principles to the facts of the present case, it would appear that no case of special equity has either been pleaded by the plaintiff or found by the Court below. What has been pleaded is that the plaintiff apprehends that the defendants will either alter or do away with the books of the partnership and will realise the money and misappropriate the same and, therefore, it was necessary that the assets and liabilities of the business should be administered and discharged under the supervision of any independent person during the pendency of the suit. It has been seen that the plaintiff is not concealed with the assets or liabilities or other goods or articles of the business of the firm.
It has been seen that the plaintiff is not concealed with the assets or liabilities or other goods or articles of the business of the firm. It is true that he has claimed certain amount of money against the firm and ordinarily for the purpose of realisation of the money, the plaintiff could say that the properties of the firm should be preserved by appointment of Receiver but in the present case, the claim for money has been found to be hit by the provisions of Sec.69 of the Partnership Act and the suit has been, prima facie, found to be not maintainable in that respect, and therefore, no Receiver can be appointed in this case for the purpose of ensuring the realisation of money which is barred under the provisions of law. That being so, there does not seem to be any special equity in favour of the plaintiff for the appointment of a Receiver. The Court below, after considering the matter could come to this conclusion only that the plaintiff has got prima facie case and there are fair questions to be tried in the suit. The Court below was not in a position to hold that any special case has been made out for appointment of the Receiver or that there was prima facie strong case in favour of the plaintiff. Obviously, thus, this case does not fall within the guidelines laid down by this Court. It has not been even alleged that the property is being wasted or the same is in peril or it in danger of being wasted. What has been alleged is that the plaintiff apprehends that the defendants will alter or do away with the books of the partnership. It is not clear as to what the plaintiff has get to do with the books of the partnership in view of the stand taken by him, in the plaint, namely, that he has no concern with the assets or liabilities or loss of profit of the firm and that he was entitled only to the payment of Rs. 2,000.00 as share of his profit and Rs. 500.00 as rent per month irrespective of any profit or loss. The Court below, clearly held that there was no clear indication of waste or damage in this case.
2,000.00 as share of his profit and Rs. 500.00 as rent per month irrespective of any profit or loss. The Court below, clearly held that there was no clear indication of waste or damage in this case. It would not be out of place to refer to the commentary of Mulla on the Civil P.C. (Act V of 1908), 13th Edn, at page 1537, in this connection, where he discussed the question of appointment of Receiver. It was stated that "the distinction between a case in which a temporary injunction may be granted and a case in which a Receiver may be appointed, is that while in either case it must be shown that the property should be preserved from waste or alienation, in the former case it is sufficient, if it be shown that the plaintiff in the suit has a fair question to raise as to the existence of the right alleged while in the latter case, a good prima facie title to the property over which the Receiver is sought to be appointed has to be made out. Where the defendant was carrying on the business of a hotel proprietor in the premises and there were no allegation of deliberate waste or fraudulent disposal, it was held that it was not a case for the appointment of a Receiver under O.40, R.1." It has been pointed out that in the present case there is no question of waste, disposal of, or peril to the property. It is clear that no ground has been made out for the appointment of Receiver in this case. 9. For the reasons stated above, I am of the view that no case for appointment of a Receiver in this case has been made out. The order under appeal is vitiated by error of law and for non-observance if the guidelines fixed by this Court is indicated above. 10. In the result, the appeal succeeds and is allowed and file order dated 2-3-1983 appointing a Receiver is set aside. There shall be no order as to costs. The view expressed in this judgment is, however, for the purpose of this appeal and it will be open to the Court below to go into the same at the hearing of the suit, if raised, and decide in accordance with law.