ORDER N.N. Sharma, J. - This revision is directed against order dated 4-7-1984 recorded by Sri G. S. Nema, learned Civil Judge, Bulandshahr in Original Suit No. 388 of 1983 by which he appointed Sri Prashant Kumar Advocate as receiver to run M/s. Roshan Insulators and Pottery Works, Khurja with the directions to defendant 1 to hand over the possession of the disputed property to the receiver within 15 days. Necessary directions were also issued to the receiver for efficient management and running of the said business, defendant 2 was to be paid the instalments of loan according to the stipulation contained in the agreement of loan. Receiver was to receive 8% of the income towards his remuneration and after defraying the necessary expenditure for the maintenance of factory and its machinery, the balance was to be deposited in the bank and six monthly accounts of income and expenditure were to he submitted by him in court regularly after getting possession of the factory. 2. It appears that these proceedings were initiated under Sections 8 and 20 of Arbitration Act (10 of 1940) by Khem Chand respondent 1 in the court below. It was alleged that there was partnership under the name and style of M/s. Roshan Insulators and Pottery Works which used to manufacture crockeries at Khurja. The agreement of partnership was entered in 1973 and the pottery was erected in May, 1973. The revisionist and respondent 1 were partners. On the persistent request of revisionist, the management of the pottery was entrusted to him in Oct. 1974, revisionist bound himself to render full and complete accounts of the profits and to pay instalments of the loan borrowed from respondent 2 to run the factory and the balance of the profits were divisible equally between the parties. 3. According to the terms of partnership, any dispute arising amongst the partners was referable to the arbitration. Revisionist did not comply with the terms of the partnership and misappropriated the entire profits and excluded the petitioner opposite party No. 1 from the income or profits earned by the factory for a long period despite service of notice, he also refused to refer the dispute to the arbitrator as provided by the partnership agreement.
Revisionist did not comply with the terms of the partnership and misappropriated the entire profits and excluded the petitioner opposite party No. 1 from the income or profits earned by the factory for a long period despite service of notice, he also refused to refer the dispute to the arbitrator as provided by the partnership agreement. So the reliefs sought in the petition were that the arbitration agreement may be got filed from revisionist and further proceedings in pursuance of the arbitration must commence, a reference of the dispute be made to the arbitrator who was to be appointed by the court and the court was to record a decree in terms of the award as provided by Sections 14 and 17 of Arbitration Act, payment of costs was also claimed. The petition was valued at Rs. 3,00,000/-. 4. Written statement was filed by revisionist alleging that the partnership came to an end long ago on 11-7-1979, the property in dispute was acquired by the family being members of joint Hindu family, that the status had already be disrupted before the death of Sri Ishwari Prasad ancestor of parties. The petitioner and revisionist are own brothers and opposite party No. 2 was being regularly paid the instalments of loan. There was no question of any appointment of arbitrator now. The petition was not maintainable under Sections 8 and 20 of Arbitration Act. Other pleas were also raised which are not necessary to be detailed for the disposal of this revision. 5. On 12-10-1983, opposite party No. 1 prayed for the appointment of receiver on the allegation that no accounts were being rendered by revisionist nor the opposite party No. 2 was being regularly paid the instalment of loan which was mounting up high. 6. Revisionist was not properly managing the affairs of the pottery which was in constant danger of being wasted. The property in dispute was in imminent danger of being sold in realisation of loan. Opposite party No. 1 was being deprived of his profits. 7. Through an affidavit of Devendra Kumar son of Sri Khem Chand, it was further asserted that revisionist was attempting to remove the movable assets of the property in dispute and if such assets were removed then the object of the petition would be frustrated and opposite party No. 1 would suffer irreparable damage. 8.
7. Through an affidavit of Devendra Kumar son of Sri Khem Chand, it was further asserted that revisionist was attempting to remove the movable assets of the property in dispute and if such assets were removed then the object of the petition would be frustrated and opposite party No. 1 would suffer irreparable damage. 8. Revisionist filed objection on the ground that a petition both under Sections 8 and 20 of the said Act (Arbitration Act), was not maintainable. There was no dispute between the parties, there was no arbitration clause in the partnership deed, opposite party No. 2 had been unnecessarily impleaded as he was not a party to the partnership deed and there was no question of appointment of any receiver. 9. Learned trial Judge recorded the impugned order which was assailed before me on behalf of revisionist. 10. The first contention raised before me was that the petition could have lain under S. 8, the mere fact that the petitioner chose to mention Sections 8 and 20 of the said Act in the petition did not justify the inference that the petition was filed under S. 20 of the said Act. In this connection, reliance was placed upon Abdul Rahman v. Abdul Khalil, reported in 1983 All LJ 761. It appears that the application for appointment of receiver was filed during the pendency of the proceeding under Section 8 of Arbitration Act. There was also a prayer for an interim injunction. It was held that the court was empowered under S. 8 of Arbitration Act to appoint an arbitrator and it was not open to the court to issue an interim injunction or appoint a receiver in proceeding under S. 8 of Arbitration Act. This authority is not in point. 11. It has been shown above that the petition and application both were submitted under Sections 8 and 20 of Arbitration Act. The reliefs sought in the petition about reference to arbitration were not awardable by a court functioning under Section 8 of Act. This distinction was pointed out in Deoki Nandan Garg v. Jagdish Prasad, reported in 1961 All LJ 516 (DB). It was observed at p. 520 : "........ There is no doubt that Sections 8 and 20 of the Indian Arbitration Act provide for alternative remedies. Section 8 is to be found in Chap.
This distinction was pointed out in Deoki Nandan Garg v. Jagdish Prasad, reported in 1961 All LJ 516 (DB). It was observed at p. 520 : "........ There is no doubt that Sections 8 and 20 of the Indian Arbitration Act provide for alternative remedies. Section 8 is to be found in Chap. 2 of the Act which relates to arbitration without the intervention of the Court while S. 20 is to be found in Chap. III and relates to arbitration with the intervention of Court where there is no suit pending. Ch. IV of the Act provides for arbitration with the intervention of the Court where there is a suit pending. Originally, therefore, the occasion for invoking S. 8 would arise if the arbitration is to be done outside the Court and any of the contingencies mentioned in that section come into existence. Section 20 of the Act has, however, to be resorted to when the entire arbitration proceedings are intended to be done through the intervention of the Court. Cl. 4 of S. 20 provides that "If no sufficient cause has been shown, the Court shall order the agreement to be filed and shall itself appoint an arbitrator." The arbitrator who is to be appointed under this clause must be one whom the parties themselves have appointed either under the agreement itself or otherwise. If, however, that is not possible because the parties cannot agree upon any particular arbitrator, the reference has to be made to an arbitrator appointed by the Court." 12. Thus, it is obvious that since these proceedings for arbitration were initiated with the intervention of the Court, only S. 20 of the said Act was to apply. 13. I have enumerated above the reliefs sought by plaintiff which are simply awardable under S. 20 of the said Act. No reference would have lain under S. 8 of the said Act as the Court had no jurisdiction to order reference of a dispute to arbitrator under S. 8 of said Act vide Union of India v. Om Prakash, reported in AIR 1976 SC 1745 . So even if a wrong section was mentioned in the application, it could not affect the merits of the case vide Maheswari & Co. Pvt. Ltd. v. Corporation of Calcutta, reported in AIR 1975 Cal 165 . Thus the first contention is repelled. 14.
So even if a wrong section was mentioned in the application, it could not affect the merits of the case vide Maheswari & Co. Pvt. Ltd. v. Corporation of Calcutta, reported in AIR 1975 Cal 165 . Thus the first contention is repelled. 14. The second contention was that the appointment of an advocate as receiver was unjust and inconvenient, the Advocate had no experience to run the business of pottery, this business was being constantly run for so many years by the revisionist who has been required to pay the instalment of the loan to respondent 2 as detailed in para 7 of the stay application, there was no allegation of any mismanagement of the firm by revisionist, the receiver would grab the entire profits of the factory, when revisionist was in possession over this factory, the appointment of receiver pendente lite was harsh and drastic step as was observed in Dilman Rai v. Srinarayan Sharma, reported in AIR 1983 Sikkim 11. In order to succeed, the petitioner should have established the relevant considerations which justified the appointment of receiver vide S. B. Industries, Freegunj v. United Bank of India, reported in AIR 1978 All 189 which posited : "In order to justify the appointment of receiver, the plaintiff must establish a reasonable possibility that the plaintiff will ultimately succeed in obtaining the relief claimed in the suit. The requirement thus is that he must establish a good prima facie case. It may further be remembered that the appointment of a receiver is, as a general rule, discretionary, and not a matter of right. A court will make an appointment of a receiver with great caution and circumspection. In a case where the remedy of the appointment of a receiver seems necessary to prevent fraud, to protect and preserve the property against an imminent danger of loss or diminution in value, destruction, squandering, wastage or removal from jurisdiction, the court may appoint a receiver. A court in exercise of its discretion to appoint or refuse a receiver must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, ends of justice, the rights of all the parties interested in the subject-matter and the adequacy of other remedies." 15. I have carefully considered all these submissions. 16.
I have carefully considered all these submissions. 16. The appointment of receiver has to be done under S. 41, Schedule of Arbitration Act and 0. 40, R. 1, Civil P.C. when the Court thinks it just and convenient. The five principles, which are to be kept in mind in this connection, are :- (1) It is a matter resting in the discretion of the court for the purpose of protecting the rights of all parties and the subject-matter, (2) the court should not appoint a receiver except upon proof by the plaintiff that prima facie he has an excellent chance of success in the suit, (3) not only the plaintiff must show a case of adverse and conflicting claims to property, but he must show some emergency or danger or loss demanding immediate action and of his own rights he must be reasonably clear and free from doubt, (4) an order will not be made where it has the effect of depriving a defendant of a de facto possession since that might cause irreparable wrong, the position however may be different if the property is shown to be in medio that is to say in the enjoyment of none, and (5) the court should look to the conduct of party who makes the application who must come to court with clean hands. 17. These principles were cited with approval in Krishnaswamy Chetty v. Thangavelu Chetty, AIR 1955 Mad 430 . 18. In Sundarlal Haveliwala v. Smt. Bhagwati Devi, reported in AIR 1967 All 400 which related to a partnership agreement containing arbitration clause similar to the agreement in this case the proceedings under S. 20 were initiated by a legal representative of deceased partner, the dispute was with regard to the winding up of the dissolved partnership firm, the court was held to have rightly appointed the receiver. 19. The authorities cited on behalf of revisionist are not in point. One of these authorities related to a revision to show that such question could have been considered by this Court. In the instant case, it has been shown that the allegations made by the petitioner and his son about the removal of movable property and imminent danger to their interest were not denied by any counter- affidavit filed on behalf of revisionist. Even the arbitration agreement was denied.
In the instant case, it has been shown that the allegations made by the petitioner and his son about the removal of movable property and imminent danger to their interest were not denied by any counter- affidavit filed on behalf of revisionist. Even the arbitration agreement was denied. It was also alleged that the dispute did not relate to a partnership business, no suit about that dispute is pending in any court, admittedly the petitioner was a partner in the said firm and has his share to the extent of , he has been precluded from getting the fruits of the partnership throughout accounts were not shown to him for so many years. his interest remained unprotected. Under such circumstances, the mere fact that the revisionist was in possession over this factory is not sufficient to disentitle opposite party No. I from getting the interim relief. So a prima facie case of partnership had been made out. A case of wrongful exclusion of opposite party No. 1 had been made out, the allegation that the property was being misappropriated by revisionist was believed by learned trial Judge. Under such circumstances, the mere fact that the revisionist was in possession is not sufficient to defeat the claim of opposite party No. 1 as was held in G. Ramchandrayya v. Nethi Iswaryya, reported in AIR 1952 Hyd 139. It was observed at page 140 : "No doubt ordinarily it is only where the Court is satisfied that there is danger apprehended of the subject-matter of the suit becoming unavailable, if the defendant was allowed to remain in possession of the same, or that the plaintiff would not he in a position to realise the fruits of his decree if he succeeds unless the property were protected, that the Court would be inclined to appoint a receiver. The circumstances of this case, in my opinion, would justify the appointment of a receiver for the safeguarding of the rights of the excluded party. The important factors are: it is now three years since the plaintiff is said to have been excluded from participation and according to both parties, the monthly profit of the shop is Rs. 300/- and calculated on this basis, if the plaintiff succeeds in his suit, he would be entitled to a sum of Rs. 5,400/-. The defendant has not produced the accounts.
300/- and calculated on this basis, if the plaintiff succeeds in his suit, he would be entitled to a sum of Rs. 5,400/-. The defendant has not produced the accounts. The proceedings also show that the defendant 8 has been resorting to obstructive tactics. These are such circumstances which necessitate the exercise of control over the business of the shop for the safeguarding of the rights of the plaintiff. In suits relating to partnership concerns, even though no circumstances tending to jeopardise the partnership assets be shown, the Court would be justified in appointing a receiver if the defendant seeks to exclude a co-partner from management. Where the documentary evidence 'prima facie' shows the existence of a partnership between the plaintiff and the defendant and the defendant contends that the plaintiff is not a partner it would he a strong case for the appointment of a receiver." 20. Under such circumstances, I find that the appointment of receiver by the court in the light of directions issued by the Court safely safeguarded the interest of parties and was eminently just and proper. Such exercise of discretion by the court below is not to be lightly interfered with by a revisional court unless it is unjust or capricious. When an order has not resulted in substantial failure of justice, this Court does not interfere in a case even though the conditions which attract the jurisdiction of the court exist. So the impugned order is unassailable. 21. In the result, the revision is dismissed with costs. The ad interim stay order dated 17-7-1984 is vacated herewith. 22. Let the proceedings be expedited by learned trial Judge.