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1989 DIGILAW 942 (ALL)

Manu Mittal v. Som Dutt Mittal

1989-12-13

G.D.DUBE, N.N.MITHAL

body1989
JUDGMENT : G. D. Dubey, J. 1. This appeal has been preferred against the judgment and order of Additional District Judge, Rampur issuing temporary injunction against the appellant and defendant-respondent Smt. Swarna Mittal restraining them from interfering in the working of the petrol-pump by the plaintiff Som Dutt Mittal. They were further directed to remove the lock put on the petrol-pump and its other structures within two days failing which the plaintiff-respondent was given a right to open the lock himself. The plaintiff- respondent was, however, directed to furnish the accounts of income and expenditure of the petrol-pump every month and shall also give an undertaking that in case the business is found to be a partnership business then he will hand over the share of profits of the pump to the appellant and defendant-respondent Smt. Swarna Mittal. 2. The plaintiff had alleged that he is the sole proprietor of the firm. He has obtained a licence of sale of petrol in 1966 from Esso Standard Eastern Incorporated Company, in the name and style of Som Dutt Subhash Chandra. In 1971, the aforesaid firm was changed to Naini Service Station. The name of Esso Company has changed to Hindustan Petrolium Corporation Limited. It was urged that the plaintiff is continuing the sole business. He has obtained the necessary licence under the U. P. High Speed Diesel Oil and Light Speed Diesel Oil Storage and Distribution Order, 1981 and also under the U. P. Shops and Commercial Establishment Act. In 1986, Brahma Dutt Mittal, father of the appellant, had started interfering in the business of the plaintiff. Consequently, Som Dutt Mittal had filed Suit No. 47 of 1986 in which an injunction order was issued in favour of the plaintiff on 7-5-1986. Disobeying this order of injunction, Brahma Dutt Mittal had put lock on the petrol-pump. When a complaint was made, the application of the plaintiff was accepted and the lock was got open on 2-9-1988. Brahma Dutt Mittal had moved two more petitions for appointing receiver of the property. These were rejected by the court. When Brahma Dutt Mittal was unsuccessful in his attempt, he instigated the appellant. The appellant had put lock on the petrol-pump in the night of 12th/13th March, 1989. It was contended that the defendants have no concern in the property in question. These were rejected by the court. When Brahma Dutt Mittal was unsuccessful in his attempt, he instigated the appellant. The appellant had put lock on the petrol-pump in the night of 12th/13th March, 1989. It was contended that the defendants have no concern in the property in question. The plaintiff also alleged that his diesel and petrol are lying in the tanks. These are evaporating and the plaintiff is suffering irreparable loss. Hence a prayer was made to get the locks opened and restrained the defendants from interfering in the possession of the plaintiff over the property in dispute during the pendency of the suit. The defendant-appellant alleged that since 1971-72 they are partners in the firm M/s. Naini Service Station. The defendant No. 2 Smt. Swaraa Mittal has 25 per cent share. Smt. Usha Mittal, mother of the plaintiff and mother-in-law of defendant No. 2, has fifty per cent share. The plaintiff- respondent has only twenty five per cent share. It was urged that this partnership firm was dissolved and by a letter dated 17-2-1986 information was sent to the Sales-tax Department that the business has been closed. It was further contended that the land, on which the business is being run, is the joint property of the plaintiff and the defendant No. 2's husband Brahma Dutt Mittal. The permission for construction on this land was obtained jointly by the co-owners of this land. According to the defendant, defendant No. 2 is a house wife and her husband remains busy in social work. Hence taking undue advantage of this fact, the plaintiff got his name soley recorded in the various licences. The defendant also alleged that the dispute between the parties has been referred to arbitration. In this arbitration proceedings, an award has been made against the plaintiff. It was also urged that a report has been lodged against the plaintiff under Sections 420, 468 and 471, IPC by the defendants against the plaintiff. Despite all these, the plaintiff was not disbursing the profits to the defendants. The defendants had no other alternative except to put the lock over the petrol-pump. 3. Both the parties had exchanged their affidavits before the lower court along with annexures. After hearing both the parties, the trial court came to the conclusion that the plaintiff is prima facie sole proprietor of the property in question. The defendants had no other alternative except to put the lock over the petrol-pump. 3. Both the parties had exchanged their affidavits before the lower court along with annexures. After hearing both the parties, the trial court came to the conclusion that the plaintiff is prima facie sole proprietor of the property in question. It was further held that by putting the lock the plaintiff is suffering unnecessary damage. The lower court held that prima facie case was established by the plaintiff and he had balance of convenience in his favour. It was also held that the plaintiff will suffer irreparable loss if the locks are not permitted to be opened. Consequently, the impugned order was passed. 4. At the very stage of admission, affidavits had been exchanged with relevant annexures. Hence with the consent of the parties, we are disposing of this appeal at the admission stage. Learned counsel for the appellant drew our attention to Annexure "2" to the affidavit filed in support of the stay application. This is an application for registration of the firm moved to the Sales-tax Officer, Rampur Circle on 30th of March, 1973. The plaintiff had shown Som Dutt Mittal (himself), Usha Mittal and Smt. Swarna Mittal as partners. Annexure "3" to the affidavit filed in support of the stay application is letter of Usha Mittal addressed to the Sales tax Officer, Rampur informing that due to some partnership changes the business name Naini Service Station has been closed with effect from 5th of February, 1986. It was urged that these documents % were furnished by the plaintiff himself to the Sales-tax Officer. Hence these documents prima facie show that the defendants were partners in the firm and the plaintiff has got no right to run the business. 5. Our attention was also drawn to some annexures to the supplementary affidavit dated 1st of August, 1989. Annexure "SA-1" to the aforesaid supplementary affidavit is a copy of an application dated 22-7-1970 by Som Dutt Mittal and Brahma Dutt Mittal for permission to construct some shops. Annexure "SA-2" is a copy of the report of some official of Town Area Committee, Rampur to the Chairman of the said Committee. It is dated 28-7-1970. The report says that there was no hinderance in the way of sanction of the permission for construction of the shops. Annexure "SA-3" is a copy of the map. Annexure "SA-2" is a copy of the report of some official of Town Area Committee, Rampur to the Chairman of the said Committee. It is dated 28-7-1970. The report says that there was no hinderance in the way of sanction of the permission for construction of the shops. Annexure "SA-3" is a copy of the map. This shows that certain shops were to be constructed over some piece of land. Annexure "SA-4" is an assessment order of the Sales-tax Department for the year 1973-74 about Naini Service Station, Bilaspur. Annexure "SA-5" is a copy of another assessment order of the Sales-tax Department of the year 1980-81 regarding Naini Service Station. In both Annexures "SA-4" and "SA-5", the plaintiff has been shown as Sajhidar (partners) of the firm Naini Service Station. It is worth mentioning at this place that in these two documents Som Dutt Mittal is alleged to have produced all the relevant books of the petrol pump. Annexure "SA-6" is a certificate given be Sales-tax Officer on 16-5-1986 to Smt Swarna Mittal stating that according to Form No. 14 submitted for the years 1981-82 and 1984-85 Smt. Usha Mittal and Smt. Swarna Mittal and Som Dutt Mittal were shown as co-sharers of the petrol-pump. 6. On the basis of the above evidence, it was urged that admission is the best evidence on which the appellant can rely. These documents show prima facie that business of Naini Service Station was a partner-ship business. Our attention was drawn to K. T. Abdul Badsha Saheb v. Century Wood Industries, AIR 1954 Mysore 33, wherein it was held that to constitute a partnership there should be firstly a relationship between two or more persons; secondly those persons must run a business; thirdly the business must be run with intention of realizing profits ; fourthly every one of the partners should share the profits and fifthly the business should be run by all or any one of them acting for all. It was also held in this case that an agreement of a partnership between persons can arise out of a mutual understanding evidenced by a consistent code of conduct and indeed by the express admission of the parties concerned. It was also held in this case that an agreement of a partnership between persons can arise out of a mutual understanding evidenced by a consistent code of conduct and indeed by the express admission of the parties concerned. It was urged that if the present case is tested on the anvil of the law laid down above it would transpire that the plaintiff himself admits the business of Naini Service Station as partnership business. Hence, he cannot resile from this admission. It was also pointed out that after 5th of February, 1986, the partnership business stands dissolved. Consequently, the consequences of Section 53 of the Partnership Act will follow. This Section 53 of the Act reads as under : "53. Right to restrain from use of firm name or firm property. After a firm is dissolved, every partner or his representative may, in the absence of a contract between the partners to the contrary, restrain any other partner or his representative from carrying on a similar business in the firm name, or from using any of the property of the firm for his own benefit, until the affairs of the firm have been completely wound up : Provided that where any partner or his representative has brought the goodwill of the firm, nothing in this section shall affect his right to use the firm name." It was urged that in view of this section 53 of the Partnership Act, the plaintiff has got no right to continue the business in the name and style of Nairn Service Station. 7. Learned counsel for the appellant has also cited a case in Meenakshi Achi v. P. S. M. Subramanian Chettiar, AIR 1957 Madras 8. In this case also a Division Bench of the Madras High Court has laid down the essentials of a partnership business. It was also held that a partnership business may be by an oral agreement or in writing and again it may be express or implied agreement 8. Learned counsel for the appellant has drawn our attention to Smt. Kusuma Gupta v. Smt. Sarla Devi, 1988 AWC 459 . In this case, a Division Bench of this Court had observed that a temporary injunction cannot be claimed as a matter of right upon the dissolution of partnership where the rights of the parties can be fully protected without it. In this case, a Division Bench of this Court had observed that a temporary injunction cannot be claimed as a matter of right upon the dissolution of partnership where the rights of the parties can be fully protected without it. The Division Bench had also observed that in such cases before granting temporary injunction the court must address itself to the issue of balance of convenience and irreparable injury adjudged in the totality of the facts obtaining in the case. The Division Bench also pointed out that the injunction which is incorporated in section 53 of the Partnership Act is based on the principle that the partners intending to continue business should not do any thing which might impede the winding of the partnership business. The basic idea under section 53 of the Partnership Act is to preserve the distributable assets of the firm pending the winding of the affairs and to ensure that some irreparable injury to the partners applying for the aid of section 53 of the Partnership Act may not be caused to them while the winding of the partnership busines is pending or in progress. It was contended that applying these principles the injunction could not have been granted to the plaintiff in the matter. Our attention was also drawn to N. C. Sharma v. B. C. Sharma, AIR 1986 All. 69 . In this case, Hon'ble O. P. Saxena, J. had observed that section 53 of the Partnership Act constitutes a total blanket on the carrying of a similar business in the firm name or using of the property of the firm for his own benefit by a partner except subject to a contract to the contrary. 9. On the basis of the above case laws and the materials placed before us, it has been argued that the trial court ought not to have issued a mandatory injunction permitting the plaintiff to open the locks himself. It was also urged that such mandatory injunction should have been resorted to only in exceptional cases. The present case was of not of such an exceptional nature. 10. It was also urged that such mandatory injunction should have been resorted to only in exceptional cases. The present case was of not of such an exceptional nature. 10. Learned counsel for the plaintiff-respondent urged that even if it be deemed, though not admitted, that at some time for reasons best known to him, Som Dutt Mittal had represented to the Sales-tax Department that Naini Service Station was a partnership business, then, as it was against the terms of the licence issued to him and also the laws governing the distribution of high speed diesel oil and petrol, the partnership was totally void. Such a void partnership cannot be taken into consideration in the matter. Before drawing our attention to various documents annexed to the counter-affidavit, learned counsel for the respondent has drawn our attention to Velu Padavachi v. Sivasooriam Pillai, AIR 1950 Madras 444. In this case a Full Bench of the Madras High Court had observed that a partnership entered into for the purposes of conducting a business in "arrack" or "toddy" on a licence granted or to be granted to only one of the partners is void ab initio whether the contract was entered into before the licence was granted or afterwords. Our attention was also drawn to S. Das Gupta v. D. Murza- mull, AIR 1973 SC 48 . In this case, the Supreme Court had observed that where it transpires from the evidence on record that partnership business had not maintained any accounts of his own, nor had opened any account in the bank nor had communicated to an authority about the creation of a partnership business then in such a case the partnership business cannot be inferred. 11. The next case law on which reliance has been placed is Viswanathan v. Namakchand, AIR 1955 Madras 536. In this case, the partnership was in breach of condition of licence given for running a talkie. It was held that such a partnership is illegal and void. It was argued that in view of the evidence which we shall discuss hereinafter the alleged contract of partnership was in contravention of the licence issued to the plaintiff for running the petrol pump. It was urged that even if a partnership had taken place, then it was void. 12. Reliance was also placed on Muddi Narayanam and Bros v. Kenumuri Subbaraju, AIR 1957 Andh. Pra. 437. It was urged that even if a partnership had taken place, then it was void. 12. Reliance was also placed on Muddi Narayanam and Bros v. Kenumuri Subbaraju, AIR 1957 Andh. Pra. 437. In this case under the Foodgrains Control Order, a person cannot engage himself in an undertaking involving the purchase, sale or storage for sale of foodgrains except under a licence and the contravention of the prohibition is made punishable under both the Defence of India Rules and also under Clause 7-A of the Foodgrains Control Order. In this case two firms had entered into partnership to carry on a rice mill business. It was held that such a partnership though lawful in its inception becomes unlawful when it actually conducts the entire business jointly on paddy purchased on licence granted only to one of them in direct violation of clause 3 of the Food Grains Control Order. The last case law on which reliance has been placed in Mohd. Hafeez Khan v. S. T. A. T. Gwalior (FB), AIR 1978 MP 116 . In this case, the Full Bench of the Madhya Pradesh High Court had considered the essentials of a partnership. The principles as enunciated in the case laws cited by learned counsel for the appellant, viz., AIR 1954 Mysore 33, AIR 1957 Madras 8 and others were reiterated. Annexure "CA-16" is a copy of letter of Esso Eastern Standard Incorporated dated February 4, 1966. By this letter, Som Dutt Subhash Chandra was appointed as dealer. From the above document, the plaintiff has tried to establish that formerly the contract was with Som Dutt Subhash Chandra and later on the constitution of this firm was changed to M/s. Naini Service Station and in 1971 a fresh contract had taken place. 13. Learned counsel for the respondent drew our attention to Annexure "CA-14" to the counter-affidavit. It is a copy of memorandum of agreement between Som Dutt Mittal and Esso Eastern Company entered on 15th day of March, 1971. It was stated in this memorandum that the business was to be carried on under the firm name and style of Naini Service Station at Nainital. Paragraph 15 of the agreement reads as under : "15. It is a copy of memorandum of agreement between Som Dutt Mittal and Esso Eastern Company entered on 15th day of March, 1971. It was stated in this memorandum that the business was to be carried on under the firm name and style of Naini Service Station at Nainital. Paragraph 15 of the agreement reads as under : "15. The dealar shall not change the constitution of the dealer's firm nor dissolve the partnership nor admit new members as partners nor allow any partner to withdraw from the partnership or share with or assign the rights conferred by this agreement without obtaining the previous written approval of the Company." 14. It was pointed out that this agreement was only in the name of Som Dutt Mittal and Esso Company. The agreement strictly prohibited the change in the constitution of the dealer firm or admission of new persons. Annexure "CA-15" is a contract between Hindustan Petrolium Corporation Ltd. and the plaintiff as the sole proprietor of M/s Naini Service Station. In this contract entered on 25th of August, 1988, Som Dutt Mittal was granted dealership of petrolium products. In this contract also, there is paragraph 47 which reads as under :. "47. Except with the previous written consent of the Corporation ; (i) The dealer shall not enter into any arrangement contract or understanding whereby the operations of the dealer thereunder are or may be controlled, carried out and/or financed by any other person, firm or company whether directly or indirectly and whether in whole or in part. (ii) The dealer (it if be a firm or a co-operative society) shall not effect any change in its constitution whether in the identity of its partners, members or in the share/share holding of any of them, or in the terms of the deed or partnership or of the Bye-laws as the case may be, in the event of the death of any partner/member of a firm Co-operative Society which has been appointed as a dealer hereunder the surviving partners/members hereby agree to indemnify and keep indemnified the Corporation against any claims or demands which may be made by the heirs of the deceased partner member." 15. Paragraph 58 to the contract also makes contract liable to termination if the dealer commits a breach of the covenent and stipulation contained in the agreement. Paragraph 58 to the contract also makes contract liable to termination if the dealer commits a breach of the covenent and stipulation contained in the agreement. In sub-clause (k) of clause 58 to the agreement, it was also provided that the very information given by the dealer in the application for appointment as a dealer was found to be incorrect. Then that too shall be a condition for termination of the covenent. 16. Annexure "CA-17" is a registration certificate of Naiai Service Station This certificate shows that it was issued by District Excise Officer of Rampur. It was renewed from time to time. The original entry appears to be of 1st of April, 1979. The certificate appears to have been renewed upto 31st March, 1989. It is also noteworthy that this registration certificate stipulates at the end that in case of breach of any conditions of the certificate or of the provisions of the United Provinces Sales Motor Sprit Taxation Act, 1939 (Act I of 1939) or of the rules made therein, the certificate may be amended or cancelled by the registering authority. Thus Annexures "CA-14" to "CA-17" clearly indicate that the agreement was between Som Dutt Mittal on one hand and the Petrolium Company on the other hand, there was a specific prohibition of adding a partner or other co-sharer in the business without the permission of the Company. The registration certificate was also exclusively in the name of Som Dutt Mittal. Thus any partnership in contravention of this aforesaid stipulation would have been void ab initio. The case laws mentioned above support the contentions of the respondent that any partnership in contravention of the aforesaid terms of the agreement and licence could not be created or come in existence. 17. The respondent has also filed certificates (Annexures "CA-18" and "CA-19") from the State Bank of India, Bilaspur, Rampur and UCO Bank, Post Office Bilaspur, district Rampur stating that the account of Naini Service Station was being operated by Som Dutt Mittal. In the case of State Bank of India, Deo Dutt Mittal was alleged to have been operating the account as a Manager. The respondent has also drawn our attention to some previous litigations regarding this petrol-pump. One Original Suit No. 47 of 1986 Som Dutt Mittal v. Brahma Dutt Mittal was pending in the court of Civil Judge, Rampur. Annexure "CA-6" is a copy of the order. The respondent has also drawn our attention to some previous litigations regarding this petrol-pump. One Original Suit No. 47 of 1986 Som Dutt Mittal v. Brahma Dutt Mittal was pending in the court of Civil Judge, Rampur. Annexure "CA-6" is a copy of the order. In this suit also, a question of opening the lock put on the petrol-pump arose. The Civil Judge, Rampur had disposed of application C-58 by which he permitted Som Dutt Mittal to open the lock allegdly put up by Brahma Dutt Mittal. Annexure "CA 3" is a copy of another order in Misc. Case No. 8 of 1970 : Som Dutt Mittal v. Kapoor Chand Jain. It appears that in a suit filed by Kapoor Chand against Devi Dutt Mittal and others, the Naini Service Station had been attached under Order 38 rule 5, CPC. Som Dutt Mittal had filed objection to the attachment by the order dated 24-8-1973. The Temporary Civil and Sessions Judge, Rampur, had released the petrol-pump in favour of Som Dutt Mittal. 18. Thus from the above documentary evidences it appears prima facie that the petrol-pump business was the sole property of the plaintiff Som Dutt Mittal. The appellant has not stated in their pleadings so far as to when partnership has come in existence. There is a bald statement regarding the creation of the partnership. The few papers submitted in the Sales-tax Office only spelled out certain partnership regarding the petrol business. However, the plaintiff has stated that even if the partnership was there, then it was void ab initio and cannot be taken into account. The lower court has rightly found that the plaintiff had a prima facie case. The petrol-pump is such a business which affects not only the businessman but the public in general. The lower court has safe-guarded the interest of the defendant-appellant by asking the plaintiff to submit accounts every month. Hence, the defendants are not at all inconvenienced by this arrangement. The plaintiff has stated that more than Rs. 60.000/- worth diesel and petrol are lying in the tank which is evaporating. By closure of this petrol-pump, the plaintiff will obviously suffer huge loss which he may not be able to recover from any one. Consequently, he is bound to suffer irreparable loss. The plaintiff has stated that more than Rs. 60.000/- worth diesel and petrol are lying in the tank which is evaporating. By closure of this petrol-pump, the plaintiff will obviously suffer huge loss which he may not be able to recover from any one. Consequently, he is bound to suffer irreparable loss. The balance of convenience was obviously in favour of the plaintiff when in a continuous litigations he has been defending his title to the petrol-pump and had been successful. It transpires that at one stage Brahma Dutt Mittal put lock over the petrol-pump and now his son has done so. The agreements with petrolium Company are with the plaintiff. The registration also stands in his name. Hence these facts go to show that it would be convenient to the plaintiff and public in general that the pumps continue to function. The defendants would not be inconvenienced by the running of the petrol-pump. Their interests stand safe-guarded by the impugned orders. This ingredient too is in favour of the plaintiff. In such a situation, the lower court was fully justified in passing the impugned order. 19. For the reasons mentioned above, we do not find any merit in this appeal. The appeal is, therefore, dismissed with costs to plaintiff-respondent. However, it is made clear that any observation made in the body of the judgment shall not affect the final disposal of the suit. The lower court would be free to arrive at its own conclusion on the basis of such evidence which may be produced before it at the time of trial.