KRISHNA BHAGWAN AGGARWAL v. 1st ADDL. DISTT. JUDGE, BADAUN
1999-04-19
O.P.GARG
body1999
DigiLaw.ai
O. P. GARG, J. ( 1 ) THE present writ petition under Article 225 of the Constitution of india involves the determination of the validity, justification, correctness and properties of the order of appointment of receiver under provisions of Order XL Rule 1 of the Code of civil Procedure in a suit for the relief of dissolution of the firm, rendition of accounts and partition and distribution of the properties and assets between the partners. ( 2 ) THE woodcut profile of the case is that a firm know as M/s. Ayodhya Prasad and Sons, a partnership firm was constituted and brought into existence for carrying on the business in burmah Shell Products, Hindustan Livers limited products and Cement etc. on 1st April, 1953. The partnership business of the firm was initially spread-over at five places, namely, bilsi, Shaswan, Mathura, Ujhiani and Badaun. After sometimes, the business establishments at Mathura and Badaun were closed down on account of the policy of the Government to promote Indian Oil Corporation in preference to Burmah Shell. The firm business further got fillip as it was expanded in Delhi, Kasganj, and biswauli. The headquarters of the firm were at ujhiani where the consolidated account of all the branches of the firm business were main tained. The partners of the firm, as would be apparent from the deed of partnership, which is Annexure C. A. 1 to the counter affidavit, were (1) Krishna Bhagwan Agarwal (present petitioner No. 1), (2) Ayodhya Prasad Agarwal (3) Sharawan Kumar Agarwal (plaintiff-respondent no. 2), (4) Krishna Murari and (5) Hari bhagwan. Krishna Bhagwan Agarwal, petitioner No. 1 had 50 per cent share of the profit or loss in the business while Ayodhya Prasad agarwal had 20 per cent share. The other three remaining partners, namely, Sharawan Kumar, krishna Murari and Hari Bhagwan each had a share to the extent of 10 per cent The various branches of the partnership firm were managed by different partners for the sake of convenience and efficient working. Ayodhya prasasd Agarwal was in the control and super vision of the branch at Ujhiani while Hari bhagwan Agarwal was looking after the -business at Bilsi and Shaswan. Krishna Bhagwan agarwal petitioner No. 1 came to control and supervise the business of the branches at Delhi, kasganj, Bisauli, though Sharwan Kumar is alleged to have managed Delhi and Kasganj branches up to the year 1979.
Krishna Bhagwan agarwal petitioner No. 1 came to control and supervise the business of the branches at Delhi, kasganj, Bisauli, though Sharwan Kumar is alleged to have managed Delhi and Kasganj branches up to the year 1979. Sharawan kumar Agarwal, it appears, was aggrieved on account of the fact that the other partners who were in collusion with each other and had stopped working honestly, failed to submit the true accounts after 31. 3. 1979 and that the income and Sales Tax returns had not been filed regularly with the result recovery of huge amounts were taken out and he was harassed for the payment of dues which he alone was not liable to pay. He served a notice dated 21. 4. 1981 on all the partners manifesting his intention to dissolve the partnership which was at Will and thereafter instituted a suit No. 65 of 1982 in the court of Civil Judge, Badaun for the relief of dissolution of partnership, rendition of accounts and for partition and distribution of the properties and assets of the firm. The details of all the branches of partnership business are given at the foot of the plaint. With the filing of the suit, the plaintiff-respondent no. 2 moved an application for appointment of receiver. The contesting partners who are defendant No. 1 to 4 to the suit, filed the objection as well as written statement. The plea taken by them is that the plaintiff-respondent no. 2 had no share in the patnership business and its properties and that the firm had been dissolved on 30. 9. 1979 with the consent of all the partners after settling the accounts and that a new firm was brought into existence on 1. 10. 1979 of which the present petitioner krishna Bhagwan and Vishnu Bhagwan only are the partners. It was further maintained that bisauli Petrol Pump is only property subject to partition and the petitioner respondent No. 2 has no share in the properties of the other branches of the business establishment. Ayodhya Prasad and Krishna Murari who were defendant No. 2 and 3 in the suit respectively died on 18. 1. 1980 and 20. 9. 1991. Their legal heirs and representatives have been substituted. The application for the appointment of the receiver moved by the plaintiff respondent No. 2 was rejected by the trial Court on 11. 9. 1997.
Ayodhya Prasad and Krishna Murari who were defendant No. 2 and 3 in the suit respectively died on 18. 1. 1980 and 20. 9. 1991. Their legal heirs and representatives have been substituted. The application for the appointment of the receiver moved by the plaintiff respondent No. 2 was rejected by the trial Court on 11. 9. 1997. The plaintiff-respondent No. 2 preferred a Misc. Civil Appeal No. 59 of 1992 which came to be decided by the 1st additional District Judge. Badaun who passed an order dated 9. 2. 1999 for the appointment of receiver. To challenge the said order passed in appeal the petitioners have involved the extraordinary jurisdiction of this court under article 225 of the Constitution of India with the prayer that the order of appointment of receiver dated 9. 2. 1999 passed by the 1st additional District Judge, Badaun in Misc. Civil appeal No. 59 of 1992 be quashed. ( 3 ) COUNTER and rejoinder affidavits have been exchanged and with the consent of the parties counsel this writ petition is being finally disposed of on merits in accordance with the Rules of the court. ( 4 ) HEARD Sri Pradeep Kumar assisted by sri Swapnil Kumar learned counsel for the petitioners and Sri Ajit Kumar on behalf of the plaintiff-respondent No. 2 at considerable length. ( 5 ) TO begin with, it may be mentioned that it is an indubitable fact that a firm M/s. Ayodhya Prasad and Sons was brought into existence in the year 1963 by Ayodhya Prasad and his four sons who entered into a partnership agreement. Vishnu Bhagwan, petitioner no. 2 one of the five sons of Ayodhya Prasad was not associated as a partner in the firm. The business of the firm was carried out from branches located in different cities and ultimately in course of time, it came to be confined at six places namely, Bilsi, Shaswan ujhiani, Delhi, Kasganj and Bisauli. None of these business establishments was being looked after by Vishnu Bhagwan. He had no concern with the firm business. It is also a common case of the parties that it was a partnership At will. Under the provisions of Section 43 of the Indian Partnership Act, a partnership At will may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
It is also a common case of the parties that it was a partnership At will. Under the provisions of Section 43 of the Indian Partnership Act, a partnership At will may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved from the date mentioned in the notice as the date of dissolution or if no date is mentioned from the date of communication of the notice Sharawan Kumar, plaintiff-respondent no. 2 undoubtedly was a partner of the firm and he served a notice in writing on other partners of his intention to dissolve the firm on 21. 4. 1981. The main thrust of the contesting defendant Nos. 1 to 4 was that a partnership firm which was constituted in the year 1963 was dissolved with the consent and agreement of all the partners on 30. 9. 1979 and that w. e. f. 1. 10. 1979 a new firm came into existence in which plaintiff-respondent was not a partner. According to the petitioners, they are the only partners in the newly constituted firm. This aspect of the controversy has been dealt with in some details by the lower appellate court. It has come to the conclusion that the partnership firm constituted in :he year 1963 was not dissolved on 30. 9. 1979. In this connection evidence in the form of applications for renewal of the firm as well as the affidavit of late ayodhya Prasad dated 12. 2. 1985, a copy of which is Annexure C. A. 10 to the counter affidavit, were considered in the context of the facts and circumstances attending the case. The firm which came into existence in the year 1963 continued to run the business at least till 12,2. 1985 a date which falls much after the institution of the suit by the plaintiff-respondent No. 2. Ayodhya Prasad father of the other four partners of the firm and who himself was a partner and had a share to the extent of 20 per cent in the firm business had filed an affidavit on 12. 2. 1985 deposing therein in unerring terms that the original partners of the firm including plaintiff-respondent No. 2 continued to run the business.
2. 1985 deposing therein in unerring terms that the original partners of the firm including plaintiff-respondent No. 2 continued to run the business. Not only this, petitioner No. 2, Vishnu Bhagwan had asserted in suit No. 230 of 1991 that the firm as was constituted on 1. 4. 1963 is still in existence. From the fact that there had been some changes in the managerial hands of the different branches it cannot be inferred that the original firm came to be dissolved. There can be no presumption of dissolution of the partnership. That fact has to be proved and established because the presumption is always in favour of the running of the business and not in favour of its closure or its dissolution. The appellate court has recorded a prima facie finding of fact that the firm constituted in the year 1963 continued to carry on the business and that its dissolution had never taken place on 30. 9. 1979. Some other prima facie findings have also been recorded by the lower appellate court in respect of which a roving enquiry is not possible and cannot be made by this writ court. The findings recorded by lower appellate court are well reasoned based on fair reading and analysis of the material brought on record. In writ jurisdiction controversial facts cannot be gone into and sifted in the absence of evidence. In the case of Chandauarkar Sita Ratna rao v. Ashalata S. Guram the question raised was whether the High Court was justified in taking the view and in upsetting the finding recorded by the appellate Bench, it was held that while considering this question, it has to be borne in mind that the High Court was exercising its jurisdiction under Article 227 of the constitution of India. In the exercise of this jurisdiction the High Court can set aside or ignore the findings of fact of an inferior court or Tribunal, if there was no evidence to justify such a conclusion and if no reasonable person could possibly have come to the conclusion which the court or Tribunal has come or in other words it is a finding which was perverse in law. Except to the limited extent indicated above, the High Court has no jurisdiction to interfere with the findings of fact.
Except to the limited extent indicated above, the High Court has no jurisdiction to interfere with the findings of fact. This decision was later on considered and approved by the apex court in the case of Mani Naninan daruwala v. Phiroz N. Bhatena and Ors. . In the decision of this court in Syed Mazhar mustafa Jafri and Anr. v. Rent Control and eviction Officer, Allahabad scope of sifting of the facts in writ jurisdiction came to be considered. In that case the following observations of the apex court in Swarana Singh v. State of Punjab were noticed :-"it is well settled that certiorari jurisdiction can be exercised only for correctly errors of jurisdiction committed by inferior courts or tribunals. A writ of certiorari can be issued only in the excise of supervisory jurisdiction which is different from appellate jurisdiction. The court exercising special jurisdiction under article 225 if not entitled to act as an appellate court, this limitation necessarily means that findings of fact reached by the inferior court of Tribunal as a result of the appreciation of evidence cannot be re-opened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however, grave it may appear to be. " ( 6 ) SIMILAR view was taken by Babhoot Mal rai Chand Oswal v. Laxmi Bai R. Tarte applying the tests laid down in the aforesaid cases, i am unable to persuade myself to hold that the findings of fact recorded by the lower appellate court suffer from such infirmity, so as to justify interference with the said findings either under Article 226 and 227 of the constitution of India. Therefore, the prima facie finding of fact recorded by the lower appellate court that originally firm M/s. Ayodhya Prasad and Sons brought into existence in the year 1963 was never dissolved on 30. 9. 1979 with the consent of the partners cannot be reappraised by this court in writ jurisdiction. The said finding cannot be said to be perverse, arbitrary or based on no evidence. ( 7 ) NOW it is the time to consider the question whether the lower appellate court was justified in appointing the receiver to take over and manage the firm business which is being carried out through various branch in different cities.
The said finding cannot be said to be perverse, arbitrary or based on no evidence. ( 7 ) NOW it is the time to consider the question whether the lower appellate court was justified in appointing the receiver to take over and manage the firm business which is being carried out through various branch in different cities. The main thrust of the learned counsel for the petitioners was that it is never advisable, just or proper to appoint a receiver in the case where the partnership business is in its strides. In support of his contention, the learned counsel for the petitioners placed reliance on the decision of the apex court in the case of K. P. A, Vellayappa Near v. Bhagirathi ammal and Ors, Khaderan Ram and Ors. v. Sharda Prasad and Ors. ; Subhash Chandra agarwal and Ors. v. District Judge, Mathura and Amar Nath Gupta v. Om Prakash verma. The considerations which determine the grant or refusal rest on well-known principles but no court has been able to lay down unvarying and inflexible rules applying to all circumstances and eventualities. The fact of the actual case are of primary consideration which determine the exercise of the discretionary power. It is true that the power is exercised sparingly and with caution and circumspection where circumstances require a summary relief. A receiver is to be appointed only in a clear case and where there is necessity or occasion for the appointment. Appointment of a receiver must not be a mere weapon of coercion and the courts do not exercise this discretionary power in the absence of a strong case. The discretion of the trial court ought not to be disturbed where it is rested on a consideration of the facts and circumstances bearing in mind the principles applicable. ( 8 ) THE question which stares at our face is whether the principles of law laid down in the aforesaid cases apply to the factual matrix of the present case. There is no doubt about the fact that the appointment of a receiver is recognized as one of the harshest remedies which the law provides for the enforcement of the rights and is allowable only in extreme cases and in circumstances where the interest of the person seeking the appointment of a receiver is exposed to manifest peril.
There is no doubt about the fact that the appointment of a receiver is recognized as one of the harshest remedies which the law provides for the enforcement of the rights and is allowable only in extreme cases and in circumstances where the interest of the person seeking the appointment of a receiver is exposed to manifest peril. Therefore, this exceedingly delicate and responsible duty has to be discharged by the court with utmost caution only when five requirements embodied in the words just and convenient in Order XL rule 1 are fulfilled by the facts of the case under consideration. The above observations came to be made in the case of T. Krishna Swamy chetty v. C. . Thangavelu Chetty. The five requirements laic down therein are as follows:-"1. The appointment of a receiver pending a suit is a matter resting in the discretion of the court. 2. The court should not appoint a receiver except upon proof by the plaintiff that prima facie he has a very excellent chance of succeeding in the suit. 3. Not only must the plaintiff show a case of adverse and conflicting claims to property, but he must show some emergency of danger or loss demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration. 4. An order appointing a receiver will not be made where it has the effect of depriving a defendant of a de facto possession, since that might cause irreparable wrong. It would be different where the property is shown to be in medio that is to say, in the enjoyment of no one. And, 5. The court, on the application made for the appointment of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame. " ( 9 ) THE above case was followed by the mysore High Court in Srinivasa Rao v. Babu rao. In the case of Dilman Rai v. Srinarayan sharma it was observed that an order appointing receiver will not be made where it has the effect of depriving the defendant of a de facto possession since that might cause irreparable wrong.
In the case of Dilman Rai v. Srinarayan sharma it was observed that an order appointing receiver will not be made where it has the effect of depriving the defendant of a de facto possession since that might cause irreparable wrong. It was cautioned that the court will not act on a possible danger only and remote or part damage will not suffice as a ground, but there must be well grounded apprehension of immediate injury and danger and danger of suffering irreparable loss A division Bench of this court had held in S. B. Industries Freegunj v. United Bank of India that to justify the appointment of receiver plaintiff must establish firstly, a prima facie good case and secondly, that it is necessary to prevent fraud and to protect and preserve the property against imminent danger, before he comes and seeks the relief of appointment of receiver. Before the plaintiff can have a receiver appointment he has to satisfy the court that he. has an interest in the property involved in the suit, i. e. the subsisting interest on the basis of partnership, and that he has special equity in his favour. Appointment of a receiver is an equitable relief and will be granted on eauitable considerations mainly. ( 10 ) IN a suit for dissolution of partnership, rendition of account and partition and distribution of its property and assets, various imponderables and contingencies arise in the matter of appointment of receiver. The only object and effect of the appointment of receiver is to maintain the things in their present condition during the pendency of the suit. The effect of appointment of receiver of running a partnership is that it operates as an injunction against other partners. Therefore, unless some special grounds are established for doing so. the court would generally be slow enough in appointing a receiver.
The effect of appointment of receiver of running a partnership is that it operates as an injunction against other partners. Therefore, unless some special grounds are established for doing so. the court would generally be slow enough in appointing a receiver. The special grounds may be misconduct of a partner which may be of such a nature as to show that he is no longer to be trusted, as for example, he is carrying on trade of his own with partnership property or if there is any mismanagement which may endanger the whole concern or if that partner is acting in a manner inconsistent with his duties and obligations or has excluded other partners from fruits of partnership firm, or apart from non-cooperation of one of the partners in the management, if the quarrels are such as to occasion a complete deadlock in carrying on the business. Prem Prakash Kapoor v. Govind ram Kapoor is an authority on the. point that if it is established that the plaintiff had been excluded from the business of the firm and the court is of the view that the firm assets were exposed to manifest peril, the order of appointment of a receiver would be eminently suited particularly when the defendants had taken over the stock in trade and the business of the firm and were dealing with the same as their own property after entering into a new partnership. A reference may also be made to the earlier decision in the case of Nihalchand l. J. Narain and Ors. v. Ram Niwas Munna Lal and Ors. in which it was held that a receiver may be appointed where there is a reasonable apprehension to the property, assets or income and are in danger of being injured, misused or dissipated The property should be preserved from loss of wastage so that the final reilef may be effective. The appointment of a receiver in such circumstances does not result in harassment to a party but protects the rights of the injured party by keeping intact, where a partner excludes another from the management of the partnership affairs, a case is made out for appointment of a receiver and this doctrine has been acted upon even where the defendant contents that the plaintiff is not a partner or that he has no interest in the partnership assets.
Abni Kumar Mukherji v. Nand kishore is a decision in which it was held that as a general rule the court will not appoint the receiver unless the dissolution of the partnership firm is sought. In an oft quoted case of Ramchandrayya v. Nethi Ishwarayya, the view taken was that in a suit relating to the partnership concern, even though no circumstances tending to jeopardize the partnership assets be shown, the court would be justified in appointing the receiver if the defendant seeks to exclude co-partners from the management. A more precise view as taken in the case of sharyau Armando Pareira v. Vishnu yeshwant Sawant and Anr, in which it was observed that a receiver is to be appointed as a matter of course when a partnership is dissolved under orders of the court of if a partnership is already dissolved and any of the parties has come to the court for seeking relief due to him as an ex-partner. The main purpose to appoint a receiver is to take charge of the partnership assets, collect the same and convert it into cash, if necessary, and to discharge the debts of the firm and thereafter divide the surplus between the partners. ( 11 ) THE extension of the above principles is to be found incorporated in the division Bench case of Patna High Court in sudhanshu Kant v. Manendra Nath. Paragraph 4 of the report reads as follows :-"4. Before the plaintiff can have a receiver appointed, he has to satisfy the court that he has an interest in the property involved in the suit and that he has special equity in his favour. Appointment of a receiver is an equitable relief and will be granted on equitable grounds mainly. Though Order 40 Rule 1, Civil procedure Code, has authorized the court to appoint a receiver when it is found just and convenient in a suit, it is nothing more than the equitable considerations that used to weigh in the mind of the court for giving an equitable relief by appoiru. nent of a receiver to a suitor. This is only a provision which declares what used to be done before it was put under an enactment. There are certain guiding principles which the court takes into account when a party asks for the appointment of a receiver in respect of the subject matter of a suit.
nent of a receiver to a suitor. This is only a provision which declares what used to be done before it was put under an enactment. There are certain guiding principles which the court takes into account when a party asks for the appointment of a receiver in respect of the subject matter of a suit. Some of those principles are that the applicant must have special equity in his favour and make out a strong prima facie case against the opposite party and show that 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. A mere shadowy claim woven in the plaint with allegations which are inconsistent and apparently misleading cannot invoke the courts assistance in this respect. " ( 12 ) THE cases of Bhupendra Nath v. Munohar Muknerjee; P. C. L. Choudhuri v. K, Singha and H. C. Dutra, Banwari Lal v. Moti Lal; Kunhan Menon v. Kannan menem; Benoy Krishna v. Satish Chandra; alkama Bibi v. Istale Hussain; Krishnasramy v. Thangavelu (S) and Muniannal v. Ronganatha Nayagar (S) law down such tests. Again in Moti Lal v. Badri Nath which was a suit by one of the partners for dissolulion of partnership, the court accepting the pud that the plaintiff had no access to management and the accounts of the business, held the appointment of the receiver justified. It is well embedded principle of law that a receiver is to be appointed as a matter of course when is partnership is dissolved. In a suit for dissolution of a partnership, a receiver can also be appointed before the adjudication if the circumstances of the case justify such a measure.
It is well embedded principle of law that a receiver is to be appointed as a matter of course when is partnership is dissolved. In a suit for dissolution of a partnership, a receiver can also be appointed before the adjudication if the circumstances of the case justify such a measure. ( 13 ) IN the case of Khanderan Ram (supra)relied upon by the learned counsel for the petitioners the legal position has been succinctly summarized as below :-"the sum and substance of a perusal of this entire law on the subject is that if the partnership has been dissolved or is sought to be dissolved by filling of the suit receiver can be appointed as a matter of course provided his appointment is sought for the taking of the assets of the firm and ultimately for distribution thereof to the partners and the relationship between the partners is extremely strained. In the cases in which one of the partners has completely excluded the other from the management and the profits of the firm and funds are misappropriated, receiver can again be appointed but for a running firm, the dissolution of which is not established, because that will affect the position of the person who is running the business and is in de facto possession of the same. " ( 14 ) IN the above case the application for appointment of receiver was held to have been rightly rejected on the ground that it appeared from the circumstances on the record that that was not a case of exclusion of plaintiff-partners from the business but their voluntary non-corportion in the management and that there was nothing on record to show that the defendants were stopping the plaintiff-revisionist from exercising their rights from going to cinema premises or looking the accounts that were being maintained. It was a case where the application for appointment of receiver was rejected in view of the established facts as mentioned above. In K. P. A. V. Vellayapa Ndar v. Bhagirathi Ammal and Ors.
It was a case where the application for appointment of receiver was rejected in view of the established facts as mentioned above. In K. P. A. V. Vellayapa Ndar v. Bhagirathi Ammal and Ors. (supra) relied upon by the learned counsel for the petitioners, the appellate due to his old age, had stepped out from the business, foregoing his right to share in the goodwill of the firm and the partners had agreed to rake over the old partnership in consideration of setting off of losses, if any from the business the amount payable towards the share of the appellant in the goodwill of the firm etc. Consequently, the partnership firm mutually stood dissolved and the new partnership had come into existence to which admittedly the appellant was not a partner; nor did they claim that he was being paid any profits out of the business carried on thereafter. It was in these circumstances that the appellant was not found liable to render the accounts. ( 15 ) IN the backdrop of the above legal position, it is clear that the appointment of a receiver is a discretionary relief, and such an order must be passed with great caution and circumspection and only on being satisfied that the partnership property was in danger of being wasted or destroyed. Not let us examine the correctness and propriety of the impugned order passed by the lower appellate court. The entire edifice of the partnership rests on mutual faith and a confidence and co-operation. The partners are bound to carry on the business of the firm to the greatest common advantage; to be just and faithful to each other and render true accounts and full information of all things affecting the firm to any partner. Similarly, every partner has a right to have access and to inspect any of the books of the firm. A partner has interest in each and every asset of the firm, including in the intangible in nature and nebulous in character of good will. In the absence of all these basic and essential elements/ requirements, the partnership is bound to crumble down. According to the petitioners, the original partnership stood dissolved on 30. 9. 1979 as it had been substituted by a new one. The plaintiff-respondent No. 2 manifested his intention to dissolve the partnership At Will by serving a notice in writing on 21. 4. 1981.
According to the petitioners, the original partnership stood dissolved on 30. 9. 1979 as it had been substituted by a new one. The plaintiff-respondent No. 2 manifested his intention to dissolve the partnership At Will by serving a notice in writing on 21. 4. 1981. Therefore, it is a case where both the warring groups are unanimous on the point that the original partnership has failed. Even though on facts, as has been prima facie found by the first appellate court that the original partnership is still surviving and has not been dissolved, the fact remain that its properties and assets have to be properly partitioned and distributed amongst the partners in proportion to their respective shares. The lower appellate court has rightly observed that the accounting does not only mean that the profits and losses have been understood by the partners. On the other hand, it necessarily implied that the properties and assets of the firm are yet to be partitioned and distributed amongst the partners Unless this exercise is completed, the dispute between the partners continues and the aggrieved partner, who has been denied the access to the accounts and the right to get his share in the property and assets, has a strong case for the appointment of the receiver. Here, the petitioner have adopted an attitude of hostility by totally excluding the plaintiff-respondent No. 2 from the partnership business. They have taken the plea that he is no longer a partner in the firm and, therefore, has no share, whatsoever, in the properties and assets of the firm. This amounts to bizarre denial of the rights of a partner and his deliberate expulsion from the firm business. The relations between the partners, who are the real brothers, are not only strained but extremely bitter. The concept of mutuality and cohesion between the partners stands shattered. Its natural consequence is that the plaintiff-respondent No. 2 stands deprived of his valuable and indefeasible right to take part in the business or to have access to the accounts of the firm. It will not be out of place to mention that there has been a protracted litigation between the partners. Even the present suit has continued to depend for the last about 17 years.
It will not be out of place to mention that there has been a protracted litigation between the partners. Even the present suit has continued to depend for the last about 17 years. During this period, the petitioners and other partners who do not see eye with the plaintiff-respondent No. 2, must have been successful in their design to further damage his interest and to make manipulations in the accounts of the firm. The petitioners, it is alleged, have no regard to the rights of their own brother, i. e. , plaintiff-respondent No. 2. There are allegations that the petitioners have been dealing with the properties and assets of the partnership firm as their own. At one stage, they had held out themselves to be the only partners of the firm but their attempts to get them recognized as such by the Sales (now trade) Tax Department were foiled due to the intervention of the plaintiff-respondent No. 2 as well as affidavit filed by their father - Ayodhya prasad. Not only this, the petitioners have also attempted to procure the licence of the dealership moil in their own names treating the establishment at Shaswan as their own personal in contradiction to the partnership business. The plaintiff-respondent No. 2 was eager to participate in the business activities of the firm and to discharge his duties as a partner but he was prevented from doing so by the petitioners. From the above facts, the exclusion of a partner from the partnership is complete. The thrust of the various decisions, referred to above, is that where a partner has been excluded from the partnership and its properties and assets have not been partitioned or distributed, appointment of receiver, as an interim measure, should be the most efficacious relief. In view of the well established facts and the circumstances attending the case, the order of appointment of receiver should have been passed as a matter of course for the preservation of the assets and the properties of the firm. The plaintiff-respondent No. 2 has made out a case that there is danger of waste and dissipation of the assets of the firm. ( 16 ) THERE is yet another aspect of the matter The appointment of receiver as stated above is a discretionary relief.
The plaintiff-respondent No. 2 has made out a case that there is danger of waste and dissipation of the assets of the firm. ( 16 ) THERE is yet another aspect of the matter The appointment of receiver as stated above is a discretionary relief. If the appellate court has exercised its discretion according to wall established judicial norms and para-metes, in that event, there can possibly be no occasion to interfere with the order. In the case of Subhash Chand Jain v. Hari Singh, the apex Court pointed out that in the matter pertaining to dissolution of partnership and accounts, in case the court is prima facie satisfied that the discretion has been correctly exercised, in that event the appellate court would not be justified in interfering with an order of appointment of receiver. This dictum of the apex Court applies on all fours to the facts of the present writ petition. The first appellate court has taken all precautions in exercising the judicial discretion and consequently, this court would not be justified in making any terference with the order. In my quest to reach the correct conclusion, I have scrutinized and analyzed the various facts and circumstances of-the case and find that the learned lower appellate court has approached the matter in a most judicious manner. As a matter of fact, if a receiver is not appointed, the partnership property and the assets would run the serious and probable risk of being squandered and wasted. The order passed by the lower appel-late court, therefore, is quite circumspect, rea-sonable and equitable. As it is, the order of appointment of receiver does not call for any interference in the writ jurisdiction. ( 17 ) HOWEVER, an unsavory feature of the order of the lower appellate court is that it has passed a blanket order of appointment of re-ceiver and has left the matter to be tackled for implementation by the trial court. No guide-lines have been provided by the lower appel late court. The question, therefore, remains who should be appointed the receiver and with what powers and functions5 One cannot lose sight of the fact that the partnership consists of a huge business dealing in oil products and cement spread over in different cities, having its headquarters at Ujhiani.
No guide-lines have been provided by the lower appel late court. The question, therefore, remains who should be appointed the receiver and with what powers and functions5 One cannot lose sight of the fact that the partnership consists of a huge business dealing in oil products and cement spread over in different cities, having its headquarters at Ujhiani. Krishna Bhagwan agarwal - petitioner No. 1 is a partner of moi-ety share, i. e. , 50 paise in a rupee while the share of the rest of the partner is either 20% or 10% in the partnership business. He is ob-viously in the effective control of the affairs of the business. Every commercial establishment has its own ways of dealing with the business, its suppliers and customers. Needless to say, the ultimate object of every business house is to make greater profits and at the same time, to give maximum satisfaction to those who come to deal with - be they its suppliers or customers. Every partner, particularly, manag-ing partner, who is in the control of its affairs is expected to assiduously work to achieve that end. If an outsider is inducted as a Receiver, he would be a total stranger to the partnership business ignorant of the methodology of the existing business and the feelings of the other partners, suppliers and the customers. Even inthough the relations between the plaintiff-respondent no. 2 and the contesting petitioners and other partners do not appear to be quite cordial - on the other hand, bitterness and strained relations have crept in, in their relationship - it cannot be forgotten that they are the brothers and other close family members. It would, therefore, be desirable that instead of appointing a stranger as a Receiver some of the partners are appointed as Joint-Receivers. If by any arrangement, the interest of the plaintiff-respondent No. 2 can be safeguarded and the partnership properties and assets are preserved and protected while the petitioner no. 1 and other partner continue in their position as before in regard to that, neither party is likely to suffer.
If by any arrangement, the interest of the plaintiff-respondent No. 2 can be safeguarded and the partnership properties and assets are preserved and protected while the petitioner no. 1 and other partner continue in their position as before in regard to that, neither party is likely to suffer. In that view and in consideration of all the circumstances of the case, I feel that the petitioner No. 1 who has substantial share in the partnership business and the plaintiff respondent No. 2, who is actually the aggrieved party, are appointed respondent No. 2, who is actually the aggrieved party, are appointed as Joint Receivers. ( 18 ) THIS writ petition, therefore, is finally disposed of with the following directions :- (i) the order of appointment of receiver dated 9. 2. 1999 passed by 1st Additional District Judge badaun is hereby upheld. (ii) With effect from 26th April, 1999, the petitioner No. 1-Krishna bhagwan Agarwal and plaintiff respondent No. 2 Shrawan Kumar are appointed as the Joint receivers of the partnership business, its properties and assets, which is being carried out in the firm name of M/s. Ayodhya Prasad and Sons, having its principal office/headquarters at Ujhiani and branches of different business establishments at Bilsi, Shaswan, Ujhiani, Delhi, kasganj and Biswauli. (iii) Both of them will be required to maintain proper accounts of the assets of the partnership - both capital and liquid including the income accruing from the business, and submit quarterly returns before the trial Court pending final conclusion of the suit; (iv) They will also be required not to draw money from the business for personal use in excess of the normal business requirements; (v) Lest the petitioners or other partners should misuse the property or cook up the accounts it will be proper if a nominee of plaintiff respondent No. 2 is associated as a co-Accountant with the existing accountant and the Accounts of the firm are required to be maintained under the joint signatures of the two Accountants, i. e. nominee of the plaintiff-respondent No. 2 in addition to keep watch over the business and its assets generally. The plaintiff-respondent No. 2 or his nominee shall have access to and to inspect and copy of any of the books of the firm without any let or hindrance from the petitioners or other partners.
The plaintiff-respondent No. 2 or his nominee shall have access to and to inspect and copy of any of the books of the firm without any let or hindrance from the petitioners or other partners. (iv) The plaintiff-respondent No. 2 or his nominee shall have access to all parts of the commercial establishments and branches in the different cities; (vii) All the financial transactions and withdrawals of money shall be carried out under the joint signatures of the petitioners No. 1-Krishna bhagwan Agarwal and plaintiff-respondent No. 2-Shrawan Kumar agarwal and none of the parties shall be entitled to receive payment of money in their individual capacity, (viii) The trial court shall bring to the notice of the Indian Oil corporatiori; Trade Tax Department; income Tax Department; Bankers and suppliers as well as all concerned authorities and the departments the aforesaid directions; (ix) If for any reason, whatsoever, the trial court finds that the arrangement of Joint Receivership as ordered above, is not workable and any of the partners is creating bottlenecks in the implementation of the above directions, it shall be at liberty to appoint a body of two or more persons, may be strangers, as Receiver to run the partnership business and to manage and protect its properties and assets. (x) in view of the fact that the suit was institution in the year 1982, the trial court is directed to decide the same with all expedition preferably within a period of six months from the date a certified copy of this judgment and order is produced before it. ( 19 ) LET certified copies of this judgment and order be supplied to the learned counsel for the parties on payment of usual charges within 48 hours from today. Writ Petition disposed of with directions. .