Research › Search › Judgment

Orissa High Court · body

2002 DIGILAW 349 (ORI)

RABINARAYAN MAHASUAR v. LOKANATH MOHASUAR

2002-06-21

P.K.MOHANTY

body2002
P. K. MOHANTY, J. ( 1 ) THE petitioner has filed this revision challenging the order dated 7-2-2002 of the District Judge, Puri, in M. A. No. 98 of 2000 reversing the order dated 31-8-2000 of the Additional Civil Judge (Sr. Divn.), Puri in Misc. Case No. 31 of 2000 (arising out of Title Suit No. 19/501 of 1996/98 ). ( 2 ) THE petitioner is the defendant and the opposite parties are the plaintiffs who have come on record being substituted as the legal representatives of the original plaintiff (since dead ). The original plaintiff has filed the suit under Order XX, Rule 15, CPC for winding up of the partnership firm and for settlement of accounts for the period from 1-4-1982 till the date of the alleged dissolution of the partnership firm on 10-7-1996. His case is that a partnership deed was executed on 30-4-1982 by and between the parties to run the hotel business in the name and style of HOTEL BASANT_ with effect from 1-4-1982. The partnership business was nomenclatured as partnership at will_. From the very beginning, the petitioner was the Managing Partner and was authorised to remain in charge of over all affairs of the hotel as per terms of the deed. He, however, did not care to submit accounts of the business to the original plaintiff despite repeated demands made to him. The petitioner even did not want to settle the accounts in any of the accounting years for division of loss and profits. The original plaintiff was also not allowed to inspect the accounts. In the circumstances, the suit was filed with prayer for settlement of the accounts, winding up of partnership firm, for realisation of interest and the dues after final accounting and for taking suitable action for misappropriation of funds. ( 3 ) THE petitioner in his written statement denied the allegations levelled against him. According to him, he was the live partner with effect from 4-1-985 (although the partnership deed was executed in 1982 ). The parties have been carrying on partnership business jointly. In the year 2000, for the first time the legal heirs of the original plaintiff filed an application under Order XL, Rule 1, CPC for appointment of receiver. The petitioner filed objection to the said application. The parties have been carrying on partnership business jointly. In the year 2000, for the first time the legal heirs of the original plaintiff filed an application under Order XL, Rule 1, CPC for appointment of receiver. The petitioner filed objection to the said application. His case is that as the live partner he has been regularly filing returns before the concerned authority with the balance-sheet. The property has been hypothecated to the O. S. F. C. whose dues are regularly being paid. In absence of specific allegation of mis-management, prayer for appointment of receiver should be rejected. ( 4 ) UPON hearing the parties, the trial Judge rejected the prayer for appointment of receiver on the ground that since the defendant is in possession of the hotel, any order of appointment of receiver would deprive him of his possession which may cause irreparable loss. In the appeal, the learned District Judge, however, by the impugned order directed for appointment of receiver one month after the order if the award/decision of the arbitrator is not taken up effectively to be worked out. ( 5 ) SHRI Padhi, learned counsel for the petitioner, submitted that present opposite parties have been arrayed after the death of the original plaintiff who was the partner of the firm and the present opposite parties who have been substituted being non-partners, appointment of receiver at their instance is not maintainable as they have no locus standi. In support of his submission, he referred to the annotation at page 2527 of the CPC (Volume-III) 15th Edition by Mulla. He also submitted that the partnership firm is in respect of a hotel business and its good-will would be lost if a receiver is appointed, as after the receiver is appointed, the reputation and business prospects of the hotel would be affected. He also submitted that the petitioner as the Managing Partner has been making repayment of the loan to the O. S. F. C. and in absence of any specific allegation of mis-management or misappropriation, prayer for appointment of receiver is mis-conceived. Shri Sarangi, learned counsel appearing for the opposite parties, submitted that the finding of the District Judge is not perverse nor has it occasioned any failure of justice and, therefore, this Court, in exercise of revisional jurisdiction, should not interfere with the impugned order. Shri Sarangi, learned counsel appearing for the opposite parties, submitted that the finding of the District Judge is not perverse nor has it occasioned any failure of justice and, therefore, this Court, in exercise of revisional jurisdiction, should not interfere with the impugned order. In this connection, he relied upon the judgment of the Supreme Court in AIR 1973 SC 76 . He also submitted that the learned District Judge has rightly directed appointment of receiver to manage the affairs of the firm. In this connection, he has relied upon the decisions of this Court in (1995) 80 Cut LT 388, 1999 87 Cutlt 653 and (1992) 74 Cut LT 618. ( 6 ) IN order to appreciate the rival contentions, it is relevant to take note of the prayer made in the plaint which is quoted hereunder :8. That the plaintiff therefore prays : (a) the Court be pleased to pass both preliminary and final decree relating to settlement of accounts of the erstwhile partnership business between the parties directing the defendant to render the true and correct accounts for the entire period beginning from 1-4-1982 (first April Eighty-two) to till the day of dissolution dated 10-7-1996 (tenth July Ninety-six ). (b) the partnership be directed to wound up. (c) interest on the dues and the dues of the plaintiff on such final accounting be awarded to the plaintiff. (d) cost of the suit be decreed against the defendant. (e) any other relief which the Court considers fit and proper may also be decreed. " a bare perusal of the above prayer would show that the original plaintiff prayed for rendition of accounts for the period from 1-4-1982 to 10-7-1996 on which date the partnership was said to have been dissolved. His further prayer for winding up of the partnership firm and to award his dues on final accounting would indicate that essentially the suit is for grant of his dues in terms of the partnership deed. Even assuming that all the prayers of the plaintiff are granted, the plaintiff would get only monetary benefit and the partnership firm will no way be affected even if no receiver is appointed. There is no specific allegation that the petitioner is about to dispose of the properties of the firm and/or there is imminent danger or loss to the properties. There is no specific allegation that the petitioner is about to dispose of the properties of the firm and/or there is imminent danger or loss to the properties. It is well settled that the appointment of receiver is not as a matter of course. It being a harsh remedy, discretion must be exercised with care and caution. An order of appointment of receiver should not be made where it has the effect of depriving of a party de facto possession which it may cause irreparable loss. In this connection, the decisions of this Court in (1999) 88 Cut LT 200: (2000 AIHC 2381), Khalli Sahu v. Gopi Gouda and (1983) 55 Cut LT 461, Sarada Devi v. Khirod Kumar Sahu, may be profitably referred to. It cannot be lost sight of the fact that the original plaintiff who was the partner of the firm during his life time did not apply for appointment of receiver. It is only after his death, when the opposite parties came to be substituted in his place, this application was made. Admittedly, they are non-partners of the firm. In view of this undisputed factual position, no receiver can be appointed at the instance of non-partners. In this connection, Mulla_s observation (supra) is appro-priate. The observation made by Mulla is quoted below : -. . . . . . . . . . . . . . where the contest is between partners on the one hand and non-partners on the other, e. g. , legal representatives of a late partner, a receiver will not be granted against a member of the firm at the instance of the legal representatives, unless some special grounds for the interference of the Court can be established. " in the application for receiver no special grounds have been made out for appointment of receiver. In none of the cases cited by Shri Sarangi his distinguishing feature has been dealt with. It is also relevant to notice here that the legal representatives of the original plaintiff filed an injunction petition against the petitioner under Order 39, Rules1 and 2, CPC before the trial Court (vide Misc. Case No. 41 of 2000) for grant of ad interim injunction restraining the petitioner from pursuing the partnership business and after the prayer was rejected by the learned trial Judge, they have come up with the present application for appointment of receiver. Case No. 41 of 2000) for grant of ad interim injunction restraining the petitioner from pursuing the partnership business and after the prayer was rejected by the learned trial Judge, they have come up with the present application for appointment of receiver. It is also not in dispute that in the meantime parties agreed to refer all their family disputes including the management of the hotel to arbitration for which they entered into agreement and the arbitrators appointed by them have given their award on 25-12-2001 during the pendency of the appeal. The learned District Judge should have given due weight to this aspect and in absence of a well-founded fear that the partnership property would be wasted or dissipitated or that other irreparable harm would be caused by the petitioner, it is not just and convenient_ for the Court to appoint a receiver. Learned District Judge has thus clearly acted with material irregularity in exercise of jurisdiction in directing appointment of receiver. ( 7 ) IN the result, the impugned order of the learned District Judge is hereby set aside. The order of the learned trial Judge is hereby confirmed. The civil revision is accordingly allowed. ( 8 ) THE suit is of the year 1996. The trial Judge is hereby directed to dispose of the same within a period of four months from the date of receipt of copy of this order. The trial Judge while disposing of the suit will also take note of and give due importance to the award of the Arbitrators who were appointed on mutual consent of the parties. The lower Court records be sent back immediately. Revision allowed.