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2019 DIGILAW 84 (AP)

Golla Venkata Ramaiah v. Golla Subrahmanyam

2019-06-13

D.V.S.S.SOMAYAJULU

body2019
ORDER : D.V.S.S. Somayajulu, J. 1. This appeal is filed questioning the decree and judgment passed in OS No. 151 of 2015 by the VII Additional District Judge, Ongole. The plaint is filed by one Sri G.V. Ramanaiah, (plaintiff No. 1) and M/s. Golla Chenchaiah, a partnership firm represented by a partner G.V. Ramanaiah. The suit is filed for the following reliefs: "(a) for grant of specific performance directing the defendants 1 to 7 to come forward for reconstitution of the partnership firm Golla Chenchaiah. In the event of failure on the part of defendants 1 to 7 to get it done through process of Court; (aa) for mandatory injunction directing the 8th defendant to continue to supply oil to retail outlet of plaintiffs firm (amended as per the orders on IA No. ..... /2015 dated......). (b) for costs; and (c) for such other reliefs as the Hon'ble Court deems fit and proper in the circumstances of the case." 2. A reading of the plaint discloses that the suit is filed for specific performance of a partnership agreement. The husband of the second defendant G. Subba Rao died on 13.6.2014. A letter was addressed on 30.7.2014 for reconstitution of proposal of the firm by the 8th defendant. Since then, disputes have arisen. A letter dated 30.7.2014 was addressed by the first plaintiff seeking six months time for reconstitution of the firm. In addition, lawyers' notices were also exchanged between the parties as the defendants did not reconstitute the firm. The exchange of notices were in May, 2015. Hence, the suit was filed for specific performance directing defendant Nos. 1 to 7 to come forward for reconstitution of the partnership firm-plaintiff No. 2. An alternative prayer is also made that in the event of failure of defendant Nos. 1 to 7, then to get the deed of partnership executed through the process of the Court. As defendant No. 8 did not supply the petroleum product an amendment is also sought for adding a prayer of a mandatory injunction against defendant No. 8. The said application was allowed and a prayer for mandatory injunction was permitted to be added. Thereafter, parties went to trial and the suit came to be dismissed by judgment dated 22.10.2018. Questioning the same, an appeal was filed. 3. The said application was allowed and a prayer for mandatory injunction was permitted to be added. Thereafter, parties went to trial and the suit came to be dismissed by judgment dated 22.10.2018. Questioning the same, an appeal was filed. 3. Alongwith the appeal, IA No. 1 of 2018 has been filed seeking a relief of interim mandatory injunction directing respondent No. 8 to continue to supply oil and petrol to the retail outlet of the second appellants-firm, pending disposal of the appeal. 4. To this, a counter-affidavit was filed by respondent Nos. 1 to 7 opposing the said application. A rejoinder was also filed in IA No. 1 of 2018. 5. The matter was taken up for hearing and this Court has heard Sri Anup Koushik Karavadi, learned Counsel for the appellants and Sri M. Sudhir Kumar, and Mahava Rao Nalluri, learned Counsel for the respondents. 6. Learned Counsel for the appellant argued that the first appeal is a continuation of the suit. It is his contention that both questions of fact and law can be argued in the first appeal. He submits that there was an interim mandatory injunction directing supply of petroleum products during the pendency of the suit and that a similar order should be allowed to be continued. He also submits that a business which has been run for decades should not be brought to a grinding halt because of the attitude and the non-cooperation of the respondents. He also draws the attention of the Court to the order passed by this Court in CMA No. 337 of 2017, wherein a Division Bench of this Court directed the 8th respondent to supply the petroleum products. Counsel submits mat initially an order was granted on 3.2.2017 in IA No. 960 of 2017 directing the 8th respondent to supply the petroleum products. Questioning the same, a CMA was filed. In the said CMA, a Division Bench of this Court clearly held that the lower Court did not commit any error in passing the order for supply of the petroleum products. Learned Counsel for the appellants/petitioners also relies upon certain other judgments and argues that the status quo ante should be preserved and that the supplies should be directed to be continued. 7. In reply to this, learned Counsel for the respondents with equal passion argued that respondent Nos. Learned Counsel for the appellants/petitioners also relies upon certain other judgments and argues that the status quo ante should be preserved and that the supplies should be directed to be continued. 7. In reply to this, learned Counsel for the respondents with equal passion argued that respondent Nos. 1 to 7 cannot be forced to enter into a partnership. He submits that partnership is a result of voluntary conduct and that a group of people should "assent" to form a partnership. He contends that partnership cannot be forced upon them. Learned Counsel points out that the plaintiff/appellant has acted in a manner detrimental to the interest of the firm. According to the learned Counsel, the accounts of the firm have not been submitted; respondents have not been given their share of the profit. Separate Bank accounts have been opened by the present 1st appellant and he has been diverting all the funds with the said accounts. He also submits that the 1st plaintiff has misappropriated the funds. 8. As far as the order in the CMA is concerned, learned Counsel relies upon the last para of the order passed in the CMA, which clearly states that the lower Court was directed to dispose of the suit without being influenced by what is stated in the order. Therefore, the Counsel submits that as the said order is an interlocutory order, the Trial Court, after considering the evidence that was let in, came to the conclusion that the petitioners were not entitled to any protection. He submits that the lower Court came to the definite conclusion that the actions of the 1st petitioner/appellant disentitles him from seeking specific performance. Counsel also raises an objection about the maintainability of the suit. He submits that the prayers in the suit make this clear that the same cannot be granted. He submits that if specific performance is not possible, the Court cannot compel the respondents to continue the business. He distinguishes between a regular specific performance suit for conveyance of property, wherein the Court has the option of executing the sale deed in favour of the plaintiffs and the request for execution of a deed of partnership through Court. 9. In the case on hand, learned Counsel submits that the Court cannot force the parties to continue the business. He distinguishes between a regular specific performance suit for conveyance of property, wherein the Court has the option of executing the sale deed in favour of the plaintiffs and the request for execution of a deed of partnership through Court. 9. In the case on hand, learned Counsel submits that the Court cannot force the parties to continue the business. According to him, the same is clearly barred by the provisions of Section 14 of the Specific Relief Act, 1963 (for short 'the Act'). He submits that it involves performance of a continuous duty which cannot be supervised by the Court. He also submits that the Act as it stood; permitted the specific performance of a partnership deed, if the suit is for the execution of formal deed of partnership, when the parties have commenced to carry on the business of the partnership. According to his contention, if all the parties/partners have commenced or agreed to carry on the business and the execution of a formal deed is pending, then the Court can direct the execution of the partnership deed. In the case on hand, he points out that right from 2015, defendant Nos. 1 to 7 have refused to carry on the business and that therefore, the suit itself is not maintainable and consequently, interlocutory application is also not maintainable. 10. Learned Counsel also relies upon Board of Control for Cricket in India v. Kochi Cricket Private Limited, (2018) 6 SCC 287 , for arguing about the prospective/ retrospective nature of amendment to the Act. 11. This Court after hearing both the learned Counsels and their passionate arguments on the subject, notices that in the CMA, the Division Bench of this Court was dealing with an order passed in February, 2017 at the interlocutory stage. At that stage, this Court did not have the entire evidence before it. Clause (a) of the partnership deed was relied upon by the Court at that stage. However, after confirming the order of the lower Court, the Division Bench clearly held that the findings in the said order are for the interlocutory application only and should not influence the lower Court in disposing of the appeal. 12. After the said order was passed, the evidence of the parties commenced with the chief-examination of PW1 in June, 2018. For the petitioners, Exs. A1 to A8 were marked. 12. After the said order was passed, the evidence of the parties commenced with the chief-examination of PW1 in June, 2018. For the petitioners, Exs. A1 to A8 were marked. Two witnesses were examined for the defendants and Exs. B1 to B12 were marked. The partnership deed on the basis of which the specific performance was sought was not filed. However, as per the submission of the learned Counsel for the petitioners, there is a clear admission about the clause and therefore, the non-filing of the deed is not fatal. 13. Apart from this, this Court notices that while passing the judgment, the lower Court has noticed that the business of the firm is quite prosperous. In addition, from Para 19 onwards of the judgment, the Court went on to decide the crux of the issue. The lower Court noticed that the 1st appellant as PW1 clearly admitted that from February, 2012 onwards, he has been looking after the affairs of the petrol and diesel business and that he has not distributed the profits for the last 15 years. In addition, the Court also noticed that out of the 8 partners, defendant Nos. 1 to 7 are not interested in carrying on the business and only the first plaintiff is seeking reconstitution. The evidence of PW1/appellant also discloses that he is doing business with his own investment, that he opened an account in SBH, Singaraikonda about five years prior to his deposition and that he is carrying on business with respondent No. 8 (Indian Oil Corporation Ltd.,) through that account and also through account in Canara Bank. He admits that he is doing transactions of the firm through his individual Bank accounts. These admissions are in the cross-examination of the witness on 15.7.2018. In addition, he also admits during the course of cross-examination on 15.7.2018 that as per the partnership deed, he is not authorised to represent the firm. 14. All these factors are highlighted by the learned Counsel for the petitioners. In addition, the case law on the subject of interim mandatory injunction is very clear. In addition, he also admits during the course of cross-examination on 15.7.2018 that as per the partnership deed, he is not authorised to represent the firm. 14. All these factors are highlighted by the learned Counsel for the petitioners. In addition, the case law on the subject of interim mandatory injunction is very clear. In a leading judgment on the subject reported in Dorab Cawasji Warden v. Coomi Sorab Warden, (1990) 2 SCC 117 , the Hon'ble Supreme Court of India clearly I held that for granting interim mandatory injunction, the plaintiffs' case should be of a higher standard than the normal prima facie case that is required for grant of temporary injunction. In addition, there should be a threat of irreparable and serious loss which cannot be compensated in terms of money. The balance of convenience is also a factor which has to be kept in mind. The said findings of the Hon'ble Supreme Court are found in Para 16 of the judgment. In addition, the other leading judgment are Purshottam Vishandas Raheja v. Shrichand Vishandas Raheja (D) through LRs., (2011) 6 SCC 73 and Samir Narain Bhojwani v. Aurora Properties & Investments, MANU/SC/0884/2018. The law on the subject does not require repetition. Apart from that, Section 41 of the Act is also of an importance. Section 41(1) of the Act states that an injunction can be refused when the conduct of the plaintiff or his agent has been such as to disentitle him from the assistance of the Court. 15. If the case on hand is examined against the backdrop of this law, the foremost condition to be satisfied is that the plaintiffs case should have a very high degree of probability of success and something more than the prima facie case is made out. The case on hand does not reveal any such higher probability of success or that a case greater than the prima facie case has been made out. The authority of 1st plaintiff to file the present suit on behalf of the firm is also in issue. The balance of convenience is also not in favour of the petitioner. He has been unilaterally conducting business on the strength of a partnership firm. Despite the clear stand of the respondents that they are not willing to carry on the business, the petitioner has been unilaterally carrying on the business. The balance of convenience is also not in favour of the petitioner. He has been unilaterally conducting business on the strength of a partnership firm. Despite the clear stand of the respondents that they are not willing to carry on the business, the petitioner has been unilaterally carrying on the business. Therefore, balancing the mischief, it is clear that the respondents need protection from the Court. The loss is also not irreparable. There is no evidence to show that the business is running into losses or that defendant Nos. 1 to 7 are bankrupt/insolvent or do not have the capacity to pay any amount in case damages are awarded. 16. Last, but not the least, the conduct of the petitioners is also a factor to be considered for granting a relief. He is routing the business funds through his personal account. The accounts of the firm are not yet settled. Shares have not been given to the respondents. A person, who seeks an equitable relief must display conduct which would entitle him to seek the relief of an interim injunction. This is what is commonly called as coming to Court with clean hands. This conduct of the plaintiff/appellant is a factor that was held against him during the course of impugned judgment. Those findings cannot be totally overlooked. 17. After considering the case law that has been cited by them also, this Court is of the opinion that none of the cases cited by the learned Counsel for the appellants are directly on the question of an interim mandatory injunction and for granting of a direction. In Suresh Kumar Sanghi v. Amrit Kumar Sanghi, AIR 1982 Del. 131 , the case was filed for a permanent injunction restraining the defendants therein from writing any letter to the Bank of Rajasthan for getting partnership account stopped, closed, suspended etc. The learned Single Judge while deciding the interlocutory application held that respondents cannot be allowed to stop the business and destroy it altogether. However, while granting the injunction, the plaintiffs were directed to maintain true and favourable account of the financial transactions and submit the quarterly report to the Court. 18. Even in the judgment of the Hon'ble Supreme Court of India cited by the respondent in the case of Mohd. Laiquiddin v. Kamala Devi Misra, (2010) 2 SCC 407 , it is clearly held as follows: "26. 18. Even in the judgment of the Hon'ble Supreme Court of India cited by the respondent in the case of Mohd. Laiquiddin v. Kamala Devi Misra, (2010) 2 SCC 407 , it is clearly held as follows: "26. In the light of aforementioned case, it is clear that when there are only two partners constituting the partnership firm, on the death of one of them, the firm is deemed to be dissolved despite the existence of a clause which says otherwise. A partnership is a contract between the partners. There cannot be any contract unilaterally without the acceptance by the other partner. The appellants, the legal representatives of original plaintiff (since deceased) was not at all interested in continuing the firm or constitute a fresh firm and they cannot be asked to continue the partnership, as there is no legal obligation upon them to do so as partnership is not a matter of heritable status but purely one of contract, which is also clear from the definition of partnership under Section 4. Therefore, the Trial Court was justified in holding that the firm dissolved by virtue of death of one of the partners and the first appellate Court as well as the High Court have taken the correct view in upholding the same." 19. In these circumstances, this Court is of the opinion that (a) the plaintiffs have failed to prove the necessary ingredients that are necessary for grant of an interim mandatory injunction. A case higher than a prima facie case has not been pleaded or proved, (b) The balance of convenience is in favour of the respondents and not in the petitioners favour. A person who has been unilaterally carrying on the business without the consent of others and without distributing profits is not entitled to a protection of the Court. Greater harm will be caused to the respondent if the business is carried out in the same manner, (c) It is not the case of the appellants that the respondents will not be able to pay the damages if any that will be awarded i.e., there is no proof of irreparable loss. 20. Last but not the least, the conduct of the petitioner disentitles him to the relief claimed. One seeks equity should come in equity. 20. Last but not the least, the conduct of the petitioner disentitles him to the relief claimed. One seeks equity should come in equity. The petitioner who has not rendered accounts of the firm for the period prior to and during the pendency of the suit is not entitled to any protection from this Court. 21. Hence, for all these above reasons, this Court is of the opinion that the petitioners have not made out a case for grant of interim mandatory injunction. The larger issues of the maintainability of the suit and the maintainability of the suit for specific performance of a partnership deed etc., in this case are left open to be decided during the course of hearing of the appeal. 22. Hence, IA No. 1 of 2019 is dismissed. 23. List the appeal for hearing in its usual course.