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Judgment
C.R.P.No.3265 of 1996 is against the judgment dated 12.11.1996 in C.M.A.No.100 of 1996 on the file of the III Additional District Judge,
Tiruchirappalli, modifying and confirming the order dated 17.9.1996 in I.A.No. 691 of 1996 in O.S.No.499 of 1996, granting injunction
restraining the petitioners from interfering with the operation of the bank accounts and carrying on the business of the partnership. Though,
injunction was granted as prayed for by the trial Court, the injunction was modified by the lower appellate Court to the extent that the Managing
Partner should convene the meeting of the partners once in a month and submit the accounts and giving opportunity to the petitioners to move the
Court for appointment of a Receiver in case they were able to establish that there was necessity for doing so.
C.R.P.No.3266 of 1966 is against the very same common order dated 12.11.1996 in C.M.A.No.101 of 1996 etc., on the file of the III
Additional District Judge, Tiruchirappalli, confirming the order of the learned Subordinate Judge, Tiruchirappalli, dated 17.9.1996 in I.A.No.693
of 1996 in O.S.No.505 of 1996, dismissing the application for, appointment of a receiver to take charge of the partnership business and to sell the
assets of the same.
C.R.P.NO. 3267 of 1996 is against the judgment dated 12.11.1996 in I.A.No.154 of 1996 in CM.A.No.100 of 1996, on the file of the III
Additional District Judge, Tiruchirappalli, dismissing the said application for receiving additional evidence in the appeal.
All the three applications were rejected by a common order of the III Additional District Judge, Tiruchirappalli. The petitioners in all the three
civil revision petitioners are the plaintiffs in O.S.No.505 of 1996, which has been filed for dissolution of the partnership firm known as
M/s.Mc.Adams Chemicals Manufacturing Company and for accounts. The above said plaintiffs are defendants in O.S.No.499 of 1996. The
plaintiffs in O.S.No.505 of 1996 have filed I.A.No.693 of 1996 for appointment of a receiver. They are the appellants in C.M.A.Nos.100 and
101 of 1996. The suit O.S.No.499 of 1996 has been filed for declaration that the removal of the second plaintiff from his position as Managing
Partner of the firm M/s.Mc.Adams Chemicals Manufacturing Company and the purported with drawl of power of the second plaintiff for operating
the bank accounts of the firm as void and illegal. The plaintiffs 2 to 5 in O.S.No.499 of 1996 and one Navaneetham are the defendants in
O.S.No.505 of 1996.
The learned Subordinate Judge, Tiruchirappalli, disposed of the I.A.No.691 of 1996 in O.S.No.499 of 1996; I.A.No.693 of 1996 in
O.S.No.505 of 1996 and another application I.A.No.692 of 1996 in O.S.No.505 of 1996 by a common order dated 17.9.1996. I.A.No.692 of
1996 was for appointment of a Commissioner to take an inventory of the goods in the business and to sell the properties of the business. The said
application was also filed by the plaintiffs in-O.S.No.505 of 1996.
The main controversy in all the three civil revision petitions relate to the continuance of the business by the partnership firm viz., M/s.Mc.Adams
Chemicals Manufacturing Company. The plaintiffs in O.S.No.505 of 1996 are nine out of fourteen partners in the said firm. While the plaintiffs in
O.S.No.499 of 1996 are the four partners of the said firm, one partner, who has not joined with plaintiffs in O.S.No. 505 Of 1996 is the first
defendant in O.S.No.499 of 1996. The plaintiffs in O.S.No.505 of 1996 prayed for discontinuing the business while the plaintiffs in O.S.No.499
of 1996 prayed for continuing the business.
The learned counsel for the petitioners Mr. Mohan Parasaran, contended that the firm is a partnership at will, when serious disputes have arisen
among the partners and majority of the partners decided to dissolve the firm, there is an automatic dissolution when the intention of the partners are
communicated to the other partners. In this case, there is sufficient communication, therefore, the only course open is to wind up the business and
sell it out. On the other hand, the learned senior counsels Mr. G. Subramaniam, and Mr. T.V. Ramanujan, respectively appearing for R.
Naveneetham (6th respondent in C.R.P.Nos. 3265 of 3267 of 1996 and 5th respondent in C.R.P.No.3266 of 1966) and the other respondents,
vehemently contended that only when the plaintiffs in the suit O.S.No.505 of 1996 for dissolution and accounts succeed, they can ask for
appointment of a receiver. They also contended that as the second plaintiff is empowered to act as managing partner as per the partnership deed,
the Courts below have rightly found that the other group has no right to interfere with his management of the business and their alleged removing
him from his position is not valid. Hence, the grant of injunction as against the plaintiffs in O.S.No.505 of 1996 is justified. Hence, the Courts
below have rightly granted injunction against them. They also contended that the lower appellate Court has modified the order of injunction by
giving certain safeguards by directing the Managing Partner to convene the meeting of all partners once in every month and submit the accounts for
their approval and also give opportunity to the aggrieved partners to move the Court for appointment of receiver in case of necessity. According to
the learned Senior counsels Mr. G. Subramaniam and T.V. Ramanujan, the firm runs smoothly, and is earning profit and therefore the dissolution is
unwarranted in the general interest of all the partners. Inasmuch as the attempt of the other partners i.e., the plaintiff in O.S.No.505 of 1996 is only
to ruine the business, their attempt should not be encouraged by appointing a receiver as claimed by them.
We will describe the plaintiffs in, O.S.No.505 of 1996 as the petitioners and the plaintiffs in O.S.No.499 of 1996, who are the defendants in the
former suit as the respondents for the purpose of convenience in these civil revision petitions.
The partnership in question, M/s. Mc. Adams Chemicals Manufacturing Company, is a registered partnership at will. There cannot be any doubt
that as regards the dissolution of such a firm, much difference is there when compared with the other partnerships. Clause 5(a) of the partnership
deed is specific on this, and the same reads as follows:-
The duration of the partnership shall be that of ""Partnership at will.
The determination or the dissolution of the partnership at will is governed by Section 43 of the Indian Partnership Act, 1932: Section 43 is as
follows:
Dissolution by the notice of a partnership at will -- (1) Where the partnership is at Will the firm may be dissolved by any partner giving notice
in writing to all the other partners of his intention to dissolve the firm.
(2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the
communication of the notice.
A reading of the said section shows that the partnership at will can be dissolved even without the intervention of the Court. In this case what we
have to find is that the notice contemplated u/s 43 has been complied with or not. It is true that there is no necessity for the partners who decided
to put an end to the partnership to give reasons for the same. However, as according to the respondents, the business is running profitably and
there was no need for dissolution of the firm at all. But on the other hand, the petitioners vehemently contend that the partnership is not actually
earning profit, on the other hand, the profits earned by the partnership stands secreted for the personal benefit of the Managing partner and he is
also running a business of his own by utilising the premises and the properties of the firm;
Therefore, we will consider the allegations and the counter allegations in the light of the report of the Commissioner, who has inspected the
business premises and submitted a report. As regards the second limb of argument that u/s 43 of the Act, whether the intention of the partners have
been communicated in this case or not it is the main question, required to be solved for the decision of both the suits i.e., O.S.No.499 and 505 of
1996. However, if a receiver is to be appointed as sought for by the petitioners during the pendency of the suit and as according to them, the firm
has been dissolved already, a preliminary investigation and finding is necessary on this vital question. If there is a prima facie case of
Communication to the respondents of the intention of the petitioners to dissolve the firm, then the consequence to follow is to appoint a receiver,
which would mean that the petitioners will succeed in the C.R.P.Nos.3265 and 3266 of 1996.
The learned counsel for the petitioners contended that the filing of the plaint and the communication of the same to the respondents tantamount
to the service of notice on the respondents and the day on which they were served should be taken to be the date of dissolution, or the date of the
plaint must be taken to be the date of dissolution, since in the plaint, the petitioners have specifically mentioned that the partnership should be
deemed to have been dissolved from the date of the plaint.
In the plaint after setting out the various acts of omission and commission by the Managing Director, the plaint narrates the steps taken for the
removal of the Managing Partner from his position and then paragraph 13 contain the following relief as first relief:-
It is therefore prayed that his Honourable Court may be pleased to pass a decree in favour of the plaintiffs and as against the Defendants:
(a) dissolving the Partnership viz., M/s.Mc. Adams Chemicals Manufacturing Company situated at 70-B, Viralimalai Road, Edamalaipatti Pudur,
Tiruchirappalli, with effect from the date of filing of the suit.
The plaint is dated 21.8.1996. If the plaint can be construed to be a notice containing a date, the question is whether the service of the plaint on the
respondents will amount to the communication of the intention of the petitioners to dissolve the partnership and the date mentioned in the plaint
should be taken to be the date of dissolution. The learned counsel for the petitioners cited the following decisions in support of his contention that
the partnership at will in this case must be deemed to have been dissolved from the date of the plaint.
Srinivasalu v. Ramakrishna, AIR 1933 Mad. 353; 2. Banarsi Das Vs. Seth Kanshi Ram and Others, ; 3. V.M. Nissar Ahmed and Others by
Guardian and next friend V.C. Abdul Munaf Saheb Vs. Rahima Bi and Others, . Arunachalarn and Co. and Others Vs. M. Sadasivarn, ; 5. P.
Venu alias Venugopal Vs. Jeya and Others,
In Balgis Beevi Ammal Vs. Hathija Beevi Ammal, a Bench of this Court has held at page 358 as follows:
Lindley on Partnership states that a dissolution of partnership at will can be inferred from circumstances, and this has also been held in the Privy
Council decision in Joopoody Sarayya v. Lakshmanaswamy, 1913 (36) Mad 185 : 19 I.C. 513 (PC) from which the learned District Munsif has
extracted a long quotation which is applicable to the facts in this case. In this case there were undoubtedly circumstances from which it was open
to the two lower Courts to draw the inference which has been drawn by them as to the partnership having been dissolved.
In the said case, the suit was filed for dissolution and accounts. The District Munsif found that the dissolution took place as early as on 22.11.1919
itself long prior to the filing of the suit and therefore the relief of accounting was barred by limitation, since the suit was filed three years after the
dissolution. The view of the District Munsif was upheld by the Division Bench of this Court in a Letters Patent Appeal. So, from the said decision,
it is clear even if there is a prayer for dissolution, the Court can arrive at a decision from the circumstances of the case that the dissolution has taken
place already and the accounting alone was possible and such accounting could be granted if it was within the period of limitation.
Banarsi Das Vs. Seth Kanshi Ram and Others, is relied upon by both the sides'' counsels. The respondents rely upon paragraphs 12 and 13,
while the counsel for the petitioners relies upon paragraph 14. In the said case, the suit was filed for declaration that the partnership in question was
dissolved on 13.5.1944 when the plaint in the earlier suit was filed and if the Court decided that the partnership was continuing the same suit be
dissolved. The other relief was for accounts from defendants 1 and 2. There were other reliefs, with which we are not concerned. The trial Court
decreed the suit holding that the business was dissolved from 13.5.1944 and the defendants were liable to render accounts to the plaintiffs.
Appeals were preferred to the High Court and the High Court in effect dismissed the appeals. One of the contentions raised before the Supreme
Court was that the limitation for the suit commenced on 13.5.1944. The Apex Court considered that point as the most important one. The
allegation in the plaint was that the partnership was dissolved on 13.5.1944 when one Shoe Prasad filed a suit No.105 of 1944 in the Court of the
Sub-Judge, Lahore. There was also an admission by (he defendant in this case that in the earlier case Suit No.105 of 1944, written statement was
filed. In the aforesaid background the question that was considered by the Apex Court was whether mere filing of the suit was sufficient for
dissolution of the partnership and whether the plaint in that suit amounted to notice of dissolution of the partnership. After referring to the provisions
contained in Section 43 of Indian Partnership Act, 1932, the Apex Court has held that a partner in a partnership at will can give notice calling upon
the partners for the dissolution of the firm without the intervention of the Court, but it, does not choose to do so and wants to go to the Court for
effecting the dissolution, he would be bound by the procedure laid down in Order 20, Rule 15 of Civil Procedure Code. After referring to the Rule
contained in Order 20 Rule 15 Of Civil Procedure Code, the learned Judges have observed in paragraph 13 as follows:
Now, it will be clear that this provision contemplates the mentioning of a date from which the firm would stand dissolved. Mentioning of such a
date would be entirely foreign to a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within the expression ""notice
used in the sub-section. It would follow therefore that the date of service of a plaint in the suit for dissolution of partnership cannot be regarded as
the date of dissolution of partnership and S.43 is of no assistance.
The learned Judges of the Apex Court have not stopped with that. In paragraph 14 they have observed as follows:
Even assuming, however, that the term ""notice"" in the provision is wide enough to include within it a plaint filed in a suit for dissolution of
partnership the sub-section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice. It would
follow, therefore, mat a partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is served on the
defendant, where there is only one defendant, and on all defendants, when there are several defendants, Since a partnership will be deemed to be
dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served. Now, if the
High Court wanted to give the benefit of the provisions of S.43 to any of the parties defendants before it, it should have borne in mind the full
implications of those provisions. We have no material on record for ascertaining the date on which the last summons was served in this case. Since
that date is not known or could have been known by the High Court, it was in error in holding that the suit was barred by time.
In the said case, a suit was filed in the first instance on 13.5.1944 for dissolution and rendition of accounts. During the pendency of the suit, the
receiver was appointed and the business was running, the partners were sharing the profits; thereafter the suit was dismissed for default as the
parties migrated to India. There was no point of limitation raised before the lower Courts, but only in the High Courts the limitation for rendition of
accounts was taken. As the question of limitation raised before the High Court was a question of facts and law, the Apex Court found that the High
Court was not justified in allowing the said question of fact. But the High Court not only allowed the point to be raised but also found that the plaint
presented on 13.5.1944 in the earlier suit mentioned above amounted to dissolution and the date of dissolution should be taken to be the date of
the plaint. The Apex Court did not agree with that contention that the date of filing of the suit was tantamount to date of dissolution of the
partnership business. The Apex Court after holding that such a plaint would not amount to a notice. However, in paragraph 14, the Apex Court
considered whether the suit, in which dissolution is claimed and the date of the service of the plaint served on the defendant can be taken to be the
date of dissolution. The decision was rendered by the Apex Court in that particular case in paragraph 13. But in paragraph 14, the Apex Court has
considered the general view to be adopted and laid down the law. The law rendered generally applicable to all cases should be taken as the law
laid down by the Supreme Court. The decision rendered on the facts of a particular case and applicable to such a case, cannot be taken to be the
general law laid down by the Supreme Court. Can we say that paragraph 14 does not contain the law declared by the Apex Court and ignore it, if
we do so we will be offending the letter and spirit of Article 141 of the Constitution of India.
In V.M. Nissar Ahmed and Others by Guardian and next friend V.C. Abdul Munaf Saheb Vs. Rahima Bi and Others, Justice Natesan after
referring to the Supreme Court case reported in Banarsi Das Vs. Seth Kanshi Ram and Others, , has held as follows:
The Supreme Court pointed out that for fixing the date of dissolution, the plaint in a suit for dissolution cannot be taken as ''notice'' under sub-
section (2) of Section 43 of the Indian Partnership Act. having regard to the requirements of notice. The Supreme Court observed:
''It would follow therefore that the date of service of the summons accompanied by a copy of the plaint in the suit for dissolution of partnership
cannot be regarded as the date of dissolution of the partnership and Section 43 is of no assistance.
The emphasis in that case was on the requirement as to due service of notice of dissolution on the other partners and fixing the date of dissolution.
It was case of written statement in which it was specifically mentioned that it must be taken as notice of dissolution. Having regard to the specific
averments in the written statement of the desire for dissolution and that the written statement, it was held that written statement itself might be taken
as notice for dissolution.
According to Justice Natesan, if a fair date is mentioned in the written statement then the dissolution must be presumed to be from the date
mentioned in the written statement. In the case on hand, we have seen that the petitioners have mentioned the date of the plaint as the dte of the
dissolution of the firm.
In Arunachalarn and Co. and Others Vs. M. Sadasivarn, , Maheswaran, J has also referred to the judgment of the Apex Court reported in
Banarsi Das Vs. Seth Kanshi Ram and Others, , and has relied upon paragraph 14 and held that the suit was maintainable as the plaintiff in the said
case did not retire as contended by the defendant and even there was no notice as required u/s 43 of the Act. The learned Judge has also held that
the Supreme Court case would help the, plaintiff''s in view of paragraph 14 and that the notice u/s 43 of the Act had been complied with.
In P. Venu alias Venugopal Vs. Jeya and Others, , the learned Judge has relied upon the facts of the Apex Court and states as follows:
Mentioning of such a date would be entirely foreign to a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within
the expression ""notice"" used in the sub-section.
According to the learned Judge, the service of summon accompanied by a plaint copy of the suit for dissolution of partnership, cannot be regarded
as the date of dissolution of the partnership u/s 43 of the Indian Partnership Act,1932.
The learned Judge in paragraph 6 observed as follows:
Thus, on the facts of that case, the Apex Court has held that even assuming that such interpretation was accepted, it would not help the party
which puts forward such a proposition of law. Those observations would not help the respondents. I am clear that this Ruling lays down the
following proposition of law, viz.,
A plaint cannot fall within the expression ""notice"" used in Sec. 43(2) of the Indian Partnership Act. It would follow therefore that the date of service
of summons accompanied by a copy of plaint on the defendants in the suit for dissolution of partnership, cannot be ""regarded as date of dissolution
of the partnership and Sec. 43 is of no assistance.
First of all I would add that the facts of the case with which we are dealing are entirely different. In the case on hand, a date is mentioned for
dissolution as the date of the plaint. After making several allegations against the Managing Director, the petitioners have removed the second
defendant from his position and purported to have taken over the management. In the circumstances, they pray for dissolving the partnership from
the date of the plaint. The Apex Court has mentioned that in a plaint for dissolution of the partnership, the date would not been mentioned and
therefore, the Court has to pass a decree in terms of Order 20, Rule 15 of CPC i.e., it has to give a date of dissolution. But we have seen in the
present case that there cannot be any dispute about the date of the plaint and the date of service of the last summon on the defendants also.
Therefore, the ruling contained in paragraph 13 in the judgment, of the Apex Court will not be applicable to the case on hand.
The learned senior counsel Mr. G. Subramaniam, for the sixth respondent contended that paragraph 14 is only a obiter dictum. On the other
hand paragraph 13 only contain the decision of the Apex Court. According to the learned counsel, paragraph 13 only relates to the relief claimed
in the suit and therefore that alone should be taken as the decision of the Apex Court. He cited the decision reported in P.S.E. Board, Patiala v.
Ashok Kumar Sehgal, 1990 Lab.I.C. 249 in support of his contention. In paragraph 21, the learned Judges have held as under:
This ratio is ''declared law'' under Article 141 of the Constitution. culled out principles of law alone are declaratory for the nation. What remains
has been left for the parties. The orders Of the Supreme Court are enforceable under Article 142 of the Constitution and the Code of Civil
Procedure. The effective order of the Supreme Court whereunder justice was done to the parties, is binding on the parties. In other words,
question as to seniority deemed promotion etc., etc., decided in favour of Ravinder Kumar Sharma is not in the nature of a binding ratio so as to
bind courts in future to regulate the relief always on those lines. The reasoning of one decision cannot be applied in another case in the absence of
similarity of situation or circumstances. It is also worthy of notice that Ravinder Kumar Sharma opted for the ordinary remedy of a suit for
declaration and instituted the suit within the period of limitation. No question of neglect, delay or laches could enter in such a situation. The
Supreme Court granted the relief to Ravinder Kumar Sharma, 1986 Lab IC 2076 after declaring the law by means of its judgment and that
judgment is not to be construed as an Act of Parliament. It is to be read in the context of the questions which arose for consideration in the case.
From a reading of the above passage, the Apex Court has indicated that the decision rendered the extent of the question which are for
consideration, should be deemed to be the law under Article 141 of the Constitution. In my view, what is stated in paragraph 14 is also an answer
to a question, that arose for consideration at that particular case.
In Banarsi Das Vs. Seth Kanshi Ram and Others, , the Supreme Court was mainly concerned as to whether the relief of accounting can be
granted or not in that particular case, since it involved the question of limitation. The High Court allowed the question of limitation to be raised and
found that the filing of the earlier suit on 13.5.1944 was the date of dissolution of the partnership and as the claim for the, relief of accounting, in the
earlier suit was after more than three years, the High Court rejected the relief. But the Apex Court held that allowing of such a question of
limitation, which was both in the nature of a question of fact and law ought not have been allowed by the High Court to be raised for the first time.
This is found in the end of paragraph 15 of the Apex Court Judgment, which is as follows:
We are clearly of opinion that the High Court was in error in allowing the plea of limitation to be raised before it particularly by defendants who
had not even filed a written statement in the case. We do not think that this was a fit case for permitting an entirely new point to be raised by a non-
contesting party to the suit.
Relying on the said conclusion alone the appeals would have been dismissed by the Supreme Court.
That apart, the question that was argued before the Apex Court was that the mere filing of a suit for dissolution of a partnership at will did not
amount to notice of dissolution of the partnership. In considering the said argument with reference to the facts in that particular case, the Apex
Court considers Section 43 of the Indian Partnership Act, 1932 and Order 20 Rule 15 of Civil Procedure Code, then hold that if the suit itself was
for dissolution, it would be entirely foreign to plaint in such a suit for dissolution. Therefore, the plaint could not within the. expression ""notice"".
However, immediately in the next paragraph, even if a wider meaning is to be given to the ""notice"" i.e., if we include the plaint also in a suit for
dissolution as notice, then, the service of the last summons on the defendant would be taken as the date for dissolution. After setting out the above
proposition the Apex Court goes to consider whether the question of limitation raised before the High Court ought to have been allowed or not.
After concluding that the High Court was in error, allowed the point to be raised, the appeals were dismissed. The paint that was actually and
mainly considered by the Apex Court was whether the High Court was right in allowing the question of limitation to be raised for the first time or
not? If that point alone was decided by the Apex Court, the appeal itself would have been decided. There was no necessity for the other two
propositions mentioned above at all for deciding the appeal. Therefore, it we accept the view of the learned Senior counsel Mr. G. Subramaniam,
that the law laid down by the Supreme Court with reference to the relief granted alone in a particular case should be taken as the law declared by
the Supreme Court, then the two propositions which I have indicated above are not directly connected with the relief to be granted in that
particular appeal. But however these two questions were raised before the Supreme Court and has answered these questions also. Therefore
paragraph 13 and 14 are law declared by the Apex Court, while the law declared in paragraph 12 and 13 are applicable to facts of a particular
case, paragraph 14 is laid down as law applicable generally.
Another contention urged by both the Senior counsels Mr. G. subramaniam as well as Mr. T. V. Ramanujan is that since the suit itself is for
dissolution, the suit must be construed t6 be one u/s 44 of the Indian Partnership Act, 1932 and therefore Order 20, Rule 15 of CPC will apply.
The point is that as per Order 20, Rule 15 CPC only after the decision by the trial Court as to whether the dissolution should be ordered or not
arid if the Court decides to dissolve the partnership, then it has to give a date. Since such a date has to be given by the trial Court till then the
partnership must be presumed to continue. In such circumstances, when a Receiver is appointed, it tantamounts to the closure of the business.
They also rely upon the relief claimed in the application of the petitioners for appointment of receiver. The receiver to be appointed is not only to
take charge of the business, including the stock in trade. Therefore, the learned counsels contend that such a prayer should not be granted. If we
go through the allegations and counter allegations in the plaint in O.S.No.499 of 1996 itself, we find that there is no understanding between the
partners at all. In the said plaint what we find is hatred, illwill and misunderstanding in the worst sense. In paragraph 9 of the plaint there is a
statement as follows:
Defendants 2 to 10 herein had pre-planned to get rid of the 2nd plaintiff somehow or other from the partnership firm so that they can grab at the
entire partnership assets themselves. With that malafide motive in mind, in collusion and conspiracy with each other they are going on giving
pinpricks to second plaintiff in the day-to-day running of the first plaintiff firm. Suffice for the purpose of this suit to state that lastly a meeting of the
partners of the firm was held on 28.7.1996 in the factory premises itself at 10.30 a.m. on behalf of one of the partners Mrs. S. Thamilselvi (6th
defendant) her father Thiru A. Malarmannan attended the meeting. Just at the fag end of the meeting he abused the 2nd plaintiff in a filthy language
and threatened him with serious consequences and also openly gave out that the running of the partnership business itself will be closed.
In paragraph 13 also there is a settlement to the following effect:
But still on account of the pin pricks given thereafter, after passing of the impugned resolution and on account of attempt to commit trespass by the
defendants 2 to 9 into the business premises, the plaintiff was compelled by circumstances to give a complaint to Edamalipatti Pudur Police. The
receipt obtained from the Police Station is filed herewith. By way of abundant caution the 2nd plaintiff has given a criminal complaint to the
Revenue Divisional Officer and copies to District Collector and inspector of Police. Copies of the same are filed herewith.
After stating as aforementioned, the relief claimed in paragraph 17, contain the following:
.. .. as a consequential relief, for a permanent injunction restraining the defendants 2 to 10, their men agents and servants from committing trespass
into the suit partnership firm viz. factory premises and interfering in any manner with the running of the first plaintiff firm by the 2nd plaintiff as its
Managing Partner.
The allegation in the plaint in O.S.No.505 of 1996, shows how the partners have lost faith in the Managing Partner and for what reason. The
sub-paragraphs6(b) (c) (d) and (e) are as follows:
(b) plaintiffs reliably learnt that the 1st defendant have been abusing the powers conferred on him by plaintiff with a view to cause wrongful loss to
the partnership business and material and monetary toss to the other partners who have reposed implicit confidence in him.
(c) Plaintiff find to their alarm and dismay that the 1st defendant is guilty of misfeasance, mismanagement and mis-representation and he has been
carrying out a well-conceived and neatly executed plan of embezzling the funds of the firm under his control, converting the assets of the firms to his
advantage and personal use and benefit arid resorting to other dubious methods as evidenced from the accounts of the firm.
(d) Plaintiffs reliably learn that the 1st defendant has been systematically debiting the expenditure which does not relate to the Partnership Firm.
Similarly, he had inflated the expenditure by debiting his personal and family expenditure. All these acts of omissions and commissions are evident
from the vouchers, Bill-Books, Chittai etc. Plaintiff hasten to add that such practice still persists unabated. The 1st defendant has gone to such an
extent in recent times that he had even despatched goods outside the Books of accounts not being satisfied with the unjust enrichment by various
omissions and commissions to the detriment of other Partners.
(e) Plaintiffs find to their great dis-illusionment that there is a marked tendency on his part to fabricate accounts, raising false promises with a view
to diverting the partnership funds to his personal business and business interests of his relatives; cheating the Partnership and partners have been
perfected by him as a fine art as will be evident from the goings at Kovilpatti. Plaintiffs now reliably understand that the 1st defendant at the
expense of the Company has taken Agency of distribution of ''Glue'' at Kovilpatti in the name of his close relatives. For this alleged purpose, he has
undertaken, at the substantial cost of the Company, tours to Delhi, Punjab and Madras, to promote his Own interest, but detrimental to the
Partnership concern. He has given false impression that the tours undertaken were only for the benefit of the Partnership Concern, whereas he has
completely betrayed the confidence on him by the Partners and used only for the personal benefit of himself, at the cost of the Partnership concern.
Plaintiffs now reliably understand that the 1st defendant has been purchasing and sending ''Glue'' in the name of different firm, where his own kith
and kin are all partners. He is marketing ''Glue'' using the Mc. Adams Chemicals Manufacturing Company Department and infrastructure of the
company. Above all, plaintiffs now reliably understand that the purchase of ''Glue"" from outside was being sold in the market by him surreptitiously
as if it is Mc.Adams Chemicals Manufacturing Company''s Glue, even to the regular buyers. This is nothing but a clear case of misdeed committed
by the 1st defendant and violating the Code of Conduct of Partners. By this, the 1st defendant has committed wrong deeds detrimental to the
interest of the Partnership concern. Further, plaintiffs now reliably understand that in order to further favour his Individual Agency, he has taken all
efforts even to reduce the production of ''Glue'' by Mc. Adams Chemicals Manufacturing Company by stopping the Plant often without any reason
at all, obviously the only reason is to encourage the sales of ''Glue'' purchased by him from outside. In fact, the profit so received by him should
only be given to the partnership Concern. But wantonly with a view to cause loss to the Company, the 1st defendant has committed those mis-
deeds. Due to other constraints, plaintiffs are not elaborating those issues at this stage.
Apart from the above said allegations and counter allegations, the Commissioner''s report also throw some light as to how the business was
conducted by the second respondent. In the interim report of the Commissioner it is stated as follows:
In the extreme western portion of this building, I found 54 H.D.P.E. barrels. All of them are empty containers, four cement bags, 18 filler earth
bags, used for filtration purpose, in this room I found one Table, Chair and one man who was working there. The third respondent''s counsel told
that was the Office Room of one Techno Chem Enterprises. In the middle portion, I found 77 Cabois of liquid glud, each weighed approximately
25 to 30 K.G. In that Carbois, one slip has been fastened and it contained details as follows:
''Techno Chem Enterprises,
30/3, Colony Main Road, Tiruchy-12''.
To
Carborundum Universal Limited,
Liquid Glue,
Carboy No:..........
Weight :...........
Weight: Tare:.........
Weight: Net:........
3 Carboys of Hpenol, the labels fastened in these carboys were appeared to be recently fastened. I found 20 mere empty carboys.
The third eastern portion is the Electrical Room. I found one meter, which contains Service connection No.667. For this room, I found four barrel
of Diesel. These is no door for any of these three portions. On the Eastern side of this building, I found one name, board is being kept. This Board
was not fied on the earth, which contained the address of Techno Chem Enterprises 70/B, Viralimalai Main Road, Tiruchirappalli-12''.
From the pleadings and commissioner''s report mentioned above, there is no love last among the partners and they are fighting bitterly against each
other.
In addition to the above, one of the partners, Rajendran has also sent a notice for dissolution on 13-8-1996 through his lawyer and another
partner Pandian had also sent a notice dated 19-9-1996 for dissolution of the firm with effect from 18-9-1996. The said Pandian has also
published a notice in the News Paper ""Dinakaran"", Trichy Edition dated 27-9-1996. The said notice purports to be one u/s 43(1) of the Indian
Partnership Act. It is also states that his notice dated 18-9-96 has been served on all the partners. He also states in the said notice, the firm has
been dissolved. Apart from the above facts, we are able to see that nine partners have sent a notice to the Managing Partner through their lawyer
on 2-8-1996. They called upon the Managing Partner to explain and bringfourth all the details of accounts and accept the misdeeds within seven
days from the date of the receipt of the notice. Then reply is sent on 13-8-1996 on behalf of the Managing Partner. Then on 15-8-1996 the
meeting of the partnership is called for. The meeting is adjourned by the petitioners. On 16-8-1996 the meeting is held. Then, the Managing
Partner is removed from his position as Managing Partner. This is the state of affairs of the partnership.
In the light of the facts, it can be safely found that there is no will or intention among the partners to continue the partnership. The partnership at
will can continue when there is a will or wish among the partners to continue it. The will or intention is the foundation of the edifice of the
partnership. When the foundation is lost or destroyed how the edifice can stand. The intention to continue the partnership by one or two partners
tantamounts to only supporting poles to prevent the edifice from falling down after the supporting walls are destroyed. In view of the specific
provisions in Section 43 of the Indian Partnership Act, the intention of one or two partners to continue the partnership is immaterial. The state of
affairs mentioned above show that the partnership has already come to an end. Legally it is so, when we apply the principles laid down in Banarsi
Das Vs. Seth Kanshi Ram and Others, , and other cases of our High Court cited above.
In Kin Foo v. Whee Seik Cheng, 1925 Rangoon, 287, Division Bench has taken the view that in a partnership case Receiver must be
appointed. In the said case, it has been held as follows:
Considering the matter now before us on principle, we reach a decision adverse to the appellant. When a plaint is presented and it is not rejected
or returned for any of the reasons mentioned in the Civil Procedure Code, but is admitted, the Court has assumed jurisdiction, and has therefore
seizin of the suit and the subject matter thereof. This jurisdiction is assumed on the allegations in the plaint. The Court does not at that stage
consider whether the facts do exist as alleged, but whether they are alleged to exist. The Court may, in the case of ambiguous plaints, even make a
mistake in thinking that certain facts are alleged, whereas they are not. The defendant may challenge the jurisdiction of the Court, but that challenge
does not affect the action already taken and the Court has seizin of the suit and its subject-matter till it gives its decision on the question of
jurisdiction. As it is sometimes put, when the jurisdiction of the Court is challenged, it has jurisdiction to decide whether it has jurisdiction or not.
From this it follows that if the Court has seizin of the suit, it must of necessity have jurisdiction to pass the necessary interlocutory orders., e.g., the
appointment of a receiver pendent lite to take charge of the partnership properties in a partnership suit.
In Sheonarain Jaiswal and Others Vs. Shree Kripa Shankar Jaiswal and Another, a Division Bench of the Patna High Court held that in a suit
for dissolution of partnership, the appointment of receiver must be a matter of course. In paragraph 10 it has been held as follows:
The plaintiffs have also alleged that there is a danger of waste and dissipation of the assets of the firm. The Court below has come to the
conclusion that in view of the strained relationship between the parties and also of the dissolution of the partnership as alleged in the plaint, it is
necessary to protect the partnership assets and for this purpose it is just and proper to appoint a receiver. In our opinion, the decision of the Court
below is right, judging from all points of view. In the circumstances of the case, we feel that it is just and proper that a receiver should be
appointed.
The state of affairs with reference to partnership and in the light of the aforesaid two decisions, in my view, it is just and proper that a receiver
has to be appointed.
The learned senior counsel Mr. G. Subramaniam and Mr. T.V. Ramanujan, contended that since the plaintiff has prayed for the relief of
dissolution, the suit itself must necessarily fall u/s 44 and hence the partnership must be presumed to continue till a date is fixed by the Court as per
Order 20 Rule 1 of the Civil Procedure Code.
The relief claimed in the suit O.S.No.505 of 1996 includes the prayer for dissolution, while the second prayer is for rendition of accounts. In
the plaint in O.S.No.505 of 1996 in paragraph 11 it has been stated as follows:
In-the meeting held on 15-8-1996 called for by the plaintiffs, the defendants did not participate and the Meeting was held and in that Meeting, it
was finally resolved to remove the 1st defendant from the post of Managing Partner and appointing in his place, Mr. R. Pandiyan and Mr. A.
Nagappan as the Managing Partner of the Partnership Firm with effect from 12 Noon of 15-8-1996.
.... .... .... .... .... .... .... .... ..
In fact, the 1st defendant to the surprise of the plaintiffs had gathered Hooligans in the Factory to threaten the plaintiffs. The act of the 1st
defendant in gathering Hooligans inside the Factory premises is also against the expected norms and behaviour. It was then felt by the plaintiffs that
the 1st defendant herein was not only cheating the Partners by illegally taking all the monies from the factory falsifying the accounts and for all mis-
deeds, misfeasance and mal-feasance and even gone to an extent of threatening the Plaintiffs by engaging Hooligans. It has made the plaintiffs to
make a final conclusion that it would be no more possible for the plaintiffs to continue to be the Partners of the Firm viz. M/s.Mc.Adams Chemicals
Manufacturing Company. In view of the illegal acts committed by the first defendant and defendants 2 to 5 who are acting in collusion and are in
consultation with the 1st defendant who is conducting the business detrimental to the interest of the partnership firm, it is no longer possible for the
plaintiffs to continue as partners of the Firm furthermore inspite of the notice issued by the plaintiffs to render proper and true accounts and since
the 1st defendant has not chosen to render proper and true accounts to the plaintiffs, plaintiffs have no other alternative than to seek a dissolution of
the partnership firm as otherwise, they apprehend that the 1st defendant will completely take away all the assets of the partnership concern and
ultimately put the plaintiffs to liabilities. It is also pertinent to point out here that last year, the 1st defendant has managed to show all the accounts
with a loss whereas on checking it was found out that the actual accounts have been falsified by the 1st defendant. Therefore it will highly
dangerous for the plaintiffs after having come to know of the mis-deeds committed by the 1st defendant, to continue to be the partners of the firm"".
If we read the first prayer in the light of the aforesaid decision what the plaintiffs are actually seeking is a declaration that the partnership has been
dissolved with effect from the date of the plaint. Apart from this, we have also found that the plaint summons in O.S.No.505 of 1996 have been
served on all the remaining partners. In the common order dated 17-9-1996 the respondents 1 to 5 i.e., the remaining five partners. Respondents
1, 2, 4,and 5 were represented by the Advocate R. Lakshminarayanan and the third respondent is represented by the Advocate S.
Sundaranathan. Both the Advocates have appeared on their behalf respectively and argued the case. Therefore, it is clear that all the remaining five
partners have been served in the suit. Even though the service can be presumed only. With reference to the Interlocutory applications, it is common
knowledge that when the advocates filed their appearance they could not confine their appearance to the Interlocutory Application alone, normally
the appearance is in the suit. Apart from the aforesaid aspect when elaborate arguments were advanced on the decision of the Apex Court Viz.,
Banarsi Das Vs. Seth Kanshi Ram and Others, , the learned counsel for the petitioners submitted that as per the aforesaid decision the date of
service of the last summon will be taken to the date of dissolution. There was no dispute or objection raised ny the learned counsel for the
respondents to the effect that for some of the defendants summons in the suit were not served or their clients were not served with the copy of the
plaint. Therefore, in the light of the decision namely, Banarsi Das Vs. Seth Kanshi Ram and Others, and other decisions mentioned above and the
specific relief contained in the plaint in O.S.No.505 of 1996 that the dissolution of the firm should be from the date of the plaint, namely
21.8.1996, the contention that the suit is only for dissolution and the date has to be fixed by the Court only in future, as provided under Order 20
Rule 15 of the CPC and therefore till such a date is fixed the partnership deemed to continue is unacceptable. Prima facie from the circumstances
of the case, I am of the view that the partnership has come to an end and got dissolved with effect from the date of the plaint. It is also to be
noticed that Section 44 of the Indian Partnership Act specifically applies to a dissolution of a firm that has got to be dissolved only by the decree of
the Court. But, if a partnership can be dissolved without going to court and at will, merely because the relief claimed in the plaint contains a prayer
for dissolution within the meaning of Section 44 of the Indian Partnership Act. Section 43 of the Act is specific about the procedure for dissolution
of a partnership at will. Section 44 of the Act is concerned with the grounds for dissolution. Only when the grounds exist and or proved to the
satisfaction of the Court, the Court has to dissolve the firm, then only Order 20 Rule 15 of CPC comes to play. But if the firm or the partnership is
at will, there is no necessity for establishing any of the grounds mentioned in Section 44 of the Act. Even if the plaintiffs in a suit for dissolution of a
firm at will does not satisfy the Court or establish the grounds mentioned u/s 44 of the Act, he is entitled to succeed. Therefore, when a plaint is
presented in a partnership case, the Court is bound to look into the facts of the case and particularly the constitution of the partnership. If the Court
finds that the firm or a partnership is at will it has to apply Section 43 of the Act and it need not search for the grounds mentioned in Section 44 of
the Act for the grant of relief to the plaintiffs.
In a suit relating to partnership at will when the question of dissolution is considered, the duty of the Court is to see whether it is a partnership
at will or not. If it is a partnership at will, the next question that has to be considered is whether notice u/s 43 has been sent or not. If not, the Court
has to take the date in the plaint, the next question that has to be considered will be as to the date of dissolution. That will be the only thing that has
to be decided. Even for that service of the last summon on any one of the partners shall be deemed to be the date of dissolution, as has been laid
down by the Apex Court and other cases cited above. Therefore, in my view, in a case of partnership at will, the question of application of Order
20, Rule 15 of CPC is applicable only for the purpose of declaring the shares, the deemed date of dissolution. The question of the Court declaring
its own date does not arise at all.
Yet another contention raised by the learned counsel for the respondents is that the firm if continued, it, will be the interest of all the parties.
The Court should always take note of interest of all the parties concerned and render justice to parties. In this case, the closing or winding up of the
partnership is not in the interest of the partners concerned. Therefore, appointment of receiver is not warranted. From the plaint in both the suits
and the Commissioner''s report, we find that the parties are bitterly fighting against each other. In the affidavit filed in support of the
C.M.P.No.1175 of 1997 in paragraphs 7 and 8, it is stated that sufficient profits are earned by the firm, The allegations reads as follows:
Inspite of the blocking of the Banking accounts by the revision petitioner by adopting extra-judicial methods, I was able to run the firm for the last
5 months (August, September, October, November and December 1996) and produced 86,475 kgs. Animal Glue Flake at the factory. The
resultant product, namely, Animal Glue Flake has also been sold to the tune of Invoice value of Rs.57,74,555 during the last 5 months. I am
maintaining regular accounts.
During the last five months, no employee was retrenched. In fact, more than 60 employees were provided employment to maintain the production
activities of the firm. The firm stands to earn fairly a substantial profit even during the last five months, when the unit was forced to face severe
financial strain due to blocking of bank accounts followed by attachment of Bank accounts by Income Tax Department, etc.
But in the counter filed on behalf of the petitioners, this averment was specifically denied in the following terms:
As regards the allegations in para 7 there is no question of the revision petitioners adopting any extra judicial methods and during the last five
months, the statistics which have been given, are themselves sufficient to prove that the firm has done only badly because during the corresponding
period in the earlier years, the company had produced much more quantity and records could be called for to prove this fact.
As regards the allegations made in para 8 I deny the allegation that there are 60 employees who have been provided employment and in fact, even
as per the return filed by the Managing Partner, before the Inspector of Factories, the total number of workers are only 39 in number and not 60.
It is not known as to how this figure has been arrived at and for what purpose. I deny the allegation that the firm had earned substantial profit in the
past five months and this fact cannot at all be true or correct in the light of the fact that whenever the deponent had been closely associating with
the business of the firm, that is for the year ending 31-3-1993 and 31-3-1994 the firm had shown substantial profit; but when the deponent had
come out and when the Managing Partner (Second respondent) himself was managing the affairs of the firm he throughout showed loss for the year
ended 31-3-1995 and 31-3-1996. In fact, for the year ended 31-3-1995, he had shown a loss of Rs.1.67 lakhs and after investigation this figure
was suddenly changed with a profit of Rs.6.5 lakhs for which he readily agreed in view of the deep investigation conducted by the auditors of the
firm. Similarly, in respect of the year ending 31-3-1996, the print out already given shows that the firm has suffered a loss of Rs.6.87 lakhs
(Rs.6,87,751.08) and in the return filed to the Income Tax Department the second respondent Managing Partner has admitted income of Rs.1 lakh
by reducing the claim of depreciation and by other extra judicial methods. This has been deliberately resorted to get over the provisions of Section
44 of the Indian Partnership Act. I strongly deny that the firm has done well during the past five months and deny specifically the averments made
in para 9 which are falsified by the statements made above"".
So, the allegation that the firm is actually earning profit cannot be accepted for the purpose of deciding the Interlocutory Applications.
The learned counsel for the respondents further contended that no case has been made out for the appointment of a receiver and it is not just
and convenient to appoint a receiver when the firm is continued to do the business and earn profits inspite of the obstacles by the petitioners. As
stated above, whether the business earns profit or not, in the light of serious allegations and the estranged feelings among the partners, it is very
difficult to appreciate that the partnership at will can be continued even after such an estrangement and ill feelings have developed among the
partners beyond all rapprochement.
It is worthwhile to mention here that when this Court made a request to the counsels on both sides to explore the possibility of a compromise,
the counsels on both sides immediately reiterated that all attempts were made to settle the matter, even when the matter was pending before the
lower Court, but it did not fructify. According to them, the same position continue even after the filing of the Civil Revision Petitions before this
Court. They openly confess their inability to render their assistance to their clients, who have determined to fight in Courts rather than settle the
matter inside or outside the Court, amicably.
I have already referred to two decisions, namely, Kin Foo v. Whee Seik Cheng 1925 Ran. 287 and in Sheonarain Jaiswal and Others Vs.
Shree Kripa Shankar Jaiswal and Another, , in a case of partnership at will when the partners have gone to the Court bitterly fighting the question
of continuing the partnership is almost immaterial. When the will is expressed to dissolve even by one of the partners among number of partners
and the will or intention is communicated to other partners u/s 43 of the Indian Partnership Act, the partnership business gets dissolved by
operation in of law. When such a statutory right is conferred with reference to a partnership at will, the court cannot ignore the statutory right and
assume or presume that the partnership is continuing. As per the decisions mentioned above, in the case of a partnership at will and when the
matter has gone to the Court, it will be just and convenient to appoint a receiver to take charge of the business.
Mr. T. V. Ramanujan, learner senior counsel for the respondents cited the following decisions in support of his contention that only when some
damage or danger to the property is alleged in a suit, a Receiver can be appointed.
T. Krishnaswamy Chetty Vs. C. Thangavelu Chetty and Others, ; 2. Krishna Kumar Poddar v. Ram kumar Agrawal AIR 1978 (PAT) 25; 3.
Bipin Chandra and Another Vs. Purushottam Bhai Dhoribhai and Co. and Others, ; 4.Subbalakshmi Ammal v. M. Rajalakshmi Ammal 1988
TNLJ 358.
T. Krishnaswamy Chetty Vs. C. Thangavelu Chetty and Others, is not a case relating to the partnership. The five principles laid down in the
said case are applicable to a case relating to immovable property. Those principles cannot be applied to a case of partnership at will.
Krishna Kumar Poddar v. Ram Kumar AgrawalAIR 1978 NOC 25 (Pat) is a case of partnership. The said decision of the Patna Bench relies
upon Banarsi Das Vs. Seth Kanshi Ram and Others, and holds that a partnership at Will cannot be deemed to be dissolved by the service of the
summons along with the plaint in the suit for dissolution. The decision has not considered the fact of law declared by the Supreme Court in
paragraph 14 of the said judgment. That apart, the said decision is also not helpful to the respondents factually because what is stated is that unless
the court is satisfied that dissolution is inevitable or that there is a wellfounded fear that the partnership properties would be wasted or dissipated or
that other irreparable harm would be caused to the plaintiff by wrongful exclusion from participation in management no receiver shall be appointed.
But in the case on hand, the fear is there, the allegation of dissipation of property is there. Further, the dissolution is inevitable in view of the
estranged and bitter feelings that has arising among the partners.
Bipin Chandra and Another Vs. Purushottam Bhai Dhoribhai and Co. and Others, . In the case injunction was granted in favour of the partners
in management. But from the facts stated in the said case, it does not appear to be a case of partnership at will. Therefore, the said case is also not
helpful to the respondents.
The decision rendered in Subbalakshmi Ammal v. Rajalakshmi Ammal 1988 TNLJ 358 is not helpful to decide the case on hand.
The learned senior counsel for the respondents Mr. T. V. Ramanujan, also cited the following decisions:
Dhulia-Amalner Motor Transport Ltd. Vs. Raychand Rupsi Dharamsi and Others, ; and 2. Ramanathan Chettiar v. Lakshminarayanan 1996 (2)
L.W. 204
and contended that notice u/s 43 of the Indian Partnership Act must express a final intention of the partnership with respect to dissolution. In the
first cited decision there was doubt in the notice about the final intention of the partners. The plaint in the present case, unambiguously states the
date of the plaint is the date of dissolution for the firm. Further, even the notice dated 18-9-1996 issued by one of the partners viz., Pandiyan, gives
a specific date for dissolution, i.e., 18-9-1996. But, however, the said notice is without prejudice to the contentions in the plaint in O.S.No.505 of
1996. Therefore, even according to the said partner, the dissolution of the partnership is with effect from the date of plaint. Therefore, I do not find
any ambiguity or any mistake in the notice.
Ramanathan Chettiar, A.R.K. v. Lakshminarayanan 1996 (2) L.W. 204 has held that when a partner is adjudicated as insolvent, the date of
adjudication should be deemed to be the date of dissolution of the firm. The said case is also not helpful to. the respondents.
The learned senior counsel Mr. G. Subramaniam, contended that as the Managing Director is a highly qualified person to run the business of
the firm, his contribution to the firm is Rs.2.25,000 and his share of profit as 15% and when he is specifically appointed as Managing Partner under
the Indian Partnership Act it is not just and equitable that he should be deprived of the right to continue as a Managing Partner. The Court should
render justice by exercising its powers. In this case, justice demands that the business must be continued. In support of his contention, he cited the
following decisions:
Balambika Vs. Elizabeth, ; and 2. A. Somasundaram M/s. Everest Engineer Works v. M/s. Jethanand Chatrumal and Ors 1997(3) L.W. 147.
Balambika Vs. Elizabeth, . In the said case, the decree holder did not file a petition u/s 83 of the Transfer of Property Act when the judgment-
debtor deposited the amount. Even though notice was ordered about the deposit of the mortgagee amount, the mortgage did not plead that the
amount was not sufficient, by filing a counter or cross-examining the judgment-debtor and he remained ex parte. Therefore, the Court directed the
delivery of the mortgaged property to the judgment-debtor. Thereafter a petition to set aside the order was filed by the mortgagee. It was
dismissed. Then, the decree-holder filed E.P.No.130 of 1988 to execute the order. In the said Execution Petition only the decree-holder pleaded
that there was a tenancy agreement and possession could be delivered to the mortgagor, but the execution Court ordered delivery. The mortgagor
filed E.A.No.105 of 1989 also setting out the aforesaid pleadings, but it was contended that the order passed by the executing Court for delivery
was a nullity as the decree-holder did not file a petition u/s 83 of the Transfer of Property Act. The learned Single Judge of (his Court has held as
follows.
But, it did not deal with the question whether in a revision under S.115, C.P.C. the High Court could be compelled to do so even where it would
result in injustice to the respondent before it and even where the conduct of the petitioner before it was despicable.
After referring the decision reported in Chennichi Alias Parikkal Goundar Vs. D.A. Srinivasan Chettiar, , which was approved by a Division Bench
of this Court in S. N. Kuba v. P.P.I. Vaithyanathan 1988 T.N.L.J. 1 the learned Judge declined to interfere by holding that he should not exercise
his discretion u/s 115 of CPC in favour of the petitioner, in view of his conduct as narrated above and in view of the hardship or injustice which
would be caused to the respondent, if the order of the Court below is set aside.
In this case we cannot say that the conduct of the petitioners were so bad that they should not be given any relief in view of such conduct.
Further, this is a case of partnership at will. The law, particularly Section 43 of the Act enables a partner to dissolve a firm at will, when a person
or group of persons choose to exercise their right conferred under a statute, even assuming for the sake of argument that they were not justified in
dissolving a flourishing business, the Court cannot fail to give effect to the statutory right.
In A. Somasundaram M/s. Everest Engineer Works v. M/s. Jethanand Chatrumal and Ors1997 (3) L.W. 147 a learned single Judge of this
Court has set out the scope of Section 115 of code of Civil Procedure, which is as follows:
Section 115 C.P.C. is a power of superintendence by this Court. The same should not be exercised in favour of a person who himself agreed to
get such an order. That apart, even if there is any illegality, unless the petitioner also says that there is a failure of justice, the power under Sec. 115,
C.P.C. cannot be invoked. If substantial justice had been done, even if there is any error, this Court will refuse to interfere under Sec. 115,
C.P.C.
The said case is also not helpful to the respondents. First of all in the said case, the interference in the civil revision petition was refused because the
order challenged was a consent order. Secondly, according to the learned Judge, even though there was some illegality, there was no failure of
justice. As has been held in the same case, the respondents have not substantiated any failure of justice, if a receiver is appointed.
The learned senior counsel relied upon a passage from Desai on Partnership, Vth Edition (1979, which reads as follows:
One rule which stands out prominently on an examination of the older reported cases of the Chancery Courts in England, is that the Courts were
certainly averse to interfere at all between partner and partner unless it was for the purpose of dissolving the partnership and of finally winding up
its affairs. The rule was based on the reason that the Court should interfere not to do partial justice but must assist only those who sought its aid for
securing complete justice which could only be done by winding up the affairs of the firm and thereby putting an end to all disputes between the
partners.
This passage helps the case of the petitioners rather than the case of the respondents.
Both Mr. G. Subramaniam as well as Mr. T. V. Ramanujan, contended that the petitioners have passed a resolution on 15-8- 1996 removing
the Managing Partner from the partnership. They have no power u/s 33 of the Indian Partnership Act. They contended that a partner may not be
expelled by majority of partners as per Section 33 of the Indian Partnership Act. They further contended that a right conferred upon a Managing
Partner to run the business and operate bank accounts has been varied, such a variation made by the petitioners by a resolution dated 15-8-1996
is contrary to Section 11 of the Indian Partnership Act, which enables variation only by consent of all partners. Therefore, the resolution is valid
and hence the Managing Partner must be allowed to continue the business. Therefore, the injunction granted by the trial Court as confirmed by the
lower appellate Court is justified and there is no necessity for appointment of a receiver and take charge of the business and wind it up. No doubt,
Section 11 of the Indian Partnership Act empowers the variation of right of a partner conferred under the Partnership Act by consent of all the
parties. In the present case, the resolution dated 15.8.1996 has not been passed by all the partners, but only by the petitioners. The majority of the
partners, namely, the petitioners i.e., nine out of fourteen partners i.e., 65% of the partners of the firm have chosen to dissolve the partnership firm,
after finding that the Managing Partner was acting against their interest and he was interested only in promoting his own interest. That position
cannot be the issue for discussion before the trial Court. As we have already found that it is a partnership at will and it can be dissolved even by
one of the partners by giving notice to other partners. The grounds set out in Section 44 of the Indian Partnership Act need not be established. In
this particular case, the date of dissolution has also been set out as the date of the presentation of the plaint. We have also found that when the last
summon was served on one of the respondents, the service of notice of dissolution is completed. So, from the pleadings and evidence produced
before the Court, we have to necessarily come to a conclusion that the partnership has got dissolved from the date of the presentation of the plaint.
Therefore, if there is any infirmity in the passing of the resolution dated 15.8.1996, varying right of the Managing Partner, it does not lead to any
result. First of all, there is no removal of the Managing Partner or expulsion of the Managing partner, as contemplated by Section 33 of the Indian
Partnership Act. When we come to Section 11 of the Act also the right of a partner cannot be varied as per Section 11 only during the
continuation of the firm and not after dissolution. If it is to be held that a Managing Partner can claim to continue to be a Managing Partner even
after dissolution, it will result in anomalous position.
Section 47 of the Indian Partnership Act contemplates that the right and obligations of the partners to continue notwithstanding the dissolution
so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution. The
Section contemplates two things - (1) after ""dissolution of the firm the authority of each partner to bind the firm; and (2) the rights and obligations
of the partners. The aforesaid two powers of the partners are only for winding up and that too if found necessary. Such rights and obligations may
continue if there was any unfinished transaction with the third parties. But in this case, there is no material placed before the Court to show that
there were any unfinished transactions.
As we have seen above, there is a prima facie case of dissolution of the firm. The next procedure is only to wind up the business. If there is
cordial relationship among the partners, the winding up can be proceeded with smoothly. But as we. have seen above, serious misunderstanding
has developed and the partners have started fighting bitterly like kilkenny cats. Therefore, allowing the Managing Partner to continue to run the
business is unnecessary. As we have seen above, the Section itself is very clear and unambiguous when it states that the rights continue only for
winding up and not for carrying on the business. In the circumstances, even assuming that the Managing Partner''s rights have been varied, which is
against Section 11 of the Indian Partnership Act, such variation cannot be effected only during the continuance of the firm and not after its
dissolution. Therefore, the Managing Partner cannot claim an injunction restraining the petitioners from interfering with the management of the
business and the operation of bank accounts therefore.
It is no doubt true that a partner is entitled to obtain injunction against the other partners whose activities are hostile and might adversely affect
the partnership and bring it to a stand still. The learned counsel relied upon the decision reported in Bipin Chandra and Another Vs. Purushottam
Bhai Dhoribhai and Co. and Others, , in support of the above proposition. In the said case, a Single Judge of the Madhya Pradesh High Court
found that the allegations made in the plaint and the application, rightly prompted the trial Court to step in to prevent the appellant from interfering
with the day-to-day management and working of the partnership and therefore, it cannot be said that the formation of the opinion by the trial Court
to proceed in terms of Rule 3 and its proviso to pass an ex parte temporary injunction. The said case does not appear to be a case of partnership
at will. Therefore, the decision in the said case is not helpful to the respondent.
When we come to the decisions of the Court below, the appellate Court has found that the removal of the Managing Partner Thiru
Balagengadaran from his position was illegal and there was no prima facie dissolution of the firm and it was continuing. They have also found that
the removal of the Managing Partner Thiru Balagengadaran from his position as Managing Partner was invalid. Only in view of the aforesaid
finding, the Courts below have granted injunction in favour of the petitioners and refused to appoint a receiver. But as we have seen above, the
partnership business has come to an end when the plaint in O.S.No.505 of 1996 was filed in the Court and when the last summon in the said suit
was served on one of the respondents. The suit is said to have been filed on 21.8.1996. That apart, one of the partners have given notice of
dissolution specifically mentioning the date of dissolution as with effect from 18.9.1996. The issue therefore in the case before the trial Court would
be only to find whether the dissolution of the firm is to take effect from the date of filing of the suit or the date mentioned in the notice i.e.,
18.9.1996. As we seen above, the duration i.e., from 20.8.1996 to 18.9.1996 is very short. However, it cannot be said that there was no
dissolution at all, as found by the Courts below. In the circumstances, in my view, there is no alternative except to come to the prima facie
conclusion that the partnership firm namely, M/s. Mc. Adams Chemicals Manufacturing Company, Tiruchirappalli, has been dissolved and what is
left is only to proceed for the winding up of the said firm. In these circumstances, it would be just and convenient to appoint a receiver to take
charge of the firm, including of its assets and liabilities as a care taker. But, however, we make it clear that it is open to all the partners to join
together and permit the receiver to continue the business during the pendency of the proceedings in the Court, but the decision must be unanimous.
The trial Court is directed to appoint a suitable person from the panel of receivers as receiver within a period of two weeks from today.
The trial Court is further directed to dispose of the suits as early as possible i.e., within a period of three months from today. The notice dated
18.9.1996 is a necessary piece of evidence and the lower appellate Court has also considered the said notice. But, however, it has chosen to
dismiss the petition for production of the same. The lower appellate Court is not justified in doing so. Hence, all the three Civil revision petitions are
allowed. However, there will be no order as to costs. Consequently, C.M.P.Nos. 17751 to 17755 of 1996 are disposed of as unnecessary.