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N.V. Balasubramanian, J.—The Writ Petitioners seek to quash the order of the first Respondent in G.O. (1-d) No. 342, Home (Cinema.2) Dept., dated 4.6.98 and to direct the licensing authority to regrant C-Form licence for the next five year period in favour of Udhayam Touring Cinema at Thondi Village.
On 24.7.81, the writ Petitioners and the fourth Respondent jointly purchased 0.62 hectares of land bearing survey No. 89.2-A in Thondi Village. They decided to start a touring cinema theatre in the said land. Accordingly the Petitioners and the fourth Respondent jointly applied for No Objection Certificate for the touring cinema theatre and the third Respondent, the Collector of Ramanathapuram District issued a No Objection Certificate by his proceedings dated 30.3.90 to put up a touring cinema in the vacant site purchased by the Petitioners and the fourth Respondent. On 27.8.90, the Petitioners and the fourth Respondent entered into a deed of partnership contributing a sum of Rs. 25,000/- each towards the capital for the purchase of equipments and to put up superstructure and also to run the partnership business. The deed provides that the partnership business should be carried on till the expiry of the licence and they had to share the profit and loss in equal shares. A licence for running the cinema theatre under the Tamil Nadu Cinemas (Regulation) Act, 1955 was issued in the names of the four persons, viz., the Petitioners and the fourth Respondent. The licence was for a period of five years. The licence was issued by the third Respondent-Collector and there is no dispute that it was issued for a period of 5 years in the joint names of the Petitioners and the fourth Respondent. The first year period had expired on 15.8.95 and as stipulated in the Tamil Nadu Cinemas (Regulation) Rules, 1957, the theatre was laid off for the three months before seeking renewal for the second five year period of C-Form licence. The Petitioners obtained the report of the Electrical Inspector regarding electrical installation and the superstructure was also inspected by the Tahsildar who recommended for renewal. The renewal application was filed by one of the Writ Petitioners enclosing relevant documents including the partnership deed. On the basis of the renewal application the licence was renewed in the names of the four persons viz., three Petitioners and the fourth Respondent by the third Respondent by his proceedings dated 2.6.96. On 22.6.96, the fourth Respondent submitted a petition to the Collector stating that without her consent, the application for enclosing relevant documents including the partnership deed. On the basis of the renewal application the licence was renewed in the names of the four persons viz., three Petitioners and the fourth Respondent by the third Respondent by his proceedings dated 2.6.96. On 22.6.96, the fourth Respondent submitted a petition to the Collector stating that without her consent, the application for renewal of C-Form licence for the second five year period was submitted. It is significant to notice, the fourth Respondent in the petition has stated that she was not willing to be a partner to the partnership business. The fourth Respondent raised the objection that without her consent, C-Form licence was issued and she was not agreeable to be a partner. The Collector issued a show-cause notice to the writ Petitioners and after hearing the writ Petitioners, he held that the application filed by the three other partners would not be considered to be a valid application seeking renewal of C-Form licence under Rule 19(2) of the Tamil Nadu Cinemas (Regulation) Rules and since the provisions of the said Rules were not complied with as the Petitioners did not produce a certified copy of registered deed authorising them to act as managing partners under Rule 41(5) of the said Rules, he held that the explanation offered by the Petitioners was not convinsing and cancelled the C-Form licence issued in favour of the Petitioners.
The Petitioners preferred an appeal against the order of the licensing authority, the Collector before the Joint Commissioner, Cinemas, Land Administration and Appellate Authority, Chennai who dismissed the appeal on the ground that unless all the owners jointly come forward for regrant of licence, the licensing authority was quite justified in cancelling the C-Form licence issued in favour of the Petitioners. Thereafter, a notice was issued on behalf of the Petitioners to the fourth Respondent stating that the Petitioners are willing to pay her share in the site, buildings and equipments and the Petitioners are ready to negotiate the value of the share in the presence of any mediator and the Petitioners are also willing to abide by any arbitration award. In the notice, it is also stated that the Petitioners are prepared to settle the issue before the Civil Court. In the meantime, another partnership deed was entered into between the three Petitioners wherein it has been referred that the fourth Respondent was not willing to continue as a partner in the partnership business and in view of the same, the remaining partners agreed to carry on the business and they also agreed to divide the profit and loss in equal shares. In the partnership agreement, it is also stated that all the three Petitioners have agreed to settle the accounts of the fourth Respondent and to pay her due share. On the basis of the partnership arrangement, an affidavit was also filed before the licensing authority by one of the writ Petitioners and in the affidavit it is stated, they agreed to extend the partnership agreement to continue the business with the fourth Respondent. A legal notice was issued on behalf of the fourth Respondent requiring the Petitioners not to submit any application before any authority for running the cinema business by suppressing the rights of the fourth Respondent in the property.
The Petitioners also preferred a revision against the order of the appellate authority and the revisional authority found that because of non-cooperation of one of the partners, the theatre was closed for a long period which affected the labourers and the Government was also losing revenue. Hence, the revisional authority directed the licensing authority to renew the C-fomi licence in favour of the Petitioners. Against the order of the revisional authority, a writ petition. W.P. No. 463/98 was filed on the file of this Court by the fourth Respondent and the matter came up before Mr. N.K. Jain. J. The learned Judge by his order dated 16.3.98, has allowed the writ petitions on the ground that no opportunity was granted to the fourth Respondent before the revisional authority passed his order. The revisional authority in compliance of the directions of this Court, heard the matter and found that the land was purchased in the names of four persons and the licence was also issued in the names of four persons and held that without the consent of the fourth Respondent, the renewal of licence cannot be granted in favour of the three Petitioners. Subsequent to the passing of the order of the revisional authority, the fourth Respondent filed a civil suit in O.S. No. 88 of 1998 on the file of the Sub-Judge, Ramanathapuram for partition and separate possession of her 1/4th share in the suit property and also for accounts. It is significant to notice that the total value of the property was estimated at Rs. 2,23,360/-. The learned Sub Judge, Ramanathapuram in the order passed in I.A. No. 226/98 in O.S.88/98 has also passed interim injunction restraining the writ Petitioners from in any way alienating or encumbering the property. It is stated that the Petitioners have filed a memo in the Civil Court submitting to a decree with an undertaking to deposit a sum of Rs. 55,840/- claimed by the fourth Respondent towards her share. It is against the order passed by the revisional authority, the present writ petition is filed.
The fourth Respondent has filed a counter affidavit wherein it is stated that the Petitioners and the fourth Respondent were and are running the theatre as a partnership business. In the counter affidavit, it is stated that the Petitioners are not entitled for regrant of licence for the theatre. An additional counter affidavit has also been filed by the fourth Respondent after the conclusion of the arguments in this case wherein the fourth Respondent instead of setting out the facts, has set out the legal arguments addressed before this Court.
Mr. N.S. Sivam, learned Counsel for the Petitioners submitted that the fourth Respondent has expressed her unwillingness to continue to be partner of the partnership business and in fact, the stand of the fourth Respondent was that there was no partnership agreement after the expiry of the first five year period. Learned Counsel submitted that the partnership agreement has come to, an end and it is open to the remaining persons to carry on the business and their request to grant C-Form licence in their favour is valid in the eye of law. He has also stated that the Petitioners have filed a memo before the Sub Court. Ramanathapuram submitting to a decree with an undertaking to deposit a sum of Rs. 55,840 as claimed by the fourth Respondent towards her share. Learned Counsel relied upon a decision of this Court in the case of Dhanalakshmi Ammal etc. v. Govt. of Tamil Nadu and 4 Ors. 1993 2 L.W. 569 in support of his claim that the Petitioners are in lawful possession of the property in question. He also submitted that the Petitioners have acted in a bonafide manner and they have obtained the renewal only in the name of four persons and there is no question of any ouster of the fourth Respondent from the business, Learned Counsel submitted that when the fourth Respondent objected for the licence standing in the name of four persons, the Petitioners issued a notice calling upon the fourth Respondent for a settlement either by arbitration or by negotiation, and the Petitioners have also entered into a partnership agreement among themselves. Learned Counsel for the Petitioners therefore submitted that all the Petitioners are in lawful possession and they are entitled for renewal of licence in their favour. Learned Counsel for the Petitioners strongly placed reliance on a decision of this Court in The Licensee, Sri Lala Talkies, Vadipatty, Madurai Taluk v. The District Collector, Madurai District, Madurai 1999 I M.L.J 526 and submitted that even after the partnership has come to an-end, all the Petitioners are in possession as co-owners and once they are in lawful possession, they are entitled for renewal of the licence and the objection of the fourth Respondent is not relevant for consideration.
Mr. Ravi Anantha Padmanabhan, learned Counsel for the fourth Respondent submitted that since there was a partnership deed entered into between the Petitioners and the fourth Respondent, though the fourth Respondent expressed her unwillingness to continue to be a partner of the partnership business, without settling the rights and liabilities of the partners or without dissolving the firm, it is not open to the Petitioners 1 to 3 to enter into a fresh partnership agreement. Learned Counsel also submitted that the licence was granted in favour of four persons and unless the four persons sign the application for renewal, the authorities were quite justified in refusing to renew the C-Form Licence in favour of the Petitioners. Learned Counsel for the fourth Respondent relied upon several decisions in, support of his plea. He referred to the decision of a Division Bench of this Court in the case of Bala Sundaram v. Gopalakrishnan 1972 II M.L.J. 566, the decision of D. Raju, J. (as His Lordship then was) in Ganapathy Swamy, N. v. The District Collector, Periyar District 1995 I L.W. 622, the decision of T. Jayarama Chouta, J. in A.V.M. Theatre, Andipatti v. The State of Tamil Nadu and Ors. 1997 Writ L.R. 269 and the decision of the Supreme Court In the case of Bishnu Ram Borah and Another Vs. Parag Saikia and Others, and submitted that it is not permissible for this Court to embark on the question of fact in exercise of the jurisdiction under Article 226 of the Constitution of India. He submitted that the decision relied upon by the learned Counsel for the Petitioner in Dhanalakshmi Animal''s case 1993 2 L.W. 569 has no application to the facts of the one and it is not open to this Court to give direction against the mandatory statutory provision of law. He referred to the decisions of the Supreme Court in Supreme Court Bar Association Vs. Union of India and Another, and State of Madhya Pradesh and Another Vs. Dharam Bir, He submitted that the decision of S.S. Subramani, J. in the case of The Licensee, Sri Lala Talkies, Vadipatty, Madurai Taluk v. The District Collector, Madurai District, Madurai 1999 I M.L.J. 526 is not applicable as the learned Judge dealt with the rights and liabilities of co-owners, whereas on the facts of the case, it was a partnership. He also relied upon an unreported decision of this Court in W.P. Nos. 596 and 597 of 1998 dated 25.8.98 and submitted that consent of all the partners is essential for the renewal of licence.
I have carefully considered the submissions of the learned Counsel for the parties. During the course of arguments, I have explored the possibility of arriving at a settlement, between the parties as the Petitioners have expressed their willingness to pay the due share to the fourth Respondent. Learned Counsel for the Petitioners produced the valuation report prepared by a registered valuer and the learned Counsel for the fourth Respondent also produced the valuation certificate given by the Village Administrative Officer. In view of the extreme stand taken by the Petitioners and the fourth Respondent, this Court is not inclined to go into the question of fact regarding the valuation of the land, buildings and theatre and the amount to be paid by the Petitioners. The relevant Rules relating to the renewal of the licence are found in Rules 92 to 97 of the Tamil Nadu Cinemas (Regulation) Rules, 1957 and it is not necessary to set out them varbatim in the judgment. However, it is essential to see whether all the conditions specified in the said Rules have been complied with.
Before going into the question, let me now deal with the decisions relied upon by the learned Counsel for the parties. Mr. N.S. Sivam, learned Counsel for the Petitioners strongly placed reliance on the decision of a Division Bench of this Court in the case of Dhanalakshmi Ammal etc. v. Govt. of Tamil Nadu and 4 Ors. 1993 II LW 569. In that case, the Appellant along with three others obtained a lease from Muthavalli of a charity for a period of 10 years and on the basis of no-objection letters given by others, a no-objection certificate was issued in the name of the Appellant to construct a permanent cinema theatre and after getting concurrence from the Wakf Board, the site was leased out in favour of the said four persons and the C-Form licence was also obtained in the name of the Appellant for running the theatre. The Respondents 4 and 5 in appeal objected to the renewal of the C-Form licence on the ground that the Appellant and (sic) 5 have surrendered the site and building of the theatre to the charity without the consent and without assessing the value of the movables in the theatre and that the Appellant was not in lawful possession of the site, building and equipments of the theatre. The question arose whether the licence renewed in favour of the Appellant was valid. This Court held that the Appellant was in lawful possession of the site, building and equipments and he satisfied the requirements of. Rule 13 of the Rules and hence, he was entitled to the renewal of the C-Form licence. This Court further held that the Appellant was a joint owner of the equipments and other movables and he had an undivided interest over them and it could not be stated that his possession of movables and equipments was unlawful.
Learned Counsel for the Petitioners also referred to the decision in the case of The Licensee, Sri Lala Talkies, Vadipatty, Madurai Taluk v. The District Collector, Madurai District, Madurai 1999 I MLJ 526. The question that arose in that case was whether a co-owner is entitled to run cinema business without the consent of other co-owners. S.S. Subramani, J., after considering the law on the subject, held as under-
In the decision reported in M. Dhanalakshmi Ammal v. Government of Tamil Nadu represented by the Secretary to Government, Home and Cinema Department 1993 Writ L.R. 958, a Division Bench of this Court had occasion to consider similar question, viz., what is meant by lawful possession. In that case, their lordships found that the Petitioner therein being a joint owner of equipment and other movables had undivided interest in them and, therefore, he is a person in lawful possession and so he was entitled to the issuance of a ''C'' form licence. In the case on hand, Petitioner is in a better position. All the three sons have inherited rights from their father, and all of them are entitled to the site, building and equipment, and it is left as a common property of all the three brothers.
A question may arise whether Petitioner is entitled to do cinema business without the consent of others. A co-owner is entitled to enjoy the property and make use of the same without detriment to the other co-owners. At the most, he will be liable for accounts. In. a. joint property, any co-owner has to use such property usually, in the sense that his user should not amount to ouster of other co-owners. In this case, Petitioner admits the right of other co-owners, and he does not want the rights of other co-owners to be taken away. If a theatre is closed, it is a loss to the entire family. It is settled law that a co-owner is entitled to make use of joint property in a way quite consistent with the continuance of joint ownership and possession, so long as he is not excluding the right of any co-sharer. If that be so, even the objection of the 4th Respondent is not relevant for consideration. The licensing authority is bound to consider only Rule 13 of the Tamil Nadu Cinema (Regulation) Rules. If the Petitioner is a lawful owner, there cannot be any objection for the grant of licence. In this case. I find that the Petitioner has satisfied both the grounds. In a similar case, viz. In R. Dhasaiyan and Anr. v. The Government of Tamil Nadu and Ors. W.P. No. 17859 of 1997 order dated 8.12.1997. I have taken a similar view.
On the other hand, learned Counsel for the fourth Respondent placed strong reliance on the decision of another Bench of this Court in Balasundaram v. Gopalakrishnan 1972 II MLJ 566, and the Division Bench of this Court held as under-
As far as the Tamil Nadu Cinema (Regulation) Rules are concerned, there are specific provisions regarding renewal, made in Rules 92 to 97. There is an eleborate procedure in this behalf and even these rules contemplate grant of a temporary permit during the interval between the application for renewal of the licence and the actual grant of the renewal and as a matter of fact, a perusal of these Rules will give an indication that the renewal of a licence is merely a continuation of the original licence and not a fresh grant at all. Consequently, the decision of the Supreme Court relied on by the learned Counsel for the Appellant does not support his case. We are clearly of the opinion that the very word "renewal" is opposed to the person applying for renewal being different from the person in whose name the licence was originally issued. If, as in the present case, the licence was originally issued in the names of the Appellant and the first Respondent jointly, a renewal of that licence could be applied for and obtained only in the names of those two persons. So long as only one of them applied for the renewal of the licence in his own name, when the original licence stands in the name of both, such an application cannot be considered to be an application for renewal of the licence and on the basis of such an application, no renewal of licence can be granted. If the Appellant had requested the authorities to treat his application as an application for a fresh licence on the ground that he is in lawful possession of the premises both by virtue of inter se arrangement between the Appellant and the first Respondent and by virtue of the original lease from the owner of the building, the position might be different.
In Ganapathy Swamy, N. v. The District Collector Periyar District 1995 I L.W. 622, D. Raju. J. (as His Lordship then was followed the Bench decision in the case of V.G. Balasundaram v. V.G. Gopalakrishnan and Ors. 1972 II M.L.J. 566 and made the following observation:
In this context, the further fact that the Petitioner owns only 20% of the shares, and in a licence of the nature and character with which we are concerned involving performance of duties and obligations, exposing the licensee to the risks of prosecution and penalities for violation of any of the conditions of any of me provisions governing the issue of licence, the objection of the other partners - Respondents have to be given due weight and consideration, and cannot be lightly brushed aside. As noticed earlier the decision in 1993 2 L.W. 569 (supra) was merely concerned with the question of lawful possession of the site, building and equipment in the teeth of disputes relating to the same and there was no occasion for the Division Bench, dealing with the said case to decide an issue of the nature which directly fell for consideration of the Division Bench which decided the decision in 1990 2 L.W. 506 (supra). At the instance of repetition it may be pointed out that in the latest decision of the Division Bench the licence stood only in the name of one person, unlike the present case. The plea based on the capacity of. any one partner applying for renewal against the wishes of other partners and purporting to represent the other partners who do not wish to continue the business by taking shelter under the general law has no relevance and such claims can have no application also to claims arising under the special legislation in question which, as pointed out earlier, carries with the licence issued there under onerous responsibilities and obligations exposing the licensee to the risk of prosecutions and penalties for any violation in addition to them are of light of running the theatre alone. This fact taken together with the negligible share of the Petitioner compared with the other objecting co-licensees-cum-partners, who held absolute majority of the shares, cannot be ignored and the Petitioner has no right to claim to represent such unwilling and opposing co-partners.
The above decision was following in A.V.M. Theatre, Andipatti v. The State of Tamil Nadu and Ors. 1997 Writ L.R. 269 and the learned Judge held as under.
When originally the licence was issued in the name of two persons jointly, the renewal of the licence would be applied for and obtained only in the names of those persons, on the application of those two persons. Whether the persons who applied for renewal of ''C'' form licence are in majority has no relevance. All the persons in whose names the original licence stands should sign the application for the renewal of ''C form licence.
In this context, the contention of the Petitioner that three licensees out of four licensees have signed the application for the renewal of ''C'' Form licence and hence, the authority should have ignored the objection of the fourth Respondent has no relevance having regard to the fact that in a case of this nature, the character and nature of the licence involve the performance of duties and the obligations exposing the licences to the risk of prosecution and penalties for violation of any of the conditions or any of the provisions governed for issue of licence, and the objection of one of the licensees has to be given due weight and consideration and it cannot be lightly brushed aside.
Learned Counsel for the fourth Respondent also referred to the decision in State of Madhya Pradesh and Another Vs. Dharam Bir, and Supreme Court Bar Association Vs. Union of India and Another, . As both the decisions deal with the power of the Apex Court under Article 142 of the Constitution, it is not necessary to consider the decisions here. Learned Counsel for the fourth Respondent referred to a decision of Karnataka High Court in the case of Nagesh Laxman Vernekar v. Anantha Krishna Naik AIR 1998 Kar. 411 and as the case deals with the powers of the Civil Court to issue directions as to the sale of large portion of the property to the person holding smaller portion in a suit for partition, the decision has no relevance to the facts of the case. Learned Counsel for the fourth Respondent also referred to the decision of the S.C. in the case of Bishnu Ram Borah and Another Vs. Parag Saikia and Others, wherein the Supreme Court held that it is not a proper exercise of jurisdiction under Article 226 of the Constitution for the High Court to issue a writ of mandamus for grant of liquor licence.
As already seen, the agreement entered into between the writ Petitioners and the fourth Respondent styled as a partnership agreement on 27.8.1990 was for a fixed period of five years and both the Petitioners and the fourth Respondent also proceeded on the basis that it was for a period of five years. u/s 42 of the Indian Partnership Act, 1932, if a partnership firm is constituted for a fixed term, subject to the contract between the partners, the firm is dissolved when the period under written agreement expires.
16 In Lindley on Partnership (14th Edition), at page 612, the learned author has also made the following observation:
A partnership which has been entered into for a fixed term or for a single adventure e-r undertaking is determined by the expiration of that term or the termination of the adventure or undertaking. If however, the partnership is continued after the expiration of the term, and there is no evidence as to the additional time for which it is to last, it is considered as having become a partnership at Will and is determinable on notice. A continuance of the business by the partners, or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.
In S.D. Singh & J.P. Gupta''s Law of Partnership in India (5th revised edition), learned authors after noticing the observation made in Lindley on partnership, made the following observation:
Under the Indian law also, a partnership constituted for a fixed period comes to an end on the expiry of that period, for, this would be the necessary result of the terms of the original contract. But it may, as it often happens he continued after the expiration of the original term, in which case the same partnership firm will be deemed to have continued as if it had not become dissolved but as to its duration there after it will be treated as partnership at Will. Such partnership may be dissolved by any partner giving proper notice to the other partners of his intention to dissolve the firm.
It has been held in the under mentioned case Pangoti Mangarao Vs. Chinnadi Kishan Rao, that where parties to partnership were to work out a sublease and the sub-lease was determined by efflux of time and there was no evidence on record to show that partnership continues even after that time, held partnership continued being particular partnership stands dissolved with determination of sub-lease and, therefore, the party cannot be insisted on to agitate his rights only in a suit under Partnership Act.
In the Law of Partnership by P.S. Narayana (Edition 1997), the learned author has also made the following observation:
Section 41(a) of the Act says that subject to contract between the partners a firm is dissolved if constituted for a fixed term, by the expiry of that term AIR 1925 Sind 300, Hem Raj v. Topan; AIR 934 Mad. 162 , Kothandapani v. Sreemanadevan Raja; L. Shiam Lal Vs. Shiam Lal and Another, .
In the Indian Partnership Act, 1932 by Om Prakash Aggarawala (4th Edition), at page 427, the learned author has observed as under:
A Contract of partnership come to an end when the period under the written agreement expires, unless it could be shown that the parties by express or implied agreement consented to continue the partnership business. The dissolution of a partnership constituted for a fixed period on the expiry of that period is a necessary result of the terms of the original contract. But a partnership for a fixed term is not exempt from dissolution by any of the other possible causes before the expiration of such term.
It is significant to notice that there is no agreement either express or implied to show that the parties have consented to continue the partnership business after the expiry of the period fixed in the deed of partnership. On the other hand, the conduct of the parties clearly shows that they have put an end to the relationship between the parties on the expiry of the term, The fourth Respondent raised objection for the renewal of the licence for the second five year period on the ground that she was not willing to continue the operation of the theatre. In her reply letter dated 23.6.1997 issued on her behalf to the notice issued on behalf of the Petitioners, she has categorically taken a stand that the partnership between the Petitioners and the fourth Respondent was only for a period of five years and there is no partnership arrangement after the lapse of the first five year period, The fourth Respondent has also taken a stand in the suit for partition before the Sub-Court, Ramanathapuram that they entered into an agreement like, Partnership agreement whereby they agreed to run a touring theatre in the suit property. The fourth Respondent has disassociated from the Petitioners after the expiry of the licence period and expressed her unwillingness to continue to be a partner in the partnership business. The stand of the fourth Respondent clearly shows that there was no agreement to continue the partnership business originally constituted after the expiry of the period of five years. Though the action of the first Petitioner in applying for renewal of the licence for and on behalf of the Petitioners and the fourth Respondent calls for a serious comment, however, when the fourth Respondent raised objection against the grant of renewal of licence by including her name, the Petitioners issued a notice calling upon the fourth Respondent for settlement of accounts either by negotiation or by arbitration and since there was no positive response, the Petitioners constituted a fresh partnership agreement among themselves and during the pendency of the appeal, they also applied for the grant of licence in the name of three Petitioners. The question that arises is whether it is permissible for the Petitioners to apply for licence in their names.
As already held by me, the partnership was for a fixed period and it was not extended by the parties to the agreement. Though the final accounts between the partners have not been settled, the effect of the operation of Section 42 of the Indian Partnership Act would be to dissolve the firm in the eye of law. Therefore, a new partnership constituted on 21.5.1997 cannot be considered as a reconstitution of the old firm. The firm is entitled to apply for registration if it satisfied the requirements of the Jaw. Rules 92 to 97 of the Tamil Nadu Cinemas (Regulation) Rules provide for the procedure to be followed in the case of renewal of licence and the licence can be renewed only if the applicant fulfils the requirements of Rule 13 of the Tamil Nadu Cinemas (Regulation) Rules. Under Rule 13 of the said Rules, if an applicant happens to be the owner of the site, building and equipments, he should produce necessary records relating to his ownership and possession. Secondly, if he is not the owner he should produce documentary evidence to the satisfaction of the licensing authority to show that he is in lawful possession of the land. Though the partnership business has come to an end, in so far as the site, building and equipments of the theatre, the Petitioners and the fourth Respondent can be considered only to be co-owners. The relationship between them after the dissolution of the firm is that there is no principle of agency which would regulate the relationship between the partners. In fact, there is no subsequent agreement between the parties to show that they agreed to share the profit and loss of the business carried on by the firm. It is well settled that it is essential that the principle of agency should regulate the relationship between the parties for a valid partnership and when the essential element is lacking between the Petitioners and the fourth Respondent after the constitution of the subsequent partnership, the relationship between the parties cannot be termed as partners. In Board of Revenue v. Murugesa Mudaliar 1955 (2) MLJ 166, the partners therein executed an agreement agreeing to cease to be partners of the firm and the question that arose before the Full Bench of this Court was as regards the legal relationship between the parties in the partnership firm. The Full Bench of this Court held that the relationship between the partners is that of co-owners and the document was construed as a release deed between the co-owners. The Full Bench in the above said case held as under:
In such a case there need be no conveyance as such by one of the co-owners. Each co-owner in theory is entitled to enjoy the entire property in part and in whole. It is not therefore necessary for one of the co-owners to convey his interest to the other co-owner. It is significant if he released his interest. The result of such release would be the enlargement of the share of the other co-owner. There can be no release by one person in favour of another, who is not already entitled to the property as a co-owner.
When the relationship between the partners after the dissolution is as co-owners, it must be held that the Petitioners are in lawful possession of the site, building and equipments and their possession cannot be regarded as illegal or unlawful as under the law each co-owner is entitled to be in possession of the entire property. Further, the three Petitioners are holding 75% of the undivided interest in the site in question. They also agreed in the partnership agreement executed between them that they would settle the amounts due to the fourth Respondent. It is also not a case of ouster of one of the co-owners from the property in question. That apart, the fourth Respondent has already instituted a suit for partition and for mesne profits and the question of ouster does not arise at all. In the factual situation, I am of the view, the decision of the Division Bench of this Court in Dhanalakshmi Ammal''s case (cited supra) would apply. The Bench of this Court in the above said case held that the Appellant therein was a joint owner of equipments and other movables having undivided interest in them and therefore, this Court held that it cannot be stated that the possession of the Appellant on the equipments and movables was possession without legal right or litigious possession. The Bench of this Court also noticed the decision in Balasundaram v. Gopalakrishnan 1972 (II) MLJ 566 and distinguished the same, It is significant to notice that Dhanalakshmi''s case was also a case of renewal of licence and this Court held that what has to be seen was whether the applicant was in lawful possession of the site, building and equipments and satisfied the requirements of Rule 13 of the Tamil Nadu Cinemas (Regulation) Rules and if he satisfied the tests, the person would be entitled to the renewal of C-Form licence. Though in the instant case, the licence was obtained in the name of four persons, on the expiry of the term, the partnership has come to an end. I am of the view, strictly speaking, the application subsequently filed by the Petitioners is not an application for renewal, but an application for a new licence in the names of the three persons. Therefore, the apprehension of the fourth Respondent that she would be mulcted with the liability or she may be exposed to criminal prosecution or any other action for the violation of the relevant Rules of the Tamil Nadu Cinemas (Regulation) Rules that may be committed by the Petitioners does not arise at all. Therefore, the decision of D. Raju, J (as His Lordship then was) in the case of Ganapathy Swamy, N. v. The District Collector, Periyar District 1995 I L.W. 622 has no application to the facts of the case.
Learned Counsel for the fourth Respondent also placed strong reliance on the unreported decision of S.S. Subramani, J. in W.P. No. 596 and 597 of 1998 dated 25.8.1998. That case was also a case of partnership. The learned Judge, on the facts of that case, has found that the licence was standing in the name of the firm and it was found that the death, retirement or insolvency of the partners did not dissolve the firm and the firm was the same person which would be seeking renewal of licence. In that case, the reconstituted firm was the same firm which continued to be the licensee for the business. Here, after the dissolution of the old firm, new firm was constituted and that firm applied for the grant of renewal of the licence. The learned Judge noticed the difference between the dissolution of the firm and reconstitution of the firm and held that a dissolution puts an end to the partnership and in the case of reconstitution, the partnership seems to be subsisting by way of another firm. The learned Judge also noticed that in the case of dissolution, followed by the constitution of a new firm by some of the erstwhile partners who may take over the assets and liabilities of the dissolved firm, the formation of the new partnership is not a reconstitution or the continuation of the old one. Further, the following observation made by the learned Judge is relevant for the purpose of this case:
From the Deed, it is clear that the Petitioner is the owner of the property and the other partners have also agreed to run the business. That being the case, the Petitioner as the owner of the property and part owner of the structure, even without the consent of any one, will be entitled to run the theatre under Rule 13 of the Tamil Nadu Cinemas (Regulation) Act. Even if he is considered to be a co-owner along with others, his right can never be rejected. The fact that he is in possession as owner can never be disputed so long as the terms of the Deed of 1963 is not questioned. The finding by the authorities that consent from others is necessary is not correct. They have not considered the material evidence. The authorities assumed that the licence was in the name of the four individuals which is also not correct.
In view of the above, I am of the view, the submission of the learned Counsel for the fourth Respondent that it is not open to the writ Petitioners to apply for renewal of the licence does not merit acceptance. It is also relevant to notice here that the fourth Respondent has not been taking a consistent stand, but her case throughout the entire proceedings was conflicting with each other. When the licence was renewed for the second five year period in the name of four persons including the fourth Respondent, the fourth Respondent objected to the grant of the licence for the inclusion of her name on the ground that the fourth Respondent was not willing to continue to be a partner in the cinema theatre. She has taken a stand before the licensee authority at the time of cancellation of the licence that she was not a partner and she was objecting to renewal of the licence. Soon after the order of the Appellant authority was passed, a notice was issued on behalf of the writ Petitioners to the fourth Respondent requesting her to come forward for settlement by way of negotiation or arbitration. In the reply issued on behalf of the fourth Respondent, the fourth Respondent has taken the stand that the partnership between the Petitioners and herself was only for a period of 5 years and there was no partnership agreement after the lapse of first five year period. Curiously, in the suit filed by her for partition before the Sub-Court, Ramanathapuram, the fourth Respondent has taken a stand that the agreement entered into between the Petitioners and the fourth Respondent was an agreement like partnership agreement. However, in the counter affidavit filed by the fourth Respondent in the writ petition, the stand of the fourth Respondent is that
...Though the writ Petitioners and I enjoy 1/4th undivided share in the theatre and the land as joint owners, we were and are running the said theatre as a partnership business. Therefore, the concept of co-owners being eligible to run the theatre to the exclusion of an objector or co-owner does not arise under the facts and circumstances of this case, since it is predominantly a partnership business.
It is clear that the fourth Respondent has been changing her stand to suit the occasion and whatever may be the stand taken by her, I am of the view that the legal relationship that exists between the parties has to be seen. As already held, there is no dispute that it was a partnership for a period of 5 years and the partnership did not continue after expiry of the period of 5 years. Though accounts might not have been settled between the parties as required under the Indian Partnership Act, the firm must be held to have been dissolved and the new firm constituted between the Petitioners cannot be regarded as a continuation of the old partnership, but a new firm. The Petitioners have agreed to pay the due share to the fourth Respondent for the employment, of her assets in the new partnership business. The fourth Respondent has already approached the Civil Court to protect her interest in the new business carried on by the Writ Petitioners. Therefore, it cannot be stated that the writ Petitioners have ousted the fourth Respondent when there is an agreement among themselves to pay and settle her share. Therefore, since there is no partnership existing between the Petitioners and the fourth Respondent, and the possession of the property is with the Petitioners, the fourth Respondent can only be regarded as a co-owner. In this situation, the decision of S.S. Subramani, J. In The Licensee, Sri Lala Talkies, Vadipatty, Madurai Taluk v. The District Collector, Madurai District, Madurai 1999 I M.L.J. 526 would squarely apply to the facts of the case. Learned Judge in that case has held that it is settled that a co-owner is entitled to make use of joint property in a way quite consistent with the continuance of joint ownership and possession, so long as he is not excluding the right of any co-sharer and if that be so, event the objection of the fourth Respondent is not relevant for consideration. The learned Judge also held that if the theatre is closed, it would be a loss to the entire family. Learned Counsel for the fourth Respondent also submitted that there was an agreement between the parties not to carry on the business of the theatre till the inter se dispute is settled. The question that arises in the writ petition relates to the correctness of the order passed by the first Respondent and in my view, it is not necessary to go into the question whether there was an agreement at all between the parties and if so, what is the effect of the agreement and the mode in the manner in which the agreement should be implemented. With the result, I hold that the impugned order passed by the first Respondent is liable to be quashed and accordingly, it is quashed. The first Respondent is directed to consider the application field by the Petitioners in the light of the directions given above. It is also-made clear that since there is an interim injunction ordered by the Civil Court in I.A. No. 226 of 98 in O.S.88 of 1988, the Petitioners should run the business if the licence is granted subject to the interim injunction passed by the Civil Court. It is further made clear that any observation made by this Court shall not be treated as binding or deciding rights of the parties in the suit except to the limited extent that the Petitioners should be regarded as in lawful possession for the grant of C-Form licence. It is made clear that nothing prevents the Civil Court from deciding the rights of the parties and also decide the question whether the property is divisible or not and if so the manner in which it should be divided in the suit.
The writ petition is allowed. Rule Nisi is made absolute. There will be no order as to costs. Consequently, W.M.P. No. 26753 of 1998 is dismissed.