C.R.No.6261 of 2009
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
C.R.No.6261 of 2009.
Decided on: November 11, 2009.
Satish Kumar Bhalla and others
.. Petitioners
VERSUS
Indira Puri and others.
.. Respondents
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CORAM: HON'BLE MR.JUSTICE M.M.S.BEDI
1. Whether reporters of local papers may be allowed
to see the judgment?
2. Whether to be referred to the Reporter?
3. Whether the judgment should be reported in the
Digest?
***
PRESENT Mr.Sandeep Bansal, Advocate,
for the petitioners.
Mr.Rajinder Mahajan, Advocate,
for the respondents.
M.M.S. BEDI, J.
Petitioners-plaintiffs have preferred this revision
petition under Article 227 of the Constitution of India, aggrieved by
the orders dated 05.12.2007 and 07.08.2008, passed by the Courts
below dismissing the application for interim injunction filed by the
petitioners-plaintiffs in their suit for permanent injunction seeking to
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restrain them from taking forcible possession of the premises
consisting of two shops and stock affixture, articles of the partnership
concern M/s Janta Cycle Company. The claim of the petitioners-
plaintiffs in their plaint is that they along with defendant-respondent
No.1 had entered into partnership agreement dated 16.06.1999. The
defendant-respondent No.2 is husband and defendant-respondent
No.3 is the son of defendant No.1. Defendant No.1 is owner of
godown which is part of property No.52 and defendant-respondent
No.2 is owner of the shops. Defendant No.2 had agreed not to take
any rent of the shops owned by him and a letter was written by him to
the Assessing Authority, Excise and Taxation Officer, Jalandhar in
this concern. The partnership agreement was reduced into writing
between the petitioners-plaintiffs and defendant No.1 and it was
signed by the parties on 16.06.1999. As per the agreement, the
petitioners-plaintiffs are partners in the business to the extent of 50
per cent and defendant No.1 is partner to the extent of remaining 50
per cent as per the clause of the partnership deed. Defendant-
respondent No.1, is a sleeping partner whereas the petitioners-
plaintiffs are working partners of the firm. The petitioners-plaintiffs
claim that plaintiffs are in actual physical possession of the shops
and godown. On 27.06.1999, the petitioners-plaintiffs and defendant
No.1 jointly wrote a letter to the Manager, Oriental Bank of
Commerce, Adarsh Nagar, Jalandhar, authorizing and empowering
petitioner-plaintiff No.3, to solely operate the account. The firm
belonging to the petitioners and defendant-respondent No.1, was
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C.R.No.6261 of 2009
being run peacefully under the name and style of M/s Janta Cycle
Company, through the Managing partner petitioner No.3. Defendant-
respondent Nos.2 & 3, on 23.10.2007, in furtherance of their
common intention took steps to dispossess the plaintiff-petitioner
No.3, from the shops of the firm, compelling the petitioners-plaintiffs
to file a suit for injunction. The defendants-respondents filed written
statement taking up the plea that defendant-respondent No.2 was
carrying on the business of trading in cycle parts along with his
brothers under the name and style of Janta Cycle Store. The
petitioner-plaintiff No.3, used to function as part time accountant with
M/s Janta Cycle Store. His main function was to write books of
accounts and prepare statutory returns of Janta Cycle Store. Since
respondent No.2, started manufacturing activities under the name
and style as Neel Kamal Rubber Private Limited and his brother
Kamal Puri and Harpal Puri got separated as such, defendant No.2
closed down the business of Janta Cycle Storel. The petitioner-
appellant No.3, started working as part time accountant in Neel
Kamal Rubber Private Limited. In the meanwhile, he approached
defendant No.2, with a request that since son of petitioner Nos.1 & 2,
are grown up and were unemployed, a proposal was given to run
business of cycle parts in partnership with his family. In view of his
long association, plaintiff No.2 & defendant No.3, agreed to the said
proposal with the condition that business would be run under the
name and style Janta Cycle Company, in which defendant No.2, and
his family and Satish Kumar and his family would have 50 per cent
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C.R.No.6261 of 2009
share in each in the partnership of the firm. Defendant-respondent
No.2, also allowed the said firm to use the premises without any
right. Both the parties agreed that in case any partner desires to
retire, the partnership firm would be dissolved with one month’s
notice and defendant No.2, would be entitled to get vacant
possession of the premises. Since respondent No.2, is highly reputed
person and plaintiff No.3 was also having regard for him, as such,
both the parties had agreed that defendant No.2, shall be sole
arbitrator in case of any dispute. It was mutually agreed that
defendant No.3, having numerous business activities, both
manufacturing and trading, as such, they cannot afford time for day
to day proceedings. It was pleaded in the written statement that
plaintiff Nos.1 & 2, were totally unemployed and as such, plaintiff
No.2, requested the defendants-respondents that plaintiff Nos.1 & 2
would devote whole time to the business affairs of the firm and in
view of that it was agreed that they would be paid salary. It was
pleaded that since plaintiffs were not rendering accounts of the firm
and the plaintiffs refused to allow the defendants to have access to
the accounts of the firm, defendant No.1, gave notice of one month
for dissolution of the firm on 27.10.2007. Defendant-respondent
Nos.1 & 2 came to know that plaintiffs are thus running the affairs of
the firm and as such, they requested the petitioners-plaintiffs not to
indulge in illegal activities but the petitiones used filthy language and
caught hold of defendant No.2 and pushed defendant No.2 out of the
shop. Preliminary objections were taken that the firm has not been
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C.R.No.6261 of 2009
impleaded as a party and that the firm having not been dissolved and
defendant having found lot of differences as per stock statement, the
plaintiffs have got no right in the premises in dispute as same is
owned by defendants. After dissolution of the firm, the plaintiffs are
running the business. The Courts below have dismissed the
application of the petitioners-plaintiffs observing that the firm stands
dissolved and the petitioners-plaintiffs are not within their right to run
the business. The business is now being run in the premises which is
owned by defendant No.2 under mutual understanding but after the
defendants withdrawn, the partnership firm stands dissolved, the
petitioners-plaintiffs having no right either in the business or in the
shop in dispute. It was also observed by the Courts below that mere
non-payment of rent does not mean that defendant No.2 cease to be
landlord of the property. All the assets of the partnership concern are
the property of defendant No.1, on dissolution as per the agreement
of partnership. It was held that the petitioners-plaintiffs have got no
right in the property i.e., the stocks and liabilities of the partnership
firm, as such, they are not entitled for any interim relief believing the
allegations in the written statement that in the books, the stocks of
Rs.45 lacs had been shown whereas actually there was a stock of
Rs.3 lacs only. The petitioners have not defrauded the defendants.
The sleeping partners are not entitled to injunction, they having not
come to the Court with clean hands.
Counsel for the petitioners has vehemently urged
that since the business of partnership concern is being run by the
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C.R.No.6261 of 2009
petitioners-plaintiffs in the shops belonging to defendant No.2, the
petitioners-plaintiffs have got a right for settlement of accounts even
if the business is wound up or the firm is dissolved. Reliance has
been placed on provisions of Sections 46 & 48 of the Partnership
Act.
Contention of counsel for the respondents is that
the partnership between the parties being at will, a notice has
admittedly been sent to the petitioners-plaintiffs for dissolution under
Section 43, in writing. Petitioners-plaintiffs having misconducted
themselves are not entitled to the equity relief of interim injunction.
After hearing the counsel for the parties in order to
ascertain whether the shop in dispute owned by defendant No.2 is in
actual physical possession of the plaintiffs, the counsel for the
respondents submitted that, as a matter of fact, the shop in dispute is
in possession of the partnership concern which stands dissolved and
that in individual capacity, the plaintiffs does not have any right to
remain in possession or to run the business of partnership concern.
Counsel for the respondents-defendants admitted
that a separate suit for rendition of account and decree for amount
found due from the defendants and also handing over of the assets
including vacant possession of the premises occupied by the firm
stands filed by the defendants on 29.09.2009.
On asking of the Court, a photocopy of the suit filed
by the defendants for rendition of account has been produced
wherein it has been admitted that the present petitioners are still
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C.R.No.6261 of 2009
running the affairs of the firm but they are indulging in illegal
activities. The said suit seems to have been filed after the present
suit for injunction filed by the petitioners.
I have heard counsel for the parties and considered
the facts and circumstances of the case.
It is an admitted fact that the petitioners and
respondent No.1, have been running a business under an agreement
of partnership. There are allegations against the petitioners of having
misconducted themselves for which a notice has been issued by
respondent No.1. It is surprising that there is an arbitration clause in
the partnership agreement but neither the parties have opted to
approach the named arbitrator nor any objection regarding
maintainability of civil suits in view of existence of arbitration clause
has been taken by any party. The defendants-respondents have
admitted that till 23.10.2007, the applicants have been running the
business of the partnership concern but it has been alleged that he
had refused to render the accounts and assets of the firm including
the vacant possession of the premises after the dissolution. Even it is
is presumed that the partnership concern has been dissolved, still the
partners are liable for any acts done by them during the existence of
partnership and for the acts done after dissolution. The partners of a
dissolved firm continue to be liable even to third parties over any act
done by them after dissolution. The defendants have admitted the
plaintiffs to be in possession of the asserts of the partnership
concern. They are liable to render the accounts to the defendants-
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C.R.No.6261 of 2009
respondents in case they have been running the business of the
partnership concern. As per the terms of agreement between the
partners, even the sole arbitrator named in the partnership Deed is
entitled to pass any award which would be binding on all the parties.
The petitioners-plaintiffs claim to be in possession of the shop of
respondent No.2, who admittedly is not a partner. He has got every
right to get possession of his premises from the partnership concern
or any of the partners of the firm having entered into possession of
his property in the capacity as partners of partnership concern. Even
if it is presumed that all the rights of the petitioners in the partnership
concern cease to exist and that the petitioners are in unauthorized
occupation of any premises of respondent No.2, he can take back
the possession from the partnership concern or any of its partners
even if the partnership concern has been dissolved. The rights of the
partners are yet to be settled in the suit filed by respondent Nos.1 &
3, for rendition of account. The petitiones-plaintiffs and the other
partners defendant Nos.1 & 3, will be deemed to be in joint
possession of the assets of the partnership concern. The petitioners
cannot seek injunction against his partners who are also deemed to
be in possession of the property as partners. The revision of the
petitioners against respondent Nos.1 & 3, partners is liable to be
dismissed on that ground. The rights of the partners have to be
determined in the suit filed by defendant-respondent Nos.1 & 3. The
Courts below have rightly dismissed the application of the petitioners
as the suit for injunction against the co-partners is not maintainable
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without impleading the partnership concern. So far as respondent
No.2, Rajinder Kumar Puri, the owner of the premises where the
business is being run is concerned, he has certainly got a right to
dispossess the petitioners or the other partners including defendant
Nos.1 & 3, in accordance with law. He being not a partner, the
petitioners along with other co-partners being in joint possession of
the property, the application for interim injunction of the petitioners
deserves to be allowed against respondent No.2, Rajinder Kumar
Puri.
The appeal is partly allowed and the impugned
orders passed by the Courts below are modified to the effect that
respondent No.2, will be restrained from dispossessing the
petitioners from his property except by due process of law. It will be
open to respondent No.2, to evict the petitioners by adopting the
procedure of law. It will also be open to respondent No.2, to claim the
market value for the use and occupation of his shop/shops which is
claimed to be in possession of petitioners. The possession of
petitioners will be deemed to be joint possession along with his co-
partners. The rights of respondent Nos.1 & 3, in the capacity as
partners of petitioners will not be prejudiced, in any manner, by the
suit for injunction filed by the petitioners. The interim injunction
application of petitioners is allowed against respondent No.2 and
dismissed against respondent Nos.1 & 3.
(M.M.S.BEDI)
JUDGE
November 11, 2009.
rka
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