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High Court Of Calcutta
N. C. Mukherji, B. C. Ray
GANESH CHANDRA MUKHERJI - Appellant
Versus
GOPAL CHANDRA HAZRA - Respondent
A. F. O. O. 156 Of 1976
Decided On : 08/23/1976
PARTNERSHIP - DISSOLUTION - APPOINTMENT OF RECEIVER - PARTNERSHIP AT WILL - EXPULSION OF PARTNER - VALIDITY - ACCOUNTING - SHARE OF PROFITS OR INTEREST - LACHES AND DELAY.
Fact of the Case:
The plaintiff, a partner in a partnership firm, filed a suit for dissolution of partnership and for appointment of a receiver. The defendants, the other partners, objected to the appointment of a receiver, contending that the plaintiff had been expelled from the partnership in accordance with the terms of the partnership deed and that there was no apprehension of the assets of the partnership being dissipated.
Finding of the Court:
The court held that the resolution expelling the plaintiff from the partnership was made in good faith by the defendants and that the plaintiff had ceased to be a partner of the firm on and from 14th June, 1971. The court further held that the partnership business was being carried on with the assets of the previous partnership and that the plaintiff was entitled to a share of the profits or, at his option, to interest at the rate of 6% per annum on the amount of his share in the property of the firm.
Issues: 1. Whether the resolution expelling the plaintiff from the partnership was made in good faith by the defendants? 2. Whether the plaintiff was entitled to a share of the profits or interest in respect of his share of the property of the firm? 3. Whether a receiver should be appointed in respect of the partnership business and its assets during the pendency of the suit?
Ratio Decidendi: 1. The court held that the resolution expelling the plaintiff from the partnership was made in good faith by the defendants, as it was passed in accordance with the terms of the partnership deed and after due notice to the plaintiff. 2. The court held that the plaintiff was entitled to a share of the profits or, at his option, to interest at the rate of 6% per annum on the amount of his share in the property of the firm, as the partnership business was being carried on with the assets of the previous partnership. 3. The court held that a receiver should not be appointed in respect of the partnership business and its assets during the pendency of the suit, as there was no apprehension of the assets being dissipated and the appointment of a receiver would hamper the smooth running of the business.
Final Decision: The appeal was allowed and the judgment and order of the lower court appointing a receiver was set aside.
( 1 ) THIS is an appeal at the instance of the defendants against the Judgment and order No. 58 dated July 18, 1975, passed by the Subordinate Judge, 4th Court, at Alipore in Title Suit No. 15 of 1974 allowing the plaintiff's application for appointment of a receiver.
( 2 ) THE plaintiff Sri Gopal Chandra Hazra instituted a suit being Title Suit No. 15 of 1974 in the 4th Court of Subordinate Judge at Alipore for a decree for dissolution of partnership executed and registered on 4th September, 1964 as well as for dissolution of the second partnership registered on 4th October, 1969. and for accounts of the partnership business and for appointment of a receiver.
( 3 ) IN the said suit the plaintiff filed an application for appointment of a receiver stating inter alia that the plaintiff and the defendants Nos. 1 to 3 who were at one time employees of Patterson Engineering Co. (India) Private Ltd. constituted a partnership business under the name and style of 'pearl Filter Enterprises'. The partnership deed was executed by them and the same was registered on September 12, 1964, with the Registrar of Firms. The firm carried on the business of water purification, engineering and all sorts of contracts in connection with filtered water supply and at the time it had its place of business at 14-D, Shankar Bose Road, Calcutta-27. Subsequently the place of business of the film was shifted to 87 Chowringhee Road, Calcutta-20.
( 4 ) THE partnership was a partnership at will and the share of each partner was one fourth in the business of firm. Each of the partners contributed Rs. 2,500/- towards capital of the firm. There was a provision in the partnership deed that the defendant No. 2, Sri Kalicharan Sharma would be deemed as Managing Partner and he would be entitled to first ten per cent, of total net profit subject to revision depending on the volume of business. The partnership firm carried on the business in this way till the end of December, 1968. The plaintiff repeatedly requested the defendants to show him the accounts relating to the partnership business during the period from August 20, 1964 to December 31, 1968, but the defendants did not render any accounts of the business to him though the deed provided for inspection and check up of the accounts by every partner.
( 5 ) THE defendants who are in majority conceived a device to start the partnership afresh in the same name and style purporting to commence from 1st January, 1969 without the partnership, registered in 1964, dissolved and in pursuance of their design the defendants induced the plaintiff to execute a fresh partnership deed along with the defendants on 9th of June. 1969, for the same purpose and the said partnership was registered with the Registrar of Firms on 4th October, 1969. The business of the firm was carried on the basis of this 2nd partnership agreement. But the defendants failed and neglected to show the plaintiff the accounts of the business for the period from August 20, 1964 to December 31, 19r8 and to make adjustment of accounts. The plaintiff's further allegation is that the accounts are not properly maintained. The defendants withdrew huge sums of money for their personal use and benefit and grossly mismanaged the affairs of the partnership business. It was also alleged that the defendants in collaboration with the employees of the firm refused the plaintiff inspection of the books of accounts and other works of the partnership firm. On repeated requests by the plaintiff a general meeting was convened on 6th January, 1971, at 1 p. m. for discussion of the affairs of the partnership business. The plaintiff by his two letters dated 5th January, 1971 and 6th January, 1971 requested for inclusion of certain items in the agenda of the said meeting. The said meeting commenced and the plaintiff and the defendants attended. But as pre-arranged amongst the defendants the meeting was abruptly stopped as some of the defendants left the meeting
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