SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

2020 Supreme(Cal) 55

IN THE HIGH COURT OF CALCUTTA
Debangsu Basak, J.
Md Mofazzular Rahman And Others - Appellants
Versus
Md Sarfaraz Alam And Others - Respondents
General Application No. 2082 of 2019, 1 of 2019, 2627 of 2019, 2 of 2019; Civil Suit No. 174 of 2019
Decided On : 04-02-2020

Advocates Appeared:
S.K. Kapur, Advocate, Rudraman Bhattacharyya, Advocate, Pooja Chakraborty, Advocate, Somdutta Bhattacharya, Advocate, Radhika Misra, Advocate, Soorjya Ganguly, Advocate, Priyanka Prasad, Advocate, Debjyoti Saha, Advocate, Anindya Kr Mitra, Advocate, Abhrajit Mitra, Advocate, Jishnu Chowdhury, Advocate, Amitabh Ray, Advocate, Aritra Basu, Advocate, Ratul Das, Advocate, Anurag Bagaria, Advocate, Ranjan Bachawat, Advocate, D.N. Sharma, Advocate, Ratnesh Rai, Advocate, Anunoy Basu, Advocate, Ankan Rai, Advocate

The court refrained from deciding the validity of expulsion and dissolution at the interim stage, leaving it for trial, and passed interim orders to protect the parties' interests.

Headnote:

Partnership Firm - Expulsion - Indian Partnership Act, 1932 - Sections 46, 47, 53 - The court considered the expulsion of a partner from the partnership firm, the validity of dissolution of the partnership firm, and the entitlement of the defendant No. 1. The court passed interim orders to protect the interests of the parties, including restrictions on encashing fixed deposits, disclosure of asset sale prices, and provision of half-yearly statements of accounts.

Fact of the Case:

Partnership firm M/s. Serajuddin & Co. with iron ores mines faced internal disputes, including the defendant No. 1's alleged prejudicial actions. The plaintiffs sought expulsion of the defendant No. 1, who claimed the partnership was at will and dissolved it. The court considered the validity of expulsion and dissolution, leaving the decision for trial.

Finding of the Court:

The court passed interim orders to protect the parties' interests, including restrictions on encashing fixed deposits and disclosure of asset sale prices. It declined the appointment of a Receiver, opting for auditors to assess the defendant No. 1's entitlement notionally treating the firm as dissolved and the defendant as expelled.

Issues: Validity of expulsion and dissolution, entitlement of the defendant No. 1, and interim protection measures.

Ratio Decidendi: The court refrained from deciding the validity of expulsion and dissolution at the interim stage, leaving it for trial. It passed interim orders to protect the parties' interests, including restrictions on encashing fixed deposits and disclosure of asset sale prices.

Final Decision: The court passed interim orders to protect the parties' interests, including restrictions on encashing fixed deposits, disclosure of asset sale prices, and provision of half-yearly statements of accounts.

JUDGMENT

Debangsu Basak, J. - Two applications have been taken up for analogous hearing as they are in the same suit. Old GA No. 2082 of 2019 new GA No. 1 of 2019 is an application at the behest of the plaintiffs seeking interim protection. Old GA No. 2627 of 2019 new GA No. 2 of 2019 is an application at the behest of the defendant No. 1 seeking interim protection.

2. Learned senior advocate appearing for the plaintiffs has submitted that, the parties to the suit were carrying on business in partnership with each other under the name and style of M/s. Serajuddin & Co. by virtue of a deed of partnership dated October 1, 2011. The partnership is into mining business. The partnership has iron ores mines situated in the district of Keonjhar in the state of Orissa. He has referred to the deed of partnership dated October 1, 2011 and submitted that, the deed of partnership permits expulsion of a partner from the partnership firm. The defendant No. 1 was acting inimical to the interest of the partnership firm. He was writing various letters to different authorities making wild, unfounded and baseless allegations against the partnership firm and the partners. Pursuant to such wild allegations, the partnership firm faced a number of proceedings from various authorities including the bankers of the partnership firm. The entire liquidity of the partnership firm got embroiled in the litigations initiated at the behest of the defendant No. 1. There has also been a shift in policy of the Central Government with regard to the iron ores mines. Therefore, the partners decided that, the partners would not be making any drawings from their respective capital account with the partnership firm. This austerity measure was put into place by the partners in the best interest of the partnership firm.

3. Learned senior advocate appearing for the plaintiffs has submitted that, the defendant No. 1 on the pretext of been unwell and also otherwise, did not look after the affairs of the partnership firm on a dayto-day basis. The defendant No. 1 was always at Kolkata. He never visited the mines. However, the defendant No. 1 by diverse correspondence instigated various authorities to initiate proceedings against the partnership firm and the partners. By reason of such actions of the defendant No. 1, the partnership firm and its business suffered.

4. Learned senior advocate appearing for the plaintiffs has submitted that, the defendant No. 1 purported to invoke the arbitration clause in the deed of partnership dated October 1, 2011. In such arbitration proceeding, the defendant No. 1 changed its stand with regard to the partnership firm and its affairs from time to time. The defendant No. 1 failed to secure any interim protection in the arbitration proceedings despite attempts. He has submitted that, the plaintiffs are contesting such arbitration proceeding on the ground that, the disputes referred to the arbitrator were not covered by the arbitration agreement.

5. Learned senior advocate appearing for the plaintiffs has referred to the various clauses of the Deed of Partnership dated October 1, 2011 and submitted that, clause 19 thereof permits expulsion of a partner from the partnership firm. In terms of such clause, a show cause notice dated June 26, 2019 was issued to the defendant No. 1. The defendant No. 1 did not reply thereto. Instead, the defendant No. 1 issued a notice of dissolution of the partnership firm dated July 13, 2019. Since, the defendant No. 1 did not reply to the show cause notice dated June 26, 2019, the defendant No. 1 was expelled from the partnership firm on July 15, 2019.

6. Learned senior advocate appearing for the plaintiffs has submitted that, in the arbitration proceeding, the defendant No. 1 never claimed that the partnership was at will. Prior to the issuance of the so-called notice for dissolution dated July 13, 2019, the defendant No. 1 initiated the arbitration proceeding and various meetings took place in such arbitration.

Click Here to Read the rest of this document
1
2
3
4
5
6
7
8
9
10
11
Judicial Analysis

AI

SupremeToday Portrait Ad
supreme today icon
logo-black

An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers

Please visit our Training & Support
Center or Contact Us for assistance

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top