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High Court Of Delhi
MOHAR SINGH - Appellant
Versus
SARDARI LAL - Respondent
Decided On : 03/01/1996
PARTNERSHIP - PARTNERSHIP DEED - GENUINENESS - TEST OF AGENCY - INJUNCTION - BALANCE OF CONVENIENCE - MAINTENANCE OF ACCOUNTS.
Fact of the Case:
Plaintiffs and defendants entered into a partnership agreement on January 17, 1982, to carry on the business of commission agency in Kiryana goods under the name Shri Giriraj Trading Company. The partnership was dissolved on October 31, 1994, and the plaintiffs filed a suit for declaration of their shares in the profit and loss and net assets of the dissolved partnership firm and to require the defendants to render true and correct accounts of the partnership firm. The defendants contended that the partnership deed was a camouflage to avoid eviction from the premises under the Delhi Rent Control Act and that they were sub-tenants in the suit shop.
Finding of the Court:
The court held that the plaintiffs had not established a prima facie case of partnership between themselves and the defendants. The court found that there was no evidence of agency between the plaintiffs and the defendants, which is an essential requirement for a partnership. The court also found that the balance of convenience favored the defendants, who had been running the business in the suit shop for over 18 years.
Issues: 1. Whether the partnership deed between the plaintiffs and the defendants was genuine? 2. Whether the plaintiffs were entitled to an injunction restraining the defendants from using the goodwill, customers, and trade name of the partnership firm? 3. Whether the defendants were liable to render accounts of the business run in the suit shop?
Ratio Decidendi: 1. The court held that the partnership deed was not genuine because there was no evidence of agency between the plaintiffs and the defendants. The court found that the plaintiffs had not shown any prima facie evidence to suggest that they had ever acted as agents for the defendants or that the defendants had ever acted as agents for them. 2. The court held that the plaintiffs were not entitled to an injunction because they had not established a prima facie case of partnership. The court also found that the balance of convenience favored the defendants, who had been running the business in the suit shop for over 18 years. 3. The court held that the defendants were not liable to render accounts of the business run in the suit shop because there was no partnership between the plaintiffs and the defendants.
Final Decision: The court dismissed the plaintiffs' application for an injunction and granted the defendants' application to vacate the injunction that had been granted earlier. The court also directed the defendants to maintain the accounts of the business run in the suit shop and to file the accounts every six months in the court for inspection by the plaintiffs.
( 1 ) IN this suit for declaration of shares of the plaintiffs in the profit and loss and net assets of the dissolved partnership firm (w. e. f. 31. 10. 1994) Shri Giriraj Trading Company at 15% and 10% respectively and require the defendants to render true, just and correct accounts of the said partnership firm w. e. f. 17. 1. 1982 till the defendant continue to use the assets etc. of the partnership firm and for a preliminary decree directing the defendants to render accounts of the partnership firm M/s. Goverdhan Traders with a further prayer for the appointment of the Local Commissioner to go into the accounts of the firm, also requiring the defendants to render accounts to the plaintiffs,byl. A. 3862/95, under0rder39, Rules 1 and 2, CPC, the plaintiffs pray for ad interim injunction restraining the defendants from, in any manner, using the properties, goodwill and name of the partnership firm Shri Giriraj Trading Company and carrying on similar business in the firm s name Shri Giriraj Trading Company, also restraining the defendants from, in any manner, selling, transferring, alienating or otherwise disposing of the assets of the said partnership firm and also praying for the appointment of the receiver with respect to the assets and property of the firm with a direction to take charge of the firm; by IA No. 4562/95, the defendants, under Order 39, Rule 4, CPC, pray for the vacation of the order dated 5. 5. 1995 granted under Order 39, Rules 1 and 2, Civil Procedure Code in IA 3862/95.
( 2 ) THE say of the plaintiffs is that a partnership was entered into between the plaintiffs and the defendants vide partnership deed dated 17. 1. 1982; that the partnership was to carry on the business of commission agency in Kiryana goods in the name of Shri Giriraj Trading Company; that plaintiff No. 1 and 2 and defendants No. 1 to 3 are the partners in the said firm and the share profit in the ratio of 15%, 10%, 40%, 10% and 25% respectively; that prior to the said partnership, plaintiff No. 2 and the defendants were the partners carrying on the same business w. e. f. 17. 6. 1978 with late father of the plaintiffs, namely Shri Prabhu Dayal as another partner therein; that Shri Prabhu Dayal died on 16. 1. 1982 at Delhi; that consequently, a deed of dissolution was entered into between plaintiff No. 2 and defendants on 17. 1. 1982 and on that date, a fresh partnership between the plaintiffs and the defendants came into existence with a fresh deed of partnership, which is the subject matter of this suit; that the partnership business between the plaintiffs and the defendants carried on from 17. 1. 1982 to 31. 10. 1994; that the said partnership was, at Will, dissolved by plaintiff No. 1 on 30. 10. 1994 through his legal notice dated 27. 7. 1994; that earlier, on 1. 4. 1994, another partnership deed was entered into between the parties due to changes into the provisions of Income Tax Act for the partners and the partnership firm; that the partnership deed contains the rights and obligations of the parties to the same as also the present suit, in great details; that the said partnership carried on business in the premises which belongs to the plaintiffs and that defendant No. 1, who has the requisite experience in the commission agency of Kiryana business, was in actual control and possession of the books of accounts; that even after the dissolution of the firm w. e. f. 31. 10. 1994, the defendants have most illegally and arbitrarily, not settled the accounts of the firm and have not paid the plaintiffs their just and true share of the assets and profits of the said firm; that the defendants are liable to account for the shares of the plaintiffs of the profits earned since dissolution; that the defendants are bound to stop the user of the premises and the goodwill, customers and trade name of the said partnership firm from 31. 10. 94 but the defendants are, however, with impunity continuing to use the goodwill, customers and trad
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