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High Court Of Delhi
SURESH KUMAR SANGHI - Appellant
Versus
AMRIT KUMAR SANGHI - Respondent
Interim Application 2879 of 1930
Decided On : 01/16/1981
PARTNERSHIP - INJUNCTION - DISSOLUTION - DETERMINATION - PARTNERSHIP AT WILL - DURATION - MUTUAL CONSENT - GOOD FAITH - MAJORITY DECISION - STATUS OF MANAGING PARTNER - BALANCE OF CONVENIENCE - IRREPARABLE INJURY - TERMS AND CONDITIONS.
Fact of the Case:
The plaintiff and defendants 1 to 6 were partners in a motor vehicle business under the name Sanghi Motors. Differences arose between the partners, leading to the plaintiff filing a suit for permanent injunction restraining defendants 1 to 4 from interfering with the partnership business. The defendants contended that the partnership was at will and could be dissolved by any partner at any time, and that the plaintiff could not maintain a suit for injunction without seeking dissolution of the partnership.
Finding of the Court:
The court held that the partnership was not at will, as the partnership agreement contained provisions that implied a term of duration and that the partnership could only be determined by mutual consent. The court also held that the plaintiff was entitled to seek an injunction to protect the partnership business from interference by the defendants, even though he was not seeking dissolution of the partnership. The court further held that the defendants' conduct in writing to the partnership's principals and bankers to suspend supplies and credit facilities constituted a breach of good faith and that the plaintiff was entitled to an injunction to prevent further interference by the defendants.
Issues: 1. Whether the partnership was at will and could be dissolved by any partner at any time. 2. Whether the plaintiff could maintain a suit for injunction without seeking dissolution of the partnership. 3. Whether the defendants' conduct constituted a breach of good faith. 4. Whether the plaintiff was entitled to an injunction to prevent further interference by the defendants.
Ratio Decidendi: 1. A partnership is not at will if the partnership agreement contains provisions that imply a term of duration and that the partnership can only be determined by mutual consent. 2. A partner can seek an injunction to protect the partnership business from interference by other partners, even if the partner is not seeking dissolution of the partnership. 3. Conduct by a partner that is prejudicial to the partnership business and that violates the duty of good faith owed to the other partners constitutes a breach of good faith. 4. A partner who has been harmed by the breach of good faith of another partner is entitled to an injunction to prevent further interference by the other partner.
Final Decision: The court granted an injunction restraining the defendants from interfering with the partnership business. The court also ordered the plaintiff to furnish an indemnity bond to the defendants and to submit a true statement of partnership accounts to the court every quarterly.
( 1 ) THE plaintiff and defendants 1 to 6 are carrying OB the business of motor- vehicles, jeeps and accessories etc. in partnership under the name and style of M/s. Sanghi Motors (defendant No. 7) under a deed of partnership dated 1st Jan. , 1971. The plaintiff Shri Suresh Kumar Sanghi and defendants 5 and 6 S/shri Satish Chander Sanghi and Sharad Kumar Sanghi are leal brothers. S/shri Amrit Kurnai Sanghi, Rattan Kumar Sanghi aid Mahendia Kumal Sanghi defendants 1 to 3 are also real brothers and are first cousins of the plaintiff. Shri Ashok Kumar Sanghi defendant No. 4 is a nephew of the plaintiff and other defendants, being son of Shri Naiendia Kumar Sanghi, who is their cousin brother. The plaintiff and defendants 5 and 6 have 50% share in the partnership business while defendants 1 to 4 own the remaining 50% share. As at present, they have got a franchise/ dealership of M/s. Mahindra aad Mahindra Ltd. , Bombay for the distribution and sale of jeeps and F. C. trucks for the areas of Union Tetritory of Delhi, Chandigarh, Haryafla and Punjab with Head Office at Delhi. The plaintiff was appointed as a Managing Partner by all the partners of the aforesaid firm and he has been managing and looking after the affairs of the firm as such since its inception. It may be pertinent to add here that the said firm had been in existence as a partnership concern even earlier since 1962 and various partnership deeds between different members of the Sanghi Family (as I would like to describe them collectively) were executed from time to time. Thus, it would appear that the present firm was only reconstituted in the year 1971.
( 2 ) SOME differences and disputes having arisen between the parties, the group led by Shri Amrit Kumar Sanghi-defendant No. 1 (called Amrit Group for the sake of convenience) wrote a letter to their principals M/s. Mahindra and Mahindra Ltd. on 30th August, 1979 requesting them to suspend supplies of motor-vehicles and parts to the partnership firm till the disputes and differences between them and the other group led by Shri Sureah Kumar Singhi (called Suresh Group for the sake of convenience) were sorted out. He, inter alia, stated that on account of serious lapses on the part of the plaintiff it had become impossible to conduct the business of the firm and with great reluctance they were compelled to close the working of the dealership operations till the matters were sorted out. The Amrit Group also addressed a letter to the Bank of Rajasthan Limited who were bankers to the partnership firm on 28th Aug. , 1979, not to honour any cheque issued by any partners in the firm s account until further intimation from them. They further requested that the authority to operate the account by any of the partners jointly or severally be suspended. At about the same time, the plaintiff instituted a suit, being Suit No. 1034 A/79, in this Court. However, some kind of settlement (termed "package deal" by the defendants) took place between the parties on 21st Sept. , 1979 and the partnership business was resumed and carried on smoothly for sometime thereafter.
( 3 ) THE plaintiff has now instituted this suit for permanent injunction restraining defendants 1 to 4 from writing any letter or sending any communication to the Bank of Rajasthan for getting the bank operation of the partnership accounts with the said Bank closed or suspended and also from writing any letter or sending any communication to M/s. Mahindra and Mahindra Ltd. for the purpose of getting the dealership terminated or supplies of jeeps and F. C. trucks stopped/ suspended to the partnership film. He has further prayed that the defendants be restrained from acting in any manner which may be prejudicial or adversely affect the interest of the partnership business. It is contended that Amrit Group has again started putting obstructions in the smooth working of the partnership firm with the sole motive/intention to get the dealership rights of M/s. Mahindra
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