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Gujarat High Court
Judgename :A.R.Dave
RAJNIKANT HASMUKHLAL GOLWALA - Appellant
Versus
NATRAJ THEATRE - Respondent
APPEAL FROM ORDER 413 of 1999
Decided On : 09/28/1999
Partnership Act, 1932 – Sections 15, 69 (1) and (2) – Validity of order passed in Special Civil Suit – Challenged – Plaintiffs Nos. 2 to 6 and defendants Nos. 1 to 11 are partners of said firm – Plaintiffs Nos. 2 to 6 assigned their rights as partners of said firm to plaintiffs Nos. 7 and 8 whereas defendants Nos. 1 to 11 have assigned or sold their rights as partners of the said firm to defendant No. 12 – At an earlier occasion plaintiffs Nos. 2 to 6 had agreed to sell or assign their rights to defendant No. 12 but subsequently no formal conveyance deed was executed and finally plaintiffs Nos. 2 to 6 had assigned their rights as partners to plaintiffs Nos. 7 and 8. Defendant No. 13 is an agent of defendant No. 12 who appears to be doing business on behalf of defendant No. 12 at present – Defendants Nos. 14 to 19 are officers of the State of Gujarat and the State of Gujarat, who are not concerned with this appeal – Is would it be just and proper on the part of any court to permit something which is patently improper or illegal – Held, It is very clear that no partner can sell any part of the assets of the partnership firm as belonging to him and this being the position, no partner can ever validly sell or dispose of any of the partnership property as his own property – Partnership property vests in the firm and it does not vest in any of the partners and therefore it would not be possible for any partner to pinpoint any portion of the partnership property as his own property – Admittedly, the firm has not been dissolved. If a person doing the business of the firm without any right to do the same on behalf of the partners, is permitted to do the business, it would perpetuate illegality – Moreover there are all chances that the loss caused to the firm on account of management of defendant No. 12 might have to be borne by the partners of the firm. Such a situation cannot be continued – Moreover, if defendant No. 12 is permitted to do the business, he would be acting in violation of the provisions of sec. 29 of the Act and in my opinion it would not be proper to permit a person to do something under an order of the court, which he is not legally entitled to do – Trial court has therefore rightly considered the above referred aspects and has permitted plaintiffs Nos. 2 to 6 to do the business of the firm – It would be open to defendants Nos. 1 to 11 to participate in the management of the business. By virtue of the above understanding, there would not be any violation of any right of any of the partners of the firm – Appeal rejected. (Paras 25, 38 to 40)
( 1 ) THE appellants are some of the original defendants who have challenged the validity of the order passed below Ex. 5 dated 29/05/1999 in Special Civil Suit No. 19 of 1999 filed in the court of Civil Judge (S. D) at Navsari.
( 2 ) THE relevant facts in a nutshell giving rise to the present litigation are as under:-
( 3 ) FOR the sake of convenience, parties to the litigation have been described as shown in the trial court. Plaintiff No. 1 is M/s. Natraj Theatre which is a partnership firm. Plaintiffs Nos. 2 to 6 and defendants Nos. 1 to 11 are partners of the said firm. It is not in dispute that plaintiffs Nos. 2 to 6 have assigned their rights as partners of the said firm to plaintiffs Nos. 7 and 8 whereas defendants Nos. 1 to 11 have assigned or sold their rights as partners of the said firm to defendant No. 12. At an earlier occasion plaintiffs Nos. 2 to 6 had agreed to sell or assign their rights to defendant No. 12 but subsequently no formal conveyance deed was executed and finally plaintiffs Nos. 2 to 6 had assigned their rights as partners to plaintiffs Nos. 7 and 8. Defendant No. 13 is an agent of defendant No. 12 who appears to be doing business on behalf of defendant No. 12 at present. Defendants Nos. 14 to 19 are officers of the State of Gujarat and the State of Gujarat, who are not concerned with this appeal.
( 4 ) PLAINTIFF No. 1 firm and plaintiffs Nos. 2 to 6 have filed Special Civil Suit No. 19/99 praying for a declaration that property named Natraj Theatre belongs to plaintiff No. 1 firm and plaintiffs Nos. 2 to 6 and defendants Nos. 1 to 11 are partners of the said firm and also for an injunction that defendants Nos. 1 to 13 should be restrained from entering the premises named Natraj Theatre which is a partnership property and they should not disturb possession of the partners of the said firm and should be restrained from doing business of the firm with regard to exhibition of films on behalf of plaintiff No. 1 firm etc. An application for interim injunction being application below Ex. 5 has also been filed. In the said application it has been prayed that during the pendency of the suit, by an interlocutory injunction, defendants Nos. 1 to 13 should be restrained from entering Natraj Theatre and from doing any business of the partnership firm.
( 5 ) AFTER hearing the concerned parties, the trial court, by an order dated 2 9/05/1999, granted the injunction as prayed for by the plaintiffs. Being aggrieved by the said order, the present appellants who are some of the defendants who have assigned or sold their rights to defendant No. 12 have approached this Court.
( 6 ) CERTAIN other relevant facts with regard to the history of the litigation be also taken note of at this stage. At an earlier point of time plaintiff No. 1 firm had given on lease the theatre, which is a partnership property, to M/s. Fortune Enterprise. There was some litigation between M/s. Fortune Enterprise on one hand and the partnership firm on the other. In pursuance of the said litigation, possession of the said theatre was handed over to plaintiff No. 1 firm on 1 6/05/1998. After some time, defendant No. 12 had taken possession of the theatre on the basis of the fact that some of the partners of the firm had sold their rights to him. Thereafter there was another litigation between plaintiffs Nos. 7 and 8 on one hand and defendant No. 12 on the other. It appears that at an earlier point of time except defendants Nos. 10 and 11, all the partners had either assigned or sold their rights or had agreed to sell their rights to defendant No. 12. Thus, defendant No. 12 was claiming rights held by plaintiffs Nos. 2 to 6 and defendants Nos. 1 to 9. He was also a power of attorney holder of some of the partners. In pursuance of the said authority or right, defendant No. 12 wanted to manage the business of the firm but it appears that he was prevented by plaintiffs Nos. 7 and 8 who were subsequently, by a deed of assignment dated 29.
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