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1980 Supreme(Raj) 50

Rajasthan High Court
P.D. Kudal & Mahendra Bhushan, JJ.
Hukmi Chand - Appellant
Versus
The Jaipur Ice & Oil Mills Co. - Respondents
D.B. Civil Special Appeal No. 78 of 1970
Decided On : February 27, 1980

Advocates Appeared:
S.K. Keshote, for Appellant; P.N. Dutt & P.D. Mathur, for Respondents.

Headnote:(a)—Contract Act, Sec. 27—Outgoing partner while selling his share and good-will covenanting that he would not carry same kind of business within local area—Restraint reasonable—Transferee from of price of land in same area bound by covenant and restrained from carrying on same business.(b)—Transfer of Property Act, Secs. 11 and 40—Transferee of land bound by covenant in restraint of trade and cannot build business premises on land to carry on same business which transferor of land had categorically agreed not to do.

       The dooctrine in restraint of trade is capable of applying where the restraint also relates to a particular piece of pro-perty. Defendant (1) Kalicharan bad voluntarily entered into an agreement containing clause 13 of the dissolution deed (fix. 2) that he was not carrying on the same kind of business, i.e., an Ice Factory, within the area of land measuring 325 x83. He had done so after taking Rs 11001/- as his share in the good-will. He or his assignees, who had purchased a part of this land calling notice of the covenant contained in clause 13 of Ex. 2 cannot be permitted to use the land in a manner inconsistent with the contract entered into by Kalicharan with the plaintiff while separating from the partnership business. Otherwise, the original purchaser or the partner separating from the partnership even upon the sale of a good-will of a firm will be able to sell the property the next day for a greater price in consideration of the assignee being allowed to escape from the liability which he (partner) had himself undertaken. Therefore, the defendants (2 to 5) who are none else but the close relations of Kali Charan (defendant-1) are also bound by clause 13 of Ex. 2. (Para 28)

MAHENDRA BHUSHAN, J.—This is a defendants Special Appeal under S. 18 of the Rajasthan High Court Ordinance against the judgment of the learned Single Judge dated December 9, 1969, and arises out of a suit for injunction.

2. The Jaipur Ice & Oil Mills Co., (hereinafter referred to as the Company) was ordinarily composed of six partners, viz Kishanlal, Mahadeo Prasad, Satya Narain, Kalicharan, Bishambhar Dass and Jeewan Prasad, and a partnership deed was executed on February 28, 1947. It started manufacturing Ice, Oil and Soap in Bani Park, Jaipur. Two of its partners, Bishambhar Dass and Jiwan Prasad left the firm on April 27. 1949, and the rest of the four partners, above named, continued the partnership business upto March 31, 1958, on which date the firm was dissolved under a dissolution deed (Ex 2). The firm had acquired a plot of land No. 1-V1I measuring 260 x 325 at Bani Park, Jaipur, on a part of which the factory had been constructed, and a residential house on a piece of this land measuring 325 x 88 with his own money. At the time of dissolution of the firm under the dissolution deed (Ex 2) dated March 31, 1958, defendant No. 1 Kalicharan retired from the partnership and was paid Rs. 26, 454.00 as a share of the capital invested by him, and over and above that he was also paid Rs. l1.001/- as his share of the price of the good-will of the firm At the time of dissolution of the firm, it was agreed between Kalicharan defendant (1), the retired partner, on the one hand, and Kishanlal, Mahadeo Prasad and Satya Narain, on the other, vide clause 12 of the dissolution deed (Ex. 2). that the aforesaid land measuring 325 x 88 and the house standing thereon would be the exclusive property of Kalicharan defendant (1) with full rights of sale and mortgage and that Kalicharan would get a boundary wall constructed or have a wire fencing on this piece of land, and open a separate door towards the road side, but would not have any entrance or exit towards the factory compound. It was also agreed (vide clause 13 of Ex 2) that Kalicharan would not carry on the same kind of business, i.e. Ice Factory, on the land in his possession. Kalicharan sold a piece of land measuring 88 x 162 out of 325 x 88, which was exclusively left to him under Ex.2, to his father Ram Niranjan Lal for a conside-ration of Rs. 3168/- by a registered sale deed (Ex. A. 18) dated January 12, 1959. Thereafter, by deed dated February 11, 1959 (Ex P23). Ramniranjan Lal entered into partnership with Smt. Genia Bai wife of Kalicharan and Hukam Chand son of Kalicharan for carrying on business of ice and also admitted Rajgopal Kanodia minor son of Kalicharan to the benefits of partnership. They also applied for a licence to put up an Ice Factory on the aforesaid land measuring 88 x 162 in their possession and started making further preparations in the direction of establishing an ice factory.

3. The Company filed the suit through its partner Mahadeo Prasad on November 29, 1961 in the Court of Munsif (East) Jaipur City against Kalicharan, Hukmichand, Ramniranjan Lal, Genia Bai and Rajgopal. minor son of Kalicharan for issuing a permanent injunction restraining the defendants from putt-ing up an ice factory on the disputed land measuring 88 x 162 and shown in green colour in the plan (Ex. 3) and prohibiting them to do any business of manufacturing of ice.

4. Kalicharan and Hukmichand filed separate written statements and took a number of pleas, but the suit was decreed by the trial court and the appeal of the defendants was also dismissed. By the time, Hukmichand filed second appeal before this Court and it was heard by a learned Single Judge. The only point which survived was as to the effect of clauses 12 and 13 of the dissolution deed (Ex., 2).

5. The conclusions arrived at by the trial Court were that clause 13 of the dissolution deed (Ex.2) did not impose un-reasonable restraint of trade on the defendant Kalicharan and his transferees, and consequently the defendants were b













































































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