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2003 Supreme(Raj) 459
Rajasthan High Court, Jaipur Bench
Honble HARBANS LAL, J.
Prahlad Sharma - Appellant
Versus
Khubi Ram & Another - Respondents
S.B. Civil Second Appeal No. 333 of 2000
Decided On : May 20, 2003
R.K. Agrawal, for Appellant S. Kasliwal & K. Verma, for Respondents
Headnote:C.P.C., Order 40 Rule 1 – Appointment of receiver – Property is in `defacto possession of respondent for 17 years and not inmedio – Running business in profit – No proof of danger being wasted, transferred or alienated – Held – For appointment of receiver the Court has to consider these five principles – (1) It is discretion of the Court (2) Primafacie a very excellent chance of succeeding in the suit (3) Emergency or danger or loss demanding immediate action (4) Defacto possession of defendant should not be deprived of (5) The conduct of the parties must be free from blame – No case is made out for appointment of receiver – Directed to submit regular quarterly statement of accounts in the Court with its copy to the appellant.
Following five principles have been laid down for appointment of receiver.
1. The appointment of a receiver pending a suit is a matter resting in the discretion of the Court.
2. The Court should not appoint a receiver except upon proof by the plaintiff that primafacie he has a very excellent chance of succeeding in the suit.
3. Not only must the plaintiff show a case of adverse and conflicting claims to property, but, he must show some emergency or danger of loss demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration.
4. An order appointing a receiver will not be made where it has the effect of depriving a defendant of `de facto possession since that might case irreparable wrong. It would be different where the property is shown to be `in medio, that is to say, in the enjoyment of no one; and
5. The Court, on the application made for the appointment of receiver, looks to the conduct of the party who makes the application and will usually refuse to inference unless his conduct has been free from blame. (Para 13)
(2). Briefly stated, the relevant fact are that the appellants- plaintiffs instituted a suit for dissolution of partnership firm and rendition of accounts which was decreed by the trial court vide judgment and decree dated 13.8.1997 directing appointment of the receiver. The appeal filed by respondent No. 1 Khubi Ram was allowed on 23.5.2000 and the aforesaid judgment and decree passed by the trial court was setaside. So, the present second appeal was filed which has been admitted on 25.8.2000.
(3). It has been stated in the application that the appellant partner is a in the firm M/s. Modern Auto Service, Bharatpur and is, therefore, entitled to look after and manage its business, assets and affairs, Respondent No. 1 has stopped giving him accounts of the firm and has started to bring up hurdles in his taking part in the activities of the firm. He served him with a notice to furnish account s of the firm, but to no avail. Instead, he falsely alleged in the reply to the notice that the appellant had retired from the firm. He claimed himself to be the sole proprietor of the business of the firm. The trial court disbelieved the case of the respondents No. 1 and held that he never retired from the partner-ship firm and continued to be its partner with respondent No. 1 having right to take accounts, shares, profits and manage its affairs. The suit was accordingly decreed directing appointment of receiver. But the first appellate court has wrongly refersed the said judgment and decree. It has been further stated that respondent No. 1 had not given him the accounts of the business and assets of the firm for his own use. In order to protect his interests, appointment of receiver is necessary. There is danger of the property being wasted, damaged and alienated by him. he has reasonable apprehension that he may mis-appropriate the property and profits o the firm and this would not only seriously prejudice his interests, but also would cause him irreparable injury. He has, therefore, prayed that the receiver may be appointed during the pendency of the appeal on such terms as may be deemed proper by the court.
(4). Respondent No. 1 has reply strongly opposed the application. According to him the appellant has no present right to take accounts of the firm because after family settlement arrived at on 23.4.1985 he has become sole proprietor of the firm M/s. Modern Auto Services, Bharatpur. The dealer-ship was granted to him as is evidence from the letters Ex.A-4 to A-9 addressed to him by indian Oil Corporation Ltd. The land on which the petrol pump was installed was exclusively purchased by him through registered sale-deed as permission to install the petrol pump was also granted to him vide judgment Ex.A-10 of the Collector, Bharatpur. He has been running the petrol pump for over 17 years. He has refutted the allegations that the property and assets of the firm are in the danger of being wasted, damaged or alienated. According to him, no receiver can be and ought to be appointed specially on a running business. There is no equity in his favour. The business of the petrol pump is being run since 1985 in profits. He has, therefore, prayed for dismissal of the application.
(5). I have heard at length the learned counsel for the parties and have also perused the record as well as the authorities cited at the bar.
(6). It is an admitted fact that the partnership between the parties was at Will. The firm M/s. Modern Auto Services, Bharatpur was established in 1965 as an HUF firm with Inder Narain as its `Karta. On 1.4.1969 a partner-ship, firm was created with five partners namely; Inder Narain, Charan lal, Khubi Ram, Prahlad Sharma, Vasudev and Girish Chandra. It was reconstituted w.e.f. 1.4.1977 vide a
