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2009 Supreme(Mad) 5524
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE G. RAJASURIA
P. Manthiramurthy, Partner M/s. Yule Engineering Corporation & Another
Versus
P. Marimuthu, Partner M/s. Yule Engineering Corporation & Another
O.O.C.J.A.3244 of 2008 in C.S. No.564 of 2006
Decided on : 15-12-2009
For the Petitioners:R. Krishnaswamy, Senior Counsel for M/s. Gurulingam, Advocate. For the Respondent:T.R. Rajaram, Senior Counsel for M/s. Karthick, R1, Mukundan & Neelakantan, R2, P. Ravishankar Rao, Advocates.
The main legal point established in the judgment is the invalidity of lease agreements under the Partnership Act, the application of the doctrine of 'lifting the veil' to scrutinize transactions, and the receiver's authority in property preservation and maintenance.
Headnote:
Partnership Dissolution - Lease Agreements - Partnership Act - Section 19, Section 22 - Receiver's Directions - Validity of Lease Agreements - Doctrine of 'Lifting the Veil' - Receiver's Authority - Eviction of Tenants - Court's Jurisdiction - Auction Sale - Final Decree Proceedings
Fact of the Case:
The court addressed the dissolution of a partnership firm, M/s. Yule Engineering Corporation, and the subsequent dispute over lease agreements involving the firm's properties. The receiver sought directions to take physical possession of the premises and evict the tenants to facilitate the sale of the properties.
Finding of the Court:
The court found that the lease agreements entered into by the managing partner, Marimuthu, with his own organizations were invalid under Section 19 of the Partnership Act. The court emphasized the doctrine of 'lifting the veil' to scrutinize the transactions and protect the interests of the partnership firm and its stakeholders. The court also clarified the receiver's authority and the limitations on the court's jurisdiction in eviction matters.
Issues: The key issues involved the validity of the lease agreements, the authority of the receiver, and the court's jurisdiction in eviction proceedings.
Ratio Decidendi: The court held that the lease agreements were invalid under Section 19 of the Partnership Act, and the doctrine of 'lifting the veil' was applicable to scrutinize the transactions. The court emphasized the receiver's authority to take necessary steps for property preservation and maintenance, while also clarifying the limitations on the court's jurisdiction in eviction matters.
Final Decision: The court directed the receiver to proceed with the sale of the properties and set a timeline for the auction. It also outlined the eviction process for the tenants, emphasizing the need for compliance with the Division Bench's directions and the execution of the court's orders.
Pithily and precisely, compendiously and concisely, the relevant facts absolutely necessary and germane for the disposal of this application would run thus:
(a) Already the preliminary decree for dissolution of partnership firm, namely, M/s. Yule Engineering Corporation was passed by this Court, as against which, OSA was filed before the Division Bench of this Court in O.S.A.No.90 of 2008. The relevant portion of the order passed in the O.S.A. No.90 of 2008 is extracted hereunder for ready reference:
“2. By consent of the parties, the judgment and the decree passed by the learned single Judge dated 112. 2007 is set aside, and the following preliminary decree is passed for dissolution of partnership as under:-
(1) It is declared that the proportionate shares of the parties in the partnership are as follows:
First respondent/plaintiff Mr. P. Mandiramoorthy 50%, and the appellant/first defendant Mr. P. Marimuthu and the 2nd respondent/2nd defendant Mr. P. Arun 25% each.
(2) It is declared that the partnership shall stand dissolved (or shall be deemed to have been dissolved) as from 03rd day of July, 2006, and it is ordered that the dissolution thereof as from that day be advertised in the Tamil Nadu Government Gazette.
And it is ordered that Mr. S. Raghunathan, Advocate be the receiver of the partnership estate and effects in the suit and do get in all the outstanding book-debts and claims of the partnership.
And it is ordered that the following accounts be taken:
(i) An account of the credits, property and effects now belonging to the said partnership;
(ii) An account of the debts and liabilities of the said partnership;
(iii) An account of all dealings and transactions between the plaintiff and defendants, from the foot of the settled account exhibited in the suit and marked (A), and not disturbing any subsequent settled accounts.
And it is ordered that the goodwill of the business heretofore carried on by the plaintiff and the defendants as in the plaint mentioned, and the stock-in-trade, be sold on the premises, and that Mr. S. Raghunathan, receiver may, on the application of any of the parties, fix a reserved bidding for all or any of the lots at such sale, and that either of the parties is to be at liberty to bid at the sale.
And it is ordered the above accounts be taken and all the other acts required to be done be completed, before the 15th day of September, 2008 and that Mr. S. Raghunathan, Receiver do certify the result of the accounts, and that all other acts are completed, and have his certificate in that behalf ready for the inspection of the parties on the 30th day of September 2008.
(3) It is declared that the joint receivers ceased to be receivers w.e.f. the date of the order of the learned single Judge i.e 112. 2007 and shall handover all the assets of the partnership firm both movable and immovable and all account books, ledgers and invoices, bank account details and the other relevant records of the partnership firm to Mr. S. Raghunathan, Receiver within two weeks from the date of receipt of a copy of this order.”
(b) Subsequently, on mentioning, the same Division Bench, added the following also.
“2. Heard the advocates for the parties.
3. Paragraph 2(1) of our order dated 3. 2008 be substituted by the following:
(1) It is declared that the proportionate shares of the parties in the partnership are as follows:
The first respondent/plaintiff Mr. P. Mandiramoorthy and the second respondent/second defendant Mr. P. Arun are each entitled to 25% and the appellant/first defendant P. Marimuthu is entitled to 50%.
Similarly, the paragraph appearing in page-3, after paragraph 2(iii), or our order be substituted by the following:
And it is ordered that the goodwill of the business heretofore carried on by the plaintiff and the defendants ash in the plaint mentioned, and the stock-in-trade, as well as movable and immovable properties of the partnership firm, by sold on the premises, and that Mr. Raghunathan, Rece
